In the Matter of Nicole D. Fraley ( 2020 )

FILED
Jan 21 2020, 9:56 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
IN THE
Indiana Supreme Court
Supreme Court Case No. 18S-DI-304
In the Matter of
Nicole D. Fraley,
Respondent.
Decided: January 21, 2020
Attorney Discipline Action
Hearing Officer Matthew R. Cox
Per Curiam Opinion
All Justices concur.
Per curiam.
We find that Respondent, Nicole Fraley, committed attorney
misconduct by severely mismanaging her trust account and by engaging
in a pattern of dishonest and fraudulent behavior. For this misconduct, we
conclude that Respondent should be disbarred.
The matter is before the Court on the report of the hearing officer
appointed by this Court to hear evidence on the Indiana Supreme Court
Disciplinary Commission’s verified disciplinary complaint. Respondent’s
2005 admission to this state’s bar subjects her to this Court’s disciplinary
jurisdiction. See IND. CONST. art. 7, § 4.
Procedural Background and Facts
The Commission filed a three-count “Verified Complaint for
Disciplinary Action” against Respondent on June 6, 2018, and we
appointed a hearing officer. Following an evidentiary hearing, the hearing
officer issued his report on September 13, 2019, finding Respondent
committed violations as set forth below.
Count 1. From 2014 through 2018, Respondent engaged in pervasive
financial misconduct, including multiple overdrafts of her trust account,
commingling of personal and client funds, use of trust account funds to
pay personal or business expenses, failing to deposit client funds into a
trust account, and conversion of client funds.
Count 2. During the Commission’s investigation into Respondent’s
trust account mismanagement, Respondent knowingly made false
statements of material fact to the Commission and submitted to the
Commission a false and forged affidavit purportedly executed by
Respondent’s former paralegal.
Count 3. The Commission initiated a noncooperation case against
Respondent due to her failure to respond to requests for information,
which was dismissed with costs after Respondent belatedly complied.
Respondent did not timely pay those costs, prompting the Commission to
send Respondent a notice letter in advance of petitioning for a costs
Indiana Supreme Court | Case No. 18S-DI-304 | January 21, 2020 Page 2 of 10
nonpayment suspension. Respondent replied with a letter to the
Commission falsely stating that she had paid her costs. Respondent
attached to that letter a copy of a check purportedly drawn on
Respondent’s personal checking account, which Respondent falsely
represented she had previously mailed to the Commission. The
Commission then requested from Respondent a copy of the cancelled
check and bank records showing that the check was presented for
payment. Respondent did not provide those items, but rather provided a
money order to “serve[ ] as a replacement for the original check,” which
Respondent claimed had not been returned to her office or cashed.
Discussion
The Commission alleged, and the hearing officer concluded, that
Respondent violated these Indiana Professional Conduct Rules
prohibiting the following misconduct:
1.15(a): Failing to hold property of a client separate from the
lawyer’s own property, and failure to maintain complete records of
client trust account funds and keep them for a period of five years
after termination of the representation.
1.15(c): Withdrawing funds from a client trust account without
earning fees or incurring expenses.
8.1(a): Knowingly making false statements of material fact to the
Disciplinary Commission in connection with a disciplinary matter.
8.4(b): Committing criminal acts that reflect adversely on the
lawyer’s honesty, trustworthiness, or fitness as a lawyer.
8.4(c): Engaging in conduct involving dishonesty, fraud, deceit, or
misrepresentation.
8.4(d): Engaging in conduct prejudicial to the administration of
justice.
Indiana Supreme Court | Case No. 18S-DI-304 | January 21, 2020 Page 3 of 10
The Commission also alleged, and the hearing officer also concluded,
that Respondent violated the following Indiana Admission and Discipline
Rules:1
23(29)(a)(4) (2016): Commingling client funds with other funds of
the attorney or firm, and failing to create or retain sufficiently
detailed records of the attorney’s trust account.
23(29)(a)(5) (2016): Making withdrawals from a trust account,
including cash and electronic withdrawals, without written
withdrawal authorization stating the amount and purpose of the
withdrawal and the payee.
23(29)(a)(4) (2017): Failing to retain complete records, including
copies of fee agreements, and to keep such records for a period of
five years after termination of the representation.
