Opinion ID: 1975492
Heading Depth: 1
Heading Rank: 8

Heading: Withdrawal of Funds from Trust Account Payable to Cash

Text: Bank records reveal that Respondent withdrew funds from the account by way of checks payable to cash. He received the proceeds of these checks and would usually deposit the checks to his personal bank account. Respondent testified that he received these funds as payment of fees, but he failed to identify the client matters to which the disbursements related. Likewise, he failed to identify the sources of funds deposited as cash into the account. The Court concludes that Respondent withdrew funds from the account by check made payable to cash in violation of Rule 16-609 of the Maryland Rules regarding Attorney Trust Accounts. Respondent failed to maintain in trust the funds he received on behalf of a client identified as Crystal Brown Banes. The third overdraft notice was issued when check number 900, in the amount of $885.90 (payable to the third party subrogee on behalf of this client) was presented by the payee, Federal Express. This occurred at the time that Respondent was already under investigation as a result of prior overdrafts. He had also indicated in a letter dated October 10, 1997, that he was reconciling the account twice a month. (Petitioner's Exhibit 8.) This check, dated December 22, 1997, was first presented January 23, 1998. On that date, the balance in the account was a little over $600. Respondent wrote checks to cash and received the proceeds of these checks while check number 900 was outstanding. Check number 900 eventually cleared the account on January 30, 1998 as the result of a deposit made in the amount of $3,000 on January 28, 1998. The deposit was an insurance check payable to another of Respondent's clients, Mary Bryant. Thus one client's obligation was paid from funds received on behalf of another client. Respondent's explanation for the January 1998 overdraft is that he was told by a bank employee that there was money in the account and he believed that he was entitled to withdraw funds as payment of fees during this period of time. The disbursement which caused the account balance to fall below the trust obligation of $885.90 on January 22, 1998 was check number 918 written to cash in the amount of $450. Respondent produced no internal records on which he relied to determine that he was entitled to withdraw fees in this amount on that date. Nor was there a deposit prior to the disbursement of check number 918 which would have entitled Respondent to a fee on January 22, 1998. At the hearing, Respondent was unable to identify any client matter which would have entitled him to withdraw the funds he did in January 1998. Nor was this an isolated incident. The evidence demonstrated that the account balance fell below the trust obligations owed to clients identified as David Pistorio, in June 1997, and Deb & Roger Jones, in November 1997. (Petitioner's Exhibits 32 and 33.) The timing of the disbursements for the Joneses provides evidence that Respondent intentionally delayed paying the Jones' creditor for almost two weeks until after the deposit of a check received on behalf of another client had been made. For instance, the Jones' settlement checks totaling $3,200 were posted to the account on October 28, 1997. Respondent made three disbursements for these clients, one to the Joneses and two to medical care providers on their behalf. (Petitioner's Exhibit 21.) Although two of these disbursements are dated October 30, 1997 and cleared the account on October 31 and November 4, 1997, respectively, the third disbursement, check number 859 in the amount of $1,000, was written by Respondent on November 12, 1997. It was not presented until November 20, 1997. By then it cleared because a deposit of $4,500 was made on November 4 and posted to the account on November 13, 1997. The $4,500 deposit was an insurance check received on behalf of a client identified as Satterfield. Had check number 859 been presented prior to the deposit of $4,500, it would not have cleared. Respondent was put on notice September 1997 that there was a problem with the account. Yet he made no effort to correct his handling of trust money, continued to withdraw amounts from the accounts, and continued to claim he had no records. This Court concludes that Respondent's failure to hold funds owed to clients and third parties in trust was willful and in violation of the Business Occupations and Professional Article § 10-306.