Opinion ID: 1952844
Heading Depth: 2
Heading Rank: 2

Heading: Blum's Mishandling of Client Funds and Pattern of Deceit

Text: The hearing judge concluded that Blum's mishandling of funds with respect to Ms. Dianat, Ms. Hubbard, Ms. Bernstein, Ms. Sellers, Ms. Walter, Mr. Asay, and Mr. Pappas violated MRPC 1.15(a), Maryland Rule 16-609, and Maryland Code, Sections 10-304 and 10-306 of the Business Occupations and Professions Article. With respect to Ms. Dianat, Ms. Hubbard, Ms. Bernstein, Ms. Sellers, Ms. Walter, Mr. Asay, and Mr. Pappas, Blum deposited funds from them into his personal or operating accounts, rather than into an attorney trust account. The hearing judge found that Blum had not yet earned these funds at the time he deposited them into his personal and operating accounts and that Blum did not use the funds for their intended and authorized purposes. Indeed, judging from the quantity of violations, it appears as though it was Blum's practice to take a client's money entrusted to him for future services and to then use that money as if it were his own, prior to earning it. It also appeared to be his practice to maintain ambiguous and disorganized financial records. Blum's statements of accounts relating to the clients at issue, for instance, contained itemizations of activities, but consistently failed to provide dates or times spent on the itemizations, thus, perhaps not entirely without purpose, often rendering the time, nature and extent of his services unclear. The lack of clear documentation in this case adds further discredit to Blum's already incredible assertions that he would perform substantial amounts of services for clients without charging them, and then later bill those clients for less than what he purportedly was owed. A hearing judge's factual findings are prima facie correct unless shown to be clearly erroneous. McLaughlin, 372 Md. at 493, 813 A.2d at 1160. Judge Dugan's findings, that the funds at issue were not earned when Blum deposited them into his personal and operating accounts, were not clearly erroneous. The funds were given to Blum in anticipation of future services, and as such, qualified as `trust money' under Section 10-301 of the Business Occupations and Professions Article. Id. at 504, 813 A.2d at 1167. Section 10-301(d) defines trust money as a deposit, payment or other money that a person entrusts to a lawyer to hold for the benefit of a client or a beneficial owner. According to Section 10-304 of the Business Professions and Occupations Article, an attorney, except in certain circumstances not relevant here, expeditiously shall deposit trust money into an attorney trust account. Along the same lines, Section 10-306 of the Business Occupations and Professions Article provides that [a] lawyer may not use trust money for any purpose other than the purpose for which the trust money is entrusted to the lawyer. Provisions of the MRPC and the Maryland Rules mirror these concepts. MRPC 1.15(a) provides in part that when a client entrusts a lawyer with the client's funds, the [f]unds shall be kept in a separate account maintained pursuant to Title 16, Chapter 600 of the Maryland Rules and that the lawyer must keep complete records of such account funds. Maryland Rule 16-609 provides, in part, that an attorney may not use any funds required by these Rules to be deposited in an attorney trust account ... for any unauthorized purpose. Ms. Dianat, Ms. Hubbard, Ms. Bernstein, Ms. Sellers, Ms. Walter, Mr. Asay, and Mr. Pappas gave the funds at issue to Blum for the purpose of retaining his future services, not to pay for services that already had been rendered. Blum, however, deposited the funds into his personal and operating accounts as if he had already earned them. Consequently, he used those funds for a purpose other than the purpose for which they were entrusted to him. Thus, we agree with the hearing judge's conclusions that with respect to the above listed clients, Blum violated MRPC 1.15(a), Maryland Rule 16-609, and Maryland Code, Sections 10-304 and 10-306 of the Business Occupations and Professions Article. We also agree with the hearing judge's conclusion that with respect to Ms. Dianat, Blum violated MRPC 1.16(d). The hearing judge found that Ms. Dianat mailed and faxed a letter to Blum in which she terminated his representation and requested a refund of unused retainer funds. Blum did not respond to Ms. Dianat's request for a refund, which prompted her to file a complaint with Bar Counsel. Upon receiving notice of that complaint, Blum acknowledged that he owed Ms. Dianat $720 and that he would pay her those funds. Blum, however, did not refund the money, and then misrepresented to Ms. Dianat's counsel, Bar Counsel, and the Court, that he had. Thus, upon Ms. Dianat's termination of Blum's representation, Blum did not take steps to the extent reasonably practicable to protect a client's interests, such as ... refunding any advance payment of fee that has not been earned. MRPC 1.16(d); see also Attorney Grievance Comm'n. v. Milliken, 348 Md. 486, 517, 704 A.2d 1225, 1240 (1998) (stating that under Md. Rule 1.16(d), an attorney is obligated to return any unearned portion of an advance fee payment) On the contrary, the only person's interests Blum was concerned with protecting were his own, and in doing so, he was willing to lie and deceive time and again. Finally, the hearing judge was correct when he concluded that Blum violated Maryland Rules 16-606 and 16-609 when he named his attorney trust account Bruce David Blum Law Firm `IOLTA.', and wrote checks made payable to cash on his attorney trust account. Maryland Rule 16-606 states: An attorney or law firm shall maintain each attorney trust account with a title that includes the name of the attorney or law firm and that clearly designates the account as `Attorney Trust Account', `Attorney Escrow Account', or `Clients' Funds Account' on all checks and deposit slips. The title shall distinguish the account from any other fiduciary account that the attorney or law firm may maintain and from any personal or business account of the attorney or law firm. Blum failed to title his attorney trust account in compliance with this rule. See Attorney Grievance Comm'n v. Bernstein, 363 Md. 208, 221-22, 768 A.2d 607, 614 (2001)(concluding that an attorney trust account entitled Maryland Legal Services, Jack A. Bernstein, Esquire, IOLTA violated the Maryland Rules regarding Attorney Trust Accounts). In addition, Blum wrote checks to cash from his attorney trust account in violation of Maryland Rule 16-609, which provides in part that [a]n instrument drawn on an attorney trust account may not be drawn payable to cash or to bearer.
