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Illinois Disciplinary Review Board recommends 1 year suspension with 6 months stayed for unintentional conversion of trust funds and misrepresentations to heirs

Hello and welcome to this Ethics Alert blog which will discuss the recent Report and Recommendation of the Illinois Disciplinary Review Board recommending a 1 year suspension with 6 months stayed and trust account probation for a lawyer who converted settlement proceeds that he received on behalf of two heirs whom he could not locate at the time of settlement and made misrepresentations about the funds when he was contacted years after he received the funds. The case is In re Guy D. Geleerd, Jr., Commission No. 2011PR00128 (March 4, 2014) and the Report and Recommendation is here: https://www.iardc.org/HB_RB_Disp_Html.asp?id=11267

According to the Review Board’s Report, the lawyer settled a wrongful death claim for estates of two people killed in a fire for $90,000.00. He properly placed the settlement funds into trust and paid out over $80,000.00. The remaining funds remained in trust since he was unable to locate two heirs. Although the funds stayed in trust, during the course of a number of years, the balance fell below the amount due the remaining heirs. When relatives inquired about the funds, the lawyer made misrepresentations. When the lawyer failed to respond to subsequent inquiries, a disciplinary complaint was filed against him.

During the Disciplinary Commission’s investigation, and after the complaint was filed, the lawyer denied that he he converted the settlement proceeds. Before the hearing, the lawyer alleged that the proceedings against him were “frivolous” and that the bank had made errors which caused a technical conversion by wrongly transferring money from his client trust fund to cover overdrafts in his other bank accounts.

At the disciplinary hearing before the Hearing Board, the lawyer admitted that the funds were used for his business and personal expenses without authorization from the beneficiaries; however, he continued to blame the shortages/conversion on the bank’s transfers of funds from his client trust fund to his other accounts. He testified that he did not authorize the transfers and did not notice them at the time, although the bank transfers occurred in 2010 and 2011, after the account balance had already fallen below the amount that should have been in the account and after the lawyer had been informed that the beneficiaries had not been paid.

The Hearing Board found that the lawyer’s conduct violated Illinois Bar Rule 1.15(a) (failing to preserve and maintain and converting the funds in his client trust account) and Illinois Bar Rule 8.4(c) (engaging in conduct involving dishonesty, fraud, deceit or misrepresentation); however, the Board also found that he had not intentionally taken the funds, but failed to properly monitor his client trust account and recommended the 1 year suspension with 6 months stayed and a 6 month probation with trust account monitoring conditions. The Board Administrator appealed Hearing Board’s findings and recommendations.

The Review Board upheld the Hearing Board’s findings and recommendations and agreed with the recommendation of a 1 year suspension with 6 months stayed. The Review Board’s Report found in aggravation that the lawyer had significant debts and was under financial pressure at the time of the conversions since creditors had started legal actions against him, his home was in foreclosure, he had financial obligations arising from his divorce, he took out numerous loans, and his personal and business bank accounts were overdrawn on occasion. He also had prior discipline involving allegations of dishonesty, he attempted to deflect responsibility and to attribute the use of the funds to bank errors and, despite the Hearing Board’s findings, he continued to contend that the misuse of the settlement funds was due to a bank error. He also “repeatedly stated in his argument that the two beneficiaries were not deprived of their funds, when the evidence conclusively established that (the lawyer) converted their funds, waited to make restitution until after a report to the ARDC, and they received their funds approximately four years after the other beneficiaries. There is no question that they were deprived of their funds. (The lawyer’s) statements suggest that he could benefit from education regarding his professional responsibilities.”

The Review Board’s Report also found in mitigation that the lawyer “has been involved in bar association activities, volunteers at his children’s school, coaches sports teams for his children, and is active in his synagogue. In addition, (the lawyer) has significantly contributed both time and money to a family foundation that raises money for cancer research. Three judges and a retired judge testified on behalf of (the lawyer) as character witnesses, testifying that (the lawyer) has a good reputation in the legal community. (The lawyer) expressed regret and acknowledged that he should have reconciled his monthly bank statements. In 2011, (the lawyer) hired a bookkeeper and office manager to assist him in reconciling the statements and manage his files. While (the lawyer) made restitution of the funds, the fact that he delayed restitution for fifteen months after he learned the heirs had not received their funds, forcing an ARDC complaint, diminishes the weight given to the payment of restitution as a mitigating factor.”

Bottom line: This case involves an apparently unintentional conversion of trust funds and misrepresentations to the rightful owners of the funds. In Florida, and in many other states, such conduct would create a presumption that disbarment would be the appropriate sanction. It appears that a 1 year suspension with 6 months stated and a 6 month probation with trust account conditions would be a somewhat lenient sanction under these specific facts. The Illinois Supreme Court will now review the matter and issue a final disciplinary opinion.
Be careful out there!

Disclaimer: this e-mail is not an advertisement and does not contain any legal advice and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire
Law Office of Joseph A. Corsmeier, P.A.
2454 McMullen Booth Road, Suite 431
Clearwater, Florida 33759
Office (727) 799-1688
Fax (727) 799-1670
[email protected]jac-law.com
www.jac-law.com

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