Attorney Grievance Commission v. Fraidin ( 2014 )

Attorney Grievance Commission of Maryland v. Michael David Fraidin, Misc. Docket AG
No. 6, September Term, 2013, Opinion by Greene, J.
ATTORNEY DISCIPLINE – Under the circumstances, an attorney’s mishandling of client
funds in his attorney trust account, combined with concocting and executing a scheme with
his wife to commit bankruptcy fraud, constitute violations of Maryland Rules 16-606.1, 16-
607, and 16-609; and MLRPC 1.15, 8.1(a), 8.4(a), (b), (c) and (d), and warrant the sanction
of disbarment.
Circuit Court for Baltimore City
Case No. 24-C-13-001934
Argued: April 7, 2014
IN THE COURT OF APPEALS
OF MARYLAND
Misc. Docket AG No. 6
September Term, 2013
______________________________________
ATTORNEY GRIEVANCE COMMISSION
OF MARYLAND
v.
MICHAEL DAVID FRAIDIN
_______________________________________
Barbera, C.J.
Harrell
Battaglia
Greene
Adkins
McDonald
Watts,
JJ.
_______________________________________
Opinion by Greene, J.
______________________________________
Filed: May 16, 2014
The Attorney Grievance Commission of Maryland (“Petitioner” or “Bar Counsel”),
acting pursuant to Maryland Rule 16-751(a), filed a “Petition For Disciplinary Or Remedial
Action” against Michael David Fraidin (“Respondent” or “Fraidin”), on March 25, 2013.
Petitioner charged Respondent with violating various Maryland Lawyers’ Rules of
Professional Conduct (“MLRPC” or “Rule”), specifically Rule 1.15 (Safekeeping Property),1
Rule 8.1 (Bar Admission and Disciplinary Matters),2 and Rule 8.4(a), (b), (c) and (d)
(Misconduct).3 In addition, Petitioner charged Respondent with violating Maryland Rules
16-606.1 (Attorney Trust Account Record-Keeping),4 16-607 (Commingling of Funds),5 and
1
MLRPC 1.15 provides in pertinent part that “(a) A lawyer shall hold property of
clients or third persons that is in a lawyer’s possession in connection with a representation
separate from the lawyer’s own property. . . .”
2
MLRPC 8.1 provides in pertinent part that “a lawyer . . . in connection with a
disciplinary matter, shall not: (a) knowingly make a false statement of material fact; or (b)
fail to disclose a fact necessary to correct a misapprehension known by the person to have
arisen in the matter, or knowingly fail to respond to a lawful demand for information from
an admissions or disciplinary authority, except that this Rule does not require disclosure of
information otherwise protected by Rule 1.6.”
3
MLRPC 8.4 provides in pertinent part that “[i]t is professional misconduct for a
lawyer to: (a) violate or attempt to violate the [MLRPC], knowingly assist or induce another
to do so, or do so through the acts of another; (b) commit a criminal act that reflects
adversely on the lawyer’s honesty, trustworthiness or fitness as a lawyer in other respects;
(c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation; (d) engage
in conduct that is prejudicial to the administration of justice[. . . .]”
4
Md. Rule 16-606.1 provides, in relevant part:
(a) Creation of Records. The following records shall be created and
maintained for the receipt and disbursement of funds of clients or of third
persons:
(1) Attorney Trust Account Identification. An identification of all attorney
trust accounts maintained . . . .
(2) Deposits and Disbursements. A record for each account that
(continued...)
16-609 (Prohibited Transactions).6 The alleged violations stemmed primarily from two
courses of conduct: (1) improper use and maintenance of Respondent’s attorney trust
account, and (2) engaging and assisting Respondent’s wife in bankruptcy fraud.
This Court referred the matter to the Honorable Christopher L. Panos of the Circuit
Court for Baltimore City for a hearing to issue findings of fact and conclusions of law
4
(...continued)
chronologically shows all deposits and disbursements . . . .
(3) Client Matter Records. A record for each client matter in which the
attorney receives funds in trust . . . .
(4) Record of Funds of the Attorney. A record that identifies the funds of the
attorney held in each attorney trust account as permitted by Rule 16-607 b.
(b) Monthly Reconciliation. An attorney shall cause to be created a monthly
reconciliation of all attorney trust account records, client matter records,
records of funds of the attorney held in an attorney trust account as permitted
by Rule 16-607 b, and the adjusted month-end financial institution statement
balance. . . .
5
Md. Rule 16-607 provides, in relevant part, the general prohibition that “an attorney
or law firm may deposit in an attorney trust account only those funds required to be deposited
in that account by Rule 16-604 or permitted to be so deposited by section b. of this Rule. .
. .”
6
Md. Rule 16-609 provides:
(a) Generally. An attorney or law firm may not borrow or pledge any funds
required by the Rules in this Chapter to be deposited in an attorney trust
account, obtain any remuneration from the financial institution for depositing
any funds in the account, or use any funds for any unauthorized purpose.
(b) No Cash Disbursements. An instrument drawn on an attorney trust
account may not be drawn payable to cash or to bearer, and no cash withdrawal
may be made from an automated teller machine or by any other method. All
disbursements from an attorney trust account shall be made by check or
electronic transfer.
(c) Negative Balance Prohibited. No funds from an attorney trust account
shall be disbursed if the disbursement would create a negative balance with
regard to an individual client matter or all client matters in the aggregate.
2
pursuant to Md. Rule 16-757. On July 30, 2013 and August 1, 2013, Judge Panos conducted
a two day evidentiary hearing, during which Respondent represented himself and elected not
to testify as a witness or present any witnesses to testify on his behalf. Thereafter, the
hearing judge issued Findings of Fact and Conclusions of Law, in which he found, by clear
and convincing evidence, that Respondent violated MLRPC 1.15, 8.1, 8.4(a), (b), (c) and (d),
as well as Maryland Rules 16-606.1, 16-607, and 16-609.
FACTS
Respondent was admitted to the practice of law on December 15, 1992, and maintains
a solo practice in Baltimore, Maryland. Respondent is married to Mara Fraidin (“Ms.
Fraidin”), and they have two children. Since the Fraidins’ marriage in 1999, Ms. Fraidin has
at no time worked outside the home or had an independent source of income. Respondent
has at all relevant times been the sole income provider for the Fraidins. In 2004, Respondent
and Ms. Fraidin purchased a home, titled in their names as tenants by the entirety and
encumbered by a deed of trust held by Bank of America, N.A. (“Bank of America”).
Subsequently, in 2009, the Fraidins began to struggle financially, leading to legal
proceedings surrounding: (1) an outstanding debt related to a credit card held in Ms.
Fraidin’s name; (2) an outstanding debt related to a credit card held in Respondent’s name;
(3) foreclosure related to the marital home; and (4) Ms. Fraidin’s filing for Chapter 13
bankruptcy relief.
3
Chase Bank Credit Card in Ms. Fraidin’s Name
On February 5, 2010, Chase Bank USA, N.A. (“Chase Bank”) sued Ms. Fraidin in the
District Court of Maryland sitting in Baltimore County to collect on approximately $9,000.00
of outstanding debt on a credit card held by Ms. Fraidin in her name alone. On April 26,
2010, Ms. Fraidin retained Respondent to represent her in the Chase Bank litigation and
executed a document titled “Attorney Fee Agreement/Contract of Employment,” which stated
that Respondent would represent Ms. Fraidin for a reduced hourly rate of $150.00. On April
28, 2010, Respondent entered his appearance as the attorney of record for Ms. Fraidin in the
Chase Bank litigation.
On February 25, 2011, Respondent, on behalf of Ms. Fraidin, and Chase Bank
negotiated a settlement for full satisfaction of Ms. Fraidin’s outstanding debt. The settlement
terms required that Ms. Fraidin pay $4,150.00 through three separate installments: $1,400.00
by March 31, 2011; $1,400.00 by April 30, 2011; and $1,350.00 by May 31, 2011. Despite
the terms of the “Attorney Fee Agreement/Contract of Employment,” Respondent never
charged Ms. Fraidin for his representation of her in that matter. Nevertheless, Respondent
made payments on behalf of Ms. Fraidin using funds from his Interest on Lawyer Trust
Account (“IOLTA”). As found by the hearing judge:
Specifically, Respondent purchased, on March 31, 2011, three money orders
[made out to the law firm representing Chase Bank in its action against Ms.
