Attorney Grievance v. Frank ( 2020 )

Attorney Grievance Commission of Maryland v. David Elliott Frank, Misc. Docket AG
No. 2, September Term 2019. Opinion by Hotten, J.
ATTORNEY DISCIPLINE – SANCTIONS – DISBARMENT – The Court of Appeals
disbarred David Elliott Frank from the practice of law in Maryland. The Court found that
Respondent violated MARPC 19-301.1 (Competence), 19-301.15 (Safekeeping Property),
19-308.1 (Bar Admission and Disciplinary Matters), 19-308.4 (Misconduct), 19-404 (Trust
Account – Required Deposits), 19-408 (Commingling of Funds), and 19-410 (Prohibited
Transactions) and Md. Code. Ann., Business Occupations & Professions § 10-306 (Trust
Money Restrictions) in the misuse of his attorney trust account, operating account, and
client funds. Respondent commingled personal and client funds in his attorney trust
account, used the funds in his attorney trust account for personal and familial financial
obligations, failed to disburse his client’s settlement funds in a timely manner, and misused
his client’s settlement funds. His conduct warranted disbarment.
Circuit Court for Montgomery County
Case No. 466226-V
Argued: May 28, 2020 IN THE COURT OF APPEALS
OF MARYLAND
Misc. Docket AG No. 2
September Term, 2019
__________________________________
ATTORNEY GRIEVANCE
COMMISSION OF MARYLAND
v.
DAVID ELLIOTT FRANK
__________________________________
Barbera, C.J.,
McDonald,
Watts,
Hotten,
Getty,
Booth,
Biran,
JJ.
__________________________________
Opinion by Hotten, J.
__________________________________
Filed: August 26, 2020
Pursuant to Maryland Uniform Electronic Legal Materials Act
(§§ 10-1601 et seq. of the State Government Article) this document
is authentic.
Suzanne Johnson
2020-11-19 13:08-05:00
Suzanne C. Johnson, Clerk
The Attorney Grievance Commission of Maryland, acting through Bar Counsel
(“Petitioner”), directed that charges be filed against David Elliott Frank (“Respondent”),
stemming from an investigation of a claim by former client, Teresa Bernhardt (“Ms.
Bernhardt”), pursuant to Maryland Rule 19-721.1 By order dated April 24, 2019, this Court
designated the Honorable Kevin G. Hessler (“hearing judge”) of the Circuit Court for
Montgomery County, to consider the matter against Respondent and render findings of fact
and conclusions of law.
On April 23, 2019, Petitioner filed a Petition for Disciplinary or Remedial Action
against Respondent. Respondent filed an answer on June 21, 2019. The circuit court
conducted a hearing from November 25-27, 2019. Prior to commencement of the hearing,
Petitioner withdrew allegations regarding Maryland Rule 19-301.5 (Fees).2 Upon
consideration of the evidence presented, the hearing judge found, by clear and convincing
evidence, that Respondent violated Maryland Attorneys’ Rules of Professional Conduct
(“MARPC”)3 19-301.1 (Competence), 19-301.15 (Safekeeping Property), 19-308.1 (Bar
1
Md. Rule 19-721 provides, in pertinent part: “Upon approval or direction of the
Commission, Bar Counsel, on behalf of the Commission, shall file a Petition for
Disciplinary or Remedial Action in the Court of Appeals.”
2
Md. Rule 19-301.5 reads, in pertinent part: “(a) An attorney shall not make an
agreement for, charge, or collect an unreasonable fee or an unreasonable amount for
expenses.”
3
Effective July 1, 2016, the Maryland Lawyers’ Rules of Professional Conduct
(“MLRPC”) were renamed the Maryland Attorneys’ Rules of Professional Conduct
(“MARPC”) and re-codified in Title 19 of the Maryland Rules, without substantive change.
Respondent’s misconduct occurred between January 2016 and March 2018. We use
MARPC throughout this opinion to maintain clarity.
Admission and Disciplinary Matters), 19-308.4 (Misconduct), 19-404 (Trust Account –
Required Deposits), 19-408 (Commingling of Funds), and 19-410 (Prohibited
Transactions) and Md. Code. Ann., Business Occupations & Professions§ 10-306 (Trust
Money Restrictions) (“Bus. Occ. & Prof.”). Both Petitioner and Respondent filed
Exceptions to the hearing judge’s findings of fact and conclusions of law.
We republish the pertinent portions of those findings of fact and conclusions of law
below.
FINDINGS OF FACT
The hearing judge rendered the following findings of facts regarding Respondent’s
management of his attorney trust account and operating account from January 2016
through March 2018.
[ ] Respondent [ ] was admitted to the Maryland Bar on June 22, 1970. [ ]
Respondent is a sole practitioner and maintains a general practice in
Montgomery County, Maryland.
[ ] Respondent’s Attorney Trust Account
In 1972, [ ] Respondent opened an attorney trust account at SunTrust Bank,
account no. x438 (“trust account” or “attorney trust account”). He
maintained the trust account until it was closed by the bank on October 18,
2016. [ ] Respondent also maintained an operating account at SunTrust
Bank, account no. x130, commencing in 1971.
***
After SunTrust closed the trust account in October of 2016, [ ] Respondent
operated his law practice for approximately three [ ] months without an
attorney trust account. In February 2017, [ ] Respondent opened a new
attorney trust account at Bank of America, account no. x3297.
2
Representation of Arline Cone
In or about 2013, [ ] Respondent was retained to represent Ms. Arline Cone
. . . in connection with a Broadway show entitled “I Will I Can[,]” which she
was working to produce. According to [ ] Respondent, the terms of the
representation provided that the majority of the fees for his services would
be paid from the revenue from the production. As a part of his representation
of Ms. Cone, [ ] Respondent received funds from investors, deposited the
funds into his trust account, and disbursed the funds to Ms. Cone as instructed
by Ms. Cone. In 2016, . . . two investors [ ] provided funds to [ ] Respondent
for the benefit of Ms. Cone.
At some point in time, Ms. Cone began residing in hotels in [ ] New York
City and the investor funds were used to pay for Ms. Cone’s hotel charges.
In January 2016, [ ] Respondent obtained a debit card associated with the
trust account. [ ] Respondent testified that he obtained the debit card to
facilitate payment of Ms. Cone’s hotel expenses. . . .
***
Between January 25, 2016 and April 21, 2016, the following electronic
transfer payments to hotels were made from funds held in Respondent’s
SunTrust Attorney Trust Account which were requested by Ms. Cone and
authorized by Respondent:
a. 1/25/2016 Doubletree $600.00
b. 1/25/2016 Doubletree $1,400.00
c. 2/24/2016 Doubletree $2,000.00
d. 3/11/2016 Doubletree $262.00
e. 3/11/2016 Doubletree $2,000.00
f. 3/14/2016 Doubletree $46.09
g. 3/14/2016 Doubletree $2,619.55
h. 3/24/2016 Marriott $909.00
i. 4/21/2016 Holiday Inn $195.13
j. 4/21/2016 Wellington Hotel $261.46
k. 4/21/2016 Holiday Inn $1,396.02
Respondent maintain[ed] that these payments were made from Ms. Cone’s
funds that were held in his trust account. Respondent’s attorney trust account
had a positive balance before such electronic payments were made.
Respondent testified that Ms. Cone was not given the debit card and that he
maintained possession of it. . . .
3
On May 26, 2016, at Ms. Cone’s request, Respondent provided written
authorization to the Holiday Inn Midtown (New York City) hotel to charge
against the attorney trust account, by providing the check card information
to the hotel. Such written authorization limited the sum to be charged to his
attorney trust account. The authorization permitted the hotel to charge up to
$2,800.00. At that time[,] Respondent did not have an advance payment of
$2,800.00 from or on behalf of Ms. Cone in his attorney trust account.
Respondent held some funds of Ms. Cone’s in his attorney trust account but
less than $2,800.00. Respondent testified he did not expect the Holiday Inn
to initiate the charges immediately and expected any charges from the
Holiday Inn would be incremental, not a lump sum charge of $2,800.00.
However, the written authorization did not preclude the charges from being
made all at once. Respondent maintained at trial that the authorization was
given with the understanding the funds would be promptly deposited on
behalf of Ms. Cone by wire transfer into his attorney trust account. [ ]
Respondent admitted that, at the time he authorized the $2,800.00 debit, he
knew that there were insufficient funds in the Cone ledger to cover the
transaction.
On May 31, 2016, Holiday Inn charged the trust account $2,800.00 as
authorized. The charge caused a negative balance in both the Cone client
ledger and the trust account. When [ ] Respondent received his SunTrust
Attorney Trust Account bank statement for the May 2016 period in mid-June
2016, he saw the $2,800.00 was charged in one lump sum five days after he
provided the written authorization for the electronic transaction.
For reasons unknown to Respondent, SunTrust did not report the deficit in
Respondent’s attorney trust account to the Attorney Grievance Commission.
