Opinion ID: 2098735
Heading Depth: 1
Heading Rank: 4

Heading: Transaction of October 23, 1992

Text: In mid October 1992, FRM was financially unstable. Several payroll checks had been returned for insufficient funds. On October 23, 1992, Weck went to Leland National Bank and met with respondent and bank president Robert Higgerson. Weck obtained a $20,000 loan and invested that money in FRM. Conflicting testimony was presented about the circumstances surrounding the making of this loan. Weck testified that in October 1992, she met with Remy and he told her that FRM still needed funds. Weck informed him that she could not afford to invest any more money. At this time, respondent became very pushy in regard to Weck providing more money to FRM. Respondent would call Weck frequently and leave messages regarding the need to speak with Weck about FRM's need for more money. Carole Gulo, a friend and neighbor of Weck, testified that she heard several messages on Weck's machine from respondent. These messages referred generally to respondent's need to discuss a money situation with Weck. Weck further testified that on October 22, 1992, respondent called Weck and, during their conversation, respondent demanded that she meet him at Leland National Bank the next morning. Respondent informed Weck that he had discussed a loan with Higgerson, the bank president, and arrangements were made for the loan to be signed at 10 a.m. Weck agreed to go to the bank because she didn't know what else to do. Weck, respondent, and Higgerson met at the bank the next day. Higgerson testified that he advised Weck that it would be an unsound investment to give FRM more money. Nevertheless, Weck borrowed $20,000 from the bank to invest in FRM. This decision was made after Weck and respondent conferred in private for several minutes. Higgerson testified that this private conference was a mutual idea between respondent and Weck. Higgerson did not hear raised voices while respondent and Weck conferred privately in a room adjoining Higgerson's office, and Weck did not appear upset after this conference. Respondent testified that, during their private conference, Weck told him that she was concerned because she appeared to be the only investor in FRM. Respondent told Weck that he was not able to invest in FRM because he was facing possible bankruptcy due to substantial medical bills he had incurred. Respondent proposed that, if Weck lost money, he would indemnify Weck out of any contingent fee he received in the environmental contamination suit in which he was representing Weck. On November 11, 1992, respondent wrote a letter to Weck memorializing this commitment. In contrast, Weck testified that, during their private conference, respondent told her that she would lose her prior investment if she did not advance the $20,000. Weck acknowledged that respondent told her about FRM's financial condition, and that he offered to personally guarantee Weck's loan. Weck also testified that respondent threatened to reveal her relationship with George Weems, Weck's boyfriend and now husband, who was married to someone else at the time. Respondent denied making such a threat. David Remy executed a promissory note and another stock assignment to Weck as collateral for the October 23 loan. Respondent drafted these documents and presented them to Weck. The assignment stated that Remy owned 100% of the shares of FRM, 54% of those shares had been previously pledged or sold, and Remy retained 46% of the shares unencumbered, of which he assigned 5% to Weck as collateral for this loan. Respondent did not tell Weck that all of Remy's stock was already pledged as collateral to Joseph Thoesen, and respondent did not tell Weck of the debt owed to Thoesen. FRM filed for bankruptcy in 1993, and Weck lost her $40,000 investment. Weck was paid some interest due on her loan from Leland National Bank. Weck herself, however, repaid the principal of this bank loan. Weck filed a civil lawsuit against respondent. That suit was pending at the time of the hearing in this case. Respondent testified at the hearing that, when he advised Weck to invest in FRM, he did not perceive a conflict of interest. Attorney Anthony Raccuglia testified as a character witness for respondent. Raccuglia has known respondent for 30 years. He testified that respondent has a reputation for being an ethical and skilled attorney. Edward Whitney, a former Ottawa police chief, a member of the Ottawa city council, and the commissioner of public health and safety, testified that he has known respondent for 45 years and that respondent is well respected and has a reputation for being honest.
The Hearing Board found that the Administrator proved by clear and convincing evidence that respondent (1) breached his fiduciary duty; (2) represented a client when the representation was materially limited by respondent's responsibilities to another client, or by respondent's own interests, without full disclosure and the client's consent, in violation of Rule 1.7(b) of the Illinois Rules of Professional Conduct (134 Ill.2d R. 1.7(b)); (3) represented multiple clients in a single matter without an explanation to each client of the risks involved, in violation of Rule 1.7(c) (134 Ill.2d R. 1.7(c)); (4) entered into a business transaction with a client without full disclosure, in violation of Rule 1.8(a) (134 Ill.2d R. 1.8(a)); (5) made a statement of material fact or law that respondent reasonably should have known was false, in violation of Rule 4.1(a) (134 Ill.2d R. 4.1(a)); and (6) engaged in conduct that tends to defeat the administration of justice or to bring the courts or the legal profession into disrepute, in violation of Supreme Court Rule 771 (134 Ill.2d R. 771). The Hearing Board found, however, that the Administrator failed to prove by clear and convincing evidence that respondent engaged in conduct that involves dishonesty, fraud, deceit, or misrepresentation, in violation of Rule 8.4(a)(4) of the Illinois Rules of Professional Conduct (134 Ill.2d R. 8.4(a)(4)). The Hearing Board recommended that respondent be suspended from the practice of law for one year. The Hearing Board rejected the Administrator's request that respondent be ordered to pay restitution to his client. Respondent filed exceptions before the Review Board. Respondent did not dispute the Hearing Board's findings but argued that the one-year suspension is excessive. The Review Board affirmed the findings of misconduct yet recommended a six-month suspension from the practice of law. The Review Board agreed with the Hearing Board that restitution is not proper under the facts of this case.