Fraidin] from 7-Eleven totaling $1,400.00 On May 2, 2011, Respondent
purchased a Bank of America cashier’s check in the amount of $1,400.00. On
June 2, 2011, Respondent purchased a final Bank of America cashier’s check
in the amount of $1,350.00 after executing a $1,350.00 “Cash Withdrawal”
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from his IOLTA account also on the same day. Funds in Respondent’s IOLTA
account, held in trust for Ms. Fraidin, were insufficient to support the
payments made by Respondent. In order to purchase the foregoing money
orders and cashier’s checks, Respondent withdrew monies in his IOLTA
account held on behalf of other clients.
Respondent maintained no client ledger detailing the deposits, disbursements, or other
exchanges associated with the legal services provided to Ms. Fraidin relating to this matter.
Bank of America Credit Card in Respondent’s Name
In December 2010, Respondent settled a $25,000.00 outstanding credit card debt with
Bank of America arising out of a credit card account held for personal use in his name alone.
The settlement included a payment plan requiring an initial payment of $7,000.00 by March
28, 2011, followed by twelve consecutive monthly payments of $1,500.00. On March 28,
2011, Respondent made a “Cash Withdrawal” of $7,000.00 from his IOLTA account, which
Respondent then used to purchase a Bank of America cashier’s check to make the initial
payment to Bank of America. With regard to Respondent’s explanation of this action, the
hearing judge found:
Respondent asserted in his defense that he was representing Ms. Fraidin in the
legal settlement with Bank of America and the money he withdrew and used
from his IOLTA account was money held in trust on Ms. Fraidin’s behalf.
Respondent thus contends that the money he withdrew from his IOLTA
account was properly accountable and attributable to his legal representation
of Ms. Fraidin. However, this defense is factually implausible in light of the
fact that the Bank of America settlement stemmed from debt he incurred
personally with a credit card issued in his name alone, which resulted in a legal
settlement between him and Bank of America. As a result, this [c]ourt finds
Respondent’s defense to be wholly without merit. [Moreover, t]he explanation
Respondent made to Bar Counsel in a July 6, 2012 letter, [stating that the cash
deposits “on 2/11/11 ($1,300), 2/14/11 ($1,000) and 3/28/11 ($5,000) were
5
monies being held on behalf of Mara Fraidin with a disbursement on 3/28/11
($7,000),”] and similar arguments made in filings and statements before this
[c]ourt regarding his purported representation of Ms. Fraidin’s legal interests
in the matter concerning the Bank of America credit card debt in his name
alone, were knowingly and intentionally falsely made.
Liquidation of Respondent’s IRA/Retirement Assets
On June 14, 2011, Respondent liquidated his personal IRA account in the amount of
$15,000.00, and wire-transferred the $15,000.00 into his IOLTA account. The hearing judge
found that “Respondent’s claim that this money . . . was being held for the benefit of and in
the course of his representation of Ms. Fraidin, to pay the debt owed on Respondent’s
personal credit card, is implausible.” Rather, the $15,000.00 wire transfer from
Respondent’s personal IRA constituted personal funds, which Respondent deposited into his
IOLTA account.
Foreclosure Action and Bankruptcy Proceedings
On June 1, 2010, Bank of America initiated a foreclosure action against Respondent
and Ms. Fraidin relating to their marital home. A public auction of the home was scheduled
for September 16, 2011. On September 14, 2011, two days prior to the scheduled public
auction, Ms. Fraidin filed a Chapter 13 Voluntary Petition for Bankruptcy, naming Bank of
America, as mortgage holder of the marital residence, as sole creditor. On September 16,
2011, Ms. Ellen W. Crosby (“Ms. Crosby”) was appointed the Bankruptcy Trustee in relation
to Ms. Fraidin’s Petition. At that time, Ms. Crosby sent Ms. Fraidin a letter providing
information about the Chapter 13 Bankruptcy process and requested copies of paychecks to
6
substantiate Ms. Fraidin’s asserted income. In response to this request, Ms. Fraidin produced
copies of several checks each in the amount of $3,000.00 and drawn on Respondent’s IOLTA
account, which purported to be paychecks from Ms. Fraidin’s employment with
Respondent’s solo law practice. With regard to Respondent’s participation in this process,
the hearing judge found:
In her bankruptcy proceedings, Ms. Fraidin asserted that she was self-
represented. Additionally, Respondent denied having served as Ms. Fraidin’s
attorney during the bankruptcy proceedings. In the course of Ms. Fraidin’s
purported self-representation in the bankruptcy proceeding, Respondent
“participated” in the collection of information, provided legal templates to Ms.
Fraidin, and communicated with Christina M. Williamson, Esquire, counsel for
Bank of America, toward the end of requesting a postponement for Ms.
Fraidin, thus conveying to Ms. Williamson the perception that Respondent was
acting as Ms. Fraidin’s “agent.” Additionally, Ms. Fraidin had, at best, a
rudimentary understanding of the bankruptcy process as she did not
comprehend the difference between the paychecks submitted in order to
substantiate her source of income and checks sent to Ms. Crosby as the Trustee
for the benefit of the creditors. Nor did Ms. Fraidin have any recollection as
to where she purportedly obtained the form petition required to initiate the
Chapter 13 Bankruptcy process. Despite never having formally entered his
appearance on behalf of Ms. Fraidin, Respondent indeed served as her attorney
in that matter.
On September 28, 2011, Ms. Fraidin filed with the United States Bankruptcy Court
two documents relating to her financial interests and income: Schedule B – Personal
Property, and Schedule I – Current Income of Individual Debtor(s). With regard to the filing
of Schedule B, the hearing judge found:
Included in the instructions on the Schedule B form is the directive, “Except
as directed below, list all personal property of the debtor of whatever kind. If
the debtor is married, state whether the husband, wife, both, or the marital
community own the property by placing an ‘H,’ ‘W,’ ‘J,’ or ‘C’ in the column
7
labeled ‘Husband, Wife, Joint or Community.’” In response to request No. 12,
requiring the identification of “interests in IRA, ERISA, Keogh, or other
pension or profit sharing plans,” Ms. Fraidin selected “None.” At the time of
Ms. Fraidin’s filing of Schedule B, Respondent maintained two retirement
accounts with a combined total balance of approximately $40,000.00. Ms.
Fraidin’s Schedule B did not identify or disclose Respondent’s retirement
accounts in her Schedule B – Personal Property forms as required. The
instructions for Schedule B also provide, inter alia, “If the property is being
held for the debtor by someone else, state that person’s name and address
under ‘Description and Location of Property.’” Ms. Fraidin did not state or
disclose that between September and December 2011, Respondent
was–according to him–holding money in his law firm escrow account for her
benefit.
With regard to Schedule I – Current Income of Individual Debtor(s), Ms. Fraidin
stated that she received $3,000.00 as “monthly gross wages, salary, and commissions.” She
further stated that, as of September 2011, she had been employed by the Law Offices of
Michael D. Fraidin for a period of two years and described her occupation as “marketing.”
In addition to Schedule I, Ms. Fraidin filed a “Chapter 13 Statement of Current Monthly
Income and Calculation of Commitment Period and Disposable Income” in which she stated
that she received from “wages, salary, tips, bonuses, overtime, commissions” in the amount
of $3,000.00 per month. When asked to identify “amounts paid by another person or entity,
on a regular basis, for the household expenses of the debtor or the debtor’s dependents,
including child support paid for that purpose” or “income from all other sources,” Ms.
Fraidin entered “$0.00.” Ms. Fraidin also filed a Statement of Financial Affairs, stating that
she received income from employment by Respondent’s law office in the amount of
$24,000.00 for 2010 and $22,000.00 for 2011. When asked to identify “income other than
8
from employment or operation of business,” Ms. Fraidin selected “None.” Despite these
averments, the hearing judge found:
Ms. Fraidin has never filed an Internal Revenue Service Form W-2 or Form
1099 in connection with her asserted employment with the Law Offices of
Michael D. Fraidin, nor did she believe her income was contingent upon
actually doing any work. Because Ms. Fraidin neither anticipated having to
perform any duties in exchange for wages nor were any W-2 or 1099 forms
ever filed on her behalf, this [c]ourt finds that Ms. Fraidin was never an
employee of the Law Offices of Michael D. Fraidin, and did not receive any
income from such employment as claimed. Despite the fact that all of the
foregoing documents were signed by Ms. Fraidin under penalty of perjury after
having certified that the information contained therein was true and correct,
this [c]ourt finds that the representations contained in Ms. Fraidin’s bankruptcy
documents, filed under oath, (that she worked for Respondent’s law office in
2010 and 2011, and that she received a monthly income of $3,000.00) were
knowingly and intentionally false.
