Opinion ID: 2326933
Heading Depth: 1
Heading Rank: 1

Heading: Background: The Maryland Proceedings

Text: The Maryland court entered its order of disbarment on June 23, 2005, revoking Respondent's license to practice law in that jurisdiction. [2] In a 54-page opinion issued on the same date, the court sustained findings of law by the Honorable Durke Thompson of the Circuit Court for Montgomery County, Maryland, reached after six days of evidentiary hearings and arguments, that Respondent violated the following Maryland Rules of Professional Conduct (2005): Rules 1.15(a) ([a] lawyer shall hold property of clients or third persons that is in a lawyer's possession in connection with a representation separate from the lawyer's own property); 1.15(b) ([u]pon receiving funds or other property in which a client or third person has an interest, a lawyer shall promptly notify the client or third person); 3.3(a) ([a] lawyer shall not knowingly . . . make a false statement of material fact or law to a tribunal); 8.4(a) (it is professional misconduct for a lawyer to (a) violate or attempt to violate the Rules of Professional Conduct, knowingly assist or induce another to do so, or do so through the acts of another); 8.4(b) ([i]t is professional misconduct for a lawyer to . . . (b) commit a criminal act that reflects adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects); 8.4(c) ([i]t is professional misconduct for a lawyer to . . . (c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation); and 8.4(d) ([i]t is professional misconduct for a lawyer to . . . (d) engage in conduct that is prejudicial to the administration of justice). Judge Thompson also found that Respondent violated provisions of the Maryland Business Occupations and Professional Code (Md.Code Ann., Bus. Occ. & Prof. Art §§ 10-306 and 10-606, relating to a lawyer's use of trust money entrusted to the lawyer). With several corrections and exceptions, the Maryland Court of Appeals accepted Judge Thompson's findings of fact, which we summarize below. [3]
Respondent maintained an office for the practice of law in Bethesda, Maryland, practicing under the name Zakroff & Associates, P.C. He was the sole stockholder of the firm, which practiced primarily in the areas of personal injury, bankruptcy and collections. At the time of the hearing, the volume of the firm's cases was approximately 250 bankruptcy matters, 320-400 personal injury cases, and 1500-2000 collection matters. Respondent was the only person in the firm who could sign checks to make disbursements. When a personal injury case was settled and the firm received settlement proceeds, clients were not promptly notified and [n]o information was provided to the client as to the date of the actual receipt of the settlement proceeds by the law firm. 876 A.2d at 669. Some portions of the settlement proceeds were payable by the firm to clients' medical care providers, but Respondent often would not sign checks that had been prepared for his signature for periods of several months. On some occasions, respondent instructed his staff to respond to payment inquiries from medical care providers by telling them that cases had not settled, even when the cases had in fact settled and the law firm had received the settlement proceeds. Respondent also instructed his staff to provide clients of the law firm with misleading information when they called about settlement of their cases. Respondent maintained several bank accounts in two different banks, including an escrow or trust account into which proceeds of client settlements were deposited and operating accounts for payment of firm expenses. When staff received calls from one of the banks indicating that an account balance was low, Respondent would direct staff to transfer funds between accounts. From time to time Respondent would also deposit personal funds into the client trust account to cover checks written from those accounts to clients and third parties. An auditor for the Maryland Attorney Grievance Commission found that for the audit period January 2, 2000 through July 31, 2002, the client trust account had a shortfall ranging from a low of $174,000.00 to a high of approximately $421,000.00. Id. at 672. One specific finding by the auditor was that on May 11, 2000, the balance in the client trust account was less than $700. The next day, a settlement in the Diaz case resulted in a deposit into the trust account of $22,600. That amount was used to make disbursement to four other clients totaling $9,500, causing insufficient funds to be available to satisfy the needs for the Diaz disbursement. Id. Respondent also withdrew from the trust account lump sums payable to Zakroff & Associates and [o]nly rarely did the withdrawals represent sums properly earned as fees and costs advanced. Id. For the January 2000 to July 2002 audit period, the auditor calculated the length of time between deposits of settlement proceeds and disbursement to third parties and clients and found that in twenty-four cases the time difference was more than six months, and in a few cases was as long as sixteen months, eighteen months, and nearly twenty-three months. Id. Judge Thompson found that [w]hile some of the delay is accountable to a variety of possibilities, the pattern of delay together with the established balances in the trust account, demonstrate that the Respondent, who was the sole signatory for the accounts of the firm, knew there were insufficient balances to satisfy clients, medical and third party service providers because the Respondent had withdrawn money from the trust account