Opinion ID: 1304454
Heading Depth: 3
Heading Rank: 2

Heading: The Bernie L. Matter

Text: Bernie L. was introduced to petitioner by his brother, Richard L., and became interested in investing in one of petitioner's real estate deals. Richard L., an attorney, negotiated for two months with petitioner on his brother's behalf, and in late 1978, Bernie L. and petitioner entered into a written joint venture agreement to purchase, improve, and resell property on Bonsall Drive in Malibu. Bernie L. invested $101,000 in the joint venture. Petitioner agreed to obtain financing and to supervise the remodeling and sale of the property. He also promised to pay property taxes and all costs and interest related to the financing. By the terms of the joint venture agreement, petitioner expressly promised to act as Bernie L.'s fiduciary and to obtain his consent before encumbering or selling the property; all construction financing was to be spent only on the Bonsall project. In analyzing the various loans secured by the Bonsall property, the panel found that petitioner used portions of a $250,000 encumbrance and a $500,000 loan (previously discussed in connection with the John T. matter) for nonventure purposes. The department concurred, and additionally determined that all of a $50,000 encumbrance and some of a $60,000 loan were used to pay for petitioner's personal expenses. The department further concluded that all four loans were procured without Bernie L.'s consent and that petitioner had refused to furnish an accounting of funds secured by the Bonsall property; whereas, the panel had found that the $500,000 encumbrance was obtained without the knowledge or consent of petitioner's coventurer. The department delineated the following aggravating factors in both matters: (1) petitioner willfully and deliberately breached obligations he owed to his coventurers; (2) despite petitioner's willful and deliberate wrongdoing, he denied culpability and failed to appreciate his fiduciary obligations; and (3) the diversion of loan proceeds to his personal use constituted a conversion of joint venture assets. As a result, the department concluded petitioner committed acts involving moral turpitude.