The hearing judge concluded that Ms. Fraidin filed the Chapter 13 Petition for the purpose
of staving off the foreclosure action and public auction. The bankruptcy filing did in fact
stay the foreclosure action and ultimately resulted in dismissal of that action without
prejudice.
Bar Counsel Investigation
Ms. Crosby, the Bankruptcy Trustee, alerted the Attorney Grievance Commission of
Maryland that she had received from Ms. Fraidin copies of eight checks, four of which were
purported to be paychecks substantiating her alleged income, all of which were drawn on
Respondent’s IOLTA account. Upon written request from Bar Counsel, Respondent
explained that Ms. Fraidin was “working for him,” and that the checks were compensation
for the “marketing services” Ms. Fraidin provided for his law office. With regard to this
9
explanation, the hearing judge found that “Respondent’s statements to Bar Counsel,
representing that he provided the four (4) checks to his wife in her capacity as an employee
of his law office and in exchange for the marketing services she provided to his law office
[were] intentional and knowing misrepresentations of facts.” Judge Panos further found:
By letter dated February 1, 2012, Bar Counsel requested a copy of
Respondent’s client ledgers from August 2011 through February 2012 and
copies of Respondent’s IOLTA account records. Despite receiving from Bar
Counsel an extension of time to compile the requested files, Respondent failed
to produce a complete copy of the documents requested. Respondent’s letter
to Bar Counsel, dated February 27, 2012, and accompanying documents, were
inadequate, and failed to fully comply with Bar Counsel’s request. Bar
Counsel requested complete copies of all bank records for August 2011
through February 2012, including all monthly statements, all deposited and
disbursed items (front and back), and all debit and credit memos. Instead,
Respondent incompletely produced copies of self-selected deposits,
disbursements, and the first page of his bank statements for September 2011
and October 2011 only. Also in his response dated February 27, 2012,
Respondent failed to produce a complete client ledger for the requested time
period and instead only produced ledgers for two self-selected completed
clients (one for R. Branton and another for Wilson Point Steel). When Bar
Counsel requested, for a second time, Respondent’s trust account records and
client ledgers, Respondent stated, “I forwarded the documents that I had
available on February 27, 2012.” Respondent was intentionally evasive and
uncooperative with Bar Counsel.
As a result of Respondent’s consistent failure to produce complete bank records and client
ledgers, demonstrating Respondent’s “lack of cooperation with Bar Counsel’s requests,” Bar
Counsel subpoenaed the missing records directly from the institution. At the evidentiary
hearing, Petitioner called Mr. John DeBone, the now retired investigator for Petitioner, as a
witness, who explained that he reviewed Respondent’s trust accounts based on both the
subpoenaed bank records and information provided by Respondent, including his client
10
ledgers, invoices, and assertions regarding certain cash deposits and withdrawals. Mr.
DeBone’s review of the records “establishe[d] that Respondent failed to delineate client
funds and that Respondent repeatedly used his IOLTA account for his and Ms. Fraidin’s
personal use.”
Mitigation
Although Respondent maintained in his defense throughout the hearing that his
conduct caused no harm to any clients or to the public, and therefore he should not be
sanctioned, the hearing judge found “no evidence of mitigation” on the part of Respondent
in relation to the alleged violations.
Judge Panos entered detailed conclusions of law, concluding that Respondent violated
Md. Rules 16-606.1, 16-607, and 16-609; and MLRPC 1.15, 8.1, 8.4(a), (b), (c), and (d), as
follows:
Conclusions of Law
A. Maryland Rule 16-606.1: Attorney Trust Record-Keeping
****
This [c]ourt finds by clear and convincing evidence, and concludes as a matter
of law, that Respondent violated Maryland Rule 16-606.1. First, Respondent
did not maintain records that comply with this [R]ule. Specifically, no proper
records were kept for [Respondent’s two] trust accounts. Subsection (a)(2)
(A)-(C) of [Md. Rule 16-606.1] requires that for each attorney trust account,
a chronological record must be kept detailing transactions made from or to
such account. By letters dated February 1, 2012, February 10, 2012, and
March 1, 2012, Bar Counsel requested copies of Respondent’s client ledger for
the period of time between August 2011 and February 2012. However, rather
than produce a client ledger meeting the requirements of this [R]ule,
11
Respondent produced documentation that, quite simply, falls far short.
Respondent did not produce client ledgers identifying each client or third
person for whom he was holding money in trust. The documents actually
produced by Respondent are insufficient, as they fail to provide most of the
required information, making them “client ledgers” only in name and not in
substance.
To say that Respondent did not keep any records would be a misstatement of
fact. However, Maryland Rule 16-606.1 ensures that clients are afforded
comprehensive protection through their attorneys’ complete and accurate
record keeping. Given a lawyer’s fiduciary duty owed to his or her client, this
[c]ourt finds by clear and convincing evidence that the scattered, incomplete
records kept by Respondent failed to comply with the rigorous standards
required by Maryland Rule 16-606.1. Thus, this [c]ourt concludes as a matter
of law that Respondent violated this [R]ule.
B. Maryland Rule 16-607: Commingling of Funds
****
By his own admission, Respondent violated this [R]ule by depositing
$22,000.00 of his personal funds into his IOLTA account. Additionally,
documentary and testimonial evidence provided by Petitioner establishes that
Respondent violated this [R]ule. Specifically, the trust account records and
Mr. DeBone’s review thereof reveal that between December 31, 2010 and
March 29, 2012, Respondent commingled his personal funds with funds
belonging to or for the benefit of his clients, and further, that Respondent used
all such funds indiscriminately for his personal use.
This [c]ourt adamantly rejects Respondent’s argument that his deposit of
personal funds–specifically the $15,000.00 liquidated from his personal IRA
account–into his IOLTA account was for the benefit of Ms. Fraidin, his client.
As to the $7,000.00 deposit, this [c]ourt finds that it also represented a
commingling of personal and client funds as, by her own admission, Ms.
Fraidin had no independent source of income from which those funds could
be derived. Realistically, all deposits made on behalf of or for the benefit of
Ms. Fraidin as a client actually represented an impermissible commingling of
personal and client funds, in direct violation of Maryland Rule 16-607.
Further, this [c]ourt finds that Respondent’s course of conduct lasted for nearly
12
the entire period examined and investigated by Bar Counsel–from January 24,
2011 through March 1, 2012.
C. Maryland Rule 16-609: Prohibited Transactions
****
This [c]ourt finds that Respondent, during the period of the account analysis
by Bar Counsel (December 31, 2010 through March 29, 2012), withdrew cash
from his trust account in violation of Maryland Rule 16-609(b) on at least
twenty-one (21) separate occasions, as evidenced by the Bank of America trust
account records. Each individual transaction represents a separate and distinct
violation of this Rule.
Respondent argues that these transactions were approved by Bank of America,
and thus cannot constitute violative transactions. Unfortunately for
Respondent, however, banking institutions do not police the legal profession,
and rules of each institution are not designed to ensure that each of its
commercial clients adhere to the rules of their own profession. Respondent
had a duty to know, and is charged with knowing, that it is unlawful for an
attorney to make cash withdrawals from client trust accounts. Respondent’s
continuous course of conduct by withdrawing cash from client trust accounts
on at least twenty-one (21) occasions in only fifteen (15) months constitutes
a blatant violation of Maryland Rule 16-609.
D. [MLRPC] Rule 1.15: Safekeeping Property
****
As a practical matter, because Rule 1.15 requires that lawyers follow the Rules
set forth in Title 16, Chapter 600 of the Maryland Rules, it is the belief of this
[c]ourt that any violation of Title 16, Chapter 600 would serve as a per se
violation of this Rule. As stated above, this [c]ourt has found that Respondent
violated Maryland Rules 16-606.1, 16-607, and 16-609. Therefore,
Respondent has violated sections (a) and (b) of this Rule.
Additionally, this [c]ourt finds by clear and convincing evidence that
Respondent violated Rule 1.15 by failing to take the necessary precautions to
safeguard client funds. Specifically, Respondent failed to safeguard funds
belonging to and associated with the clients identified on Mr. DeBone’s client
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ledger, namely: “S. Calhoun;” “H. Calhoun;” “G. Kopp;” “J. Townes;” and,
“Unknown.” The disbursements associated with the four named clients and
the one “Unknown” do not have corresponding deposits during the period of
the account analysis (December 31, 2010 through March 29, 2012). Therefore,
any corresponding deposit would necessarily have been made prior to
December 31, 2010. The disbursements, when combined, exceed the
beginning balance of the account on December 31, 2010 and reveal that
Respondent was out of trust in the amount of $1,925.28. Even assuming
without deciding that such disbursements were made for the benefit of the four
clients and “Unknown,” as opposed to being used for personal reasons, the
disbursements used $1,925.28 in funds belonging to another unidentified
client. Therefore, this [c]ourt concludes as a matter of law that Respondent
violated Rule 1.15 by failing to keep the property of his clients safe.
