IMO a Member of the Bar of the Supreme Court of Delaware

IN THE SUPREME COURT OF THE STATE OF DELAWARE
IN THE MATTER OF A MEMBER §
OF THE BAR OF THE SUPREME § No. 10, 2021
COURT OF DELAWARE: §
§ Board Case No. 114137-B
BRIAN P. GLANCY, §
§
Respondent. §
Submitted: January 26, 2021
Decided: February 5, 2021
Before SEITZ, Chief Justice; VALIHURA and MONTGOMERY-
REEVES, Justices.
ORDER
It appears to the Court that:
(1) This is a lawyer disciplinary proceeding. On January 8, 2021 a
panel of the Board on Professional Responsibility (“the Board”) filed its
Report with this Court, recommending that the respondent, Brian P. Glancy,
be publicly reprimanded and subject to specific conditions. Neither the Office
of Disciplinary Counsel (“ODC”) nor Glancy has filed any objections to the
Board’s report.
(2) The Court has considered the matter carefully. Glancy admitted
the ethical violations alleged in the ODC’s petition against him. The Board
carefully considered Glancy’s ethical violations, his negligent state of mind,
the potential injury and actual injury, the presumptive sanction, and all of the
applicable aggravating and mitigating factors. Under the circumstances, we
find the Board’s recommendation of a public reprimand and the imposition of
specific conditions to be appropriate. Thus, we accept the Board’s findings
and recommendation for discipline and incorporate the Board’s findings and
recommendation by reference.
NOW, THEREFORE, IT IS ORDERED that the Board’s Report filed
on January 8, 2021 (attached hereto) is ACCEPTED. The Office of
Disciplinary Counsel shall disseminate this Order in accordance with Rule 14
of the Delaware Lawyers’ Rules of Disciplinary Procedure.
BY THE COURT:
/s/ Collins J. Seitz, Jr.
Chief Justice
2
EFiled: Jan 08 2021 05:20PM EST
Filing ID 66240102
Case Number 10,2021
BOARD ON PROFESSIONAL RESPONSIBILITY
OF THE
SUPREME COURT OF THE STATE OF DELAWARE
IN THE MATTER OF A MEMBER )
OF THE BAR OF THE SUPREME ) CONFIDENTIAL
COURT OF THE STATE OF )
DELAWARE: ) Board Case No. 114137-B
)
BRIAN P. GLANCY, )
Respondent. )
REPORT AND RECOMMENDATION OF THE BOARD
UPON THE PETITION FOR DISCIPLINE
I. PROCEDURAL BACKGROUND
Pending before a panel of the Board on Professional Responsibility (the
“Board”) is a Petition for Discipline filed by the Office of Disciplinary Counsel (the
“ODC”) on September 2, 2020, in Board Case No. 114137–B (the “Petition”) against
Brian P. Glancy, Esquire (“Respondent”), a member of the Bar of the Supreme Court
of the State of Delaware.
The Petition alleged violations of Rules 1.15(a), 1.15(d), 8.4(c), and 8.4(d) of
the Delaware Lawyers’ Rules of Professional Conduct. See Petition ¶¶ 32-39.
Respondent, through his counsel, Charles Slanina, Esquire, filed an Answer to the
Petition on September 22, 2020 (the “Answer”).
Page 1 of 28
In accordance with a Notice of Hearing issued October 12, 2020, the Board
convened a hearing (the “Hearing”) by the panel on November 12, 2020.1 The
members of the panel of the Board were Theresa Ballard, Carolyn M. McNeice, and
Joseph C. Schoell, Chair (the “Panel”). Patricia Bartley Schwartz, Esquire,
represented the ODC. Charles Slanina, Esquire, represented Respondent.
On November 11, 2020, the ODC and Respondent submitted to the Panel a
Stipulation of Admitted Facts and Violations and Joint Recommendation of
Sanctions (the “Stipulation”). Appended to the Stipulation were eighteen Exhibits,
which were identical to the Exhibits appended to the ODC’s Petition.
