Opinion ID: 1454365
Heading Depth: 1
Heading Rank: 7

Heading: twenty-sixth cause of complaint

Text: In this cause the Bar alleged that Griffith violated former DR 1-102(A)(3): (A) A lawyer shall not:    (3) Engage in illegal conduct involving moral turpitude. [17] The Bar in its amended complaint alleged that Griffith (1) made or caused to be made false entries in the books and records of Columbia Pacific by concealing or causing to be concealed from the bank the true beneficiaries and actual borrowers on the credit applications and loan documents for each loan set forth in the 3rd through 25th causes of complaint, and (2) willfully misapplied or caused to be misapplied Columbia Pacific Bank funds in that he caused the bank to disburse bank funds in the names of the First Northwest shareholders set forth in the 3rd through 25th causes of complaint knowing that the true beneficiary and actual borrower was First Northwest. Griffith's answer denied the Bar's allegations in this cause of complaint. The Trial Panel found Griffith not guilty of this cause of complaint. It simply said that it had previously found that the loans set forth in the 3rd through 25th causes were actual loans of the named borrower and not loans of First Northwest so that the legal lending limits for First Northwest had not been exceeded by those loans. Therefore, the Bar had failed to prove the charge by clear and convincing proof. The Bar relies upon the 9th Circuit case of United States v. Kennedy, 564 F.2d 1329 (9th Cir.1977), where one Herbert Adair desired to purchase an insurance company in the State of Washington. Adair contacted Eugene Kramer, a loan officer with the Bank of America, who had authority to grant loans up to $25,000 without further approval. It was agreed that Adair would secure a number of individual borrowers who would apply for loans which Kramer would approve. [18] The proceeds of the loans would then be turned over to Adair who would use them to purchase the insurance company. Kramer was to receive $15,000 for his trouble. Adair arranged with the defendant Kennedy, a practicing lawyer, to apply for a loan. Kennedy agreed to do so in return for a commitment for future legal retainers. Adair and Kennedy went to the bank where Kramer loaned Kennedy $25,000 to purchase condominium property. Kennedy's application for the loan grossly overstated his financial condition. The purported purpose of the loan, which all three people knew was false, was entered into the bank records. Kennedy turned the proceeds of the loan over to Adair. Within a week Kennedy became a member of the Board of Directors of the insurance company which Adair was attempting to acquire. Kennedy was found guilty of (1) making false statements on the bank loan application; (2) aiding and abetting the loan officer in the misapplication of bank funds; (3) aiding and abetting the loan officer in making false entries on bank records. The 9th Circuit affirmed Kennedy's conviction stating that the undisputed evidence shows that in truth the funds were borrowed for Adair, using Kennedy as a sham borrower. 564 F.2d at 1339. United States v. Kennedy, supra , is distinguishable on its facts from Griffith's conduct in connection with the loans from Columbia Pacific to the First Northwest, Brookens, Hardy and Griffith. Here the loans were to named borrowers based upon their individual financial capacity to repay. The fact that the proceeds of the loans were delivered to First Northwest to reloan to its customers does not make Columbia Pacific loans sham transactions. Griffith did not make false statements on the loan applications nor did he aid and abet a loan officer in making false bank records and in misapplying bank funds. We find Griffith not guilty of the 26th cause of complaint.