The trust account balance remained negative until June 28, 2016, when [ ]
Respondent deposited $17,925.74 into the account. The deposit included a
settlement check from National Interstate Insurance Company in the amount
of $17,500[.00] received in connection with the settlement of a personal
injury matter for which he represented another client, Teresa Bernhardt, who
is the complainant in the case at bar. The [remaining] balance of the deposit
was comprised of other client monies. At the end of June 2016[,] Respondent
opted to leave in his attorney trust account, $2,800.00 of an attorney fee
earned in connection with Ms. Bernhardt’s personal injury matter. He
testified that he did so in order to correct the account deficit. This resolved
the shortfall in Respondent’s Trust Account in connection with the Holiday
Inn charge on May 31, 2016.
4
Respondent testified he received his June 2016 SunTrust Bank statement for
his attorney trust account on or around July 10, 2016. The June 2016
SunTrust Bank statement was reconciled by Respondent on or around July
15, 2016 and balanced. His June 30, 2016 attorney trust bank account
statement showed a positive $13,097.48.
In July 2016 there were more debits for Ms. Cone’s hotel stays charged to
Respondent’s attorney trust account. Beginning on July 5, 2016, the
following hotel charges were paid from Respondent’s attorney trust account:
a. 7/5/2016 Hilton Stamford $2,436.39
b. 7/6/2016 Hilton Stamford $1,029.39
c. 7/12/2016 Hilton Stamford $1,119.76
d. 7/15/2016 Hilton Stamford $1,310.01
e. 7/19/2016 Hilton Stamford $1,018.39
f. 7/25/2016 Hilton Stamford $1,170.04
g. 7/27/2016 Hilton Stamford $1,140.65
Respondent maintain[ed] that these charges were unauthorized and that he
first discovered the unauthorized charges to his attorney trust account from
July 2016 to[,] on or about[,] August 12, 2016 when he opened his bank
statement for reconciliation. Respondent testified that he received his July
2016 SunTrust Bank statement for his attorney trust account on the 9[th] or
10[th] of August, 2016, and reconciled the account within a few days
thereafter. The ending balance for the trust account in July 2016, after the
hotel charges, was $182.87.
In August of 2016 there were more debits to Respondent’s attorney trust
account for Ms. Cone’s hotel charges. Beginning on August 2, 2016, the
following hotel charges were paid from Respondent’s attorney trust account:
a. 8/2/2016 Hilton Stamford $1,167.31
b. 8/3/2016 Hilton Stamford $1,000.68
c. 8/8/2016 Hilton Stamford $877.55
d. 8/12/2016 Hilton Stamford $1,681.96
Such charges placed Respondent’s attorney trust account in a negative
balance status. On August 12, 2016, after the last hotel charge, the trust
account had a balance of negative $4,448.01. Respondent testified he learned
of these hotel charges upon reviewing the August 2016 SunTrust Bank
5
statement for his attorney trust account which he said he received around
September 10, 2016.[4]
***
[ ] Respondent did not dispute the charges with SunTrust Bank or Hilton. He
failed to file a police report or provide any credible explanation as to how the
Hilton obtained his debit card information. [ ] Respondent did not terminate
his representation of Ms. Cone. Respondent did not take any legal action
against Ms. Cone to recover the funds.
***
By August 2, 2016, the trust account balance was negative $985.66. As of
October 1, 2016, [ ] Respondent’s trust account balance was negative
$3,937.42. [ ] Respondent’s SunTrust Attorney Trust Account was closed
by the bank on October 18, 2016 after two consecutive months of negative
balances. At the time the account was closed, the balance was negative
$3,803.53.
. . . Respondent failed to provide documentation showing that any payments
of restitution had been made, claiming that he thought the bank records
subpoenaed by the [Attorney Grievance Commission] would have included
the restitution payments.
[ ] Respondent’s Arline Cone ledger balance remained negative until the trust
account was closed in October 2016. At the time the account was closed, the
Cone ledger balance was negative $14,772.68.
Respondent opened a new attorney trust account with Bank of America in
February 2017. The new attorney trust account with Bank of America had
no check or debit card feature.
During the period between October 18, 2016 and February of 2017,
Respondent had no attorney trust account.
4
There was evidence that Ms. Cone indicated to Respondent that she would repay
Respondent $16,789.00 to compensate for the over-charges to his attorney trust account
related to her hotel stays. However, no funds were ever received. He was not reimbursed
any funds from Ms. Cone and was never repaid any of the hotel charges made in May, July,
and August of 2016. Respondent testified that Ms. Cone died in June 2019.
6
Representation of Teresa Bernhardt
On April 26, 2015, Teresa Bernhardt was in a car accident in Naples, Florida.
The at-fault driver was insured by National Interstate Insurance Company.
On or about June 3, 2015, Ms. Bernhardt, who was staying with family in
Maryland, retained [ ] Respondent to represent her in connection with the
accident. . . .
By June 2016, Ms. Bernhardt had completed medical treatment and [ ]
Respondent received a settlement offer from National Interstate Insurance
Company in the amount of $17,500.00. At the time, Ms. Bernhardt was out
of the country and had executed a Power of Attorney authorizing her son,
Nuno Passarino, to resolve the case on her behalf. On June 28, 2016, Mr.
Passarino came to [ ] Respondent’s office and executed a Full and Final
Release and endorsed the $17,500.00 settlement check. As part of the
settlement, [ ] Respondent prepared a settlement statement providing that the
funds would be disbursed as follows:
Recipient Disbursement Deposit
Settlement $17,500.00
Amount
Respondent – $6,208.33
Attorney’s fees
Respondent – $59.66
Expenses
Greater $3,000.00
Washington
Orthopedic
Group
F&S Radiology, $158.25
P.C.
Notary Public $4.00
Teresa Bernhardt $8,713.12
Total $17,500.00 $17,500.00
On June 28, 2016, [ ] Respondent deposited the $17,500.00 settlement check
into his trust account. The settlement check was made payable to Respondent
and Teres[]a Bernhardt. The check was deposited into the account together
with $425.74 in other client monies. The total deposit was $17,925.74. At
the time of the deposit, the trust account had a negative balance of $1,356.37.
Following the deposit of the settlement check, [ ] Respondent immediately
disbursed a partial payment to himself of attorney’s fees in the amount of
$3,048.33. On June 29, 2016, [ ] Respondent disbursed an additional $63.66
7
to himself for reimbursement of expenses. Following the disbursements to [
] Respondent, the balance of the Bernhardt ledger was $14,091.67. However,
as of June 30, 2016, the trust account had an ending monthly balance of only
$13,097.48.
On July 1, 2016, [ ] Respondent issued checks to Greater Washington
Orthopedic Group and F&S Radiology in the amounts reflected on the
settlement sheet. On July 6, 2016, the payment to Greater Washington
Orthopedic Group cleared the trust account.
On July 1, 2016, [ ] Respondent mailed a check to Ms. Bernhardt’s son, Mr.
Passarino, drawn on Respondent’s trust account in the amount of $8,713.12
representing Ms. Bernhardt’s share of the $17,500.00 settlement amount.
On July 22, 2016, the $8,713.12 check for Ms. Bernhardt provided to her son
was presented for payment. It was dishonored due to insufficient funds in
Respondent’s attorney account. That same day, July 22, 2016, the $158.25
check to F&S Radiology was presented for payment and cleared. As of July
22, 2016, the trust account balance was only $2,317.34, and the Bernhardt
client ledger balance was $10,869.76.
When Respondent wrote the disbursement checks in the Bernhardt case in
early July 2016, there were sufficient funds in [ ] Respondent’s attorney trust
account for payment of all such checks.
Notably, between July 1, 2016 when the check for Ms. Bernhardt’s matter
was provided to Mr. Passarino and July 22, 2016 when it was presented to
the bank for payment and dishonored, five check card withdrawals were
made from the account for hotel charges for Ms. Cone, all at the [ ] Hilton
[Stamford]: one on July 5, 2016 in the amount of $2,436.39, one on July 6,
2016 for $1,029.50, one on July 12, 2016 in the amount of $1,119.76, one on
July 15, 2016 for $1,310.01[,] and one on July 19, 2016 for $1,018.39. These
charges were the primary cause of the insufficient attorney trust account
balance to cover the check provided to Mr. Passarino for Ms. Bernhardt’s
share of her settlement proceeds.
***
By August 2, 2016, [ ] the $17,500.00 received by Respondent for the
settlement of the Bernhardt case had been fully depleted. Below is a
summary of the activity in [ ] Respondent’s attorney trust account for the
8
time between his receipt of [Ms.] Bernhardt’s settlement proceeds and the
time they were exhausted:
9
Of the $17,500.00 received, $10,392.05 was disbursed for the benefit of Ms.
Cone, and $892.09 was disbursed to [ ] Respondent as attorney’s fees in an
unrelated matter.