At the Hearing, the Panel heard testimony from Respondent, and from Brian
F. Funk, Esquire, a member of the Delaware Bar.
II. FACTUAL FINDINGS
Since Respondent’s Answer had admitted the violations alleged in the
Petition, the ODC, Respondent, and the Panel treated the Hearing as relating
primarily to the appropriate sanction. (Tr. 5:22-7:11 (Opening Statement of Mr.
Slanina))
1
In the interests of minimizing health risks associated with the COVID-19 virus,
the Panel’s Hearing was conducted remotely through the Zoom platform. The
transcript of the Hearing was circulated to the members of the Panel on December
28, 2020. The transcript of the Hearing is cited in this Report and Recommendation
as “Tr. __.”
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The Exhibits submitted with the Stipulation consist of:
(1) A Certificate of Formation for Strata Law-DE, LLC, a Delaware limited
liability company, dated as of October 13, 2016;
(2) Email correspondence of Ms. Schwartz and Mr. Slanina dated February
5, 2019;
(3) A Wells Fargo Bank, N.A. (“Wells Fargo”) account statement for the
Strata Law Delaware Real Estate Settlement Account (account no.
) for the period April 1 through April 30, 2017, with
outstanding check detail and trial balance report;
(4) A Wells Fargo account statement for the Strata Law Delaware Real
Estate Settlement Account (account no. ) for the period
October 1 through October 31, 2017, with outstanding check detail and
trial balance report;
(5) A Wells Fargo account statement for the Strata Law Delaware Real
Estate Settlement Account (account no. ) for the period
February 1 through February 28, 2018, with reconciliation statement;
(6) A Wells Fargo account statement for the Strata Law Delaware Real
Estate Settlement Account (account no. ) for the period
August 1 through August 31, 2018;
(7) A Wells Fargo account statement for the Strata Law Delaware Real
Estate Settlement Account (account no. ) for the period
September 1 through September 30, 2018;
(8) Wells Fargo account statements for the Strata Law Delaware Rule
1.15A Attorney Trust Account (account no. ) for the period
December 1, 2016 through September 30, 2017;
(9) A Wells Fargo account statement for the Strata Law Delaware Rule
1.15A Attorney Trust Account (account no. ) for the period
May 1 through May 31, 2018;
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(10) A Wells Fargo account statement for the Strata Law Delaware Rule
1.15A Attorney Trust Account (account no. ) for the period
June 1 through June 30, 2018;
(11) A Wells Fargo account statement for the Strata Law Delaware Rule
1.15A Attorney Trust Account (account no. ) for the period
July 1 through July 31, 2018;
(12) Email correspondence of Respondent and Jenn Letzkus of Community
Closing Network (“CCN”) dated July 9, 2018, together with
correspondence to Respondent from Bunny J. Christopher, Executive
Director of the Lawyer Fund for Client Protection (the “LFCP”) dated
July 9, 2018;
(13) Email correspondence of Jenn Letzkus of CCN with Wendell Sammons
of Wells Fargo dated July 16 and July 17, 2018;
(14) A Wells Fargo account statement for the Strata Law Delaware Rule
1.15A Attorney Trust Account (account no. ) for the period
August 1 through August 31, 2018;
(15) A Wells Fargo account statement for the Strata Law Delaware Rule
1.15A Attorney Trust Account (account no. ) for the period
September 1 through September 30, 2018;
(16) Three notices from Wells Fargo to the ODC dated September 12, 2018,
September 20, 2018, and September 25, 2018;
(17) Internet printouts from the Louisiana Secretary of State related to
certain businesses associated with Patricia L Howell, with a mailing
address located in Lafayette, Louisiana; and
(18) Respondent’s Certificates of Compliance, as submitted to the Delaware
Supreme Court for 2017 (submitted March 1, 2017) and 2018
(submitted February 28, 2018).
The Exhibits are not disputed, have been stipulated to by the parties, and are
deemed admitted into evidence by the Panel.
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Based on the factual allegations of the Petition admitted by Respondent and
the credible uncontroverted testimony received at the Hearing from Respondent, and
the submitted exhibits, the Panel makes the factual findings which follow.