and paid it into firm operating accounts in order to satisfy financial needs. The reason for the financial needs was, in part, due to the appropriation of monies from the business accounts to the Respondent personally. [4] Id. at 673. During 1999-2000, Respondent, who had experienced a dysfunctional family upbringing, encountered marital problems and sought therapy. Id. Licensed clinical social worker Paulette Hurwitz testified to her belief that Respondent's depression interfered with [his] ability to think clearly and the depression interfered with the analysis of whether taking money from the trust account was more than a means to an end of solving some immediate problem. Id. at 673. Respondent initially eschewed [taking] medication for his depression because his wife is a trained `healer' using holistic treatment for ills. Id. at 674. Hurwitz opined that Respondent did not think in terms of using the trust account monies as a wrongful act, id. at 673, but had no opinion as to whether Respondent knew that taking monies was wrongful. Id. Judge Thompson noted that Respondent paints a picture of [his] practice as a chaotic affair with periodic crises that was in this state because of his own depression and his unwillingness to disappoint potential clients causing him to take on improvident cases; that Respondent asserts he never intended nor did he steal any monies from any client and that everyone who is due any monies have [sic] been paid in full; and that Respondent d[id] not deny the status of his trust account, but pleads ignorance to the precise balances and believed there were sufficient monies to cover the checks he directed his staff to prepare. Id. at 674. However, Judge Thompson found not credible Respondent's assertion that he did not know of the deficiencies in the trust account and his professed ignorance of the multiple occasions of his depositing personal funds (including $80,000 in proceeds of a life insurance loan that Respondent took out) into the trust account. Id. Judge Thompson also made findings about a bankruptcy matter handled by Respondent's law firm. The client, Patterson, had initially consulted Respondent about filing for bankruptcy. Associates in Respondent's firm presented for the client's signature and presented to the bankruptcy trustee bankruptcy schedules that did not list as an asset a claim that the client had against the Little estate, a claim being handled personally by Respondent. The claim also was not disclosed during a meeting of creditors when the bankruptcy trustee asked about the existence of any additional claims. See 876 A.2d at 675. After one of the associates who was the attorney of record for the bankruptcy matter learned of the claim, he advised the bankruptcy trustee of the claim. Id. at 676. The bankruptcy court sanctioned counsel for the debtor for the improper claim of an exemption. Id. at 685. Judge Thompson also noted that several mental health professionals saw Respondent after the Attorney Grievance Commission commenced its investigation. Dr. Christianne Tellefsen, a highly experienced psychiatrist, id. at 676, saw Respondent at the request of his counsel. Dr. Tellefsen was not familiar with any allegations of wrongful conduct, id., but opined that Respondent had depression with elements of mania and that the conditions were static for the entire adult life of Respondent, that he also evidenced some attention deficit, that he tended not to pay attention to problems until they became a crisis and then respondent provided a quick fix but did not address the root of the problem, and that he had no deliberate intent to violate the rules, but only to cope. Id. at 676. Respondent probably knew that taking the trust monies for his own use was wrong and that he felt badly about it. This dynamic only created more stress and more depression. Id. at 676-77. Dr. Michael Spodak, a forensic psychiatrist, opined that Respondent had mental difficulties [that] evidenced themselves in everyday life and not just in his practice and a debilitative mental condition that was the cause of the conduct in the allegations facing him. Id. at 677. Respondent's symptoms included disorganization, sleeplessness, irritability, stress, detachment, lack of emotion, procrastination, dishevelment, late payment of bills, expenditure of $40,000 for a pool to please his wife and then burying it, selling property at a loss, too much work, bad employees, late taxes, and the refusal to confront his daughter [who also suffered from depression] about remaining reclusive in the house. Id. Dr. Spodak d[id] not believe that the Respondent intended to steal money but his depression caused the Respondent to not care about consequences and to not consider ethical responsibilities, although he did not let everything go to pieces. Id. Dr. Spodak agreed that Respondent utilized quick fixes to meet his crises. Id. Dr. Spodak felt that the Respondent had the ability to control his behavior, even though it was somewhat impaired. Id. Dr. Jeffrey Janofsky, also a forensic psychiatrist, agreed that the Respondent suffers from depression but believed it was much less than a major depression. Id. Dr. Janofsky cited to Respondent's ability to restore the trust account by repayment, develop a methodology to cover shortages in the trust account, and [to] undert[ake] a determined assault on the medical insurers and medical providers for his clients. Id. Dr. Janofsky believed that Respondent is much improved as a result of taking Zoloft. [5] Id. Taking into account the testimony of all of the mental health professionals, Judge Thompson