Court Opinion

ID: 9393829
Source: CourtListenerOpinion
Date Created: 2023-05-11 15:03:32.12643+00
Date Added: 2024-06-11T17:18:55.701479
License: Public Domain

Supreme Court of Florida
                             ____________

                          No. SC2021-0011
                            ____________

                        THE FLORIDA BAR,
                          Complainant,

                                  vs.

                  STEPHEN MATTHEW BANDER,
                         Respondent.

                            May 11, 2023

PER CURIAM.

     Respondent, Stephen Matthew Bander, seeks review of a

referee’s report recommending that he be found guilty of

professional misconduct and disbarred for failing to place client

funds in his trust account, failing to timely provide refunds to his

clients for double payment of attorney’s fees, and using the fees to

pay firm operating expenses. 1 Bander challenges the referee’s

findings of fact and recommendations as to guilt, arguing that his

     1. We have jurisdiction. See art. V, § 15, Fla. Const.
conduct did not violate any of the Rules Regulating The Florida Bar

(Bar Rules). He also asserts that if he violated the rules,

disbarment is a disproportionate sanction. We disagree, and for the

reasons discussed below, we approve the referee’s report in its

entirety and disbar Bander from the practice of law.

                          I. BACKGROUND

     Bander represented three clients—identified as clients N, A,

and F—who sought U.S. residency through the Immigrant Investor

Program (IIP). The three clients invested through an EB-5 Regional

Center, Miami Metropolitan Regional Center, in a project called

Skyrise Miami Tower Investors, LLC (Skyrise). Skyrise offered to

pay the clients’ legal fees for the representation related to the visas

up to $40,000 per client. Bander billed each of the clients a total of

$25,000 for the representation. Half of the fee was due at the time

the client signed the engagement agreement with Bander, and the

second half was due after United States Citizenship and

Immigration Services (USCIS) made a determination on the clients’

visa applications. Bander sent the invoice for his legal services to

each client at the prescribed time. He also sent an invoice for the

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legal services to Skyrise. Both the clients and Skyrise promptly

paid the invoiced fees.

     Between 2015 and 2017, Bander received $90,000 in

payments for legal fees from Skyrise. Each of the Skyrise payments

occurred after the clients had already paid the legal fees. For

example, Client N was billed for the initial fee on May 22, 2015, and

paid on July 8, 2015. Skyrise was billed for the same portion of the

fee on October 14, 2015, and paid Bander on November 2, 2015.

USCIS approved Client N’s application on November 14, 2016, and

the next day, both the client and Skyrise were billed for the

remainder of the fee. The client paid Bander on November 17,

2016, and Skyrise paid on November 23, 2016. However, the client

was not informed of the Skyrise payments until February 27, 2017,

and the refund was not sent to the client until March 14, 2017.

Bander followed a substantially similar pattern with Clients A and

F.

     Because the clients had already paid the legal fees, the Skyrise

payments were reimbursements of the legal fees to be given back to

the clients. Instead of placing these funds in his trust account and

sending refunds for the double payments promptly to the clients,
                                 -3-
Bander put these monies in his operating account and used the

funds for firm expenses. Eventually, Bander refunded the legal fees

to the clients, but only after he received a subpoena for testimony

before the United States Security and Exchange Commission (SEC)

in February 2017. According to Bander, he was concerned that the

SEC would require disgorgement of the funds and, as a result, his

clients would not be able to receive the reimbursements. Because

of this concern, Bander provided refunds of the legal fees to his

clients prior to providing testimony to the SEC.

     The SEC had previously investigated Bander’s firm and

Bander’s father for acting as an unregistered broker-dealer in

connection with representation of clients seeking residency through

the IIP program. The firm was receiving unauthorized commissions

from the Regional Centers for the investments facilitated by the

firm’s clients. Bander on behalf of the firm signed a cease-and-

desist order as part of a settlement agreement that involved

disgorgement of the fees. In 2017, the SEC reopened the

investigation of Bander’s law firm. Because of the Skyrise

payments, the SEC was concerned that the firm was again receiving

commissions from the investment entities. In his testimony to the
                                -4-
SEC, Bander admitted that he did not hold the Skyrise

reimbursements in his trust account, did not notify the clients

about the reimbursements, and used the reimbursements for firm

expenses. This prompted the SEC to file a Bar grievance against

Bander.