E. [MLRPC] Rule 8.1: Bar Admission and Disciplinary Matters
****
Respondent did not testify under oath during the disciplinary hearing.
Throughout the course of this matter, however, Respondent’s arguments,
excuses, and explanations are best characterized as having been cyclical, off-
point, tangential, inconsistent, and at times intentionally misleading.
By letter dated May 31, 2012, Bar Counsel requested the following from
Respondent: “Provide the name of the client whose $15,000.00 was wired into
the account on June 14, 2011. Provide the source of the funds and an account
of any associated disbursements.” By letter dated July 6, 2012, Respondent
stated: “As far as the $15,000.00 wire transfer, these monies were for the
benefit of Mara Fraidin, who instructed me to hold the monies on her behalf.”
This [c]ourt finds that Respondent’s statement to Bar Counsel constituted
knowing and intentional misrepresentations of fact which were intended to
mislead Bar Counsel. It was not until July 1, 2013–almost an entire year
later–that Respondent identified the actual source of this $15,000.00 wire
transfer as being a cash deposit of his liquidated personal IRA. As further
evidence of the false nature of Respondent’s assertion that the $15,000.00
deposit was for Ms. Fraidin’s benefit, Ms. Fraidin herself testified during her
deposition that she never asked Respondent to liquidate any portion of his IRA
or transfer $15,000.00 for her benefit. Additionally, Ms. Fraidin never
declared such a gift within the filing of her documents associated with the
bankruptcy petition. Therefore, this [c]ourt concludes as a matter of law that
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Respondent made knowing and intentional misrepresentations of fact to Bar
Counsel when he stated that funds were deposited and held for the benefit of
his wife.
This [c]ourt further concludes that Respondent violated Rule 8.1(b) by failing
to timely provide information and documentation requested by Bar Counsel’s
letters of February 1, 2012 and May 31, 2012. Because Respondent failed to
provide requested bank records associated with Bank of America, Bar Counsel
was forced to subpoena them directly from the institution. Additionally,
Respondent failed to provide the following information in response to Bar
Counsel’s follow-up letter of May 31, 2012:
(1) a complete explanation of the wire transfer on September 16, 2011 to
BMW Financial SVS;
(2) an explanation for why funds on behalf of P. Beck were not disbursed until
November 14, 2011;
(3) an explanation for the deposit of $8.00 payable to Ms. Fraidin on May 13,
2011 . . . ; an explanation of the two deposits from Barbara Heller-Walsh on
August 11, 2011;
(4) a complete explanation for the deposit of $6,164.08 from Ellen Cosby;
(5) a complete accounting for each “cash withdrawal” including the name of
the client whose funds were disbursed and all associated documentation; and,
(6) a complete explanation of the counter debit of $3,117.41 on August 10,
2012 and equal deposit on August 11, 2012.
This [c]ourt notes that Respondent remarked upon the burdensome nature of
Bar Counsel’s investigation. Notwithstanding Respondent’s “burden,” this
[c]ourt finds by clear and convincing evidence that he violated Rule 8.1(a) by
knowingly and intentionally making false statements to Bar Counsel, and
violated Rule 8.1(b) by intentionally misleading and failing to timely provide
information to Bar Counsel.
F. [MLRPC] Rule 8.4 (a) - (d): Misconduct
****
This [c]ourt finds by clear and convincing evidence that Respondent aided,
abetted and assisted Ms. Fraidin in violating 18 U.S.C. § 152 (2) and (3) by
helping in the preparation and filing of forms and schedules which contained
misrepresentations signed by Ms. Fraidin under penalty of perjury, in the
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United States Bankruptcy Court. As such, Respondent’s conduct in this regard
clearly substantiates a conclusion that Respondent violated, assisted, aided and
abetted his wife in violating 18 U.S.C. § 157.
Subsequent to filing her Chapter 13 bankruptcy petition to stave off
foreclosure, Ms. Fraidin submitted a Schedule Summary to the United States
Bankruptcy Court, which this [c]ourt finds to have contained blatantly
incorrect and misleading information. Respondent has maintained throughout
the course of the instant proceeding that he was not the bankruptcy attorney of
record. However, Respondent’s actions do not at all reflect his unyielding
denial of involvement in and engagement as Ms. Fraidin’s attorney in her
bankruptcy proceeding. Quite the contrary, Respondent’s actions suggest
nothing else–and support no other conclusion–but that he acted as Ms.
Fraidin’s attorney (albeit not “of record”) because, during the course of Ms.
Fraidin’s Chapter 13 Bankruptcy proceeding, Respondent by his own actions
promulgated the perception that he was Ms. Fraidin’s “agent,” as he interacted
with an attorney representing the bankruptcy creditor, Bank of America, and
requested a continuance of the bankruptcy hearing. As such, this [c]ourt finds
by clear and convincing evidence that a reasonable person in Ms. Fraidin’s
position would believe that Respondent was acting on her behalf to advance
and protect her legal interest as her attorney throughout the bankruptcy
proceedings.
Additionally, during the course of Ms. Fraidin’s bankruptcy case, Respondent
admitted that he, as a husband, gave his wife emotional support and “whatever
help he thought might be useful to his wife in the preparation and filing of her
Chapter 13 forms.” This [c]ourt finds most of these forms to be necessary for
the resolution of the bankruptcy action. Furthermore, Respondent admitted
during the depositions of him and Ms. Fraidin, that he provided his wife with
“[a]ny information that [she] needed” related to the bankruptcy filings.
Respondent further acknowledged and admitted the advisory role he performed
in Ms. Fraidin’s bankruptcy petition, stating that “[i]f she would have asked
me a question, I would have given her an answer.” Respondent, not Ms.
Fraidin, maintained all the books and financial records associated with his law
office, and those related to the Fraidin household. Therefore, the information
required to complete Ms. Fraidin’s Chapter 13 Bankruptcy filings was
provided by Respondent, either directly or by way of information supplied to
his wife, and was knowingly and intentionally inaccurate. Thus, this [c]ourt
concludes as a matter of law that Respondent’s actions would constitute a
violation of 18 U.S.C. § 152 (2) and (3), and as a result, a violation of
16
[MLRPC] 8.4(b).
Regarding Petitioner’s allegation that Respondent violated 18 U.S.C § 157,
this [c]ourt finds by clear and convincing evidence that Respondent and Ms.
Fraidin concocted a scheme to defraud the United States Bankruptcy Court and
executed it, all toward the ends of preventing the foreclosure of their home and
qualifying Ms. Fraidin for a lesser Chapter 13 payment plan. This [c]ourt finds
that the information contained in Ms. Fraidin’s Chapter 13 Bankruptcy form
was the beginning of bankruptcy fraud as alleged. On September 28, 2011,
Ms. Fraidin filed a Schedule I – Current Income of Individual Debtor(s),
wherein she stated that she received $3,000.00 as “monthly gross wages,
salary, and commission.” Ms. Fraidin also stated that, as of September 2011,
she had been employed by the Law Offices of Michael D. Fraidin for a period
of two (2) years and described her occupation as “marketing.” Despite Ms.
Fraidin’s assertion on a federal document that she was employed by
Respondent, she failed to file a W-2 or 1099 reflecting that “employment.”
Further, Ms. Fraidin admitted during her deposition in this matter that the
payments of $3,000.00 per month were not contingent upon her performing
any work for Respondent in his law office. Ms. Cosby, Ms. Fraidin’s trustee,
requested “paychecks” in order to verify monthly income and substantiate Ms.
Fraidin’s claim that she was, in fact, employed and received monthly income
in the amount of $3,000.00. In response, Ms. Fraidin supplied checks written
from Respondent’s IOLTA account [only some of which were cashed]. As a
result of Ms. Fraidin’s ability to provide proof of income and employment, she
was permitted to proceed under a Chapter 13 reorganization plan, as opposed
to a plan under Chapter 7. Thus, this [c]ourt concludes that Respondent and
Ms. Fraidin, by their scheme as executed, committed a fraud upon the
Bankruptcy Court of the United States, and that Respondent’s role in the
scheme constitutes a direct violation of 8.4(b) and (c).