Respondent is a member of the Bar of the Supreme Court of Delaware, having
been admitted in 1986. (Stipulation ¶ I (1); Tr. 10:3-5) Since his admission to the
Bar, Respondent has been engaged in the practice of law, initially with the law firm
of O’Donnell & Hughes and later with the firms of Schlusser & Reiver, and Hughes,
Sisk & Glancy. (Tr. 10:6-11:18) Respondent started as a general practitioner, but
over time his practice gravitated toward transactional work and residential real estate
settlements in particular. (Tr. 11:19-12:1) In 2002, Respondent commenced
employment with a Maryland-based law firm called Bouland & Brush, LLC. The
Bouland & Brush firm was affiliated with Fountainhead Title Group
(“Fountainhead”), and Respondent handled real estate closings for the firm in
Delaware and served as its only Delaware attorney. (Tr. 12:2-13:4)
From 2008 until October 2016, Respondent was employed by and managed
the Delaware office of Strata Law, LLC (“Strata Law”). Strata Law was a Delaware
limited liability company owned by two Maryland attorneys who had started with
Fountainhead, which had merged with a different company known as RGS Title.
(Tr. 13:5-14:4) At all times relevant to the Petition, Respondent was responsible for
certifying that the books and records for the Delaware office of Strata Law were in
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compliance with Rule 1.15 of the Delaware Lawyers’ Rules of Professional
Conduct. (Stipulation ¶ I (2); Tr. 14:5-10)
The Delaware office of Strata Law maintained two accounts with Wells Fargo
(together, the “Strata Law Wells Fargo Trust Accounts”): (i) the Delaware Real
Estate Settlement Account (Account No. ) (“Account ”), and
(ii) the Delaware Rule 1.15A Attorney Trust Account (Account No. )
(“Account ”). 2
In the fall of 2016, Strata Law was sold to a different Maryland-based title
company called Community Closing Network (as defined above, CCN). (Tr. 14:19-
15:2) In October 2016, Respondent formed Strata Law-DE, LLC (“Strata Law-
DE”), as a new entity to continue his practice with the “Strata Law” name.
(Stipulation ¶ I (5); Tr. 15:3-22) Respondent opened new trust accounts for Strata
Law-DE with M&T Bank. Respondent did not close the Strata Law Wells Fargo
Trust Accounts. (Stipulation ¶ I (7); Tr. 15:23-16:12)
As of December 31, 2016, there were at least 136 checks outstanding in
Account . The checks had been issued between February 2013 and September
2
According to Respondent’s Certificates of Compliance, the full title for Account
was “Strata Law, LLC, Rule 1.15A Attorney Trust Account/Real Estate
Settlement Account.” The full title for Account was “Strata Law, LLC IOLTA
Delaware Real Estate Settlement Account DE Rule 1.15A Attorney Trust Account.”
(See Stipulation, Exhibit 18, Item 3.1)
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2016. (Stipulation ¶ I (8), Exhibit 3) The accounts had been used for a large volume
of real estate settlements, and the amounts of the outstanding checks were comprised
of many small sums. (Tr. 21:21-23:22)3
From December 2016 through September 30, 2017, Respondent continued to
use Account for real estate transactions. (Stipulation ¶ I (15), Exhibit 8)
At some point in time after the closing of the original Strata Law firm,
Respondent no longer received account information related to the Strata Law Wells
Fargo Trust Accounts. (Tr. 17:1-11) Respondent understood that the new owners of
the old Strata Law firm were safeguarding and managing the Strata Law Wells Fargo
Trust Accounts. (Tr. 28:19-29:6) In early 2018, Respondent heard from one of
Strata Law’s founders that they intended to wind down all of the Stata Law accounts,
and escheat any remaining funds to the State of Maryland. Respondent objected to
any proposal to escheat property for Delaware real estate settlements under a
Maryland escheat procedure. (Tr. 17:12-22)
During May 2018, a total of six unauthorized electronic transfers were made
out of Account . The account statement for Account identifies transfers
totaling $13,217.55 out of Account to “Business to Business ACH Debit –
3
Respondent explained in his testimony at the Hearing that the Strata Law firm had
been handling “50, 60 plus settlements a month over many years.” (Tr. 22:4-5)
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Capital One Phone.” All of the entries include the name “Patricia.” (Stipulation ¶ I
(16), Exhibit 9)
During June 2018, a total of twelve unauthorized electronic transfers were
made out of Account . This includes ten transfers totaling $17,358.28 to
“Business to Business ACH Debit – Capital One Phone,” and two transfers totaling
$719.93 to “ATT Payment.” All twelve transactions contain the name “Patricia” at
the end of the entry. (Stipulation ¶ I (17), Exhibit 10)
During July 2018, ten unauthorized electronic transfers were made out of
Account . Eight transfers totaling $13,358.01 were transferred from Account
to “Business to Business ACH Debit – Capital One Phone.” These eight
transfers include the name “Patricia” at the end of the entry. Two other transfers
totaling $1,260.63 were to “Lafayette Consol.” These transfers included the notation
“Strata LLC” in the entry. (Stipulation ¶ I (18), Exhibit 11)
On July 9, 2018, Respondent was notified by the LFCP that Strata Law-DE
had been selected for audit by the LFCP. (Stipulation, Exhibit 12) Respondent
forwarded the correspondence notifying him of the audit to Jenn Letzkus with CCN.
