Opinion ID: 2356073
Heading Depth: 1
Heading Rank: 3

Heading: Fraudulent Press Release

Text: On March 14, 2002, at 4:35 p.m. and on March 2002 at 12:27 a.m., DuPont Direct Financial Holdings, Inc., of which Respondent was president and general counsel, announced in a press release that monies under management by `Wavecount Asset Management, LLC (a wholly-owned subsidiary of DIRX [an abbreviation for DuPont Direct Financial Holdings, Inc.]) in conjunction with DIRX's investment affiliate, Native American Securities Company (a broker-dealer member of the NASD and SIPC) have exceeded $100 million.' . . . The statement in this press release was false. DuPont Direct Financial Holdings, Inc. had only $20,000,000 worth of assets under its management. . . . Respondent approved the issuance of the press release of March 14, 2002. At the time he approved it, he was aware that the assets under the management of DuPont Direct Financial Holdings, Inc. were $20,000,000 and that the figure of $100,000,000 as stated in the press release was greatly inflated. The press releases were issued with the intention of inducing potential investors to place their assets under the management of DuPont Direct Financial Holdings, Inc. . . . On January 13, 2005, the Department of Enforcement of the NASD filed with the hearing officers an amended Complaint against DuPont Securities Group, Inc. and Respondent individually. The Complaint alleged in paragraphs 21 through 32 that Respondent's company had issued the press release described above and that of the $100,000,000 reportedly under the management of DuPont Direct, at least $80,000,000 was not, in fact, under the management of DuPont Direct. . . . Respondent was represented by counsel in the NASD proceeding until April 14, 2005, the date on which an opposition to a Motion for Partial Summary Disposition filed by the Department of Enforcement w as due. . . . Instead of filing an opposition, Respondent's counsel filed a notice of withdrawal, citing the fact that counsel had been unable to adequately communicate with Respondent. . . . On April 25, 2005, the hearing officer issued a Show Cause Order requiring Respondent to show cause why Respondent and his company should not be held in default. Respondent did not respond. . . . As a result of Respondent's default, the allegations of the Complaint were deemed admitted. . . . As a result, the hearing officer found that Respondent had reviewed and approved a press release falsely stating that assets under management of DuPont Direct and its operating subsidiaries exceeded $100,000,000. . . . The hearing officer found that at least $80,000,000 was not, in fact, under the management of DuPont Direct. . . . The hearing officer found Respondent acted with scienter, which was defined as `a mental state embracing an intent to deceive, manipulate, or defraud. . . .' The hearing officer found from Respondent's conduct that Respondent intended to deceive investors in DuPont Direct. . . . Respondent's conduct violates Rule 8.4(c), which prohibits attorneys from engaging in conduct involving `dishonesty, fraud, deceit or misrepresentation.' In this case, the evidence shows that Respondent, as president and general counsel of DuPont Direct, approved the issuance of a press release which was designed to deceive potential investors in his company by making the company appear more successful than it actually was. His motive in doing so was to induce potential investors to buy stock in a company in which he served as president, director, and chief legal officer based on false representations. His failure to defend the NASD proceeding in which the press release was an issue reinforces these conclusions. His conduct was deceitful and violated Rule 8.4(c). All of the above findings of fact and conclusions of law are based on clear and convincing evidence. The petitioner took no exceptions to the hearing court's findings of fact and conclusions of law. In fact, it is on the basis of those very findings and conclusions that it makes its recommendation as to sanction. Emphasizing the facts the hearing court found and the conclusions it drew from those facts, the petitioner urges the respondent's disbarment. Noting that the respondent was found to have made knowingly false statements, amounting to perjury, as to his bar status, and to have acted to mislead and defraud investors and, because the respondent did not participate in the proceedings, the absence of mitigating factors or exceptional circumstances, it relies on Attorney Grievance Comm'n v. Vanderlinde, 364 Md. 376, 418, 773 A.2d 463, 488 (2001) to justify its recommendation. For purposes of sanction, when there are no exceptions taken, we