Opinion ID: 1209474
Heading Depth: 1
Heading Rank: 2

Heading: Investment in A.F. Resources, Inc.

Text: The respondent represented A.F. Resources, Inc. (A.F. Resources). That corporation, through another individual, solicited a $10,000 investment from Garland Ridenour. The respondent attended a meeting with Ridenour in Tennessee during which that potential investment was discussed. Thereafter, Ridenour agreed to send the respondent a check for $10,000 to purchase an interest in oil and gas leases and other things incidental to a gathering system to be constructed by A.F. Resources. Ridenour's letter transmitting the check summarized the agreement between him and the respondent that the respondent would deposit the $10,000 in the respondent's trust account at the Bank of Broadmoor in Colorado Springs. In fact the respondent had no such account and fabricated its existence in his discussion with Ridenour. The letter conditioned the release of the moneys upon the receipt of certification of title and recordation of the assignment of the agreed oil and gas lease interest to the investor. The assignment had been executed and recorded prior to the receipt of Ridenour's letter and check. The letter also provided that if satisfactory documentation was not received Ridenour was to give written notice to the respondent, and the respondent was to return the funds immediately in exchange for Ridenour's release of the assignment. Finally, the letter requested the respondent to acknowledge its terms and conditions by signing and returning an executed copy to Ridenour. Upon receipt of the check, the respondent deposited $9,000 into his personal account and turned the other $1,000 over to a principal in A.F. Resources. The $9,000 was disbursed at various times for expenses of A.F. Resources and the account was closed. The respondent did not promptly sign and return the letter to the investor. Consequently, Ridenour called the Bank of Broadmoor to inquire about the deposit, and learned that the respondent had no trust account with that bank but that the funds had been deposited in the respondent's personal account. Ridenour immediately demanded the return of his money. The respondent and A.F. Resources took the position that they were entitled to the moneys because the agreed interest had been assigned to Ridenour and he refused to sign any release of that interest. While this was transpiring, a real estate agent who was attempting to acquire an interest in the A.F. Resources operations refunded the $10,000 to the investor. The stipulation notes that there is a legal issue concerning whether A.F. Resources was entitled to the investment money since the assignment of the interest to the investor had been recorded and further notes that the $9,000 was paid out of the respondent's account for A.F. Resources business and that it cannot be concluded that the respondent converted any moneys to his own use. The stipulation recognizes, however, that the respondent's conduct in this matter was contrary to DR1-102(A)(4) (engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation), DR1-102(A)(6) (engaging in conduct that adversely reflects on fitness to practice law), DR 9-102(A) (preserving identity of funds and property of a client), and therefore violated DR1-102(A)(1) (violation of a disciplinary rule). The stipulation also provides that the respondent's conduct in the A.F. Resources matter constitutes ground for discipline under C.R.C.P. 241.6(1) (any act or omission that violates the provisions of the Code of Professional Responsibility), C.R.C.P. 241.6(2) (any act or omission that violates accepted rules or standards of legal ethics), and C.R.C.P. 241.6(3) (any act or omission that violates the highest standards of honesty, justice, or morality).