Ms. Letzkus replied and informed Respondent that Account had not been
reconciled since September 30, 2017 (Stipulation ¶ I (19), Exhibit 12)
On July 16, 2018, Wendell Sammons, a Vice President with Wells Fargo,
notified Respondent and Ms. Letzkus of unusual activity in Account . On July
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17, 2018, Ms. Letzkus responded to Mr. Sammons (copying Respondent) that the
ACH transactions in Account were fraudulent and the account should be frozen
from ACH transactions. (Stipulation ¶ I (20), Exhibit 13) Based on his
correspondence with Wells Fargo and Ms. Letzkus, Respondent understood that any
unauthorized activity in connection with the accounts had been halted and that
“everything was taken care of and safe.” (Tr. 18:6-22)
Notwithstanding the July 17, 2020 correspondence with Wells Fargo, Account
was subject to further unauthorized transactions in August and September
2018. During August 2018, $100,500 was transferred from Account to
Account . Thereafter, twelve unauthorized electronic transfers totaling
$22,721.63 were made from Account to “Business to Business ACH Debit –
Capital One Mobile.” The entries for these transactions included the name “Patricia”
or “Dieguez” at the end of each entry. Nine unauthorized transfers, totaling
$73,976.94, were made from Account to “Business to Business ACH Debit -
The Beet, A Cold Sale.” These two transfers included the name “Brian Glancy” at
the end of the entry (Stipulation ¶ I (21), Exhibit 14)
In September 2018, six unauthorized electronic transfers were made from
Account . The transfers totaled $9,502.58 and were to “Business to Business
ACH Debit – Capital One Mobile.” The six transfers include the name “Dieguez”
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at the end of the entry. Three of the transfers were returned for insufficient funds
(Stipulation ¶ I (22), Exhibit 15)
Respondent testified that he learned later that, after the activity in the Strata
Law Wells Fargo Trust Accounts was reported as fraudulent and unauthorized in
July 2018, some person called Wells Fargo pretending to be Respondent and had the
accounts un-frozen. (Tr. 18:16-22)
Between September 12 and September 25, 2018, Wells Fargo sent three
notices of overdrafts on Account to the ODC. (Stipulation ¶¶ I (23-25), Exhibit
16)
To summarize, over the course of 2018 the Strata Law Wells Fargo Trust
Accounts were subject to numerous unauthorized and fraudulent transfers during the
period from May 2018 through September 2018. In all, these transactions resulted
in theft in the amount of $150,854.92. (Stipulation ¶ I (33)) It is undisputed that
Respondent had no knowledge of or involvement with the unauthorized electronic
transfers as summarized above. (See Stipulation ¶¶ I (16-18, 21-22); Tr. 21:15-20)
In his testimony before the Panel, Respondent provided additional
information and background related to the Strata Law Wells Fargo Trust Accounts,
and what was learned concerning the unauthorized transfers from those accounts in
2018. After learning of the unauthorized transfers, Respondent was informed that
there was a lengthy investigation focusing on fraud committed by an individual in
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the State of Louisiana. (Tr. 18:23-21:9) Respondent understood that state or federal
law enforcement authorities were involved in the investigative process, but was not
contacted by such authorities. (Tr. 20:4-12) Although certain evidence submitted
in this matter suggests that an individual named Patricia L. Howell of Louisiana may
had some involvement with the unauthorized transfers, the Panel is unable to discern
exactly how the fraudulent transfers from the Strata Law Wells Fargo Trust
Accounts were accomplished or who caused or facilitated the fraudulent activity.