     After the final hearing in this case, the referee filed a report

with findings of fact and recommending that Bander be found guilty

of violating five Bar Rules: 4-1.4 (Communication); 4-1.7 (Conflict of

Interest; Current Clients); 4-1.8 (Conflict of Interest; Prohibited and

Other Transactions); 4-8.4(c) (Misconduct); and 5-1.1 (Trust

Accounts).

     The referee found the following seven aggravating factors:

dishonest or selfish motive; pattern of misconduct; multiple

offenses; submission of false evidence, false statements, or other

deceptive practices; refusal to acknowledge the wrongful nature of

the conduct; vulnerability of the victim; and substantial experience

in the practice of law. See Fla. Std. Imposing Law. Sancs. 3.2(b).

The referee found three mitigating factors: absence of a prior

disciplinary record; personal or emotional problems; and timely

good faith effort to make restitution or to rectify the consequences
                                 -5-
of the misconduct. See Fla. Std. Imposing Law. Sancs. 3.3(b).

Based on his misconduct, the Standards for Imposing Lawyer

Sanctions (Standards), and existing case law, the referee

recommends that Bander be disbarred and that he be assessed the

Bar’s costs. Bander filed a notice of intent to seek review of the

referee’s report and challenges the findings of fact and each

recommendation as to guilt.

                            II. ANALYSIS

              A. The Referee’s Findings of Fact and
                  Recommendations as to Guilt.

     Though Bander claims he is challenging the referee’s factual

findings, Bander does not dispute that he engaged in the underlying

conduct, nor does he take issue with any specific findings by the

referee. Our review of the record reveals no error with any of the

referee’s factual findings and we approve them entirely. Regarding

the referee’s recommendations as to guilt, Bander believes that his

conduct does not amount to violations of the Bar Rules. We

disagree.

     Our review of a challenge to the referee’s findings of fact is

limited; if the findings of fact are supported by competent and

                                 -6-
substantial evidence in the record, we will not reweigh the evidence

and substitute our judgment for that of the referee. See Fla. Bar v.

Alters, 260 So. 3d 72, 79 (Fla. 2018) (citing Fla. Bar v. Frederick,

756 So. 2d 79, 86 (Fla. 2000)). To the extent a party challenges the

referee’s recommendations as to guilt, the referee’s factual findings

must be sufficient under the applicable rules to support the

recommendations. See Fla. Bar v. Patterson, 257 So. 3d 56, 61 (Fla.

2018) (citing Fla. Bar v. Shoureas, 913 So. 2d 554, 557-58 (Fla.

2005)). The burden is on the party challenging the referee’s

findings of fact and recommendations as to guilt to demonstrate

that there is no evidence in the record to support the findings or

that the record evidence clearly contradicts the conclusions. See

Fla. Bar v. Germain, 957 So. 2d 613, 620 (Fla. 2007).

                          Informed Consent

     The referee recommends that Bander be found guilty of

violating Bar Rules 4-1.4, 4-1.7, and 4-1.8. In certain

circumstances, a lawyer must obtain written informed consent from

a client before entering into or continuing a representation. Specific

to this case, a lawyer is prohibited from accepting compensation for

the representation from a third party unless the client gives
                                 -7-
informed consent. See R. Regulating Fla. Bar 4-1.8(f)(1). Further, a

lawyer must “promptly inform the client” of any circumstance that

requires informed consent. R. Regulating Fla. Bar 4-1.4(a)(1).

Finally, informed consent must be given and “confirmed in writing.”

