Opinion ID: 2286297
Heading Depth: 2
Heading Rank: 1

Heading: Misappropriation, Commingling, and Other Violations in the Lartey Case

Text: The Larteys, Virginia residents, retained respondent to represent them in connection with a claim for damages for personal injuries arising out of an automobile accident which occurred in Virginia on February 8, 1996. Respondent never advised them that he was not licensed to practice in Virginia. In early January 1997, without discussing the matter with the Larteys, respondent agreed with the insurance carrier to settle Mr. Lartey's claim for $2,757.65, and Mrs. Lartey's, for $2,961.57. The insurance carrier sent checks in those amounts payable to each client and respondent as counsel, release forms for their signatures, and a request that no funds be distributed until the Larteys executed the releases. Without his clients' knowledge or consent, respondent forged their names on the checks and deposited them into an account which he used for personal and business expenses and entrusted funds. By January 31, 1997, respondent's account was overdrawn by $369.78, and he had not yet paid the Larteys' medical providers as required nor disbursed any funds to them. When the insurance company had not received the executed releases by April 1997, it sent respondent a second set of forms. Respondent still did not inform the Larteys of the settlement, but he signed his name and had someone sign their names on the release forms and returned them to the insurance company sometime in May 1997. Having received several demands for payment from their medical providers, the Larteys called respondent and informed him that they would seek another attorney. When they went to retrieve their files, respondent told them that he was able to settle for only $750 each and that after deducting his contingent fee, they were due $500 each, and he would use the remaining funds to pay their medical providers. Respondent issued each of them a check for $500 at a time when his account was overdrawn by $183.35; however, he later deposited cash and other funds to cover the checks. Respondent never paid the Larteys' medical providers, and their delinquent accounts were reported to credit agencies. In response to the ethical complaint filed by the Larteys, respondent falsely represented that he had their consent to sign the settlement checks and that he had made cash disbursements to them consisting of two $500 payments in August 1996 and $1711.50 and $1507.65 in April 1997 for a total of $3219.15. Respondent also created documents purportedly representing their receipt for these disbursements. The receipts were created by using forms signed in blank by the Larteys to allow respondent to obtain their medical records. Respondent urged the Larteys to withdraw their ethical complaint in return for his payment of their medical bills and additional funds, but they did not agree. As of the time of the hearing, respondent still had not paid any additional funds to, or on behalf of, the Larteys. The Board concluded that respondent violated the following disciplinary rules in representing the Larteys, as charged by Bar Counsel: Rule 1.4(a) (failure to keep clients reasonably informed about status of their matters); Rule 1.4(c) (failure to inform client of settlement offer promptly); Rule 1.15(a) (failure to maintain client's and or third party's property separate from the lawyer's own property, i.e., commingling or intentional or reckless misappropriation of funds); Rule 1.15(b) (failure to notify client promptly of receipt of funds for client or third party); Rule 1.17 (failure to deposit entrusted funds into separate trust account); Rule 8.4(b) (committing criminal acts (theft, fraud and forgery) that reflect adversely on his honesty, trustworthiness or fitness as a lawyer); and Rule 8.4(c) (conduct involving dishonesty, fraud, deceit or misrepresentation). The Board's findings and conclusions are supported by the record. The rule against commingling requires that a lawyer maintain a separate escrow account for entrusted funds of a client or third party. In re Hessler, 549 A.2d 700 (D.C. 1988). Here, respondent deposited the settlement checks in the bank account which he used for the deposit of personal and business funds as well as for the deposit of entrusted funds. This account was neither a trust account nor escrow account, as required by the Rule. Respondent has conceded the commingling violation under Rule 1.15(a) and the failure to maintain a trust account under Rule 1.17. Further, respondent misappropriated the funds of his clients and the funds entrusted to him to pay the Larteys and their medical service providers, as the Hearing Committee found and the Board adopted. Misappropriation is `any unauthorized use of client's funds entrusted to [a lawyer], including not only stealing but also unauthorized temporary use for the lawyer's own purpose, whether or not he derives any personal gain or benefit therefrom.' In re Pierson, 690 A.2d 941, 947 (D.C.1997) (quoting In re Harrison, 461 A.2d 1034, 1036 (D.C.1983)) (other citations omitted). Improper intent is not required, as it is essentially a per se offense. Harrison, 461 A.2d at 1036. Respondent's account balance fell well below the amounts he owed to the Larteys or to their medical providers, and he has never, even up to the time of the hearing, disbursed all of the money owed to them or to their medical providers. Such unauthorized use of a client's funds constitutes misappropriation. See Pierson, 690 A.2d at 947; In re Clarke, 684 A.2d 1276, 1280 (D.C.1996). The Board concluded that the misappropriation here was egregious because it was accompanied by acts of forgery, fraud, and false statements. The record supports this conclusion. Respondent admits that he signed the Larteys' signatures on the settlement checks. Because he did this without their knowledge, consent, or authority, his actions constitute forgery. The Hearing Committee credited the Larteys' testimony that the receipts which respondent had produced to Bar Counsel were false and that their signatures had been forged. Respondent also failed to keep his clients reasonably informed about the status of their case and to comply promptly with reasonable requests for information as required by Rule 1.4. In addition, he failed to inform them of the settlement offer, his acceptance of it, and the receipt of the settlement proceeds. We conclude that the violations found in connection with the Larteys' case are fully supported by the record. In his brief before this court, respondent does not challenge substantively the findings and conclusions related to these charges.