23(29)(c)(2) (2017): Paying personal or business expenses directly
from the attorney’s trust account.
23(29)(c)(4) (2017): Failing to deposit client funds intact into the
attorney’s trust account.
23(29)(c)(5) (2017): Making disbursements from a trust account in
the form of cash or counter withdrawals.
In her petition for review, Respondent largely does not contest the
accounting violations underlying Count 1, although she contends those
violations did not result in conversion of client funds. Regarding Counts 2
and 3, Respondent essentially invites us to reweigh what she claims is
conflicting evidence presented to the hearing officer. Having conducted
1The time period at issue in this case spans several amendments to Rule 23 that became
effective on January 1, 2017, including a substantial revision and reorganization of section 29.
Indiana Supreme Court | Case No. 18S-DI-304 | January 21, 2020 Page 4 of 10
our own de novo examination of the materials before us,2 we find
Respondent’s arguments wholly unavailing.
Respondent’s contention that she did not convert client funds rests on
her untenable claim that all client payments deposited into her trust
account were flat fees that had been fully earned by Respondent at the
time of deposit. (See Pet. for Rev. at 2 (citing Tr. Vol. 2 at 101)). We initially
note the written fee agreements and appropriate accounting records that
ordinarily would be available to help test such a claim are not available
here, because Respondent intentionally destroyed the former and failed to
maintain the latter. Further, Respondent’s testimony at the final hearing
that she believed these to have been fully-earned fees at the time of
deposit is flatly contradicted by Respondent’s statement to the
Commission during its investigation that “I have never knowingly
deposited personal funds into any of the firm’s trust accounts.” (Comm’n
Ex. 52, Ex. Vol. 3 at 64). In any event, Respondent’s admission to having
improperly commingled client and personal funds in her trust account
necessarily acknowledges the existence of client funds in that account, and
the record provides ample direct and circumstantial evidence that
Respondent converted client funds for her own personal use. To cite just
two of the more blatant examples, Respondent deposited a $300 retainer
2 Respondent faults the hearing officer for having adopted a substantial portion of the
Commission’s proposed findings verbatim. In the context of appellate review, we have
explained that “wholesale adoption of one party’s findings results in an inevitable erosion of
the confidence of an appellate court that the findings reflect the considered judgment of the
trial court” and that “near verbatim reproductions may appropriately justify cautious
appellate scrutiny.” Stevens v. State, 770 N.E.2d 739, 762 (Ind. 2002) (cleaned up). However,
our process of review in disciplinary cases differs somewhat from the appellate review
process. See, e.g., Matter of Coleman, 67 N.E.3d 629, 630 n.1 (Ind. 2017) (“Where review is timely
sought, we review de novo all matters presented to the Court, with the hearing officer’s
findings receiving emphasis due to the unique opportunity for direct observation of
witnesses”). Moreover, the hearing officer did not adopt any substantive portion of the
Commission’s six-page proposed sanction analysis, nor did the hearing officer adopt the
Commission’s ultimate sanction recommendation, both of which demonstrate that the hearing
officer “carefully considered and purposefully used [ ] the individual findings proposed by”
the Commission. See Stevens, 770 N.E.2d at 762. In any event, our de novo review of the record
has revealed ample, and indeed overwhelming, support for the findings in the hearing
officer’s report.
Indiana Supreme Court | Case No. 18S-DI-304 | January 21, 2020 Page 5 of 10
for one client and then promptly withdrew $323.89 as her “flat fee” in that
case, which Respondent acknowledged “doesn’t make any sense” and left
her in the negative with that client. (Comm’n Ex. 60, Ex. Vol. 6 at 34-35). In
a second client’s case, involving the handling of settlement proceeds that
indisputably included client funds being processed through the trust
account, Respondent claimed to have paid $1,112 to that client’s insurer
when in fact Respondent had paid this amount to another client.