During Respondent’s deposition, Petitioner inquired as to why Respondent
continued to write checks to his wife from his IOLTA account despite the
realization there was a problem with his actions. Respondent admitted that he
first realized that there was a problem with drawing checks on his IOLTA
account on October 7, 2011. Despite this awareness, Respondent nevertheless
continued to draw checks on his IOLTA account to pay his wife. After
drawing a check on his IOLTA account on October 26, 2011, Respondent
provided Ms. Fraidin with a check so that she could forward it to her
bankruptcy trustee. During his deposition, Respondent admitted “he gave his
wife cash and never put the checks into the bank account.” When further
17
questioned about how his wife obtained copies of the checks forwarded to Ms.
Crosby, Respondent became evasive, failing to answer Petitioner’s
straightforward questions with an affirmative “yes” or “no,” instead
alternatively responding, “I don’t know.” For these reasons, the [c]ourt finds
by clear and convincing evidence that Respondent’s actions, when viewed
conjunctively, further establish that Respondent and Ms. Fraidin knowingly
and intentionally falsified United States Bankruptcy documentation and that
Respondent intentionally fabricated paychecks for Ms. Fraidin as drawn on his
IOLTA account for the sole purpose of submitting the same to the bankruptcy
trustee in order to substantiate the misrepresentation that Ms. Fraidin was
gainfully employed by Respondent’s solo law practice. This [c]ourt
additionally finds by clear and convincing evidence that Ms. Fraidin’s
purported income (stemming as it did from non-existent employment) was
falsified for the purpose of staving off the foreclosure of the Fraidin family
home by filing a petition for a Chapter 13 reorganization plan. Respondent’s
ongoing scheme, laden with repeated instances of dishonesty and
misrepresentation, while having achieved its desired end, constitutes a fraud
committed upon the United States Bankruptcy Court, and as such, represents
a clear violation of the Maryland Lawyer’s Rules of Professional Conduct.
Respondent’s violations of [MLRPC] 8.1(a) and 8.4(b) as noted above,
necessarily constitute a violation of 8.4(c) inasmuch as his conduct involved
dishonesty, fraud, and misrepresentation. Further, Respondent’s conduct,
when taken as a whole, violates [MLRPC] 8.4(d) inasmuch as his dishonest
and fraudulent behavior unquestionably besmirches and brings shame upon the
legal profession, and places lawyers in disrepute. Thus, in sum, this [c]ourt
concludes that Respondent, Michael Fraidin, has violated [Rules 16-606.1, 16-
607, and 16-609]. Additionally, Respondent violated [MLRPC 1.15, 8.1, and
8.4(a), (b), (c), and (d)]. (Citations and footnotes omitted).
DISCUSSION
In attorney discipline proceedings, this Court has original and complete jurisdiction
and conducts an independent review of the record. Attorney Grievance Comm’n v.
Jarosinski, 411 Md. 432, 448, 983 A.2d 477, 487 (2009). In our review of the record, the
hearing judge’s findings of fact will not be disturbed unless clearly erroneous. Rule 16-
18
759(b)(2); Attorney Grievance Comm’n v. Guida, 391 Md. 33, 50, 891 A.2d 1085, 1095
(2006). “The Court gives deference to the hearing judge’s assessment of the credibility of
the witnesses.” Attorney Grievance Comm’n v. Thomas, 409 Md. 121, 147, 973 A.2d 185,
201 (2009) (citing Attorney Grievance Comm’n v. Ugwuonye, 405 Md. 351, 368, 952 A.2d
226, 236 (2008)). We review the hearing judge’s conclusions of law de novo. Rule 16-
759(b)(1).
Petitioner takes no exceptions to the hearing judge’s findings of fact and conclusions
of law. Although Respondent initially filed extensive written exceptions to the hearing
judge’s findings of fact and conclusions of law, at oral argument before this Court, counsel
for Respondent withdrew many of the written exceptions and limited Respondent’s
exceptions to those addressed in our discussion below.
Respondent’s Attorney Trust Account
With regard to Respondent’s handling of his IOLTA account, the hearing judge
concluded that Respondent violated MLRPC Rule 1.15, as well as Md. Rules 16-606.1, 16-
607, and 16-609. Respondent’s only exception as to the misuse of his trust account concerns
the precise amount in which the hearing judge found Respondent to be out of trust in
concluding that Respondent violated Rule 1.15.
First, “Maryland Rule 16-606.1, entitled ‘Attorney Trust Account Record-Keeping,’
requires attorneys to create and maintain records for all transactions regarding his or her
attorney trust account, including ‘ledgers showing all deposits and disbursements’ from the
19
account.” Attorney Grievance Comm’n v. Harmon, 433 Md. 612, 624, 72 A.3d 555, 562-63
(2013). Respondent concedes that he was not in compliance with Md. Rule 16-606.1,
because he failed to maintain adequate client ledgers, including incomplete records of
deposits and disbursements related to his two trust accounts. As stated by the hearing judge,
Respondent kept “scattered, incomplete records,” which did not “comply with the rigorous
standards required by [the Rule].” We therefore agree with the hearing judge that
Respondent violated Md. Rule 16-606.1.
Second, Md. Rule 16-607, “Commingling of Funds,” requires an attorney to keep
client property separate from personal property. Again, Respondent concedes that he
violated this Rule by depositing personal funds into his IOLTA account, including the wire-
transfer of $15,000.00 from Respondent’s retirement account into his trust account. In
addition, we agree with the hearing judge that all deposits allegedly made on behalf of
Respondent’s wife, who testified that she had no independent source of income, “represented
an impermissible commingling of personal and client funds, in direct violation of Maryland
Rule 16-607,” where some of those funds were then utilized to make payments toward the
credit card account held in Respondent’s name alone. We therefore agree with the hearing
judge that Respondent violated Md. Rule 16-607.
Third, Md. Rule 16-609, “Prohibited Transactions,” prohibits cash withdrawals from
attorney trust accounts. Md. Rule 16-609(b). See also Attorney Grievance Comm’n v. Obi,
393 Md. 643, 656, 904 A.2d 422, 429 (2006) (“Cash withdrawals from an escrow account
20
clearly frustrate [Rule 16-609’s] purpose, which is ‘to enable one who is authorized to do so
to trace the disposition of escrow funds.’”) (quoting Attorney Grievance Comm’n v. Harper,
356 Md. 53, 65, 737 A.2d 557, 563 (1999)). Respondent concedes that he made numerous
impermissible cash withdrawals from his IOLTA account. We therefore agree with the
hearing judge that Respondent violated Md. Rule 16-609.
Finally, MLRPC Rule 1.15 essentially captures the requirements and prohibitions of
Md. Rules 16-606.1, 16-607, and 16-609. Rule 1.15(a) specifically provides that:
A lawyer shall hold property of clients or third persons that is in a lawyer’s
possession in connection with a representation separate from the lawyer’s own
property. Funds shall be kept in a separate account maintained pursuant to
Title 16, Chapter 600 of the Maryland Rules, and records shall be created
and maintained in accordance with the Rules in that Chapter. Other
property shall be identified specifically as such and appropriately safeguarded,
and records of its receipt and distribution shall be created and maintained.
Complete records of the account funds and of other property shall be kept by
the lawyer and shall be preserved for a period of at least five years after the
date the record was created. (Emphasis added.)
In this case, the hearing judge determined that “[a]s a practical matter, because Rule 1.15
requires that lawyers follow the Rules set forth in Title 16, Chapter 600 of the Maryland
Rules, . . . any violation of Title 16, Chapter 600 would serve as a per se violation of [Rule
1.15].” Under the circumstances of this case, we agree that Respondent’s violations of Md.
Rules 16-606.1, 16-607, and 16-609 constitute per se violations of MLRPC Rule 1.15. See
Attorney Grievance Comm’n v. Ellison, 384 Md. 688, 709, 867 A.2d 259, 271 (2005) (“[I]t
is not outside the purview of this Court to draft overlapping rules, a narrow one for managing
attorney client trust fund accounts and a broader one to set a minimum standard of
21
professional conduct in dealing with attorney/client trust funds. As such, a set of facts that
constitutes a violation of one [Rule] may violate also the other [Rule] without there
necessarily arising an unfairly duplicative set of sanctions.”). In this case, the hearing judge
concluded as a matter of law that because Respondent violated Md. Rules 16-606.1, 16-607,
and 16-609, he also violated MLRPC Rule 1.15. The evidence clearly supports the hearing
judge’s conclusion. First, Respondent’s insufficient record keeping, a violation of Md. Rule
16-606.1, is also a clear violation of Rule 1.15. See Obi, 393 Md. at 657, 904 A.2d at 430
(finding a violation of Rule 1.15(a) where the attorney maintained inadequate records of
client funds). Second, depositing his own personal funds into his trust account in violation
of Md. Rule 16-607 is a textbook example of a Rule 1.15 violation. See Attorney Grievance
Comm’n v. DiCicco, 369 Md. 662, 679, 802 A.2d 1014, 1023-24 (2002) (noting that the
hearing judge determined that “the same clear and convincing evidence that proved the
[r]espondent violated Rule 1.15(a) requires me to also find that he violated the general
prohibition against commingling in paragraph (a) of Md. Rule 16-607”). Finally,
Respondent’s cash withdrawals to make payments on his credit card, which violate Md. Rule
16-609, also constitute a violation of Rule 1.15. See Attorney Grievance Comm’n v. Bell,
432 Md. 542, 553, 69 A.3d 1040, 1046 (2013) (“[W]ithdrawing funds from a trust account
for personal matters also constitutes a violation of Rule 1.15(a).”); DiCicco, 369 Md. at 676,
802 A.2d at 1022 (finding a violation of Rule 1.15 where the attorney used his escrow
account “as if it also served as his personal bank account”).