R. Regulating Fla. Bar 4-1.7(b)(4). Here, the three clients’ legal fees

were paid by a third party, Skyrise. Bander did not inform the

clients that this created a conflict of interest and did not obtain the

required written informed consent from the clients. Instead,

Bander argues that he was not required to obtain informed consent

from the clients because there was not a substantial risk that his

representation would be limited by the third-party payment

arrangement. However, the rule clearly states that informed

consent is always required when a third party is paying the attorney

fees. See R. Regulating Fla. Bar 4-1.8(f)(1). Whether there is a risk

to the client-lawyer relationship is an additional consideration used

to determine if the representation can continue; however, it is not a

consideration for determining when informed consent is required.

Id. Bander was required to inform the clients of the conflict of

interest associated with the payment of legal fees by a third party

                                 -8-
and receive written informed consent for the arrangement. He did

neither.

     Accordingly, we approve the referee’s recommendation that

Bander be found guilty of violating Bar Rules 4-1.4, 4-1.7, and

4-1.8.

                     Trust Account Requirements

     Next, the referee recommends that Bander be found guilty of

violating Bar Rule 5-1.1 for not placing the third-party payments in

his trust account. In general, a “lawyer must hold in trust,

separate from the lawyer’s own property, funds and property of

clients or third persons that are in the lawyer’s possession in

connection with a representation.” R. Regulating Fla. Bar

5-1.1(a)(1). “Money or other property entrusted to a lawyer for a

specific purpose, including advances for fees, costs, and expenses,

is held in trust and must be applied only to that purpose. . . . [A]

refusal to account for and deliver over the property on demand is

conversion.” R. Regulating Fla. Bar 5-1.1(b). “On receiving funds

or other property in which a client or third person has an interest, a

lawyer must promptly notify the client or third person” and “must

promptly deliver to the client or third person any funds or other
                                 -9-
property that the client or third person is entitled to receive . . . .”

R. Regulating Fla. Bar 5-1.1(e).

     Here, Bander billed both the client and the third party,

Skyrise, for his legal fees. The clients paid the legal fees, and later,

Skyrise also paid the same legal fees. Bander acknowledges that he

was required to return the double payments to his clients.

However, he claims that because the monies he received from

Skyrise were earned legal fees, he was allowed to deposit them into

his operating account and use the funds like any other earned legal

fees—except the payments from Skyrise were not like any other

earned legal fees. They were a duplicate payment for fees that had

already been paid by the clients. The monies were clearly the

clients’ property at the point Bander received them. Thus, the

monies should have been deposited into Bander’s trust account

pursuant to Bar Rule 5-1.1(a)(1) until they were promptly returned

to the clients. Even if the clients indicated that they wished for the

monies to be kept for any additional work, Bander was still required

to deposit the funds into his trust account and hold them there

until he actually earned them.

                                   - 10 -
     In addition to being required to deposit the funds into his trust

account, Bander was required under Bar Rule 5-1.1(e) to promptly

notify and deliver the monies to the three clients. Instead, Bander

placed the funds in his operating account and converted them to

his own use for firm expenses. Bander’s use of the funds, failure to

promptly notify his clients of their receipt, and failure to return the

funds to the clients until prompted by the SEC subpoena are

actions in clear violation of Bar Rule 5-1.1.

     Accordingly, we approve the referee’s recommendation that

Bander be found guilty of violating Bar Rule 5-1.1.

                              Misconduct

     Finally, the referee recommends that Bander be found guilty of

violating Bar Rule 4-8.4(c). However, Bander argues the record

contains no evidence that he knowingly or deliberately made a false

and misleading statement about the third-party payments or

intended to mislead or conceal the payments from his clients. Bar

Rule 4-8.4(c) states a lawyer must not “engage in conduct involving

dishonesty, fraud, deceit, or misrepresentation.”

     Here, Bander knowingly kept the double payment of fees

despite admitting that they should be returned to the clients. He
                                 - 11 -
did not inform the clients of the third-party payments or return the

money to the clients until he received a subpoena from the SEC.

This was a deliberate misuse of the clients’ funds. See, e.g., Fla.