By mid-August 2016, [ ] Respondent was aware that Ms. Bernhardt’s funds
had been depleted due to the charges against his attorney trust account in
connection with the hotel stays of Ms. Cone.
Between December 9, 2016 and June 29, 2017, Ms. Bernhardt, and others on
her behalf, called and emailed [ ] Respondent numerous times in an effort to
recover her $8,713.12. . . .
Finally, on November 8, 2018, more than two [ ] years after he learned that
the $8,713.12 check to her had been dishonored, and thirteen [ ] months after
Ms. Bernhardt filed a complaint with [Petitioner], [ ] Respondent paid Ms.
Bernhardt $8,713.12. [ ] Respondent claims that he took a loan from his
retirement account to pay Ms. Bernhardt.
. . . In November 2017, Respondent applied to Bank of America for a home
equity loan to restore the balance in his attorney trust account and to pay Ms.
Bernhardt the $8,713.12 due her, but his loan application was denied.
Petitioner point[ed] out that between February 2017 and March 2018, rather
than pay Ms. Bernhardt any amount, [ ] Respondent disbursed approximately
$18,000.00 from his trust account to himself for attorney’s fees.
Negative Balances in Other Client Matters
By August 2, 2016, the trust account balance was negative $985.66. [ ]
Respondent’s trust account balance remained in the negative from August 2,
2016 through October 18, 2016. Between August 11, 2016 and October 18,
2016, [ ] Respondent continued to deposit client and third-party funds into
the trust account notwithstanding the fact that the deposits caused negative
ledger balances in four [ ] additional client matters. The sums were collected
in connection with collection work done by [ ] Respondent for various
doctors whose patients owed them money. The deposits are identified as
follows:
• On August 11, 2016, [ ] Respondent deposited $105.84 into
the trust account for the benefit of Montgomery
Gastroenterology and Dr. Weinberg. At the time of the
deposit the account had a negative balance of $2,863.89.
10
• On August 18, 2016, [ ] Respondent deposited $200.00 for
the benefit of Montgomery Gastroenterology into the trust
account, which at the time had a negative balance of
$4,440.01.
• On August 26, 2016, [ ] Respondent deposited $145.00 for
the benefit of Montgomery Gastroenterology and Dr.
Fossett into the trust account, which at the time had a
negative balance of $4,240.01.
• On September 7, 2016, [ ] Respondent deposited $167.41
for the benefit of Montgomery Gastroenterology into the
trust account, which had a balance of negative $4,095.01 at
the time.
• On September 22, 20 l6, [ ] Respondent deposited $155.00
for the benefit of Montgomery Gastroenterology, Dr.
Fossett, Dr. Roggin and Dr. Weinberg into the trust
account, which had a negative balance of $4,092.42.
• On October 13, 2016, [ ] Respondent deposited $133.89,
which included $35.00 in payments for Montgomery
Gastroenterology and Dr. Weinberg into the trust account,
which had a negative balance of $3,937.42.
Thus, between August 11, 2016 and October 18, 2016, [ ] Respondent caused
a total of $907.14 to be deposited into his attorney trust account associated
with his representation of Montgomery Gastroenterology, Dr. Fossett, Dr.
Roggin, and Dr. Weinberg in debt collection matters. The [c]ourt [found]
that [ ] Respondent deposited, or caused others to deposit, client and third-
party funds into his attorney trust account when the account had a negative
balance, knowing that the funds would immediately be applied to the
negative account balance, thereby becoming unavailable to disburse to the
clients to whose matters they pertained. The [c]ourt also [found] that [ ]
Respondent failed to inform debtors that they could provide payments
directly to medical providers and failed to take any appropriate action to
ensure the safekeeping of those funds. [ ] Respondent failed to safekeep
$907.14 belonging to Montgomery Gastroenterology, Dr. Fossett, Dr.
Roggin, and Dr. Weinberg, or at the very least the sum of $739.73 which was
net of the dishonored check received from one of the debtors.
On October 7, 2016, Respondent received a $5,000.00 wire transfer of funds
from Mark Robeck, one of the investors in the Broadway play. Respondent
chose to deposit these funds into Respondent’s attorney operating account
instead of his attorney trust account. He then disbursed the sum of $5,000.00
from his operating account for the benefit of Ms. Cone in accordance with
the instructions received from Mr. Robeck. The [c]ourt [found] that [ ]
11
Respondent deposited the $5,000.00, intended for the benefit of Ms. Cone,
into his operating account because he knew at the time that any funds
deposited into his trust account would be applied to the outstanding negative
balance in that account.
Commingling Funds and Payment of Personal Expenses
. . . Between January 2016 and March 2018, [ ] Respondent deposited his
relatives’ personal funds into his attorney trust account and used the funds to
pay their personal expenses as well as some of his own personal expenses.
Between January 2016 and December 2017, [ ] Respondent paid the
following amounts from his trust account for his relatives’ personal
expenses:
Date Associated Payee Amount
Relative
January Son Bob’s $150.00
2016 Furniture
February Son Bob’s $150.00
2016 Furniture
March 2016 Son Bob’s $150.00
Furniture
April 2016 Son Bob’s $150.00
Furniture
April 2016 Son E-ZPass $60.83
May 2016 Son Bob’s $150.00
Furniture
June 2016 Son E-ZPass $45.55
December Stepdaught Home $109.00
2017 er and Son- Depot
In-Law
***
[ ] Respondent also paid from his attorney trust account, on behalf of his son,
citations and tickets to Chevy Chase Village, Montgomery County, and
Maryland Transportation Authority.
[ ] Respondent admitted that he was not representing his relatives. They were
not clients of his. The [c]ourt [found] that [ ] Respondent used his attorney
trust account to deposit and disburse funds, as itemized above, not associated
with the representation of any client. Respondent argue[d] that Rule 19-404
12
permits him to receive funds from non-clients, deposit them into his attorney
trust account, and use them as the non-client directs if he is essentially acting
as an escrow agent for the non-client, which, in his testimony and proposed
findings, he contend[ed] he was. The court [was] not persuaded by
Respondent’s escrow argument. The court note[d] that at the trial of this
matter he never called any of the third-party relatives to establish or support
his escrow argument. The court [was] also unclear as to why, if the funds
provided were to pay the bills of those family members, the family members
could not have paid the bills themselves instead of providing the funds to
Respondent to be deposited into his attorney trust account before the bills
were paid.
In addition to using his trust account to pay his relatives’ expenses, [ ]
Respondent used the trust account to pay his own personal expenses. At
some point prior to February 2016, [ ] Respondent obtained a loan from
SunTrust Bank to purchase a vehicle. The terms of the loan required a
monthly payment in the amount of $424.99. The car and loan were in [ ]
Respondent’s name but, according to [ ] Respondent, his son was responsible
for the payments. In February, March, and April of 2016, [ ] Respondent
paid from his trust account the monthly loan payment owed to SunTrust
Bank. By November 2017, [ ] Respondent sold the car associated with the
SunTrust loan and purchased another vehicle, also titled in his name. The
second vehicle was purchased with a loan from Ford Credit, the terms of
which required a monthly payment in the amount of $463.05. [ ] Respondent
made electronic transfers from his Bank of America Attorney Trust Account
for the car payments in the months of November 2017, February 2018, and
March 2018.
The [c]ourt [found] that, being an obligor on the loan documents, [ ]
Respondent was responsible for the payment of the car notes associated with
the two vehicles and that he deposited into and disbursed funds from his
attorney trust account not associated with the representation of any client.
On January 11, 2016, Respondent drew a $900.00 check against his attorney
trust account payable to “cash.” In the memo portion of the check [was]
written “withdrawal for Arli[n]e Cone.” . . . [Respondent] maintain[ed] that
he cashed the check and sent the cash to Ms. Cone via federal express and
accounted for it in the client ledger maintained for Ms. Cone. On January
12, 2016 there was $9,589.90 in the attorney trust account. According to the
Cone “I Will I Can Ledger” $900.00 was withdrawn from the account leaving
$6,310.00. However, the [c]ourt [could not] be certain that this $900.00
corresponds to the $900.00 check as the client ledger [was] not dated and
[was] oftentimes illegible.
13
[Petitioner’s] Investigation
On August 10, 2017, Ms. Bernhardt filed a complaint with the Attorney
Grievance Commission. On September 25, 2017, [ ] Respondent provided a
written response to [Petitioner]. In his response, [ ] Respondent stated, in
part:
As I explained to Ms. Bernhardt, her son and the attorney who
called me on her behalf, my Escrow Account was also holding
funds for another client. This client requested I sign a Credit
Card Authorization Form in the amount being held for her to
cover her obligation to The Holiday Inn in Midtown, NY. The
Authorization was signed and I specifically provided in writing
that the Authorization was limited to the sum of $2,800.00, the
exact amount I was holding for this particular client, and was
not to exceed that amount. The Hotel, unbeknownst to me,
used this Authorization to continue to cover this client’s
continuing obligation despite my having limited the amount.