22
In addition to the violations of Title 16, Chapter 600 of the Maryland Rules, the
hearing judge based his conclusion that Respondent violated MLRPC Rule 1.15 on his
finding that Respondent’s IOLTA account was out of trust in the amount of $1,925.28.
Respondent does not dispute that his account was out of trust or that he failed to keep client
property safe by failing to keep accurate records, but he disputes the exact amount in which
his account was out of trust. Because it is clear that Respondent’s account was out of trust
and the exact amount at which Respondent was out of trust has no bearing on the sanction
to be imposed, we decline to address Respondent’s exception regarding the exact amount.
See Attorney Grievance Comm’n v. Snyder, 368 Md. 242, 261-62, 793 A.2d 515, 526 (2002)
(electing not to address one of the respondent’s exceptions because it would not affect the
sanction). See also Attorney Grievance Comm’n v. Thomas, 409 Md. 121, 175, 973 A.2d
185, 218 (2009) (citations and quotations omitted) (“[A]n attorney’s misappropriation of
funds entrusted to his care, be the amount small or large, is of great concern and represents
the gravest form of professional misconduct.”).
We also note that Respondent violated Rule 1.15 by commingling personal funds with
client funds in his trust account to then write checks on his trust account to his wife, in order
to create the illusion that she worked for his law office. Although the hearing judge did not
expressly rely on this fact in reaching his conclusion, we conclude as a matter of law that
Respondent failed to keep client funds safe and violated Rule 1.15 by depositing his personal
funds into his escrow account (i.e. commingling personal funds with client funds) and then
23
making unauthorized withdrawals in the form of “paychecks” to his wife. See Attorney
Grievance Comm’n v. Nussbaum, 401 Md. 612, 639, 934 A.2d 1, 16 (2007) (concluding that
attorney’s use of his escrow account to pay personal debts constituted an intentional
misappropriation of client funds as well as commingling of funds in violation of Rule 1.15).
Accordingly, we agree with the hearing judge that Respondent failed to keep his clients’
property safe in violation of Rule 1.15.
Rule 8.1
MLRPC Rule 8.1 requires attorneys to cooperate with Bar Counsel’s lawful demands
for information. In this case, the hearing judge found that “Respondent was intentionally
evasive and uncooperative with Bar Counsel.” The hearing judge further concluded that
Respondent violated Rule 8.1(a) by making “knowing and intentional misrepresentations of
fact which were intended to mislead Bar Counsel,” in particular where Respondent stated to
Bar Counsel that the $15,000.00 wire-transfer deposit into his escrow account was for the
benefit of Ms. Fraidin, and did not reveal to Bar Counsel until nearly one year later that the
source of the funds was Respondent’s liquidated retirement account. In addition, the hearing
judge concluded that Respondent violated Rule 8.1(b) “by failing to timely provide
information and documentation requested by Bar Counsel” regarding Respondent’s bank
accounts, which forced Bar Counsel to subpoena the records directly from the institution.
In our review of the record, we agree with the hearing judge that Respondent was evasive
and misleading during Bar Counsel’s investigation, and therefore violated Rule 8.1.
24
Rule 8.4 Misconduct
MLRPC Rule 8.4 provides in relevant part that it is “misconduct” for an attorney to:
(a) violate or attempt to violate the [MLRPC], knowingly assist or induce
another to do so, or do so through the acts of another;
(b) commit a criminal act that reflects adversely on the lawyer’s honesty,
trustworthiness or fitness as a lawyer in other respects;
(c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation;
and
(d) engage in conduct that is prejudicial to the administration of justice. . . .
In this case, the hearing judge found “by clear and convincing evidence that Respondent
aided, abetted and assisted Ms. Fraidin in violating 18 U.S.C. § 152 (2) and (3) by helping
in the preparation and filing of forms and schedules which contained misrepresentations
signed by Ms. Fraidin under penalty of perjury, in the United States Bankruptcy Court[,]”
which in turn “substantiates a conclusion that Respondent violated, assisted, aided and
abetted his wife in violating 18 U.S.C. § 157.”7 In addition, the hearing judge found “by
7
18 U.S.C. § 152 (2012) generally prohibits the concealment of assets as well as false
oaths and claims during the course of bankruptcy proceedings. Specifically, § 152(2)
provides criminal penalties for a person who “knowingly and fraudulently makes a false oath
or account in or in relation to any case under title 11” and § 152(3) provides criminal
penalties for a person who “knowingly and fraudulently makes a false declaration, certificate,
verification, or statement under penalty of perjury as permitted under section 1746 of title 28,
in or in relation to any case under title 11.”
18 U.S.C. § 157 (2012) is the federal bankruptcy fraud statute, providing criminal
penalties for “[a] person who, having devised or intending to devise a scheme or artifice to
defraud and for the purpose of executing or concealing such a scheme or artifice or
attempting to do so–(1) files a petition under title 11, . . . ; (2) files a document in a
proceeding under title 11; or (3) makes a false or fraudulent representation, claim, or promise
concerning or in relation to a proceeding under title 11, at any time before or after the filing
of the petition, or in relation to a proceeding falsely asserted to be pending under such title.”
25
clear and convincing evidence that Respondent and Ms. Fraidin concocted a scheme to
defraud the United States Bankruptcy Court and executed it, all toward the ends of
preventing the foreclosure of their home and qualifying Ms. Fraidin for a lesser Chapter 13
payment plan.” Based on this finding, the hearing judge concluded that Respondent had
committed a criminal act “that reflects adversely on the lawyer’s honesty, trustworthiness or
fitness as a lawyer” in violation of MLRPC Rule 8.4(b).8 The hearing judge further
concluded that the same constitutes conduct “involving dishonesty, fraud, deceit or
misrepresentation” and that Respondent’s “dishonest and fraudulent behavior unquestionably
besmirches and brings shame upon the legal profession, and places lawyers in disrepute” in
violation of Rule 8.4(d). Finally, the hearing judge concluded that all of Respondent’s
actions, taken together, constitute a violation of Rule 8.4(a), as he has violated multiple rules
under the MLRPC.
Respondent excepts to the conclusion that he violated Rule 8.4 with regard to the
bankruptcy proceedings, primarily because he was at no time the attorney of record in Ms.
8
Although there is no indication that either Respondent or Ms. Fraidin has been
charged with violations of any federal bankruptcy statutes, as noted by the hearing judge in
his conclusions of law, criminal prosecution is not required to prove that a lawyer committed
a “criminal act” for the purposes of Rule 8.4(b). See Attorney Grievance Comm’n v.
Garland, 345 Md. 383, 390, 692 A.2d 465, 468 (1997). As we made clear in Attorney
Grievance Comm’n v. Childress, 364 Md. 48, 55, 770 A.2d 685, 689 (2001), where discipline
is based upon an alleged criminal act where there has been no conviction, the standard of
proof is clear and convincing evidence. In this case, the hearing judge found by clear and
convincing evidence that Respondent assisted his wife in making false statements within the
bankruptcy documents, as well as concocted and executed a scheme to defraud the United
States Bankruptcy Court, which would constitute violations of 18 U.S.C. §§ 152 and 157.
26
Fraidin’s bankruptcy case. In addition, Respondent argues that the statements at issue in the
bankruptcy forms, which the hearing judge found to be false, could not be the basis for a
finding of bankruptcy fraud because those statements and figures were not required to be
included on the forms. For the following reasons, we overrule Respondent’s exceptions.
