Opinion ID: 1530409
Heading Depth: 2
Heading Rank: 1

Heading: Misappropriation of Trust Funds

Text: The Hearing Committee found that Respondent was guilty of several acts constituting misappropriation of trust funds. We agree. Misappropriation is any unauthorized use by an attorney of ... funds entrusted to him or her, whether or not temporary or for personal gain or benefit. In re Choroszej, 624 A.2d 434, 436 (D.C.1992). Violation of the rule is complete when the balance in [the trust] account falls below the amount due the client. In re Micheel, 610 A.2d 231, 233 (D.C.1992); accord, In re Pels, 653 A.2d 388, 394 (D.C.1995). An act of misappropriation was complete on January 19, 1995, when the trust account balance fell to $78,892.40. At that time, Respondent was not entitled to draw fees upon Officer Humble's settlement proceeds, because he had not yet provided his client with a list of proposed disbursements and received his client's approval. [7] The offense of misappropriation is a per se offense requiring no proof that Respondent intended to use his client's funds for unauthorized purposes. In re Choroszej, 624 A.2d at 436 (D.C.1992); In re Evans, 578 A.2d 1141, 1142 (D.C.1990). Respondent's mental state is relevant to the appropriate sanction for his misconduct. In re Addams, 579 A.2d 190, 191 (D.C.1990) (en banc) (in virtually all cases of misappropriation, disbarment will be the only appropriate sanction unless it appears that the misconduct resulted from nothing more than simple negligence). Accord In re Pierson, 690 A.2d 941, 948 (D.C. 1997); In re Clarke, 684 A.2d 1276, 1280 (D.C.1996); In re Morrell, 684 A.2d 361, 373 (D.C.1996); In re Pels, 653 A.2d at 389; In re Micheel, 610 A.2d at 237 (D.C.1992). Bar Counsel urged that the evidence in this case establishes as least reckless misappropriation. The Committee found that Respondent acted with knowledge that this invasion of trust proceeds was wrongful. We can draw no other conclusion from the delay in accounting for receipt of funds, the failure to cooperate with Bar Counsel's investigation, and Respondent's failure to produce any records to support his use of the trust proceeds. HC Rep. at 8. Because it is clear that Respondent's conduct was at least reckless, we find it unnecessary to decide whether the evidence also establishes that Respondent had actual knowledge, as of January, 1995, that the trust account had insufficient funds to cover the amount that he was obligated to hold in trust for Officer Humble. There is no doubt that the misappropriation is attributable to more than mere negligence. As of May 19, 1995, when the balance in the trust account fell below the sum that should have been held in trust to pay the client's creditors, Respondent was guilty of an additional act of misappropriation. As the Committee found, that misappropriation was ongoing at least through the date of the hearing, May 24, 1996. Again, Bar Counsel urged a finding of at least reckless misappropriation and the Committee found that Respondent acted with knowledge that his use of the trust founds was wrongful. No other conclusion can follow from Respondent's repeated use of Trust proceeds to pay his personal creditors rather than applying trust proceeds as entrusted. HC Rep. at 9. Again, we find it unnecessary to determine whether Respondent's misconduct was attributable to gross recklessness or to actual knowledge that the balance in the trust account was insufficient to cover the outstanding claims against the settlement proceeds. Respondent admitted that by August or September 1995, he was aware that there were insufficient funds in the trust account to pay Dr. Garmon. Tr. 139-40. He did not restore the funds to his trust account then and had not done so by the time of the hearing. Tr. 140-42. Prior to August, 1995, Respondent appears to have been operating without any sense of obligation to maintain records or to keep his own funds and debts separate from those of his clients. We agree with Bar Counsel and the Hearing Committee that the facts of this case are so egregious that the misappropriation cannot have been the result of mere negligence. The Committee noted that Respondent, by his own admission engaged in two other acts of misappropriation of trust account funds. The two checks written to the D.C. Superior Court were used to cover Superior Court filing fees for clients who had no funds in the trust account. Tr. 121-123. Respondent testified that the use of trust account funds to pay those filing fees was inadvertent. Id. The Committee found that Respondent was grossly negligent in permitting those unauthorized uses of other people's entrusted money. HC Rep. at 9.