found it clear that Respondent suffered from significant depression and the depression affected both his personal and professional relationships and lifestyle. The depression interfered with Respondent's ability to think through the problems he perceived were plaguing him and to develop acceptable solutions and to implement them. As a result, Respondent was crisis driven which caused him to abuse his trust account and utilize monies deposited therein for others for his personal use. Id. at 678. Judge Thompson found that Respondent acted without malice toward clients or with intent to steal and that no client or medical assignee experienced any actual loss. Id. at 678. He also found, however, that [t]he sheer magnitude of the imbalance of the trust account, the repeated conduct of drawing upon it, the methodology used by the Respondent, and his apparent appreciation of the wrongfulness, albeit rationalized away contradicts his claims of ignorance. Id. Judge Thompson found clear and convincing evidence that Respondent knowingly used client funds for unauthorized purposes, id. ; that he misrepresented to the Attorney Grievance Commission investigator the use of $50,000.00 deposited into the trust account purportedly to cover payroll when, in fact, it was used to pay proceeds to a client on a personal injury matter which could not be covered by existing balances, id. at 679; that he delay[ed] in paying third party assignees [] monies due the assignees after a settlement was reached in a personal injury matter, id. ; that the balance of Respondent's client trust account was insufficient for much, if not all, of the period examined by the Petitioner's investigator, id. at 680; that Respondent commingled funds by depositing his personal funds on nineteen separate occasions from April 2000 until July 30, 2002, id. ; and that Respondent directly or through those he directed, failed to promptly notify clients or other interested parties of the receipt of funds to which they were lawfully entitled and `kited' other settlements or supplied funds from his personal accounts to cover shortfalls, id. Regarding the Patterson matter, Judge Thompson found that Respondent was also fully aware of the Patterson bankruptcy proceedings even though he did not personally handle the matter but, after filing a lawsuit in an effort to recover monies for Patterson, made no effort to notify the bankruptcy trustee and deliberately withheld information from the bankruptcy schedules. Id.
The Court of Appeals of Maryland found that the facts of this case support a finding of both intentional dishonesty and misappropriation on the part of the respondent. Id. at 690. Having accepted Judge Thompson's findings summarized above, the court stated that the only remaining question was the appropriate sanction. [6] Id. at 689. The court noted that the standard for determining the appropriate sanction when an attorney's conduct involved intentional dishonesty and misappropriation, id., was stated in the case of Attorney Grievance Comm'n. v. Vanderlinde, 364 Md. 376, 773 A.2d 463 (2001). The court quoted Vanderlinde: In cases of intentional dishonesty, misappropriation cases, fraud, stealing, serious criminal conduct and the like, we will not accept, as compelling extenuating circumstances, anything less than the most serious and utterly debilitating mental or physical health conditions, arising from any source that is the root cause of the misconduct and that also result in an attorney's utter inability to conform his or her conduct in accordance with the law and with the MRPC. Only if the circumstances are that compelling, will we even consider imposing less than the most severe sanction of disbarment in cases of stealing, dishonesty, fraudulent conduct, the intentional misappropriation of funds or other serious criminal conduct, whether occurring in the practice of law, or otherwise. 773 A.2d at 485. The court then considered whether there existed compelling extenuating circumstances that warranted the imposition of a lesser sanction than disbarment and concluded that there were not. The court acknowledged that it was undisputed that respondent suffers from `significant' depression. 876 A.2d at 690. It noted that the mental health professionals disagreed about whether Respondent's disorders were the root cause of his behavior, id. at 691, but concluded that [a]ssuming for the sake of argument that we accept the opinion that respondent's disorders were the root cause of his misbehavior, respondent would still fail to satisfy the Vanderlinde mitigation standard, since that standard requires that the disability be nothing `less than the most serious and utterly debilitating' mental condition and that the condition be not only the `root cause' of the misconduct but also result in the attorney's utter inability to conform his or her conduct in accordance with the law and with the MRPC. Id. The court concluded that nothing in the record indicated that Respondent suffered from a disorder that rendered him utterly unable in that way. To the contrary, the court observed, during the relevant time period Respondent maintained a successful and high-volume law practice where he worked 70-80 hours a week. Noting that Respondent had presented to the court a list of remedial actions that he alleges to have undertaken, the court stated that even [a]ssuming . . . that respondent testified to these facts and that they are part of the record, [7] they would not change our disposition of this matter. Id. at 686 n. 17. The court concluded that the appropriate sanction was disbarment.