Bar v. Cramer, 643 So. 2d 1069, 1070 (Fla. 1994) (concluding that

lawyer’s use of trust account funds to pay operating expenses was

done in an attempt to mislead the IRS after being notified that the

IRS intended to levy). We therefore approve the referee’s

recommendation that Bander be found guilty of violating Bar Rule

4-8.4(c).

                            B. Discipline.

     We now turn to the referee’s recommended discipline,

disbarment. A referee’s recommended discipline must have a

reasonable basis in existing case law and the Florida Standards for

Imposing Lawyer Sanctions. See Fla. Bar v. Picon, 205 So. 3d 759,

765 (Fla. 2016) (citing Fla. Bar v. Temmer, 753 So. 2d 555, 558 (Fla.

1999)). In reviewing a referee’s recommended discipline, this

Court’s scope of review is broader than that afforded to the referee’s

findings of fact because, ultimately, it is this Court’s responsibility

to order the appropriate sanction. See Fla. Bar v. Kinsella, 260 So.

                                 - 12 -
3d 1046, 1048 (Fla. 2018); Fla. Bar v. Anderson, 538 So. 2d 852,

854 (Fla. 1989); see also art. V, § 15, Fla. Const.

     We begin our review with the referee’s findings in aggravation

and mitigation. Bander argues that the referee’s finding that seven

aggravating factors apply as well as the referee’s failure to find

additional mitigating circumstances were in error. “[A] referee’s

findings in mitigation and aggravation carry a presumption of

correctness and will be upheld unless clearly erroneous or without

support in the record.” Alters, 260 So. 3d at 82 (quoting Germain,

957 So. 2d at 621).

     First, Bander argues that dishonest or selfish motive does not

apply because he was merely mistaken about the nature of the

funds in assuming they were earned fees that should be deposited

in his operating account. However, Bander knew the Skyrise

payments were duplicative of the clients’ payments and intended to

be reimbursements to the clients. Instead of promptly informing

the clients and returning the funds, he used them to pay firm

expenses. This is sufficient evidence to support this aggravating

factor.

                                 - 13 -
     Next, Bander argues that the pattern of misconduct and

multiple offense factors do not apply. However, Bander’s conduct

violated five Bar Rules and involved three different clients and six

different payments over a two-year period. This is sufficient

evidence to support both a pattern of misconduct and multiple

offenses. See Fla. Bar v. Smith, 866 So. 2d 41, 47 (Fla. 2004)

(finding a pattern of misconduct for neglect that extended over one

and a half years, and multiple offenses for a recommendation of

guilt for thirteen rule violations).

     Bander argues that submission of false evidence is not

supported. However, Bander admitted to the SEC and the Bar that

the clients were entitled to the third-party payments as refunds; but

then at the final hearing, he claimed that he believed the funds

were instead earned legal fees that he was entitled to use for firm

expenses. This new statement is in direct contrast with earlier

admissions and was a deliberate attempt to minimize culpability.

Thus, there is sufficient evidence to support the submission of false

evidence factor.

     Additionally, Bander continues to maintain that he did not

violate any Bar Rules, even though his misconduct in this case is a
                                  - 14 -
textbook example of misuse of client funds. A review of the Bar

Rules and rudimentary legal research would have quickly dispelled

Bander of the notion that he can do whatever he chooses with client

property. We find that Bander has clearly failed to acknowledge the

wrongful nature of the conduct and the referee correctly applied

this factor. See Germain, 957 So. 2d at 622 (noting that when an

issue rests on a legal question, the aggravating factor of failing to

acknowledge the wrongfulness of the conduct clearly applies if

simple legal research could have led to the discovery that the

conduct was unethical).

     Next, despite having practiced law since 1999, Bander claims

that having a third party pay legal expenses was a new issue for

him. However, the substantial experience factor is not parsed by

expertise in specific areas of the law, but instead applies to

experience related to the capability of determining whether conduct

is violative of the rules. See Fla. Bar v. Broome, 932 So. 2d 1036,

1042 (Fla. 2006) (providing that substantial experience in the law is

relevant as an aggravating factor for “kinds of violations more likely

to be committed by inexperienced lawyers than seasoned attorneys,

so as to make violations by seasoned attorneys more egregious”).
                                 - 15 -
Thus, Bander’s experience of over twenty years in the practice of

law is an appropriate aggravating factor.