[Petitioner] maintain[ed] [ ] Respondent knowingly misrepresented that the
Holiday Inn – Midtown was the hotel which exceeded the authorized debit
and was responsible for the July and August 2016 hotel charges resulting in
the misappropriation of Ms. Bernhardt’s funds. Contrary to [ ] Respondent’s
representation to [Petitioner], the bank records reveal[ed] that the Holiday
Inn did not charge more than the $2,800.00 authorized by [ ] Respondent.
The hotel responsible for the additional charges was the Hilton. The [c]ourt
[found] that [ ] Respondent misidentified to [Petitioner] that it was the Hilton
Hotel rather than the Holiday Inn which incurred charges in excess of the
$2[,]800.00 amount. [ ] Respondent did not, either during [Petitioner]’s
investigation or during the hearing in this matter, provide any explanation as
to how the Hilton obtained his debit card information.
On November 1, 2017, [Petitioner] requested that [ ] Respondent provide the
following:
Any and all financial records you maintained for the
escrow/attorney trust account you identified in your letter of
September 25, 2017 covering the period January 1, 2016 to
present. These records are to include, but not be limited to:
monthly bank statements, cancelled checks, deposit tickets,
client ledger cards, transaction register, credit/debit
memoranda, records of all electronic transfers showing the
14
identity of the depositor and/or intended recipient and
reconciliation reports.
[Petitioner] also requested that [ ] Respondent identify the person to whom
he gave the signed credit card authorization and provide all related
documents. On November 3, 2017, [ ] Respondent wrote to [Petitioner],
requesting an extension of time to produce the documents requested and
stated further:
I am told by the client for whom these unauthorized
withdrawals from my escrow account caused Ms. Bernhardt’s
check to be returned by the bank that she is expecting funds
from her business venture to be available to her one day next
week and that she will be able to reimburse me with sufficient
funds to cover the amount due Ms. Bernhardt no later than
November 17, 2017. When this money is paid to Ms.
Bernhardt, will it still be necessary to provide you with the
documentation you have requested or will this matter simply
be closed?
By letter dated November 13, 2017, [Petitioner] granted the extension
request and advised [ ] Respondent that the information requested needed to
be produced regardless of whether restitution was made to Ms. Bernhardt.
[Petitioner] further requested that [ ] Respondent provide the name and
contact information for the client for whom the unauthorized withdrawals
were made.
On November 16, 2017, [ ] Respondent provided a copy of the authorization
for the Holiday Inn – Midtown but redacted Ms. Cone’s name. On November
28, 2017, [ ] Respondent provided additional information and documentation
to [Petitioner]. [ ] Respondent continued to refuse to identify Ms. Cone,
redacted any information identifying her[,] and failed to produce any client
ledgers associated with Ms. Cone or “I Will I Can.” [Petitioner] assert[ed]
that this constitutes a failure on the part of Respondent to fully cooperate in
its investigation. Respondent indicate[d] that he was told by Ms. Cone to
keep her identity confidential. Respondent maintain[ed] that pursuant to Md.
Rule 19-301.6 he had an obligation to keep Ms. Cone’s identity confidential
and that pursuant to Md. Rule 19-308.1, he was not required to disclose
information otherwise protected by Rule 19-301.6 in response to
[Petitioner]’s inquiry. . . .
(internal citations and internal footnotes omitted).
15
CONCLUSIONS OF LAW
Based on the findings of facts, the hearing judge concluded, by clear and convincing
evidence, that Respondent’s mishandling of his attorney trust account and subsequent
actions during Petitioner’s investigation, violated the following rules of professional
conduct and one statutory violation.
Rule 19-301.1: Competence
The hearing judge determined Respondent violated Rule 19-301.1,5 including the
failure to properly maintain his attorney trust account between January 2016 and March
2018. The hearing judge found that Respondent made several transactions with the
account’s debit card, knowing there were insufficient funds in the account. Respondent
failed to ensure that the charges associated with Ms. Cone did not impact other clients’
funds. The hearing judge determined “Respondent’s carelessness in creating a situation in
which a client was provided access to information creating the ability to cause the
withdrawal of funds from Respondent’s attorney trust account, thereby essentially
relinquishing to her a measure of control over the funds contained in that account, amounts
to incompetence[.]”
In addition to mismanaging his attorney trust account, the hearing judge concluded
that Respondent failed to safeguard client funds when he deposited funds into his attorney
5
Md. Rule 19-301.1 provides: “An attorney shall provide competent representation
to a client. Competent representation requires the legal knowledge, skill, thoroughness and
preparation reasonably necessary for the representation.”
16
trust account, knowing it would apply to the account’s negative balance, as detailed above,
in violation of Rule 19-301.1.
Finally, the hearing judge concluded Respondent also violated Rule 19-301.1 by
operating his law firm without an attorney trust account for about four months, from
October 2016 to February 2017.
Rule 19-301.15: Safekeeping Property
The hearing judge concluded Respondent violated Rule 19-301.15(a)6 by failing to
properly safeguard the client funds in his attorney trust account. Respondent failed to
6
Md. Rule 19-301.15 provides, in relevant part:
(a) An attorney shall hold property of clients or third persons that is in an
attorney’s possession in connection with a representation separate from the
attorney’s own property. Funds shall be kept in a separate account
maintained pursuant to Title 19, Chapter 400 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 attorney and shall be preserved for a period of
at least five years after the date the record was created.
(b) An attorney may deposit the attorney’s own funds in a client trust account
only as permitted by Rule 19-408 (b).
(c) Unless the client gives informed consent, confirmed in writing, to a
different arrangement, an attorney shall deposit legal fees and expenses that
have been paid in advance into a client trust account and may withdraw those
funds for the attorney’s own benefit only as fees are earned or expenses
incurred.
(d) Upon receiving funds or other property in which a client or third person
has an interest, an attorney shall promptly notify the client or third person.
Except as stated in this Rule or otherwise permitted by law or by agreement
(continued . . .)
17
safeguard Ms. Bernhardt’s and other clients’ funds by permitting the use of his attorney
trust account for Ms. Cone’s expenses, without regard to whether there were sufficient
funds for Ms. Cone’s disposal. The hearing judge determined that Respondent, who
admitted to doing so, violated Rule 19-301.15(a) by depositing client funds into his
operating account rather than his attorney trust account. The hearing judge also found that
Respondent violated Rule 19-301.15(a) by paying personal financial obligations on behalf
of himself and non-client family members.
In addition, the hearing judge concluded that Respondent violated Rule 19-
301.15(b) when he deposited funds into his attorney trust account to pay for his personal
financial obligations.
Finally, the hearing judge determined that Respondent, who admitted to doing so,
violated Rule 19-301.15(d) when he failed to deliver, in a timely manner, Ms. Bernhardt’s
portion of the settlement funds. He waited two years after receiving the settlement funds
to disburse any amount to Ms. Bernhardt, but promptly collected attorney’s fees for his
representation of Ms. Bernhardt and other clients.
(. . . continued)
with the client, an attorney shall deliver promptly to the client or third person
any funds or other property that the client or third person is entitled to receive
and, upon request by the client or third person, shall render promptly a full
accounting regarding such property.
***
18
Rule 19-308.1: Bar Admission and Disciplinary Matters
The hearing judge concluded that Respondent violated Rule 19-308.1(a)7 by
knowingly misrepresenting to Petitioner the amount of money in his attorney trust account.
In his letter to Petitioner, Respondent stated “The Authorization was signed and I
specifically provided in writing that the Authorization was limited to the sum of $2,800.00,
the exact amount I was holding for this particular client, and was not to exceed that
amount.” (emphasis added). The hearing judge found Respondent violated Rule 19-
308.1(a), based on his knowingly maintaining an attorney trust account balance lower than
$2,800.00, yet intentionally indicating the contrary.8
Additionally, the hearing judge concluded that Respondent violated Rule 19-
308.1(b) by consistently failing to disclose Ms. Cone’s identity and contact information.
7
Md. Rule 19-308.1 reads:
An applicant for admission or reinstatement to the bar, or an attorney in
connection with a bar admission application or 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 19-301.6 (1.6).
8
Petitioner alleged Respondent violated Rule 19-308.1 by intentionally misleading
Petitioner when he stated the Holiday Inn Midtown, rather than the Hilton, charged his
attorney trust account more than the authorized $2,800.00. The hearing judge determined
Respondent did not violate Rule 19-308.1 for this action because he unintentionally
misidentified the name of the hotel.
19
Respondent attempted to defend this action by citing Maryland Rule 19-301.6,9 but the
hearing judge rejected this defense, explaining that Respondent’s actions were
unjustifiable. The hearing judge determined Maryland Rule 19-301.6 could be considered
in mitigation, but could not be a complete bar to his actions. Thus, the hearing judge found
Respondent violated Rule 19-308.1(b).