treat the findings of fact as established. Rule 16-759(b)(2)(A). [7] See Attorney Grievance Comm'n v. Logan, 390 Md. 313, 319, 888 A.2d 359, 363 (2005). Moreover, our de novo review of the hearing court's conclusions of law, Rule 16-759(b)(1), [8] satisfies us that they follow from, and are supported by, the court's factual findings, which, again, have been established. The goal of attorney discipline is protection of the public, rather than the punishment of the erring attorney. See Attorney Grievance Comm'n v. Goff, 399 Md. 1, 30-31, 922 A.2d 554, 571 (2007); Attorney Grievance Comm'n v. Mba-Jonas, 397 Md. 690, 703, 919 A.2d 669, 677 (2007); Attorney Grievance Comm'n v. Rees, 396 Md. 248, 254, 913 A.2d 68, 72 (2006); Attorney Grievance Comm'n v. Kreamer, 387 Md. 503, 534, 876 A.2d 79, 97-98 (2005). Imposing sanctions that are commensurate with the nature and gravity of the violations and the intent with which they were committed is consistent with, and in fact furthers, that purpose, Attorney Grievance Comm'n v. Awuah, 346 Md. 420, 435, 697 A.2d 446, 454; Attorney Grievance Comm'n v. Glenn, 341 Md. 448, 484, 671 A.2d 463, 480 (1996); Attorney Grievance Comm'n v. Myers, 333 Md. 440, 447, 635 A.2d 1315, 1318 (1994), in that such sanctions promote general and specific deterrence, Attorney Grievance Comm'n v. Sliffman, 330 Md. 515, 529, 625 A.2d 314, 321 (1993); Attorney Grievance Comm'n v. Berger, 326 Md. 129, 131, 604 A.2d 58, 58 (1992) (citing Attorney Grievance Comm'n v. Owrutsky, 322 Md. 334, 355, 587 A.2d 511, 521 (1991)), protect the integrity of the legal profession, Attorney Grievance Comm'n v. Cassidy, 362 Md. 689, 698, 766 A.2d 632, 637 (2001), further the public's confidence in the legal profession, Attorney Grievance Comm'n v. Christopher, 383 Md. 624, 639, 861 A.2d 692, 701 (2004); Attorney Grievance Comm'n v. Stein, 373 Md. 531, 537, 819 A.2d 372, 375 (2003); Attorney Grievance Comm'n v. Powell, 369 Md. 462, 474, 800 A.2d 782, 789 (2002), and take account of the facts and circumstances of each particular case, including any mitigating factors. See Attorney Grievance Comm'n v. Atkinson, 357 Md. 646, 656, 745 A.2d 1086, 1092 (2000); Attorney Grievance Comm'n v. Gavin, 350 Md. 176, 197-98, 711 A.2d 193, 204 (1998). Given the importance we place on maintaining the public's confidence, the attorney's prior grievance history[,] . . . the attorney's remorse for the misconduct, and the likelihood of the conduct being repeated are relevant considerations, as well. Attorney Grievance Comm'n v. Post, 379 Md. 60, 71, 839 A.2d 718, 724-25 (2003). As to the latter consideration, the likelihood of repetition, we have recognized that conduct, although an aberration, can be so egregious as to warrant the imposition of a significant sanction. See Attorney Grievance Comm'n v. Franz, 355 Md. 752, 762, 736 A.2d 339, 344 (1999) (offering Attorney Grievance Comm'n v. Protokowicz, 329 Md. 252, 263, 619 A.2d 100, 105 (1993), as an example of such conduct). As the hearing court found, the petitioner emphasizes, and the respondent does not refute, the respondent made statements that were knowingly false, amounting to perjury, as to his bar status, and acted to mislead and defraud investors. In Vanderlinde, we made clear: [u]nlike matters relating to competency, diligence and the like, intentional dishonest conduct is closely entwined with the most important matters of basic character to such a degree as to make intentional dishonest conduct by a lawyer almost beyond excuse. Honesty and dishonesty are, or are not, present in an attorney's character[,] 364 Md. at 418, 773 A.2d at 488, and concluded that [d]isbarment ordinarily should be the sanction for intentionally dishonest conduct. Id. In addition to being dishonest  perjurous and fraudulent  the respondent's conduct is unmitigated, never mind the standard Vanderlinde and its predecessors require. See Vanderlinde, 364 Md. at 413, 773 A.2d at 485, (requiring the showing of compelling extenuating circumstances to mitigate intentional dishonest conduct). Moreover, tolerating such conduct by imposing other than a significant sanction would not protect the integrity of the legal profession and, rather than further the public's confidence in the legal profession, would undermine its confidence. That would be the case whatever the respondent's prior disciplinary history. We agree with the petitioner; the appropriate sanction in this case is disbarment. IT IS SO ORDERED; RESPONDENT SHALL PAY ALL COSTS AS TAXED BY THE CLERK OF THIS COURT, INCLUDING COSTS OF ALL TRANSCRIPTS, PURSUANT TO MARYLAND RULE 16-761, FOR WHICH SUM JUDGMENT IS ENTERED IN FAVOR OF THE ATTORNEY GRIEVANCE COMMISSION AGAINST DAVID WAYNE PARSONS.