Opinion ID: 836086
Heading Depth: 1
Heading Rank: 4

Heading: fourth cause of complaint [18]

Text: Finally, the Bar argues that it has proved its fourth cause of complaint, which the trial panel characterized as alleging that the accused assisted in Charlesworth's conversion of funds belonging to Farber's and McGuire's/Charlesworth's supposed investors. The trial panel rejected that allegation, based on its finding that the money at issue belonged to Farber and McGuire/Charlesworth, and not to third-party investors. The Bar does not contest that finding, as far as it goes. However, the Bar argues that the trial panel's decision is incomplete because it does not address another allegation in the fourth cause, viz., that the accused converted to his own use funds that had been entrusted to him by his clients Farber and McGuire. See DR 9-101(A) (requiring client funds to be deposited and maintained in lawyer trust account.) In that regard, the Bar notes that there was no fee agreement between the accused and Farber or McGuire, and that the accused was not authorized to help himself to the funds that had been entrusted to him. The Bar further argues that the accused, in fact, did help himself to those funds on a regular basis, by: (1) taking some $3,850 in cash back from deposits; (2) writing checks to himself or to cash on the Farber Ltd. trust account to a total of $10,250; and (3) failing to deposit all the cashier's checks that McGuire had entrusted to him into the Farber Ltd. trust account. The accused responds, first, that the Bar belatedly and unfairly is changing its case. Originally, the Bar had alleged and argued that the accused converted money belonging to supposed third-party investors by disbursing that money for Farber's and McGuire's use without obtaining the investors' consent. Now, the Bar is charging that the accused converted money entrusted to him by Farber and McGuire to his own use. The accused suggests that he has not received fair notice of the latter charge and, therefore, cannot be found guilty on those grounds. The accused further urges that the evidence on which the Bar relies is not persuasive because it attempts to take unfair advantage of his loss of the records that could show where the money had gone. Finally, he argues that there is no evidence in the record to counter his own general testimony that whatever money was taken from the trust account was taken pursuant to Farber's or McGuire's instructions. [19] We are not persuaded by the accused's fair notice argument. Although we would agree with him that the allegations in the fourth cause are directed primarily at the notion that the accused assisted or acquiesced in Charlesworth's conversion of funds belonging to third-party investors, they also clearly charge that the accused converted at least some of the funds that were entrusted to him to his own use. [20] Moreover, the Bar clearly made an issue of the accused's cash-back transactions and his personal withdrawals from the Farber Ltd. trust account in its memorandum to the trial panel. Still, we are not persuaded by the requisite clear-and-convincing-evidence standard that those transactions amounted to conversion. We first focus on the alleged conversions with regard to funds belonging to Farber. The accused took $500 cash back from a deposit of funds that Farber had given him and wrote himself a check for $1,000 a few days after that deposit. The accused's explanation that those transactions were with Farber's permission is plausible, as those amounts appear to be reasonable fees in relation to the legal services that the accused provided Farber. Other evidence in the recordthe accused's wife's testimony and a letter from a computer technician corroborate the accused's testimony that he had lost his own copies of his trust-account records. For the above-described reasons, as to Farber, we conclude that the Bar has failed to sustain its burden of proof with respect to the DR 9-101(A) charge. As to the accused's taking cash back and withdrawals of funds belonging to McGuire, our reasoning for concluding that the Bar has failed in its proof differs. As discussed above, we conclude that the accused was assisting McGuire in a criminal enterprise. In the absence of any clear evidence as to how the accused was being compensated for that assistance, there is another equally plausible explanation for the transactions at issuethat McGuire had authorized them to compensate the accused for his money-laundering activities. Ultimately, then, the evidence in the record is insufficient to support the charges in the fourth cause of complaint, i.e., mishandling or conversion of client funds.