Rule 19-308.4: Misconduct
The hearing judge determined that Respondent violated Rule 19-308.4(a), (c), and
(d).10 The hearing judge concluded that Respondent violated Rule 19-308.4(a) because of
9
Md. Rule 19-301.6 reads, in relevant part:
(b) An attorney may reveal information relating to the representation of a
client to the extent the attorney reasonably believes necessary:
***
(5) to establish a claim or defense on behalf of the attorney in a controversy
between the attorney and the client, to establish a defense to a criminal
charge, civil claim, or disciplinary complaint against the attorney based upon
conduct in which the client was involved or to respond to allegations in any
proceeding concerning the attorney’s representation of the client[.]
10
Md. Rule 19-308.4 reads, in relevant part:
It is professional misconduct for an attorney to:
(a) violate or attempt to violate the Maryland Attorneys’ Rules of
Professional Conduct, knowingly assist or induce another to do so, or do so
through the acts of another;
***
(continued . . .)
20
his failure to comply with other Rules of Professional Conduct, including Rules 19-301.1
(Communication), 19-301.15 (Safekeeping Property), 19-308.1 (Bar Admission and
Disciplinary Matters), 19-404 (Trust Account – Required Deposits), 19-408 (Commingling
Funds), and 19-410 (Prohibited Transactions), in the misuse of his attorney trust account,
operating account, and client funds as discussed herein. See Attorney Grievance Comm’n
v. Kaufman, 466 Md. 404, 419, 220 A.3d 316, 325 (2019) (holding that the attorney’s
“failure to comply with the other Rules of Professional Conduct” violated Rule 19-
308.4(a)). The hearing judge also concluded that Respondent violated Rule 19-308.4(c)
by misusing client funds on several occasions based on acts of deceit and dishonesty. See
Attorney Grievance Comm’n v. Somerville, 379 Md. 586, 592, 842 A.2d 811, 814 (2004)
(holding that misusing client funds was dishonest). Finally, the hearing judge found that
Respondent violated Rule 19-308.4(d) by commingling personal funds, using his trust
account for unauthorized purposes, and depositing client funds into his operating account,
rather than his attorney trust account, all of which constitute “engag[ing] in conduct that is
prejudicial to the administration of justice[.]” Md. Rule 19-308.4(d). Pursuant to Rule 19-
308.4, it is professional misconduct to engage in the conduct attributable to Respondent.
Thus, Respondent’s numerous acts of misconduct, as recounted in this section, constitute
professional misconduct in violation of Rule 19-308.4.
(. . . continued)
(c) engage in conduct involving dishonesty, fraud, deceit or
misrepresentation;
(d) engage in conduct that is prejudicial to the administration of justice[.]
21
Rule 19-404: Trust Account – Required Deposits
The hearing judge determined that Respondent violated Rule 19-40411 by
intentionally depositing $5,000.00 of client funds, paid for by investors, into his operating
account, rather than his attorney trust account. The hearing judge recognized that
Respondent may have deposited the funds into his operating account to avoid having the
funds applied against the negative balance in his attorney trust account. However, the
hearing judge determined that this motivation did not preclude a finding that Respondent
violated Rule 19-404.
Rule 19-408: Commingling of Funds
The hearing judge determined that Respondent violated Rule 19-40812 each time he
deposited non-client funds into his attorney trust account to pay his personal and familial
11
Md. Rule 19-404 reads:
Except as otherwise permitted by rule or other law, all funds, including cash,
received and accepted by an attorney or law firm in this State from a client
or third person to be delivered in whole or in part to a client or third person,
unless received as payment of fees owed the attorney by the client or in
reimbursement for expenses properly advanced on behalf of the client, shall
be deposited in an attorney trust account in an approved financial institution.
This Rule does not apply to an instrument received by an attorney or law firm
that is made payable solely to a client or third person and is transmitted
directly to the client or third person.
12
Md. Rule 19-408(a) reads: “An attorney or law firm may deposit in an attorney
trust account only those funds required to be deposited in that account by Rule 19-404 or
permitted to be so deposited by section (b) of this Rule.” The exceptions in subsection (b)
are inapplicable to the instant case.
22
financial obligations. See Attorney Grievance Comm’n v. Webster, 348 Md. 662, 705 A.2d
1135 (1998).
Rule 19-410: Prohibited Transactions
The hearing judge concluded that Respondent violated Rule 19-410(a)13 when he
used client settlement funds designated for Ms. Bernhardt to be used for purposes other
than disbursement to Ms. Bernhardt and allowed, on several occasions, client funds to be
applied to the negative balance in his attorney trust account. The hearing judge also
determined that Respondent violated Rule 19-410(b) when he issued a $900.00 check
payable to cash. Finally, the hearing judge found that Respondent violated Rule 19-410(c)
when he permitted transactions that generated negative ledger balances and maintained
negative balances in his attorney trust account.
13
Md. Rule 19-410 reads:
(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.
23
Md. Code Ann., Bus. Occ. & Prof. § 10-306The hearing judge determined that Respondent’s misuse of funds in his attorney
trust account violated Bus. Occ. & Prof. § 10-306,14 in addition to MARPC Rules 19-
301.15, 19-404, 19-408, and 19-410, by virtue of using the funds in his attorney trust
account for a purpose that was contrary to that for which the funds were entrusted. The
hearing judge also determined that Respondent knowingly and willfully authorized the
Holiday Inn Midtown to withdraw $2,800.00 from his attorney trust account when it
contained insufficient funds to cover the withdrawal, knowingly and willfully deposited
client funds into his attorney trust account recognizing the funds would apply to the
account’s negative balance, and knowingly and willfully deposited client funds into his
operating account rather than his attorney trust account. Based on the knowing and willful
violation by Respondent of Bus. Occ. & Prof. § 10-306, the hearing judge determined
Respondent could be disciplined pursuant to Bus. Occ. & Prof. § 10-307.
Aggravating and Mitigating Factors
We now address the conclusions of the hearing judge regarding the existence of
aggravating and mitigating factors.
14
Bus. Occ. & Prof. § 10-306 reads: “A lawyer may not use trust money for any
purpose other than the purpose for which the trust money is entrusted to the lawyer.” Bus.
Occ. & Prof. § 10-307 provides authority to discipline an attorney for violating § 10-306.
“A lawyer who willfully violates any provision of this Part I of this subtitle, except for the
requirement that a lawyer deposit trust money in an attorney trust account for charitable
purposes under § 10-303 of this subtitle, is subject to disciplinary proceedings as the
Maryland Rules provide.” Bus. Occ. & Prof. § 10-307.
24
In Attorney Grievance Comm’n v. Shuler, 443 Md. 494, 117 A.3d 38 (2015), we
outlined that the following aggravating factors should be considered:
(1) prior attorney discipline; (2) a dishonest or selfish motive; (3) a pattern
of misconduct; (4) multiple violations of the M[A]RPC; (5) bad faith
obstruction of the attorney discipline proceeding by intentionally failing to
comply with the Maryland Rules or orders of this Court [ ]; (6) submission
of false evidence, false statements, or other deceptive practices during the
attorney discipline proceeding; (7) a refusal to acknowledge the
misconduct’s wrongful nature; (8) the victim’s vulnerability; (9) substantial
experience in the practice of law; (10) indifference to making restitution or
rectifying the misconduct’s consequences; (11) illegal conduct, including
that involving the use of controlled substances; and (12) likelihood of
repetition of the misconduct.
Id. at 506-07, 117 A.3d at 46 (alterations in original omitted). In the case at bar, the hearing
judge determined that several aggravating factors were attributable to Respondent. The
hearing judge found that Respondent had substantial experience in the practice of law,
engaged in a pattern of misconduct, committed multiple violations of the MARPC, refused
to acknowledge the misconduct’s wrongful nature, and engaged in deceptive practices
during the course of Petitioner’s investigation. The hearing judge recognized that
Respondent ultimately paid restitution to Ms. Bernhardt, but did so only as a result of
Petitioner’s investigation. We agree.
We have identified the following mitigating factors to be considered in issuing an
appropriate sanction against those who violate the Rules of Professional Conduct:
[A]bsence of a prior disciplinary record; absence of a dishonest or selfish
motive; personal or emotional problems; timely good faith efforts to make
restitution or to rectify consequences of misconduct; full and free disclosure
to disciplinary board or cooperative attitude toward proceedings;
inexperience in the practice of law; character or reputation; physical or
mental disability or impairment; delay in disciplinary proceedings; interim
25
rehabilitation; imposition of other penalties or sanctions; remorse; and
finally, remoteness of prior offenses.
Attorney Grievance Comm’n v. Hodes, 441 Md. 136, 209, 105 A.3d 533, 576 (2014). In
the case at bar, the hearing judge found few mitigating factors. The hearing judge
recognized that Respondent had no prior disciplinary record and attempted to repay Ms.
Bernhardt by “attempting to obtain a home equity loan and ultimately borrowing funds
from his retirement account.” The hearing judge also found that several months after his
first attorney trust account was closed, Respondent opened a new attorney trust account at
Bank of America that did not include check or debit card capabilities. This account has
not fallen into a negative balance.