Respondent also told the Commission that two checks totaling about
$7,800 drawn from settlement proceeds in that case were written to a
church’s building and scholarship funds pursuant to the terms of
settlement, when in fact those checks were payments for Respondent’s
children’s private school tuition. (Comm’n Ex. 29, Ex. Vol. 2 at 46-48;
Comm’n Ex. 55, Ex. Vol. 4 at 238; Comm’n Ex. 60, Ex. Vol. 6 at 56). Finally,
Respondent’s series of overdrafts (eight in all, including four totaling
about $1,000 committed after Respondent had completed two remedial
financial education courses) and her elaborate pattern of deception
regarding those overdrafts provide substantial additional support for the
hearing officer’s finding of conversion.
Turning to that pattern of deception, the record likewise offers scant
reason to second-guess the hearing officer’s findings. Regarding Count 2,
the evidence overwhelmingly supports the findings that Respondent, in
an attempt to shift blame for one of the overdrafts onto a former paralegal,
knowingly provided the Commission with a forged and false affidavit
purportedly from her former paralegal. In the affidavit, the paralegal’s
name was misspelled, her address and telephone number were incorrect,
and her signature differed from the paralegal’s signature on other
documents executed while in Respondent’s employ. Similarly, the
notary’s signature on the affidavit differed from the signature the notary
provided to the Commission, and the notary’s commission expiration date
on the affidavit was inaccurate. Both the paralegal and the notary testified
they had never met one another and had never seen the affidavit before,
and Respondent admitted a material factual assertion in the affidavit –
that the paralegal was responsible for making daily deposits to the trust
account – was false. (See Comm’n Ex. 60, Ex. Vol. 5 at 242; Tr. Vol. 2 at 43).
Against this backdrop, Respondent would have us weigh more heavily
Indiana Supreme Court | Case No. 18S-DI-304 | January 21, 2020 Page 6 of 10
testimony from herself and her legal partner and mother, Carol Weber,
that Weber found the affidavit dropped through the firm’s front door mail
slot. (Pet. for Rev. at 3). The hearing officer was not required to credit this
testimony, though. Even if he had, this testimony does not preclude the
possibility Respondent placed the affidavit in the mail slot herself,
intending it to be found by Weber. More importantly, under the
circumstances this testimony simply does not bear on the questions of
whether the affidavit was forged or known to be false at the time
Respondent provided it to the Commission.
The evidence also overwhelmingly supports the findings that
Respondent made a series of false statements to the Commission
regarding an “extensive accounting” of her trust account allegedly
performed by a bank manager at Respondent’s request. Respondent
identified this manager as “Jessica Wells,” a person with whom
Respondent indicated she was personally acquainted through her
daughter’s soccer team. Respondent also provided the Commission with
an address and phone number for “Jessica Wells” she indicated she had
obtained through a soccer team list containing the names and contact
information of the parents. However, the bank has never employed
anyone by the name “Jessica Wells,” the address provided by Respondent
is a heavily-wooded and vacant lot, and the phone number provided by
Respondent belonged to one of Respondent’s clients, M.B., a fact
Respondent attempted to conceal by omitting M.B. from the list of clients
she provided to the Commission. Notwithstanding Respondent’s
reiteration of this “Jessica Wells” narrative during her final hearing
testimony, Respondent’s counsel expressly stipulated at the hearing that
“we’re in agreement there was no Jessica Wells” and that “this person
doesn’t exist.” (Tr. Vol. 2 at 73).3
3Counsel attempted to qualify this stipulation by suggesting that Respondent simply might
have been mistaken about this person’s name (id. at 72), but such a position cannot be
reconciled with Respondent’s insistence that she was personally acquainted with this person
and obtained the person’s contact information from a list identifying parents by name.
Indiana Supreme Court | Case No. 18S-DI-304 | January 21, 2020 Page 7 of 10
Respondent also made numerous other false statements to the
Commission regarding her accounting practices. For example, Respondent
repeatedly denied being a signatory on her firm’s business account. When
ultimately confronted at a deposition with several checks drawn on the
business account bearing her handwriting and signature, Respondent
simply repeated the phrase “I shouldn’t have signed the check.” (Comm’n
Ex. 60, Ex. Vol. 6 at 29). And Respondent similarly denied any knowledge
of the existence of a personal checking account shared jointly with her
husband, even after being confronted with several checks drawn on that
account bearing her handwriting and signature. (Id. at 27, 29).