     Finally, Bander argues that the victims were not vulnerable as

they knew that Skyrise promised to pay their legal fees and they

could have inquired with Skyrise as to the status of those

payments. However, Bander failed to receive written informed

consent for the third-party payments, so it is not clear whether the

clients did actually know about the Skyrise payment arrangement.

Further, Bar Rule 5-1.1(e) requires an attorney to immediately

inform clients of receipt of funds in which they have an interest, in

part because of the vulnerability of clients generally in having an

attorney receive funds on their behalf. Thus, this factor is

supported by the record as well.

     All seven aggravating factors found by the referee are

supported by the record, and we conclude that they were

appropriately considered in determining the sanction.

     In addition to the three mitigating factors found by the referee,

Bander argues that the following additional factors should have also

been considered: absence of a selfish or dishonest motive; full and

free disclosure to the Bar and cooperative attitude toward the
                                - 16 -
proceedings; character or reputation; physical or mental disability

or impairment; and unreasonable delay in the proceedings. See

Fla. Std. Imposing Law. Sancs. 3.3(b). However, the absence of a

selfish or dishonest motive mitigating factor cannot be found

simultaneously with the dishonest or selfish motive aggravating

factor. Nor can the full and free disclosure mitigating factor be

found simultaneously with the submission of false evidence

aggravating factor. As the submission of false evidence and

dishonest or selfish motive aggravating factors were both found by

the referee and supported by the record, there is no basis for

finding absence of a dishonest or selfish motive and full and free

disclosure as mitigating factors in this case.

     For physical or mental disability, we agree with the referee

that the evidence presented in the form of testimony by Bander

about suffering symptoms of undiagnosed Graves’ disease was not

related to the misconduct, and Bander’s testimony about this issue

was not substantiated by any other evidence. See Fla. Bar v.

Horowitz, 697 So. 2d 78, 83-84 (Fla. 1997) (approving referee’s

rejection of mental disability as a mitigating factor where lawyer’s

                                - 17 -
claim of clinical depression was unsubstantiated and concluding

that it helped explain but did not excuse lawyer’s misconduct).

     Finally, as to delay in proceedings, Bander has not identified

specific prejudice resulting from the delay. See Alters, 260 So. 3d

at 83 (providing that the mitigating factor of an unreasonable delay

does not apply if the lawyer “failed to demonstrate before the referee

any specific prejudice he suffered resulting from the delay”).

Though Bander stated he would have preserved his late father’s

testimony regarding the earlier dealings with the SEC before his

death in 2018, this does not appear to be relevant to the third-party

payments at issue, especially as his father retired in 2015, and the

payments were made between 2015-2017. Thus, the referee’s

determination that these additional mitigating factors did not apply

is supported by the record.

     As to the sanction, the referee recommends disbarment based

primarily on the violation of Bar Rule 5-1.1 in misusing client

funds. “Disbarment is the presumptively appropriate sanction,

under both the Standards and existing case law, when a lawyer

intentionally misappropriates trust funds.” Id. at 84; see Fla. Stds.

Imposing Law. Sancs. 4.1(a) (“Disbarment is appropriate when a
                                - 18 -
lawyer intentionally or knowingly converts client property regardless

of injury or potential injury.”); 5.1(a)(6) (Disbarment is appropriate

when a lawyer “engages in any other intentional conduct involving

dishonesty, fraud, deceit, or misrepresentation that seriously

adversely reflects on the lawyer’s fitness to practice.”).