First, whether Respondent was Ms. Fraidin’s attorney of record in the bankruptcy case
is of no moment. It is well established that discipline for professional misconduct is “not
limited to conduct which occurred in the course of an attorney-client relationship.” Attorney
Grievance Comm’n v. Childress, 360 Md. 373, 383-84, 758 A.2d 117, 122-23 (2000). It is
clear from the record that Respondent assisted Ms. Fraidin in the preparation of the
bankruptcy documents. Indeed, Respondent admitted that, as a husband, he gave “whatever
help he thought might be useful to his wife in the preparation and filing of her Chapter 13
forms.” The hearing judge also concluded that a reasonable person would believe that
Respondent was acting as Ms. Fraidin’s “agent” during the bankruptcy proceedings due to
his communications with the creditor’s attorney and his request of a continuance of the
bankruptcy hearing. Regardless of a third party’s perception of Respondent’s role in the
bankruptcy proceedings, what is abundantly clear is that Respondent was intimately involved
with the preparation and proceedings in his wife’s bankruptcy case. In addition, Ms. Fraidin
testified that Respondent maintained all the financial records both for his law office and for
the family household. Therefore, by necessity, Respondent provided the financial
information necessary to complete the bankruptcy forms to Ms. Fraidin. Accordingly, we
27
agree with the hearing judge’s conclusion that Respondent was directly involved with the
preparation and filing of Ms. Fraidin’s Chapter 13 bankruptcy documents. See Attorney
Grievance Comm’n v. Wingerter, 400 Md. 214, 231, 929 A.2d 47, 57-58 (2007) (noting that
evidence of an attorney’s awareness of immigration fraud and failure to report same, in
addition to an attorney’s concealment of the conspiracy, “was evidence of not simply a
passive involvement; it demonstrated an active involvement”).
Second, it is equally clear that the bankruptcy documents filed by Ms. Fraidin
contained intentionally false statements of fact. It is of no consequence that the statements
appearing on the bankruptcy forms were not required by law. It is the falsity and misleading
nature of the statements that provide the basis of a violation of 18 U.S.C. §§ 152 and 157.
See supra note 7. Therefore, Respondent’s argument that the trial judge could not find that
Respondent and Ms. Fraidin committed bankruptcy fraud because the false statements were
not required by law to be included on the forms is entirely without merit.
As relied on by the hearing judge, the false statements primarily related to Ms.
Fraidin’s purported employment with Respondent’s law office.9 In order to qualify for a
Chapter 13 Bankruptcy payment plan, Respondent believed it was necessary to establish Ms.
Fraidin’s source of income. To that end, Ms. Fraidin stated on her Chapter 13 Bankruptcy
9
Although there appear to be additional false statements on Ms. Fraidin’s bankruptcy
forms, for example, her failure to identify property owned by her spouse, Respondent, the
hearing judge’s conclusions focused solely on the statements regarding Ms. Fraidin’s
purported employment with Respondent’s law office. We shall therefore limit our discussion
accordingly.
28
forms that she was employed by Respondent’s law office, received $3,000.00 as “monthly
gross wages, salary, and commissions,” and described her occupation as “marketing.”
Throughout the instant proceedings, Respondent has maintained that Ms. Fraidin worked for
him and did in fact engage in “marketing” activities for his law office. During her
deposition, however, Ms. Fraidin made clear that she had no set hours or duties as part of her
employment with Respondent’s law office, and that the monthly payments of $3,000.00 were
not contingent upon performance of any work or set hours. Tellingly, Ms. Fraidin has never
filed any tax documents (IRS Forms W-2 or 1099) related to such employment, despite her
assertions that she was employed in Respondent’s law office for two years. Further, Ms.
Fraidin indicated in her deposition that the $3,000.00 payments were part of the “support”
given to her by Respondent, who has been at all times the “main income earner in the house,”
and were akin to a “monthly allowance.” Therefore, even if Ms. Fraidin did in fact engage
in “marketing” activities on behalf of Respondent’s law office, the payments of $3,000.00
per month did not correspond to those activities as income for the purposes of the bankruptcy
filing. Accordingly, we agree with the hearing judge that the statements to the contrary on
the bankruptcy forms were misrepresentations of fact, intended to mislead and defraud the
United States Bankruptcy Court, and that “Ms. Fraidin’s purported income (stemming as it
did from non-existent employment) was falsified for the purpose of staving off the
foreclosure of the Fraidin family home by filing a petition for a Chapter 13 reorganization
29
plan.” 10
Moreover, to further substantiate the statements regarding Ms. Fraidin’s alleged
employment, Respondent issued checks for $3,000.00 to Ms. Fraidin from his IOLTA
account,11 which she in turn gave to the bankruptcy trustee as proof of her income. Although
Respondent has at all times claimed that Ms. Fraidin worked for him and that these checks
represented her monthly paychecks, the record reveals that only half of the checks forwarded
to the bankruptcy trustee were actually cashed. The only logical conclusion is that the
$3,000.00 checks were not in fact the paychecks they purported to be, and were instead
10
Respondent excepts to the finding that the statements regarding income were “for
the purpose of staving off the foreclosure of the Fraidin family home,” because the
foreclosure was stayed automatically by the initial filing, independent of the documents
detailing Ms. Fraidin’s income. We disagree with the emphasis that Respondent places on
the instructions of each bankruptcy document. To the contrary, we agree with the hearing
judge that Respondent assisted Ms. Fraidin in filing bankruptcy documents containing false
statements. We further agree with the hearing judge that the purpose of the false statements
(relating to Ms. Fraidin’s purported employment, and otherwise), taken together, was to stop
the foreclosure of the family home. Moreover, we note that Respondent failed to present a
case before the hearing judge, at which time he could have made these arguments to the
hearing judge. Instead, the hearing judge was required to infer Respondent’s intent in
assisting in the falsification of documents based on the facts presented by Petitioner. Based
on the evidence presented, we conclude that the hearing judge did not err in finding that
Respondent and his wife “concocted a scheme” to prevent the foreclosure of the family
home. Accordingly, we overrule Respondent’s exception.
11
We note that the use of Respondent’s IOLTA account to issue purported paychecks
alone constitutes a violation of Rule 8.4, because Respondent used funds in his trust account
for an unauthorized purpose. See Attorney Grievance Comm’n v. Foltz, 411 Md. 359, 406,
983 A.2d 434, 462 (2009) (overruling the respondent’s exception to the hearing judge’s
conclusion that “by using a bank account designated as an attorney trust account for his
business and personal transactions, Respondent falsely represented that the funds in the
account were being held in trust for clients or client related matters, and therefore not
available to creditors, in violation of [Rule] 8.4(c)”).
30
issued to Ms. Fraidin in order to convince the bankruptcy trustee that she had a regular
monthly income of $3,000.00. The falsified regular income would then affect Ms. Fraidin’s
Chapter 13 payment plan as determined by the trustee. Consistent with the conclusions of
the hearing judge, we agree that Respondent assisted his wife in submitting false documents
and used his trust account to commit fraud in the United States Bankruptcy Court.
Respondent’s conduct is akin to that in Attorney Grievance Comm’n v. Snyder, 368
Md. 242, 793 A.2d 515 (2002), in which the respondent commingled funds in his client
escrow account and used that account to conceal assets from his creditors during the
pendency of his personal bankruptcy litigation. The respondent in Snyder also wrote checks
from his trust account for personal purposes. We held there that the respondent’s “well-
calculated attempt to conceal personal assets in conjunction with the bankruptcy proceedings
resulted in the commingling of funds . . . . It also involved dishonesty, fraud, deceit,
misrepresentation and conduct prejudicial to the administration of justice in violation of
[MLRPC] 8.4(c) and (d).” Snyder, 368 Md. at 261, 793 A.2d at 526.
Similarly, in Attorney Grievance Comm’n v. Byrd, 408 Md. 449, 970 A.2d 870 (2009),
the attorney filed false business reports under oath in his personal bankruptcy proceeding.
There, we agreed with the hearing judge that the attorney’s false statements to the bankruptcy
court “manifestly involved dishonesty and was prejudicial to the administration of justice”
and that he violated Rule 8.4(b), (c), and (d) “by filing a false business report in
contravention of the law, and, in doing so, made false statements to the bankruptcy court and
31
the Trustee.” Byrd, 408 Md. at 482, 970 A.2d at 889. Likewise, in Attorney Grievance
Comm’n v. Zodrow, 419 Md. 286, 19 A.3d 381 (2011), the hearing judge found a violation
of Rule 8.4 where the attorney failed to make pertinent disclosures regarding his assets and
debts during his personal bankruptcy case, and testified in a false and misleading manner.
