Opinion ID: 2098735
Heading Depth: 1
Heading Rank: 3

Heading: Transaction of September 1992

Text: Weck met with respondent in late September 1992 and wrote a check to FRM for $5,000. At this point, Weck converted her position, for the full $20,000 that she had advanced, from a loan to an equity investment. Pursuant to this arrangement, Weck was to receive 5% of the outstanding stock in FRM. The only stock outstanding, however, was the 1,000 shares originally owned by Remy. Respondent did not advise Weck that Remy had pledged all of his shares as collateral to Thoesen. Respondent deposited Weck's $5,000 check into FRM's special account. This money was used to cover payroll expenses, including respondent's retainer. Weck knew that FRM needed funds to cover payroll, but respondent did not tell Weck that some of her funds would be used to pay his fees. Conflicting testimony was presented as to whether Weck first discussed the additional $5,000 with Remy, or whether respondent approached Weck about the additional loan. Weck testified that she was concerned about advancing additional funds, but that respondent assured her that she would soon be receiving a large amount of money from the environmental contamination lawsuit in which respondent was representing Weck. Respondent also told Weck that if she did not loan the additional $5,000 to FRM, she would lose the money that she had already loaned to the company. Weck further testified that respondent suggested that she convert her position to an equity investor, rather than a creditor, as that would be the most effective way to obtain the highest return, given FRM's projected sales. Weck never received any stock certificates or documentation reflecting her stock ownership. Weck later told her boyfriend, now her husband, George Weems, that she had loaned money to FRM. Weems was a close friend of respondent. Weems was familiar with FRM and its financial condition, and advised Weck not to invest any further in the company.