STANDARD OF REVIEW
Although we have “original and complete jurisdiction and conduct[] an independent
review of the record[,]” we review the hearing court’s findings of fact for clear error.
Attorney Grievance Comm’n v. Whitehead, 405 Md. 240, 253, 950 A.2d 798, 806 (2008)
(internal citations omitted). “The hearing court’s findings of fact are prima facie correct
and will not be disturbed unless they are shown to be clearly erroneous.” Attorney
Grievance Comm’n v. Harrington, 367 Md. 36, 49, 785 A.2d 1260, 1267 (2001) (internal
citations and quotation marks omitted). Where parties have filed exceptions, we “shall
determine whether the findings of fact have been proven by the requisite standard of proof
26
outlined in Md. Rule [19-727(c)].”15 Attorney Grievance Comm’n v. White, 448 Md. 33,
50, 136 A.3d 819, 829 (2016) (internal quotation marks omitted).
We have “the ultimate authority to decide whether a lawyer has violated the
professional rules.” Harrington, 367 Md. at 49, 785 A.2d at 1267 (internal citations and
quotation marks omitted). Therefore, we review the hearing court’s conclusions of law de
novo. Whitehead, 405 Md. at 253, 950 A.2d at 806.
DISCUSSION
Petitioner excepted to the hearing judge’s conclusions of law, and Respondent took
several exceptions to the hearing judge’s findings of fact and conclusions of law. We
discuss each party’s exceptions in turn.
I. Exceptions
A. Petitioner’s Exception
Petitioner excepts to the hearing judge’s conclusion that Respondent violated Rule
19-308.1(a), by falsely misrepresenting to Petitioner that his attorney trust account had a
balance of at least $2,800.00. Petitioner charged Respondent with violating Rule 19-308.1
by intentionally misleading Petitioner regarding the name of the hotel authorized to
withdraw the $2,800.00 from his attorney trust account, and Respondent’s concealment of
Ms. Cone’s identity and contact information. Petitioner did not, however, charge
Respondent with violating Rule 19-308.1 for misrepresenting the amount of money in his
15
Md. Rule 19-727(c) reads: “Bar Counsel has the burden of proving the averments
of the petition by clear and convincing evidence. If the attorney asserts an affirmative
defense or a matter of mitigation or extenuation, the attorney has the burden of proving the
defense or matter by a preponderance of the evidence.”
27
attorney trust account. Although Petitioner agrees with the hearing judge’s conclusion that
this action violated Rule 19-308.1, Petitioner excepts, citing In Re Ruffalo.
In Ruffalo,16 the United States Supreme Court held that, in attorney disciplinary
proceedings, the “charge must be known before the proceedings commence.” In Re
Ruffalo, 390 U.S. 544, 551, 88 S. Ct. 1222, 1226 (1968). Maryland precedent subsequent
to the holding in Ruffalo reinforces this principle. In Attorney Grievance Comm’n v.
Costanzo,17 we vacated the hearing judge’s finding that the attorney violated several
MARPC not charged in the Petition for Disciplinary Action. 432 Md. 233, 256-57, 68
A.3d 808, 821-22 (2013) (citing Ruffalo, 390 U.S. at 551, 88 S. Ct. at 1226). We held that
“tacking-on of disciplinary charges against an attorney without notice of such charges
16
In Ruffalo, John Ruffalo, Jr., (“Mr. Ruffalo”) was sanctioned to an indefinite
suspension by the Supreme Court of Ohio. Mahoning Cnty. Bar Ass’n v. Ruffalo, 176 Ohio
St. 263, 270, 199 N.E.2d 396, 401 (1964). The Supreme Court of Ohio found that Mr.
Ruffalo violated several Ohio Rules of Professional Conduct by “purchas[ing] an interest
in the subject matter of the litigation that he [was] conducting” and “work[ing] against the
interests of his employer[ ] so as to benefit [himself] and his clients[.]” Ruffalo, 176 Ohio
St. at 265, 268, 199 N.E.2d at 398, 400. On petition to the United States Supreme Court,
the Court did not consider the underlying allegations of misconduct. As expressed in-text,
the United States Supreme Court analyzed the necessity of notice in attorney disciplinary
proceedings. Ruffalo, 390 U.S. at 545, 88 S. Ct. at 1223.
17
In Costanzo, the Attorney Grievance Commission brought an attorney
disciplinary proceeding against Frank M. Costanzo (“Mr. Costanzo”). Mr. Costanzo failed
to provide competent and diligent representation, failed to consult with his client regarding
the scope of representation, failed to pursue a viable claim on behalf of his client, failed to
communicate diligently with his client, misused client funds, and abandoned representation
of his client without notice. Costanzo, 432 Md. at 253-57, 68 A.3d at 819-22. This Court
held that Mr. Costanzo violated Maryland Rules 19-301.1, 19-301.2, 19-301.3, 19-301.4,
19-301.15, 19-301.16, 19-308.4, and 16-609 and Md. Bus. Occ. & Prof. § 10-306. Id. at
257, 68 A.3d at 822.
28
deprives the attorney of procedural due process.” Id. at 256, 68 A.3d at 821. In Attorney
Grievance Comm’n v. Patton,18 we sustained Bar Counsel’s exception that facts occurring
after a Petition for Disciplinary Action is filed cannot form the basis of a violation of the
MARPC. 432 Md. 359, 377-78, 69 A.3d 11, 22 (2013).
Based on the holdings in Ruffalo, Costanzo, and Patton, we sustain Petitioner’s
exception on this point. The hearing judge should not have concluded that Respondent
violated Rule 19-308.1 by misrepresenting the amount of funds in his attorney trust
account, because it was not alleged in the Petition.
B. Respondent’s Exceptions
Respondent takes exception to several of the hearing judge’s findings of fact and
conclusions of law.
Respondent excepts to the hearing judge’s finding that Respondent knowingly made
a false statement when he represented to Petitioner that he had $2,800.00 in his attorney
trust account at the time he authorized the Holiday Inn Midtown withdrawal. At the
hearing, Respondent admitted that there were insufficient funds to cover the $2,800.00
authorization. Respondent has maintained that he did not believe the funds would be
disbursed in one lump sum. As the hearing judge found, Respondent was aware there were
18
In Patton, an attorney disciplinary proceeding was brought against Richard
Valentine Patton (“Mr. Patton”). Mr. Patton failed to appear in court for several of his
clients, illegally possessed and used narcotics, continued to represent clients despite his
dependency on narcotics, charged clients unreasonable fees, and was convicted of several
criminal offenses, including illegal possession of a firearm and illegal possession of
narcotics. See Patton, 432 Md. at 364-71, 69 A.3d at 14-18. This Court held that Mr.
Patton’s misconduct violated Maryland Rules 19-301.1, 19-301.2, 19-301.5, 19-301.13,
19-301.16, 19-303.4, 19-308.1, and 19-308.4. Id. at 371, 377-78, 69 A.3d at 18, 21-22.
29
insufficient funds in his attorney trust account. Thus, based on Respondent’s own
testimony, we hold that this finding of fact is not clearly erroneous. See Whitehead, 405
Md. at 254, 950 A.2d at 807 (holding that “the hearing judge’s findings of fact generally
will be accepted unless they are clearly erroneous”).
Respondent again asserts that Maryland Rule 19-301.6 required him to keep Ms.
Cone’s information confidential and excepts to the hearing judge finding that Maryland
Rule 19-301.6 was inapplicable. Although Maryland Rule 19-301.6(a) requires an attorney
to maintain client information confidential, we have held that “the confidentiality duty,
unless exempted by law, must succumb to discovery and the search for truth.” Parler &
Wobber v. Miles & Stockbridge, 359 Md. 671, 705, 756 A.2d 526, 545 (2000).
The confidentiality umbrella of the ethical rule encompasses all
situations except where the evidence is sought from the lawyer through
compulsion of law. In the latter situation, only the attorney-client privilege,
not the broader rule of confidentiality, protects against disclosure. Thus,
relevant evidence sought through discovery, unless protected by the attorney-
client privilege, must be produced and the ethical duty of confidence takes a
back seat to the quest for truth. Stated differently, the search for truth is
paramount to just disposition of cases in controversy and Maryland’s broad
discovery rules take precedent over the attorney’s ethical duty of
confidentiality unless protected by law.
Id. at 689-90, 756 A.2d at 536 (internal citations and quotation marks omitted) (emphasis
in original). In the case at bar, Petitioner sought disciplinary action against Respondent for
mishandling his attorney trust account in relation to his representation of Ms. Cone and
Ms. Bernhardt. Petitioner sought information regarding Ms. Cone and Ms. Bernhardt.