The hearing judge concluded that Blum's myriad misrepresentations to Ms. Dianat's counsel, Bar Counsel, the inquiry panel, and the court, regarding Blum's admitted forgery of Check 317, violated MRPC 3.3(a)(1) and (a)(4), 3.4(a) and (b), 8.1(a) and (b) and 8.4(c) and (d). We agree. Blum misrepresented to Ms. Dianat's new attorney that he had refunded Ms. Dianat's money to her. He then altered Check 317 and manufactured a photocopy purporting to be the back of that check in order to create the illusion that he had paid Ms. Dianat with a check that had been negotiated. By this conduct, the hearing judge found that Blum violated MRPC 3.4(a) and (b) and MRPC 8.4(c) and (d). We agree. Blum had received Ms. Dianat's complaint to Bar Counsel and knew that her attorney was attempting to collect her money when he altered the check and concocted the deceptive photocopy. Consequently, Blum unlawfully obstruct[ed] another party's access to evidence, ... unlawfully alter[ed] ... a document ... having potential evidentiary value, [and] falsif[ied] evidence. MRPC 3.4(a) and (b). His alteration of the check and his misrepresentations to Ms. Dianat's attorney were also fraught with dishonesty, fraud, [and] deceit, MRPC 8.4(c), and were prejudicial to the administration of justice. MRPC 8.4(d). See also Attorney Grievance Comm'n v. Koven, 361 Md. 337, 342-343, 761 A.2d 881, 883-884 (2000)(concluding that an attorney violated Rule 8.4(c) and (d) when he intentionally altered Department of Labor letters and alien certification receipts, [ ] created letters and faxes to mislead [a company] and its employees, and [ ] submitted a false billing statement); Attorney Grievance Comm'n v. White, 354 Md. 346, 350-54, 731 A.2d 447, 450-52 (1999) (concluding that destroying evidence and giving false testimony in federal district court violate MRPC 3.4(a)). Blum's disingenuous and obstructive conduct continued as Bar Counsel attempted to investigate Ms. Dianat's complaint. In response to Bar Counsel's inquiry, Blum falsely claimed that the bank account upon which Check 317 was drawn did not provide negotiated checks when Check 317 was negotiated and that he would contact the bank for the check. In addition, Blum lied to Bar Counsel investigator John Reburn about the movement of Ms. Dianat's money between his accounts and failed to respond to repeated requests for financial records related to Ms. Dianat's complaint. This conduct, the hearing judge correctly determined, violated MRPC 8.1(a)([A] lawyer in connection with ... a disciplinary matter, shall not ... knowingly make a false statement of material fact.) and MRPC 8.4(c) (It is professional misconduct for a lawyer to ... engage in conduct involving dishonesty, fraud, deceit or misrepresentation.); see also Attorney Grievance Comm'n v. Angst, 369 Md. 404, 410, 800 A.2d 747, 751 (2002)(concluding that misrepresentations to Bar Counsel and Bar Counsel investigator constituted violations of MRPC 8.1(a) and 8.4(c)) Blum's motion to quash a Bar Counsel subpoena and his conduct at the hearing on that motion also violated several Maryland Rules of Professional Conduct. Judge Dugan concluded, and we agree, that during the hearing before the Honorable Martha G. Kavanaugh of the Circuit Court for Montgomery County, Blum violated MRPC 3.3(a)(1) and (a)(4), and MRPC 8.4(c) and (d), when he knowingly made repeated and blatant false statements of material fact to Judge Kavanaugh and offered evidence he knew to be false. Blum repeated, this time under oath, his previous lies with respect Check 317 and the account upon which it was drawn. In addition, he falsely claimed, among other things, that the bank told him it could not find the original Check 317, that Mr. Willis (Ms. Dianat's counsel), had requested that check, and that according to its records, it provided the check to Mr. Willis. See White, 354 Md. at 363-64, 731 A.2d at 457 (1999)(concluding that attorney's false testimony under oath during a deposition violated MRPC 3.3(a)(1) and (a)(4) and 8.4(c) and (d)). When Blum made similar misrepresentations to the inquiry panel, the hearing judge correctly concluded that the same rules were violated, in addition to MRPC 8.1(a)([A] lawyer in connection with ... a disciplinary matter, shall not ... knowingly make a false statement of material fact.) and MRPC 3.4(a) and (b)(prohibiting a lawyer from unlawfully obstruct[ing] another party's access to evidence[,]... unlawfully alter[ing] ... a document ... having potential evidentiary value[,] [and] falsifying evidence). Finally, the hearing judge correctly concluded that as Bar Counsel continued to request information from Blum, and as he continued to fail to provide that information, he violated MRPC 8.1(b)([A] lawyer in connection with ... a disciplinary matter, shall not ... knowingly fail to respond to a lawful demand for information from [a]... disciplinary authority....) See also Attorney Grievance Comm'n v. Powell, 369 Md. 462, 473 n. 8, 800 A.2d 782, 789 (2002) (An attorney is required to cooperate with Bar Counsel during the investigative process. Once a petition for disciplinary action is filed, an attorney is obligated to provide requested discovery in accordance with the Maryland Rules of Procedure.).