Court Opinion

ID: 2719779
Source: CourtListenerOpinion
Date Created: 2014-08-21 15:04:07.318871+00
Date Added: 2024-06-11T12:06:26.437258
License: Public Domain

TO BE PUBLISHED

              ,i5uprrtur (Court of I ttfurkv
                              2014-SC-000192-KB

INQUIRY COMMISSION                                                       MOVANT

V.                            IN SUPREME COURT

JOHN GREENE ARNETT, JR.                                             RESPONDENT
KBA MEMBER NO. 01745

                             OPINION AND ORDER

      The Kentucky Bar Association Inquiry Commission petitions this Court

to enter an order temporarily suspending John Greene Arnett, Jr.

("Respondent") from the practice of law pursuant to Supreme Court Rule

("SCR") 3.165(1)(a) and (b) until such time as the merits of a disciplinary

proceeding can be determined. In support thereof, the Inquiry Commission

claims that Respondent has misappropriated or otherwise improperly dealt

with funds held in trust on behalf of his clients. Respondent's KBA member

number is 01745 and his bar roster address is 6900 Houston Road, Building

600, Suite 23, Florence, Kentucky 41022.

      The Inquiry Commission sought Respondent's temporary suspension

after obtaining a bar complaint filed by Linda Tally Smith, the Commonwealth's

Attorney for Gallatin and Boone Counties. Ms. Smith has since provided this
Court with a detailed affidavit listing the factual circumstance giving rise to

this petition.

      The facts, according to Ms. Smith, are as follows. In February of 2012,

Robert Shane Hamblin retained Respondent to represent him in a divorce

proceeding in the Boone Circuit Court, Case No. 12-CI-00361. The following

month, Mr. Hamblin provided Respondent with $75,000 in marital funds to be

held in trust pending division of the couple's assets. Respondent placed these

funds in his IOLTA Account held at Fifth Third Bank (the "Trust Account"). As

part of the divorce settlement, the trial court ordered Mr. Hamblin to pay his

ex-wife $37,500. Accordingly, Mr. Hamblin instructed Respondent to release to

him the funds Respondent was purportedly holding in trust. Respondent,

however, refused to disburse the funds to either Mr. Hamblin or his ex-wife.

       In November of 2012, Mr. Hamblin retained local attorney Ryan Beck to

finalize the divorce proceedings. After learning that Mr. Hamblin had been

unable to recover his $75,000, Mr. Beck informed Ms. Smith of Respondent's

actions. Ms. Smith in turn requested Detective Joshua Quinn of the Boone

County Sheriff's Department investigate the matter. Detective Quinn obtained

the Trust Account records which revealed that the account had been

completely depleted. As of the filing of this petition, Mr. Hamblin's funds have

not been located.

       Ms. Smith's affidavit also alleges that Respondent has misappropriated

funds of other clients. To be more specific, Ms. Smith stated that the Trust

Account records reflected that, between February 1, 2012 and November 30,

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2013, 105 checks or withdrawal slips made payable to Respondent were

executed totaling $178,315. Therefore, it appears Respondent withdrew funds

that were to be held in trust for his clients and converted these funds to his

own personal use. Furthermore, several of Respondent's former clients have

since complained to the Boone County Sheriff's Department that Respondent

failed to promptly provide them with their respective settlement funds.

Respondent allegedly advised these former clients that he would retain their

individual settlements for a period of ten years. As of the time of the petition's

filing, Detective Quinn has been unable to locate the clients' settlement funds.

Notably, however, no one other than Mr. Hamblin has been identified as a

victim to Respondent's alleged misappropriation.

      The Inquiry Commission is clearly in the early stages of its investigation.

Indeed, Ms. Smith and Detective Quinn are still in the process of identifying

Respondent's many accounts, obtaining the records of those accounts, and

uncovering potential victims. Ms. Smith explained that her office is planning

on seeking a formal indictment in the near future. In the meantime, the

Inquiry Commission seeks suspension of Respondent's license to practice law

while it gathers the information needed to prepare a complete and all-

encompassing Charge.

