Opinion ID: 2316688
Heading Depth: 2
Heading Rank: 2

Heading: Management of Bartholdi Property

Text: Humen's conduct was also unethical with respect to the management of the Bartholdi property. For the first year after her purchase, Mrs. O'Connell managed the Bartholdi property without assistance from respondent. The record reflects that she collected the rents and made certain disbursements during that time period. In 1983, however, respondent induced Mrs. O'Connell to allow him to take over the management of the property. In his Response to Grievance, Humen stated that he took over the management because the property was losing money and because Mrs. O'Connell was late on her mortgage payments to Lewandowski. The statements that Mrs. O'Connell was late in her mortgage payments were contradicted by Mr. Lewandowski, who testified that all the mortgage payments had been made within the time specified by the mortgage. During the years he managed the property, respondent never formally reported or accounted to his client for the income produced by the Bartholdi property, the expenses required to maintain it, or the profit it earned. Respondent failed to claim either a profit or a loss for the Bartholdi property on Mrs. O'Connell's income tax returns, which he prepared. From 1982 through 1987, the only reference to the Bartholdi property on Mrs. O'Connell's tax returns is a 1982 claim for depreciation of the property based on fifteen-year life. That claim did not reappear in any subsequent year. Moreover, Humen made no claim for any tax deduction for interest paid on the Lewandowski mortgage, and prepared no schedule of income or expenses, as required by the tax code. Respondent's failure to account regularly to his client concerning both the rental income earned by the Bartholdi property and the maintenance expenses incurred thereon is inexcusable. Moreover, from the client's testimony and respondent's Response to Grievance, any limited accounting actually provided to the client by respondent on an informal basis was misleading: Mrs. O'Connell testified that respondent told her not only that the property did not show a profit, but also that she was obligated to respondent who was paying part of the mortgage payments on that property as well as the mortgage payments on property she owned in West Virginia. However, respondent testified before the DEC that the property was indeed making a profit, sufficient to pay not only Lewandowski's mortgage but also the mortgage on Mrs. O'Connell's West Virginia property. Respondent's conduct with respect to the management of the Bartholdi property shows a lack of reasonable diligence, in violation of RPC 1.3; a failure to communicate properly with his client, in violation of RPC 1.4; a misrepresentation to his client of her financial situation, in violation of RPC 8.4(c); and a failure to safeguard his client's property, in violation of RPC 1.15(b).