Opinion ID: 1937211
Heading Depth: 1
Heading Rank: 4

Heading: closing of trust account

Text: ¶ 22. A particular focus of the reinstatement proceeding was on Mr. Carroll's trust account difficulties during the suspension. SCR 22.31(1), SCR 22.29(4)(h), and the suspension decision all required Mr. Carroll to comply with SCR 22.26 relating to activities following suspension. SCR 22.26(1)(d) requires the attorney to close his or her practice during the period of suspension. The closing of the practice necessarily requires closing of a trust account. ¶ 23. The OLR required Mr. Carroll to close his trust account by January 25, 2002, 15 days after the effective date of the suspension. After he filed his compliance affidavit with the OLR, he had telephone conversations with it that eventually resulted in a February 7, 2002, letter from the OLR that acknowledged there were still funds in the trust account, and that he was having difficulty locating the clients who were to receive the funds. The OLR volunteered to assist Mr. Carroll in locating the clients and, if that did not prove successful, it indicated it would work with you to determine the best course of action. The trust account was not closed until June 14, 2002. ¶ 24. The referee made the following findings of fact: (1) Mr. Carroll did not timely close the trust account. (2) Mr. Carroll misled the OLR in early February 2002 into believing there was only $8000 in the trust account remaining to be paid back to clients when, in fact, there was $20,000 in the account. (3) When a disbursement in April 2002 was made to a client, the trust account was overdrawn. Mr. Carroll then commingled $1000 of his personal funds into the trust account to cover the payment. (4) At some point prior to closure of the account Mr. Carroll improperly distributed $2500 of the trust funds to himself. (5) In February 2003 Mr. Carroll had to open an escrow account to cover trust account disbursements of over $2000 that in reality had not occurred as of June 14, 2002. (6) In general, the reconciliation and maintenance of the trust account during the period of closure was insufficient. ¶ 25. The referee concluded as a matter of law that Mr. Carroll violated SCR 22.26(1)(d) by failing to properly and promptly close his trust account and therefore failing to properly close his practice during the suspension period. ¶ 26. Mr. Carroll's argument in response to the findings is as follows: (1) There never was a set time within which to close the trust account. Rather, he was permitted by the OLR to keep it open until all clients could be found. The OLR substantiallyif not entirely concedes this point. (2) He never led the OLR into believing there was $8000 in trust when in fact there was $20,000. Rather, he simply told the OLR that two clients were owed $8000, not that this was the balance in the account. Further, he told the OLR in a February 2002 telephone conversation that there was approximately $10,000 in the account. Once again, the OLR has not argued that the referee's finding on this was entirely correct. (3) He concedes he deposited $1000 of his own funds into the trust account to assure the checks issued from the account would clear. (4) He concedes that he improperly disbursed $2500 to himself when in fact the amount should have been $157. He claims there was confusion as to what amount a particular client was owed and as soon as he became aware of the unintentional error he rectified it, again by his own funds. (5) He concedes that he had to later open up an escrow account to cover discrepancies that had not been resolved as of June 14, 2002, in particular the erroneous disbursement of trust funds to himself. (6) He claimed he did accurate reconciliations of the trust account in 2002 and presented an exhibit to that effect. [6-10] ¶ 27. We adopt some of these findings of fact but reject others as clearly erroneous: (1) The finding that Mr. Carroll did not timely close his trust account is clearly erroneous. The evidence does not reflect that there was a set time in which to close the trust account once the OLR was aware that he was having difficulty locating some former clients. Although he may not have finally closed the account as quickly as would have been desirable, there is insufficient evidence to conclude that he clearly exceeded an established date for closure. (2) The finding that Mr. Carroll misled the OLR as to the amount in the trust account in February 2002 was clearly erroneous. There is no persuasive proof that he overstated the amount in the account. (3) In light of his concession, we adopt the finding of fact that Mr. Carroll improperly commingled his personal funds into the trust account in order to meet an April 2002 payment. (4) We adopt the finding of fact that Mr. Carroll improperly distributed $2500 of the trust funds to himself when the amount should have been substantially less, as he also concedes. He pleads confusion as an excuse and rectified the situation as soon as he was aware of the error, but that does not affect the fact that the impropriety occurred. We cannot dismiss this as an honest error as he requests. (5) We adopt the finding of fact that subsequent to the closure of the trust account Mr. Carroll had to open an escrow account to cover additional trust account disbursements that in reality had not occurred as of the date of closure, yet another concession. (6) We adopt the finding of fact that the reconciliation and maintenance of the trust account during the period of closure was in general insufficient. At the very least, Mr. Carroll's improper disbursement to himself demonstrates that the reconciliation and maintenance of the account was not satisfactory. [11] ¶ 28. We accordingly agree with the referee's conclusion of law that Mr. Carroll violated SCR 22.26 during the period of suspension by failing to properly operate and promptly close his trust account.