The Florida Bar v. Stephen Matthew Bander ( 2023 )

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,
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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
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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
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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
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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
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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
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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
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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.
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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
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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.
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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.
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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
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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”).
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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
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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
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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
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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
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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
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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
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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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