Regarding Count 3, Respondent argues “there was no evidence to
support th[e] inference” that Respondent also lied about having mailed a
check for payment of costs to the Commission (Pet. for Rev. at 3), but the
evidence readily supports such an inference. Respondent told the
Commission she had paid her costs via personal check, and she attached a
copy of “Check No. 195” from her personal account bearing a date of
August 8, 2017. Respondent did not respond to the Commission’s request
for copies of Respondent’s bank records or a copy of the cancelled check.
The Commission eventually subpoenaed Respondent’s personal bank
records, which revealed that Respondent had disbursed all of her personal
checks substantially in numeric order, and that from June 2017 through
November 2017 Respondent had been disbursing checks numbered in the
160s. (See Comm’n Ex. 53, Ex. Vol. 3 at 87-246 and Vol. 4 at 4-48).
In sum, we find sufficient support for the hearing officer’s findings and
conclusions with regard to all three counts against Respondent, and we
likewise find Respondent violated each of the rules set forth above.
We address finally the question of appropriate sanction. Respondent
has no prior formal discipline,4 and if her misconduct had been limited to
4 However, Respondent has been the subject of three separate show cause proceedings arising
from her noncooperation with investigations by the Commission, and her first four overdrafts
resulted in an informal disposition reached with the Commission. (See Comm’n Ex. 13, Ex.
Vol. 1 at 52; Comm’n Ex. 73, Ex. Vol. 6 at 129).
Indiana Supreme Court | Case No. 18S-DI-304 | January 21, 2020 Page 8 of 10
negligent accounting practices we might have been inclined to agree with
her proposal for a probationary model of discipline with trust account
monitoring. See, e.g., Matter of Mercho, 78 N.E.3d 1101 (Ind. 2017)
(imposing a 90-day active suspension followed by probation with trust
account monitoring where the attorney’s financial mismanagement was
negligent but not criminal). However, Respondent’s criminal conversion
of client funds, and her elaborate pattern of fraudulent and dishonest
behavior during the investigation and litigation of this matter, elevate this
case into an entirely different realm. Matter of Ellison, 87 N.E.3d 460, 462
(Ind. 2017); Matter of Pierce, 80 N.E.3d 888, 890-91 (Ind. 2017). Respondent
lied at innumerable junctures to the Commission and during sworn
testimony, forged an affidavit containing false statements of material fact,
falsified a personal check, and even invented a fictitious bank manager –
all in an effort to extricate herself from various investigations and
proceedings that began as simple overdraft inquiries. Put simply, the
criminal and dishonest nature of Respondent’s pattern of misconduct
demonstrates that she cannot be safely recommended to the public as a
person fit to practice law. Further, Respondent’s total lack of insight
during these proceedings into the wrongfulness of failing to account for
client funds and using those funds to pay personal expenses, and her
utterly inexplicable decisions during the progression of this case to double
and even triple down on her demonstrably false statements, persuade us
that her fitness to practice law is not capable of being restored.
Conclusion
The Court concludes that Respondent violated Professional Conduct
Rules 1.15(a), 1.15(c), 8.1(a), 8.4(b), 8.4(c), and 8.4(d), and Admission and
Discipline Rules 23(29)(a)(4) (2016), 23(29)(a)(5) (2016), 23(29)(a)(4) (2017),
23(29)(c)(2) (2017), 23(29)(c)(4) (2017), and 23(29)(c)(5) (2017). For
Respondent’s professional misconduct, the Court disbars Respondent
from the practice of law in this state effective immediately. Respondent
shall fulfill all the duties of a disbarred attorney under Admission and
Discipline Rule 23(26). The costs of the proceeding are assessed against
Respondent, and the hearing officer appointed in this case is discharged.
Indiana Supreme Court | Case No. 18S-DI-304 | January 21, 2020 Page 9 of 10
All Justices concur.
ATTORNEYS FOR RESPONDENT
James R. Williams
Matthew L. Kelsey
Muncie, Indiana
ATTORNEY FOR INDIANA SUPREME COURT
DISCIPLINARY COMMISSION
G. Michael Witte, Executive Director
Indianapolis, Indiana
Indiana Supreme Court | Case No. 18S-DI-304 | January 21, 2020 Page 10 of 10