      SCR 3.165 is the rule governing temporary suspensions. This rule

states, in pertinent part, the following:

          (1) On petition of the Inquiry Commission . . . an attorney may
             be temporarily suspended from the practice of law [when] .. .
             (a) It appears that probable cause exists to believe that an
             attorney is or has been misappropriating funds the attorney
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                holds for others to his/her own use or has been otherwise
                improperly dealing with said funds; or (b) It appears that
                probable cause exists to believe that an attorney's conduct
                poses a substantial threat of harm to his clients or to the
                public . . . .

       After reviewing the petition and Ms. Smith's affidavit, we believe the

Inquiry Commission has supplied us with a reasonable basis to believe that

Respondent misappropriated, at the very least, Mr. Hamblin's $75,000.          See

Inquiry Comm'n v. Sexton, 102 S.W.3d 512 (Ky. 2003) (concluding that

temporary suspension pursuant to SCR 3.165(1)(a) was appropriate partially

due to the attorney's failure to disburse funds obtained from a settlement

agreement). Considering that Respondent has failed to discredit the petition in

any way and has not even provided a simple explanation regarding the

whereabouts of Mr. Hamblin's funds, we must conclude that probable cause

exists warranting temporary suspension pursuant to subsection (1)(a) of SCR

3 .165 .

           In regards to subsection (1)(b) of SCR 3.165, this Court has consistently

held that proof of an attorney's misappropriation of client funds may also

provide the Court with probable cause to believe that the attorney poses a

substantial threat of harm to his or her clients or the public.     See, e.g., Inquiry

Comm'n v. Layton, 53 S.W.3d 70 (Ky. 2000) (finding probable cause to believe

that an attorney poses a substantial threat of harm to his clients or the public

based on his misappropriation of client funds). Moreover, this Court has

suspended attorneys pursuant to 3.165(1)(b) based exclusively on evidence

that the attorney placed his or her client's funds into a trust account after

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which that specific account was depleted without the client's knowledge or

permission. See Inquiry Comm'n v. Friedman, 317 S.W.3d 586 (Ky. 2010)

(ruling that an attorney posed a substantial threat of harm to his clients and

the public after discovering that he deposited his clients' settlement funds into

a bank account which he subsequently emptied without the client's

knowledge); Kentucky Bar Ass'n v. Shelburne, 918 S.W.2d 735 (Ky. 1996)

(stating that an attorney who misappropriated his client's money by depleting

the trust account in which the money was held, posed "a real and present

danger . . . to the public."). Therefore, given the nature of Respondent's actions

and based on the number of potential victims the investigation will yield, we

find that Respondent poses a substantial threat of harm to his clients and the

public.

      In summation, this Court concludes that there is probable cause to

believe Respondent "has been misappropriating funds [that he] holds for others

to [his] own use or has been otherwise improperly dealing with said funds," and

that his particular "conduct poses a substantial threat of harm to his clients or

to the public." SCR 3.165(1)(a)-(b). Consequently, the Inquiry Commission's

petition for temporary suspension is granted.

   ACCORDINGLY, IT IS HEREBY ORDERED:

   (1) Respondent is temporarily suspended from the practice of law in the

       Commonwealth of Kentucky, effective upon the date of entry of this

      order, pending further orders from this Court;

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(2) Disciplinary proceedings against Respondent may be initiated by the

  Inquiry Commission pursuant to SCR 3.160, unless already begun or

   Respondent resigns under terms of disbarment;

(3) Pursuant to SCR 3.165(5), Respondent shall, within twenty (20) days

   from the date of the entry of this Opinion and Order, notify in writing all

   clients of his inability to provide further legal services and furnish the

   Director of the Kentucky Bar Association with copies of all such letters;

(4) Pursuant to SCR 3.165(6), Respondent shall immediately, to the extent

   reasonably possible, cancel and cease any advertising activities in which

   he is engaged.

   All sitting. All concur.

   ENTERED: August 21, 2014.

                                    CHIEF JUSTICE

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