On July 19, 2005, the District of Columbia Bar Counsel moved this Court to disbar Respondent by reciprocal discipline under D.C. Bar Rule XI, § 11. We entered an order suspending Respondent from the practice of law in this jurisdiction and directed the Board either to recommend the appropriate discipline based upon reciprocity or to proceed with this matter de novo. Declining to proceed de novo, the Board filed its December 28, 2005 Report and Recommendation with this court, urging us to disbar Respondent on the basis of Maryland's full adjudication and subsequent order of disbarment. See Board Report at 14 (We conclude that identical reciprocal discipline of disbarment is entirely appropriate). Citing In re Zdravkovich, 831 A.2d 964, 968 (D.C.2003), the Board noted that there is a rebuttable presumption in favor of the imposition of identical reciprocal discipline unless the court finds that one or more of the exceptions set forth in D.C. Bar R. XI, § 11(c) applies. [8] See Board Report at 4-5. The Board rejected Respondent's argument that he was denied due process in the Maryland disciplinary proceedings, concluding that Respondent failed to show that he was denied notice or a meaningful opportunity to explain or defend against the allegations of misconduct. Id. at 6. The Board also rejected Respondent's claims as to infirmity of proof, concluding that there was more than sufficient evidence of misconduct, id. at 7, including misappropriation, dishonesty, and knowing omission of an asset from his client's schedule of assets filed in the bankruptcy court. The Board rejected Respondent's assertion that the problems in the bankruptcy proceeding arose from his failure to properly supervise an associate. [9] Id. at 9. The Board determined further that the Maryland Rules that Respondent was found to have violated are substantively similar to District of Columbia Rules, id., and that Respondent's misconduct in Maryland constitutes misconduct in the District of Columbia. Id. at 9, 10. The Board then turned to Respondent's argument that, in the District of Columbia, the misconduct found by the Maryland court would warrant discipline substantially different from disbarment. The Board concluded that [t]he sanction imposed in Maryland [disbarment] is precisely the sanction that would be imposed in the District of Columbia. Id. at 10 (citing In re Addams, 579 A.2d 190, 191 (D.C.1990)) (en banc) (in virtually all cases of misappropriation, disbarment will be the only appropriate action unless it appears that the misconduct resulted from nothing more than simple negligence). The Board rejected Respondent's argument that his disability warrants mitigation of the sanction in this jurisdiction even though such mitigation was denied by the Maryland court. Board Report at 11. The Board quoted the Maryland standard for mitigation articulated in Vanderlinde and then described the mitigation standard in this jurisdiction: [I]n the District of Columbia mitigation is warranted when the respondent establishes that (1) he suffered from an impairment at the time he misappropriated funds; (2) a preponderance of the evidence supports a finding that his impairment substantially caused him to engage in [the] misconduct; and (3) he is now substantially rehabilitated. Board Report at 12 (quoting from In re Stanback, 681 A.2d 1109, 1115 (D.C.1996)). The Board reasoned that [a]lthough the standard for disability in mitigation in the District of Columbia is different than the standard in Maryland, both jurisdictions require a showing that the disability caused the misconduct. Id. at 11. The Board concluded that [t]he Maryland Court's findings demonstrate that the record evidence failed to establish the requisite causal nexus between the disability and the violations under Kersey  that Respondent's psychological impairments `substantially caused him to engage in the misconduct.' Accordingly, Respondent is not entitled to Kersey mitigation for his intentional misappropriation and dishonesty. Id. at 12-13. [10]