Opinion ID: 2055394
Heading Depth: 1
Heading Rank: 1

Heading: 1. State Bank of Boyd Matter.

Text: On October 23, 1984, the Commissioner of Commerce (Commissioner) closed the State Bank of Boyd (Bank), appointed the FDIC to act as receiver and approved the sale of the Bank's assets and transfer of its liabilities. On behalf of her clients, owners of Lac Qui Parle Bancorporation, the Bank's holding company, Nora petitioned a district court for an alternative writ of mandamus requesting recovery of the Bank's property and certificate. The petition was denied. A Minnesota Court of Appeals panel affirmed, in part because Nora's clients lacked standing. State Bank of Boyd v. Hatch, 384 N.W.2d 550, 555 (Minn.App.1986). In an attempt to reopen the Bank without authorization by the Commissioner, Nora and her clients became involved with Jonathan May, who claimed to be the trustee of a multibillion dollar trust that could be used to provide capital to the Bank. The referee found Nora inadequately investigated May, his claims and his references. Nora was named purported chairman of the board of the Bank's holding company and May was named as the Bank's purported president. Without having received any legal tender as capitalization for the Bank, Nora authorized distribution of cashier's checks signed in blank by May under an alias to individuals Nora had not adequately investigated, whom May represented were to become authorized agents of Lac Qui Parle Bancorporation. No usage restrictions accompanied the checks, instead Nora assumed, but did not verify, that May had conveyed her oral instructions to the recipients. May cashed several of the checks and left the state with an undisclosed number of others. An individual in Florida used some of the checks to purchase personal goods, which were subsequently returned. Nora also authorized the issuance of cashier's checks to individuals facing either the expiration of redemption period on their farm or the sale of personal property, and others to test the validity of cashier's checks as final payment, even if drawn on an insolvent and closed bank. At that time, Nora was aware the Bank did not comply with the requirement that Minnesota banks have segregated cash on deposit for the payment of cashier's checks. The referee found Nora's public announcement of the Bank's reopening and capitalization was without basis in fact or law. Nora then knew a Minnesota bank must display its certificate and that the Commissioner had possession of the Bank's certificate. Upon an investigation of the cashier's checks by the Minnesota Department of Commerce, Nora and her clients stipulated to a temporary restraining order enjoining them from engaging in the banking business. Nora now characterizes the attempted reopening as flakey. Because of Nora's inadequate investigation of May and improper authorization of cashier's checks, the referee concluded Nora violated Rule 1.1 of the Minnesota Rules of Professional Conduct (MRPC) (competence). Her misrepresentations regarding the Boyd Bank reopening and capitalization were deemed to constitute a violation of MRPC 8.4(c). The referee further concluded Nora engage[d] in conduct prejudicial to the administration of justice in violation of MRPC 8.4(d), by pursuing the reopening after the court of appeals panel determined her clients had no standing. In mitigation, Nora had no dishonest or selfish motive in this matter and did not personally gain from the cashier's checks. She also fully cooperated in the Boyd Bank investigation, which the referee found likely averted further harm to her clients or others.