We stated that the respondent’s misconduct was “one infected with fraud, deceit and
dishonesty.” Zodrow, 419 Md. at 305, 19 A.3d at 392 (quoting Attorney Grievance Comm’n
v. Willcher, 340 Md. 217, 220, 665 A.2d 1059, 1061 (1995)).12
Based on our review of the case at bar, the record overwhelmingly supports the
hearing judge’s findings that the statements regarding Ms. Fraidin’s $3,000.00 monthly
income were false, and that Respondent assisted Ms. Fraidin in making those false statements
as contained in her bankruptcy filings and to the bankruptcy trustee. In addition, by
providing false support for Ms. Fraidin’s claims regarding her income in the form of checks
drawn on Respondent’s trust account, Respondent utilized his trust account to commit
bankruptcy fraud. Not unlike the situation in Snyder, Byrd, and Zodrow, we conclude that
Respondent’s conduct in the present case was “infected with fraud, deceit and dishonesty.”
Accordingly, we agree with the hearing judge that Respondent has violated Rule 8.4(a), (b),
(c), and (d).
12
We note that Zodrow was a reciprocal discipline case. Although the Colorado
Supreme Court had issued a term of suspension, this Court concluded that the respondent’s
intentional, dishonest conduct warranted disbarment. Zodrow, 419 Md. at 306, 19 A.3d at
393 (“[T]he current state of law in this State warrants substantially different discipline than
that imposed by Colorado.” (citation and quotations omitted)).
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Sanctions
In attorney discipline cases, the sanction imposed depends on the facts and
circumstances of each case, and in arriving at an appropriate sanction we “consider the nature
of the ethical duties violated in light of any aggravating or mitigating circumstances.”
Attorney Grievance Comm’n v. Paul, 423 Md. 268, 284, 31 A.3d 512, 522 (2011).
Accordingly, the sanctions imposed should be “commensurate with the nature and gravity
of the violations and the intent with which they were committed.” Attorney Grievance
Comm’n v. Stein, 373 Md. 531, 537, 819 A.2d 372, 375 (2003). Considering the facts and
circumstances of this case, we agree with Petitioner that the appropriate sanction is
disbarment.
The misconduct in the instant case is twofold: (1) Respondent’s intentional
mishandling of his attorney trust account, and (2) Respondent’s role in assisting his wife in
the preparation of her bankruptcy documents, which included misrepresentations of fact for
the purpose of defrauding the United States Bankruptcy Court. It is the combination of
Respondent’s mishandling of his attorney trust accounts in conjunction with Respondent’s
conduct in relation to the bankruptcy proceedings resulting in his violations of MLRPC
8.4(a), (b), (c) and (d) that warrant the ultimate sanction in this case. See Attorney Grievance
Comm’n v. Siskind, 401 Md. 41, 74, 930 A.2d 328, 347 (2007) (“The gravity of misconduct
is not measured solely by the number of rules broken but is determined largely by the
lawyer’s conduct.”) (quoting Attorney Grievance Comm’n v. Briscoe, 357 Md. 554, 568, 745
33
A.2d 1037, 1044 (2000)). We are particularly concerned that Respondent would resort to
such deception, commingling of personal funds and client funds, intentionally mishandle his
IOLTA account, and expose his clients to risks of loss to avert the foreclosure of his
property. As the record discloses, and as conceded by counsel, if Respondent had engaged
competent bankruptcy counsel, he could have easily achieved his goal within the bounds of
the law.
“Candor and truthfulness are two of the most important moral character traits of a
lawyer.” Attorney Grievance Comm’n v. Myers, 333 Md. 440, 449, 635 A.2d 1315, 1319
(1994) (citations omitted). For that reason, “[w]e long have held that acts of dishonesty,
fraud, or misleading behavior may warrant a sanction of disbarment.” Siskind, 401 Md. at
75, 930 A.2d at 348. “Unlike matters relating to competency, diligence, and the like,
intentional dishonest conduct is closely entwined with the most important matters of basic
character to such a degree as to make intentional dishonest conduct by a lawyer almost
beyond excuse.” Attorney Grievance Comm’n v. Webster, 402 Md. 448, 473-74, 937 A.2d
161, 175-76 (2007) (citation and quotation omitted). Moreover, as we stated in Attorney
Grievance Comm’n v. Vanderlinde, 364 Md. 376, 773 A.2d 463 (2001), and have oft
repeated:
[I]n cases of intentional dishonesty, misappropriation cases, fraud, stealing,
serious criminal conduct and the like, we will not accept, as “compelling
extenuating circumstances,” anything less than the most serious and utterly
debilitating mental or physical health conditions, arising from any source that
is the “root cause” of the misconduct and that also result in an attorney’s utter
inability to conform his or her conduct in accordance with the law and with the
34
[MLRPC]. Only if the circumstances are that compelling, will we even
consider imposing less than the most severe sanction of disbarment in cases of
stealing, dishonesty, fraudulent conduct, the intentional misappropriation of
funds or other serious criminal conduct, whether occurring in the practice of
law, or otherwise.
364 Md. at 413-14, 773 A.2d at 485. For that reason, we held that disbarment was the
appropriate sanction in Attorney Grievance Comm’n v. Byrd, 408 Md. 449, 970 A.2d 870
(2009). In that case, where the respondent had committed a series of MLRPC violations, we
noted that the “most significant” was “his violations of [MLRPC] 8.4(b) and 8.4(c), by
committing perjury when he filed false business reports under oath in the bankruptcy
proceeding. . . . [and] this act alone warrants disbarment.” Byrd, 408 Md. at 483, 970 A.2d
at 889.
Respondent asks that we impose a sanction of suspension with the right to apply for
reinstatement after some period of time, based on the fact that Respondent has been
practicing for twenty years with no prior complaints against him. Respondent, however, cites
to no cases where we have imposed such a sanction for an attorney’s intentional deceitful
conduct. Moreover, Respondent has not provided, nor did the hearing judge find, any
circumstances warranting mitigation in this case. On the other hand, Petitioner recommends
that we impose a sanction of disbarment. In arriving at that sanction, Petitioner asks that we
consider several aggravating factors, including Respondent’s dishonest or selfish motive, a
pattern of misconduct, bad faith obstruction of the disciplinary proceeding, refusal to
acknowledge wrongful nature of his conduct, substantial experience in the practice of law,
35
and engaging in egregious criminal conduct.13
We agree that the aggravating factors are implicated. Respondent’s motives in this
case were dishonest and selfish. Respondent obstructed the disciplinary investigation by
intentionally misrepresenting the facts to Bar Counsel. Respondent also made false
statements and misrepresentations to Bar Counsel and to the hearing judge throughout the
disciplinary proceedings, particularly in regards to the use of his IOLTA account, his
representation of Ms. Fraidin in the credit card litigation, and his role in Ms. Fraidin’s
bankruptcy proceedings. Although Respondent has acknowledged his mishandling of his
attorney escrow account, he has failed to take responsibility for his actions relating to the
bankruptcy proceedings and the scheme he implemented with his wife to defraud the United
13
We have explained that for purposes of aggravating factors in sanctioning, “we tend
to rely on the factors included in Standard 9.22 of the American Bar Association Standards
for Imposing Lawyer Sanctions.” Attorney Grievance Comm’n v. Patton, 432 Md. 359, 379-
80, 69 A.3d 11, 23 (2013). Those factors include:
(a) prior disciplinary offenses;
(b) dishonest or selfish motive;
(c) a pattern of misconduct;
(d) multiple offenses;
(e) bad faith obstruction of the disciplinary proceeding by
intentionally failing to comply with rules or orders of the
disciplinary agency;
(f) submission of false evidence, false statements, or other
deceptive practices during the disciplinary process;
(g) refusal to acknowledge wrongful nature of conduct;
(h) vulnerability of victim;
(i) substantial experience in the practice of law;
(j) indifference to making restitution;
(k) illegal conduct, including that involving the use of controlled substances.
36
States Bankruptcy Court. Taking into consideration the intentional mishandling of his trust
account, the deceitful nature of his conduct in relation to Ms. Fraidin’s bankruptcy matter,
and the aggravating factors, the appropriate sanction is disbarment.
IT IS SO ORDERED; RESPONDENT SHALL
PAY ALL COSTS AS TAXED BY THE
CLERK OF THIS COURT, INCLUDING
THE COSTS OF ALL TRANSCRIPTS,
PURSUANT TO RULE 16-761, FOR WHICH
SUM JUDGMENT IS ENTERED IN FAVOR
O F T H E A T T O R N E Y G R IE V A N C E
C O M M IS S IO N A G A IN ST M IC H A E L
DAVID FRAIDIN.
37