Opinion ID: 1199038
Heading Depth: 1
Heading Rank: 1

Heading: misappropriation of funds

Text: Evidence before the panel established that Mark Haigler hired respondent to initiate a wrongful death action relating to the death of Haigler's wife. At the time of her death, Haigler's wife had four children who were living with their father, John White, in O'Fallon, Missouri. White also hired respondent to represent the four children, agreeing to have Haigler appointed guardian ad litem for the children in a friendly suit in order to have the district court approve a settlement. The settlement provided for Haigler to receive $15,000.00 and the children to share $45,000.00. Respondent testified that by agreement with both Haigler and White he was to receive thirty-three percent of the gross amount of the $60,000.00 settlement, that is, $15,000.00, as his attorneys fee. However, the court order approving the settlement shows that each child was to receive $10,287.50 and respondent was only to receive $3,850.00 as an attorneys fee for his services to the children. Moreover, on the same date as the settlement order, the court issued an Order For Trust in which the court ordered $11,250.00 to be deposited in an account for each of the four children in Boatman's Bank in O'Fallon, Missouri with $962.50 to be immediately withdrawn from each of the accounts to pay respondent for his services. Respondent received a check from the friendly suit defendants in the amount of $60,000.00 and deposited it into his attorney trust account. He then paid Haigler $10,000.00 for his share which was $15,000.00 minus the $5,000.00 attorneys fee. Later, respondent wrote a $30,000.00 check from his attorney trust account to John White and sent it to him in Missouri. This check had a notation on it that read as trustee for his 4 minor children, but it was not sent to a trust account in the Missouri bank per the requirements of the court's order. In fact, respondent did not assist White in establishing the trust account nor was there any indication that he provided a copy of the court order to the bank as the court directed him to do. Not only did respondent violate the conditions of the court orders, the $30,000.00 check made out to White was returned unpaid as the account had insufficient funds to cover it. White testified that he contacted respondent about the check, and respondent told him that he was having some problems with transfers of funds in his bank. Respondent explained to the Professional Responsibility Tribunal (trial panel) that his trust account was low on funds because he had paid numerous bills for a client and errantly relied upon a sight draft from that client in the amount of $45,000.00 which was to be deposited into his account to cover these bills as well as his attorneys fee for the work. When the draft was not honored, his trust account had insufficient funds to cover both the $30,000.00 check and all of the bills he had previously paid. He asserts that he did not wilfully misappropriate the settlement money, but rather, mistakenly relied upon the integrity of a client. He notes that he has yet to be paid by that client, and had to sell some of his own assets to pay White what he owed him. We cannot accept this explanation as an excuse for respondent's misconduct. Respondent's trust account records indicate that the funds were deposited into his account on October 20, 1988, and that the check to White was not written until November 13, 1988. Respondent should have known by the latter date that the draft had not been honored and the funds had not been deposited into his trust account. Nevertheless, during the month that elapsed from the deposit of the settlement proceeds, respondent not only wrote the $10,000.00 check to Haigler, but also wrote checks in the amounts of $7,000.00 to himself personally, $12,000.00 for four months of house payments on his home mortgage, $1010.00 for travelers checks for which he testified was legal business, as well as transferring $8,089.50 to a Rotan Mosle stock account. Evidence further showed that respondent made numerous withdrawals and drafts upon the trust account for personal expenses after the check was returned. He also made several payments to his brother from the account even though at the time the brother did not have any money in the account. Respondent's bank statements show that from November, 1988 to May, 1989, there were insufficient funds in his trust account to pay the money still owed to the children. Some money was in the account, and it clearly belonged to the children, but respondent made no effort to disburse even those few funds to the children. It is clear that respondent misappropriated the funds entrusted to him. Pursuant to repeated efforts by White to obtain the money, respondent paid all of the proceeds to White along with 10.5 percent interest. However, the first payment was made in response to a request by White for $5,880.00 to pay for medical, dental and personal expenses of the children. Respondent did not even attempt to make any further restitution until nine months later, after these disciplinary proceedings were filed. At that time, he sent a check for $1,750.00 represented to be interest on the money owed to the children. Full restitution was made three months later, over a year after respondent received the settlement check. Rule 1.4(b) of the Rules Governing Disciplinary Proceedings provides: Where money or other property has been entrusted to any attorney for a specific purpose, he must apply it to that purpose. He may not avail himself of a counterclaim or setoff for fees against any money or other property of his client coming into his hands for a specific purpose, and a refusal to account for and deliver over such money or property upon demand shall be deemed a conversion. This does not apply to the retention of money or property otherwise coming into the hands of a lawyer and upon which the lawyer has a valid lien for his services. (Emphasis added) Subsection (c) of Rule 1.4 states that [t]heft by conversion or otherwise of the funds of a client shall, if proved, result in disbarment. Complainant must prove the allegations of the complaint by clear and convincing evidence. Rule 6.12(c); State of Oklahoma ex rel. Oklahoma Bar Association v. Miskovsky, 804 P.2d 434 (Okl. 1991). We find that complainant proved by clear and convincing evidence that respondent converted the funds from the settlement to his own use and he failed to deliver the funds to White upon demand.