Opinion ID: 1961094
Heading Depth: 2
Heading Rank: 1

Heading: The Money

Text: Petitioner, through the work of its employee, John DeBone, conducted an investigation of respondent's bank accounts at Riggs National Bank. The account into which Mr. Lobo wired $30,000 on March 1, 1996 was not an escrow account, but a personal account entitled Edward Patrick Gallagher, Attorney-At-Law (hereinafter, Attorney Account). Mr. DeBone's review of this Attorney Account's transactions showed that the account was primarily used by respondent for business and personal expenses, and thus was not an escrow account, and that its balance before Mr. Lobo's March 1, 1996 wire of $30,000 was approximately $1,200. On March 4, 1996, prior to the opening of an escrow account, two disbursements of $3,180 were made from the Attorney Account and wired to an account in England. An escrow account for Mr. Lobo was created on March 4, 1996 and was entitled, Edward Patrick Gallagher, Esquire, Escrow for Phillip Lobo (hereinafter, Escrow Account). However, the account was not opened with the entire $30,000 that Mr. Lobo had agreed to when he wired it to respondent. Mr. DeBone testified, and respondent's bank records indicate, that the account was opened with only $23,570. Respondent and his wife, Joann N. Gallagher, were signers on this account, which was an interest bearing money market checking account. A wire transfer of $549.75 was made from the Escrow Account to a bank in England on March 12, 1996. Over the next six months, five checks cleared from the account, which brought the Escrow Account's balance to less than $600. All five checks were made payable to respondent, with the first check being signed by Mrs. Gallagher. The four other checks were signed by respondent. On February 18, 1997, check number 109, for $505, had drained the account to approximately $50. By July 11, 1997, when respondent closed the account, the Escrow Account had a balance of $22.37, which included seven service charge deductions. The hearing court found that there was no credible explanation for the disbursement of the $30,000 that Mr. Lobo wired to respondent on March 1, 1996 and that these disbursements were clearly inconsistent with the Escrow Agreement, which respondent had signed. The hearing court highlighted the fact that respondent claimed, that between March 1st and 3rd of 1996, he received one or more calls from Mr. Suri and that Mr. Suri indicated that Mr. Lobo was present and wished to disburse funds from the Escrow Account. Although respondent claims that a voice in the background of Mr. Suri's office was Mr. Lobo, respondent could not have known Mr. Lobo's voice because they had never met. In addition, Mr. Lobo testified that he did not return to Bombay until March 9, 1996 and respondent knew that Mr. Lobo was in Hong Kong at that time because that is the location from which Mr. Lobo wired the $30,000 to respondent. Furthermore, Judge Stevenson found that respondent's testimony concerning these calls was not consistent with his prior representations. During petitioner's investigation in May 1999, respondent told Mr. Fletcher the following: that respondent had lost all of his documentation in Mr. Lobo's file due to a recent move and that respondent had communicated with Mr. Lobo only once at the beginning of his representation of Mr. Lobo. Respondent's answer to petitioner's interrogatories similarly stated that he only spoke to Mr. Lobo once via telephone. Respondent admitted to his representation of Mr. Lobo and to the receipt of the $30,000 in question, yet he denied that the money was to be held in an escrow account. He explained that his departure from the terms of the escrow agreement was due to telephone conversations between respondent and Mr. Suri. Respondent claims that Mr. Suri and Mr. Lobo were partners and business associates and that Mr. Suri was authorized to speak for Mr. Lobo. Respondent claims that he disbursed the funds in the Escrow Account according to Mr. Suri's instructions. Respondent admitted that he was never shown any writing that imposed an agency relationship between Mr. Suri and Mr. Lobo and respondent did not produce any evidence to corroborate these claims. [8] The hearing court specifically found that respondent's explanation of why he dishonored the escrow agreement between himself and Mr. Lobo was not supported by the facts. After citing to the fact that respondent could not corroborate his claims of a prior business relationship between Mr. Suri and Mr. Lobo, the hearing court found there to be sufficient evidence to illustrate that Mr. Suri and respondent were, in fact, business associates. First, Mr. Lobo testified to the Suri-respondent relationship. Although respondent denied any relationship with Mr. Suri, the State of Maryland Personal Property Tax Return for International Business Services (USA), Inc. (hereinafter IBS), which was prepared by respondent and his wife, indicated that respondent, his wife, and Mr. Suri were the officers of IBS. Respondent also had signature authority for an IBS bank account, his 1996 office address was the same address as IBS's letterhead, he received money from IBS and he paid the rent for IBS from his own personal account. In addition, a business letter from respondent's wife to Mr. Lobo identified Mr. Suri as her agent in Bombay. The court found respondent's actions to be contrary to an honest belief that Lobo knew about or had authorized the disbursements from the account, facts which Lobo denied. After Mr. Lobo formally requested a refund of the entire $30,000, respondent made yet another withdrawal of $505 to himself without questioning or attempting to verify his understanding that Mr. Suri had the authority to disburse the funds. Respondent never questioned why Mr. Lobo was demanding a refund for the entire amount. Additionally, the hearing court found, contrary to respondent's assertion, that Mr. Suri's accounting of the money does not corroborate respondent's version of the disbursements. In letters purportedly written by Mr. Suri, Mr. Suri believed that the entire balance of $30,000 was intact as of May 26, 1996. However, by that time, respondent had disbursed approximately $26,000 of those funds. In addition, Mr. Suri's accounting does not mention a $10,000 check written to respondent in May of 1996. Respondent claims that Mr. Suri told respondent to give the disbursement to a Mr. Bagaria, a Bombay businessman in the United States, as authorized by Mr. Lobo. However, Mr. Suri's accounting has no record of the disbursement and Mr. Lobo denies knowing Mr. Bagaria. No evidence showed any relation between Mr. Lobo and Mr. Bagaria, but it did reveal that respondent and Mr. Bagaria had a prior business relationship, as respondent had set up a corporation for Mr. Bagaria on November 9, 1995. Finally, Mr. Suri's accounting of the Escrow Account identifies that approximately $6,250 was returned to Mr. Lobo, while respondent's accounting indicates that only $22.37 was returned. Mr. Lobo denies receiving any money and the bank records show no transfers from the Escrow Account to Mr. Suri or Mr. Lobo. While Mr. Lobo testified that his original payment to Mr. Suri was to cover all fees for the visa process, respondent stated that he took money from the account for fees relating to his representation of Mr. Lobo. The court found that even if respondent was entitled to any fee, then the approximate $6,300 in legal fees still does not account for the absence of the remaining money, totaling approximately $23,700, still owed to Mr. Lobo. The hearing court found that the initial wire transfers of money to England, taken from Mr. Lobo's original $30,000 wire transfer, were not made to further Mr. Lobo's business interests, but rather to further the interests of respondent and IBS. [9] At his deposition, respondent indicated that these wire transfers were used to pay commitment/application fees to Anglo American Ventures, Ltd., in an effort to obtain large scale financing from that overseas institution. Mr. Lobo denies any dealings with Anglo American at this time. In fact, the evidence reveals that IBS had actually been attempting to procure financing for the purchase of Master Host Inn and Howard Johnson-Richmond prior to respondent's contact with Mr. Lobo. Respondent admits that he and his wife were attempting to obtain this financing in 1995 and 1996. In August of 1996, after Mr Lobo had moved to Australia and abandoned his attempt to obtain a L-1 Visa to come to the United States, IBS and Mr. Suri were still attempting to buy and renovate the Master Host Inn.