Opinion ID: 1379246
Heading Depth: 1
Heading Rank: 6

Heading: The Disciplinary Counsel Matter

Text: April Pearson was a foster child living with Sara and Theodis Coulter in Sumter. She is disabled, with a low I.Q. and classified as educable retarded. Lexington County Department of Social Services supervised April Pearson. In 1984, when April was about thirteen years old, she became entitled to $20,882.61 in back payments from the Social Security Administration as a result of a class action lawsuit. Following the directives of her supervisor, Amber McMillan, a social worker with Lexington County DSS, contacted the Coulters for the name of an attorney to establish a trust or similar savings fund in which to deposit this money. The Coulters had used Respondent on two prior occasions, so they recommended him to Ms. McMillan. Ms. McMillan met with Respondent and he prepared a trust document on January 21, 1994, appointing himself Trustee. The trust document was executed by Ms. McMillan and witnessed by two individuals. In Article II, Respondent was appointed Trustee. In Article IV, the trust principal was identified as the $20,882.61. Article V of the trust relieved the Trustee from the provisions of the Uniform Trustee's Accounting Act and other such restrictive legislation which may be in effect. The Uniform Trust Act had not been enacted in South Carolina. The Uniform Trustee's Accounting Act did not exist. Article VI of the trust provided that the Trustee could pay himself from the trust such compensation as was usual and reasonable, and may pay attorney's fees or other expenses incurred. Other than Article VI of the trust, there was no fee agreement between Respondent and the Coulters, Ms. McMillan, Lexington County DSS, or South Carolina DSS. Lexington County DSS issued a check for $20,882.61 on February 1, 1994 to Drexler [sic] Law Firm to establish the April Pearson trust account. Respondent deposited the check into his escrow account and opened a mutual fund on behalf of April Pearson with Washington Mutual Investors Fund in the name of Terry A. Trexler, Trustee, April Pearson Trust, DTD 1/31/94. Respondent only deposited $15,000 of the April Pearson money into the trust when he opened it and misappropriated the remaining $5,882.61. Without notice to or knowledge of the Coulters, Amber McMillan, or Lexington County or South Carolina DSS, Respondent made a telephone redemption of $5,000 from the mutual fund on February 1, 1995 and deposited the money into his escrow account. Respondent then misappropriated this money, loaning it to a private investigator, Robert Lee Moore. On July 25, 1995, Respondent wrote himself a check for $285 from his escrow account labeled April Pearson as a fee. This was done without notice to or knowledge of the Coulters, Amber McMillan, or Lexington County or South Carolina DSS. If it was a fee, Respondent provided no bill, invoice, or statement. Respondent unilaterally executed a loan agreement, stating that he would borrow $9,510 from the April Pearson Trust on July 7, 1995 and July 20, 1995. The document went on to provide that a lump sum payment of $13,000 would be paid back to the trust during the year 1998. Respondent then withdrew $6,510 on July 7, 1995 and $3,000 on July 20, 1995 from the trust account, deposited the funds into his escrow account, and subsequently spent the money. Respondent did not: (1) enter into a transaction with his client with terms of interest set forth therein, (2) enter into a transaction with his client with terms that were reasonable and fair to his client, (3) enter into a transaction with his client with terms that were fully disclosed and transmitted in writing to the client in a manner that could be reasonably understood by the client, (4) give the client a reasonable opportunity to seek the advice of independent counsel in the transaction, or (5) require the client to consent in writing to the transaction. Despite April's mental disability, Respondent did not maintain a normal lawyer-client relationship with her. He did not seek the appointment of a guardian or take other protective action with respect to her regarding the management of the trust, and specifically the taking of the $9,510 loan and the $5,000 loaned to the private investigator. Although the trust was intended primarily for April's future, it was understood that the Coulters could withdraw money from the trust for the benefit of April. On November 17, 1994, the Coulters received $1,777.81 from the trust to purchase a computer for April. The Coulters also received from Respondent $580 in July 1995 to purchase bedroom furniture for April and $1,000 in July 1997 for a vacation ($500) and a fee to adopt April ($450). The adoption did not take place. In addition, when Mr. Coulter was out of work due to an on-thejob injury, the family requested, and received from Respondent, $1,500 to apply toward family bills. The checks for $580, $1,000, and $1,500 were not withdrawn from April's trust account, but were taken from Respondent's personal funds or law firm funds. When the investigation into the April Pearson trust began, in September of 1998, the balance in the trust's mutual fund was only $790.59. After Respondent learned about the investigation, he paid $13,000 back into the trust on October 1, 1998. The $13,000 check was drawn on a personal account maintained by Respondent and his mother. Washington Mutual Investors calculated that if Respondent had simply deposited the initial $15,000 on May 11, 1994 and taken no withdrawals from that sum, the value of the fund on October 1, 1998 would have been $34,471.99. In the alternative, if Respondent had deposited the entire $20,882.61, taken the withdrawals described above, and deposited the $13,000 on October 1, 1998, the value of the fund on October 1, 1998 would have been $22,885.25. As an additional alternative, if Respondent had deposited the full $20,882.61 on May 11, 1994, together with the deposit of $13,000 on October 1, 1998, and deducted the withdrawals of his loan and the sums paid to the Coulters, the balance as of October 1, 1998 would have been $34,057.78. The actual balance on October 1, 1998, after the $13,000 deposit, was $13,105.34. Respondent did not respond to the subsequent inquiries and investigation into this matter.