Petitioner lawfully requested the information in compliance with all discovery rules, but
Respondent failed to cooperate with each of Petitioner’s requests. As we have recognized,
30
“[t]he practice of law carries with it special responsibilities of self-regulation, and attorney
cooperation with disciplinary authorities is of the utmost importance to the success of the
process and the integrity of the profession.” Attorney Grievance Comm’n v. Fezell, 361
Md. 234, 255, 760 A.2d 1108, 1119 (2000). Thus, we hold that the hearing judge’s finding
of fact regarding Maryland Rule 19-301.6 was not clearly erroneous. See Whitehead, 405
Md. at 254, 950 A.2d at 807.
II. Conclusions of Law
A. Rule 19-301.1: Competence
Maryland Rule 19-301.1 requires an attorney to provide competent representation
in a client matter. We agree with the hearing judge’s conclusion relative to Respondent’s
violations of Rule 19-301.1.19
In Attorney Grievance Comm’n v. Smith, we held that an attorney “demonstrates
incompetence, and therefore violates Rule 19-301.1, when he [or she] fails to properly
maintain his [or her] client trust account.” 457 Md. 159, 214, 177 A.3d 640, 673 (2018)
(citing Attorney Grievance Comm’n v. Bell, 432 Md. 542, 552, 69 A.3d 1040, 1046 (2013)).
In the case at bar, Respondent failed to properly maintain his attorney trust account for
more than a year. He made several transactions with the account’s debit card feature
knowing there were insufficient funds in the account. Additionally, he failed to ensure that
Ms. Cone’s hotel expenses did not impact funds in his attorney trust account intended for
19
Respondent takes exception to the hearing judge’s finding that he was careless in
the use of his attorney trust account and did not violate Maryland Rule 19-301.1. We
conclude, as the hearing judge did, that Respondent did act carelessly with the trust
account’s debit card information.
31
other clients. Respondent also failed to take measures designed to avoid similar future
charges. Furthermore, Respondent failed to safeguard client funds when he deposited
client funds into his attorney trust account, knowing it would be used to satisfy the negative
balance of the account rather than client expenses. Finally, Respondent operated his law
firm without an attorney trust account from October 2016 to February 2017. We hold, as
the hearing judge did, that each of these actions amounts to a violation of Maryland Rule
19-301.1.
B. Rule 19-301.15: Safekeeping Property
Maryland Rule 19-301.15 requires an attorney to safeguard her or his clients’
property, including client funds. We agree with the hearing judge and hold that Respondent
violated Maryland Rule 19-301.15(a), (b), and (d).
Respondent failed to safeguard the funds of Ms. Bernhardt and other clients when
he authorized the use of his attorney trust account to satisfy Ms. Cone’s expenses.
Respondent failed to safeguard Ms. Cone’s funds when he deposited $5,000.00 of those
funds into his operating account, rather than his attorney trust account. Furthermore,
Respondent deposited funds into his attorney trust account, and used those funds to pay for
personal and familial financial obligations. Finally, Respondent failed to timely deliver
Ms. Bernhardt’s portion of her settlement funds to her but promptly disbursed his portion
to himself. We hold, as the hearing judge did, that each of these actions amounts to a
violation of Maryland Rule 19-301.15(a), (b), and (d).
32
C. Rule 19-308.1: Bar Admission and Disciplinary Matters
Maryland Rule 19-308.1 prohibits an attorney from knowingly making a false
statement during a disciplinary proceeding. We hold that Respondent violated Maryland
Rule 19-308.1.
We sustain Petitioner’s exception to the hearing judge’s conclusion that Respondent
violated Rule 19-308.1 by misrepresenting the amount of funds in his attorney trust account
because it was not alleged in the Petition. As discussed previously, in Ruffalo, the United
States Supreme Court held that, in attorney disciplinary proceedings, the “charge must be
known before the proceedings commence.” 390 U.S. at 551, 88 S. Ct. at 1226. In Costanzo
and Patton, we applied this principle and held that an attorney could not be found to have
violated an MARPC not alleged in the original disciplinary proceeding petition. We hold
here that Petitioner must enumerate all charges against an attorney in its Petition for
Disciplinary Action. Assuming arguendo, that Respondent’s action of misrepresenting the
amount of funds in his attorney trust account violates Maryland Rule 19-308.1, we observe
that Petitioner never charged Respondent with violating Rule 19-308.1 in its Petition.
Therefore, we hold that the violation of Rule 19-308.1 was not sustained.
Respondent, however, consistently failed to disclose Ms. Cone’s identity and
contact information. Maryland Rule 19-308.1(b) prohibits an attorney from “knowingly
fail[ing] to respond to a lawful demand for information from an admissions or disciplinary
authority[.]” Although Rule 19-308.1(b) provides an exception for information protected
by Maryland Rule 19-301.6, as stated above, we agree with the hearing judge that
Respondent, in the case at bar, could not use Maryland Rule 19-301.6 as an excuse for
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failing to disclose Ms. Cone’s identity and contact information. Respondent refused to
provide the lawfully requested information and redacted Ms. Cone’s information from the
records of his attorney trust account and hotel authorization form. We hold Respondent’s
failure to disclose Ms. Cone’s information, after several lawful requests, violated Maryland
Rule 19-308.1(b).
D. Rule 19-308.4: Misconduct
We hold that Respondent violated Maryland Rule 19-308.4(a), (c), and (d).
In Attorney Grievance Comm’n v. Foltz, we restated the well-established principle
that an attorney violates Maryland Rule 19-308.4(a) when she or he violates other
professional rules. 411 Md. 359, 395, 983 A.2d 434, 456 (2009). In violating MARPC
Rules 19-301.1, 19-301.15, 19-308.1, 19-308.4, 19-404, 19-408, 19-410 and Bus. Occ. &
Prof. § 10-306, Respondent violated Maryland Rule 19-308.4(a).
In Attorney Grievance Comm’n v. Somerville, we held that misappropriating funds
amounts to an “act infected with deceit and dishonesty,” in violation of Maryland Rule 19-
308.4(c). 379 Md. 586, 593, 842 A.2d 811, 815 (2004) (quoting Attorney Grievance
Comm’n v. Spery, 371 Md. 560, 568, 810 A.2d 487, 491-92 (2002)) (additional citations
omitted). As reflected above, Respondent misappropriated client funds on several
occasions. Respondent consistently maintained a negative balance in his attorney trust
account. He failed to ensure that Ms. Bernhardt’s settlement proceeds would be maintained
in his attorney trust account. In addition, Respondent’s actions following the discovery of
the misappropriation of Ms. Bernhardt’s settlement funds were also deceitful; he failed to
immediately remedy the situation with Ms. Bernhardt, collected over $18,000.00 in
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attorney’s fees without paying Ms. Bernhardt her portion of the settlement funds, and
repeatedly misrepresented to Ms. Bernhardt that he would disburse to her, her portion of
the settlement funds. Respondent knowingly deposited $5,000.00 of Ms. Cone’s funds into
his operating account rather than his attorney trust account. Respondent’s actions
constitute a violation of Maryland Rule 19-308.4(c).
Finally, we hold that Respondent violated Maryland Rule 19-308.4(d). In Attorney
Grievance Comm’n v. Brady, we held that “conduct prejudicial to the administration of
justice is that which reflects negatively on the legal profession and sets a bad example for
the public at large.” 422 Md. 441, 460, 30 A.3d 902, 913 (2011) (internal citations and
quotation marks omitted). In Attorney Grievance Comm’n v. Mungin, we held that “[a]
lawyer’s mishandling of his or her attorney trust account can [ ] constitute conduct that is
prejudicial to the administration of justice.” 439 Md. 290, 315, 96 A.3d 122, 136 (2014).
In the case at bar, as stated, Respondent knowingly mishandled his attorney trust account
in relation to Ms. Cone, Ms. Bernhardt, and other clients. Respondent failed to disburse
funds appropriately and promptly. Respondent’s misconduct in handling his attorney trust
account and client funds, reflects negatively on the legal profession. As such, we hold
Respondent violated Maryland Rule 19-308.4(d).
E. Rule 19-404: Trust Account – Required Deposits
Maryland Rule 19-404 requires an attorney to deposit client funds into her or his
attorney trust account. As previously discussed, Respondent received a $5,000.00 check
from an investor to be used for the representation of Ms. Cone. Upon receiving this check,
Respondent deposited it into his operating account rather than his attorney trust account as
35
required by Maryland Rule 19-404. Thus, we hold that Respondent violated Maryland
Rule 19-404 by failing to deposit $5,000.00 of Ms. Cone’s funds into his attorney trust
account.
F. Rule 19-408: Commingling of Funds
Maryland Rule 19-408 forbids an attorney from commingling client and personal
funds in her or his attorney trust account. In Attorney Grievance Comm’n v. Webster, we
held that “when an account is designated an attorney trust account, . . . [u]se of the trust
account for personal purposes while still designated a trust account, even if it was no longer
intended that the account be used for trust purposes, is prohibited.” 348 Md. 662, 677, 705
A.2d 1135, 1142 (1998). In the case at bar, Respondent deposited familial and personal
funds into his attorney trust account to pay for non-client obligations on several occasions,
thereby commingling client and personal funds in his attorney trust account. Each time he
deposited non-client funds into his attorney trust account, Respondent violated Maryland
Rule 19-408.