     This presumption has been overcome in very limited situations

on “a showing of substantial mitigating circumstances.” Alters, 260

So. 3d at 84 (citing Fla. Bar v. McFall, 863 So. 2d 303 (Fla. 2003);

Fla. Bar v. Tauler, 775 So. 2d 944 (Fla. 2000)). For example, the

presumption of disbarment may be overcome by a showing that the

trust funds were not intentionally misappropriated and not for

personal use, or the misconduct occurred during a period of

extreme personal or emotional distress or was due to substantially

impaired judgment. See Fla. Bar v. Mason, 826 So. 2d 985, 988

(Fla. 2002) (imposing suspension for misconduct involving

inadvertent transfer of funds to an operating account based on

inexperience in managing trust accounts and the attorney

immediately addressed the problems once aware); Fla. Bar v. Wolf,

930 So. 2d 574, 578 (Fla. 2006) (ordering suspension for

unintentional trust account violations due to sloppy bookkeeping by
                                 - 19 -
attorney who immediately covered shortages and had significant

mitigating factors including unreasonable delay); Smith, 866 So. 2d

at 47 (imposing suspension where “financial mismanagement was

the product of extraordinary sloppiness and negligence in

bookkeeping, rather than misappropriation or an intent to deceive

[lawyer’s] clients.”); Tauler, 775 So. 2d at 948 (imposing suspension

where “misappropriations were the result of severe financial

hardship brought on by [lawyer’s spouse’s] health problems and

bankruptcy” and were isolated instances of misconduct); McFall,

863 So. 2d at 308 (imposing suspension based on numerous

mitigating factors including personal and medical problems

involving significant amounts of pain medications that altered the

lawyer’s thinking, which diminished culpability).

     However, this is not one of those extremely limited

circumstances. Bander knowingly converted client property for his

own benefit. Despite previously admitting that the monies were

client funds, Bander attempted to recharacterize the payments as

earned legal fees during the Bar proceedings to avoid responsibility

for his misuse of the funds. Thus, Bander has not demonstrated

that his case should be an exception to the presumptively
                                - 20 -
appropriate sanction of disbarment, and we conclude that the

recommended sanction of disbarment has a reasonable basis in the

existing case law.

     Because the referee’s recommendation of disbarment has a

reasonable basis in both case law and the Standards, we conclude

that this is the appropriate sanction in this case.

                          III. CONCLUSION

     Accordingly, we approve the referee’s report in its entirety.

Stephen Matthew Bander is hereby disbarred. The disbarment will

be effective 30 days from the filing of this opinion so that Bander

can close out his practice and protect the interests of existing

clients. If Bander notifies this Court in writing that he is no longer

practicing and does not need the 30 days to protect existing clients,

this Court will enter an order making the disbarment effective

immediately. Bander shall fully comply with Rule Regulating The

Florida Bar 3-5.1(h) and Rule Regulating The Florida Bar 3-6.1, if

applicable. Bander is further directed to comply with all other

terms and conditions of the report.

     Judgment is entered for The Florida Bar, 651 East Jefferson

Street, Tallahassee, Florida 32399-2300, for recovery of costs from
                                - 21 -
Stephen Matthew Bander in the amount of $20,293.75, for which

sum let execution issue.

     It is so ordered.

MUÑIZ, C.J., and CANADY, LABARGA, COURIEL, GROSSHANS,
and FRANCIS, JJ., concur.

THE FILING OF A MOTION FOR REHEARING SHALL NOT ALTER
THE EFFECTIVE DATE OF THIS DISBARMENT.

Original Proceeding – The Florida Bar

Joshua E. Doyle, Executive Director, The Florida Bar, Tallahassee,
Florida, Patricia Ann Toro Savitz, Staff Counsel, The Florida Bar,
Tallahassee, Florida, Mark Mason, Bar Counsel, The Florida Bar,
Tallahassee, Florida, and Jennifer R. Falcone, Bar Counsel, The
Florida Bar, Miami, Florida; and Kevin W. Cox, Tiffany
Roddenberry, and Kathryn Isted of Holland & Knight, LLP,
Tallahassee, Florida,

     for Complainant

D. Culver Smith III of Culver Smith III, P.A., West Palm Beach,
Florida,

     for Respondent

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