G. Rule 19-410: Prohibited Transactions
Maryland Rule 19-410(a) generally prohibits attorneys from using funds for any
unauthorized purposes. Respondent was only authorized to disburse Ms. Bernhardt’s
settlement funds to her, or her representative; as such, when Respondent allowed Ms.
Bernhardt’s funds to be used for other unauthorized purposes, he violated Maryland Rule
19-410(a). Respondent also violated Maryland Rule 19-410(a) when he allowed client
funds to be applied to the negative balances in his attorney trust account on several
occasions. Respondent was not authorized to use the client funds in his attorney trust
36
account to maintain a positive account balance. Thus, by allowing client funds to apply to
the negative balances in his attorney trust account, Respondent used these funds for
unauthorized purposes and violated Maryland Rule 19-410(a).
Maryland Rule 19-410(b) requires attorneys to disburse funds from an attorney trust
account by check or electronic transfer. “[A]n 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.” Md. Rule 19-410(b). Respondent violated Maryland
Rule 19-410(b) when he issued a $900.00 check payable to cash. Although Respondent
may have issued this check for Ms. Cone and delivered the cash to her, the action of issuing
a check payable to cash violates Maryland Rule 19-410(b).
Finally, Maryland Rule 19-410(c) requires an attorney to maintain a positive
balance in her or his attorney trust account. If disbursement of funds would create a
negative balance in the attorney’s trust account, the attorney shall not disburse the funds.
Respondent maintained an attorney trust account with a negative balance. He generated
several transactions that resulted in a negative balance in his attorney trust account. These
actions constitute a violation of Maryland Rule 19-410(c).
H. Md. Code Ann., Bus. Occ. & Prof. § 10-306Bus. Occ. & Prof. § 10-306 also prohibits an attorney from using funds in her or his
attorney trust account for any purpose other than “for which the trust money [was]
entrusted to the [attorney].” Client funds in attorney trust accounts may only be used for
the specific client for which they were deposited. In the instant case, Respondent misused
client funds on several occasions, in violation of MARPC Rules 19-301.15, 19-404, 19-
37
408, and 19-410, by virtue of using the funds in his attorney trust account for a purpose
that was contrary to that for which the funds were entrusted. Respondent allowed client
funds in his attorney trust account to be applied to the account’s negative balance and
deposited client funds into his operating account rather than his attorney trust account, as
is required by the Maryland Rules. As such, Respondent also violated Bus. Occ. & Prof.
§ 10-306 by misusing his client funds. We agree with the hearing judge’s determination
and hold that Respondent knowingly and willfully violated Bus. Occ. & Prof. § 10-306
because Respondent was keenly aware of his actions leading to the misuse of client funds.
SANCTION
In determining an appropriate sanction, “we are motivated by our obligation to
protect members of the public from attorneys who have demonstrated that they are unfit
for the practice of law.” Attorney Grievance Comm’n v. Kaufman, 466 Md. 404, 428, 220
A.3d 316, 330 (2019); see also Attorney Grievance Comm’n v. Zuckerman, 386 Md. 341,
375, 872 A.2d 693, 713 (2005) (holding that we seek to “protect the public, to deter other
lawyers from engaging in violations of the Maryland Rules of Professional Conduct, and
to maintain the integrity of the legal profession”). “[T]he appropriate sanction for [ ]
violation[s] of the M[A]RPC depends on the facts and circumstances of each case,
including consideration of any mitigating factors” and aggravating factors. Zuckerman,
386 Md. at 375, 872 A.2d at 713 (internal citations omitted). Ultimately, “we impose a
sanction that is commensurate with the nature and gravity of the violations and the intent
with which they are committed.” Id. (internal citations and quotation marks omitted).
38
We hold that Respondent violated MARPC Rules 19-301.1 (Competence), 19-
301.15 (Safekeeping Property), 19-308.1 (Bar Admission and Disciplinary Matters), 19-
308.4 (Misconduct), 19-404 (Trust Account – Required Deposits), 19-408 (Commingling
of Funds), and 19-410 (Prohibited Transactions) and Bus. Occ. & Prof. § 10-306 (Trust
Money Restrictions). We also confirm the existence of the following aggravating factors:
(1) substantial experience in the practice of law, (2) a pattern of misconduct, (3) multiple
violations of the MARPC, (4) failure to acknowledge the misconduct’s wrongful nature,
(5) failure to make restitution timely, and (6) deceptive practices during the attorney
discipline proceeding.
In similar cases involving misuse of funds, mishandling of an attorney trust account,
and dishonesty, we have found that disbarment or indefinite suspension are appropriate
sanctions. In Attorney Grievance Comm’n v. McLaughlin, we indefinitely suspended an
attorney who misappropriated client funds, overdrew funds on his attorney trust account,
used client funds to cure the overdraft issues, paid personal expenses with funds from his
attorney trust account, commingled personal funds with client funds in his attorney trust
account, and issued checks from his attorney trust account payable to cash. 409 Md. 304,
328, 974 A.2d 315, 329 (2009). We found these actions violated MARPC Rules 19-301.8,
19-301.15, 19-308.1, 19-308.4(c) and (d), 16-607, 16-609, and Bus. Occ. & Prof. § 10-306.
Id. at 319, 974 A.2d at 324. Instead of disbarring the attorney, we chose to indefinitely
suspend him because we recognized that the attorney acted negligently, rather than
intentionally, and possessed no aggravating factors. Id. at 329, 974 A.2d at 329.
39
In Attorney Grievance Comm’n v. Zdravkovich, on the other hand, we disbarred the
attorney for misappropriating client funds, regardless of whether the client suffered actual
financial loss. 381 Md. 680, 704, 852 A.2d 82, 96 (2004). We held that “misappropriation
is a most egregious violation even without actual loss, because the failure to keep client
funds separate subjects the funds to the claims of creditors of the lawyer. The rule is
concerned with the risk of loss, not only the actual loss.” Id. “Intentional misappropriation
of funds entrusted to an attorney’s care is an act infected with deceit and dishonesty and,
in the absence of compelling extenuating circumstances justifying a lesser sanction, will
result in disbarment.” Id. (internal citations and quotation marks omitted). We found that
the attorney’s actions violated Bus. Occ. & Prof. § 10-306 and MARPC Rules 19-301.15,
19-308.1, and 19-308.4(b), (c), and (d).
Similarly, in Attorney Grievance Comm’n v. Thomas, we disbarred the attorney for
intentionally misusing client funds. 409 Md. 121, 973 A.2d 185 (2009). We found that
the attorney’s actions violated Bus. Occ. & Prof. §§ 10-306 and 10-307 and MARPC Rules
19-301.15 and 19-308.4(b) and (c). Id. at 150, 154, 163, 973 A.2d at 205, 210. We also
recognized the attorney possessed no mitigating factors. Id. at 167-68, 973 A.2d at 212-
13. Thus, we held that the attorney’s actions and lack of mitigating factors supported the
sanction of disbarment. Id. at 175, 973 A.2d at 218.
In the case at bar, Respondent contends that a reprimand is an appropriate sanction,
while Petitioner argues for disbarment. Respondent violated several of the same Rules as
the attorney in McLaughlin, intentionally misappropriated client funds similar to the
attorney in Zdravkovich, and engaged in acts of dishonesty similar to the attorney in
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Thomas. Unlike the attorney in McLaughlin, Respondent acted knowingly and
intentionally, rather than negligently. He continues to blame Ms. Cone, a former client,
for his misconduct and fails to take responsibility. Respondent places great weight on his
lack of a prior disciplinary record, but fails to acknowledge the aggravating factors.
Although Respondent attempted to rectify the situation with Ms. Bernhardt by using his
own funds, Respondent failed to do so timely, and only provided restitution after Petitioner
initiated its investigation. Respondent consistently misled Ms. Bernhardt to believe that
he was actively engaged in the recovery of her settlement funds. Following precedent and
considering the aggravating factors presented, we hold that Respondent’s conduct warrants
the ultimate sanction of disbarment.
IT IS SO ORDERED; RESPONDENT
SHALL PAY ALL COSTS AS TAXED
BY THE CLERK OF THIS COURT,
INCLUDING COSTS OF ALL
TRANSCRIPTS, PURSUANT TO
MARYLAND RULE 19-709 (d), FOR
WHICH SUM JUDGMENT IS
ENTERED IN FAVOR OF THE
ATTORNEY GRIEVANCE
COMMISSION AGAINST DAVID
ELLIOTT FRANK.
41
The correction notice(s) for this opinion(s) can be found here:
https://mdcourts.gov/sites/default/files/import/appellate/correctionnotices/coa/2a19agcn.pdf
https://mdcourts.gov/sites/default/files/import/appellate/correctionnotices/coa/2a19agcn2.pdf