(See Stipulation, Exhibits 9 & 17; Tr. 18:23-19:13)
In an effort to address and remediate the fraud committed with respect to the
Strata Law Wells Fargo Trust Accounts, Respondent opened a new account with
about $60,000 of his own funds. Respondent has endeavored to find payees for
checks issued from the Strata Law Wells Fargo Trust Accounts, and to pay amounts
due to such payees to the extent that he can locate them. As of the date of the
Hearing, Respondent had paid out approximately $35,000.00 to payees that he was
able to identify and locate. (Tr. 23:23-24:17) As of the date of the Hearing,
Respondent indicated that he expected to get through the backlog of payees for the
Strata Law Wells Fargo Trust Accounts in about four months, and to pay those who
could be located with reasonable effort. (Tr. 36:6-37:21) The remediation efforts
undertaken by Respondent have not been assisted with any funds recovered from
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those committing the fraud from the accounts. Nor has Respondent been assisted by
the former principals of Strata Law or Wells Fargo. (Tr. 19:14-20:3; 21:10-14)
Respondent’s Certificates of Compliance, submitted pursuant to Rule of
Professional Conduct 1.15 for the years 2017 and 2018, contained
misrepresentations concerning the status of Strata Law’s books and records.
Respondent answered “YES” when he should have answered “NO” to items 2.5, 2.6,
2.9 and 2.12.4 The Stipulation and Respondent’s Answer concede the
misrepresentations. (Stipulation ¶ I (31); Answer ¶ 31) Respondent testified that he
included the Strata Law accounts on his Certificates of Compliance without giving
a great deal of thought to the matter, and that he understood the accounts remained
his responsibility but thought they were being properly maintained. (Tr. 27:20-
4
On the Certificates of Compliance, Question 2.5 states: “Other than the minimum
amount of non-fiduciary funds allowable (no more than $2000 to cover bank service
charges), only funds held in a fiduciary capacity are held in any attorney trust/escrow
account. Other funds, including earned fees, are not commingled with escrow
funds.” Question 2.6 states: “Check register balances for all bank accounts are
reconciled monthly to bank statement balances.” Question 2.9 states: “With respect
to attorney trust/escrow account(s), the reconciled end-of-month cash balance agrees
with the total of the client balance listing of the client subsidiary ledger.” Question
2.12 states: “With respect to attorney trust/escrow account(s), for those fiduciary
funds which should be disbursed and for which checks have been issued in an
attempt to disburse funds, all checks have cleared within six months from the date
of issuance OR for each check which has not cleared within six months, steps are
promptly being taken to contact the payees to determine the reason the checks were
not deposited, and replacement checks are being issued, as necessary or appropriate;
with regard to abandoned or unclaimed trust funds, these account(s) comply with
Supreme Court Rule 72.” (Stipulation, Exhibit 18)
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28:12) Respondent acknowledged that he should have been attending to the
accounts to resolve any unpaid checks. (Tr. 28:12-14)
Respondent was the subject of discipline for similar conduct to the conduct at
issue in this matter in 2006. (Stipulation ¶ II (3)) On November 1, 2006, the ODC
issued a private admonition to Respondent related to the books and records of the
firm of Bouland & Brush. The private admonition related to the failure to timely
reconcile accounts of Bouland & Brush and resulting overdrafts on the escrow
account for which Respondent was responsible while he was employed with
Bouland & Brush. (Tr. 24:22-26:20)
During his testimony before the Panel, Respondent expressed remorse over
the problems with the Strata Law Wells Fargo Trust Accounts and related matters.
He testified that the experience was personally embarrassing and mortifying. (Tr.
26:21-28:14) He also took responsibility his actions. (Tr. 28:15-29:8)
Following the conclusion of Respondent’s testimony, the Panel heard
testimony from Brian F. Funk, Esquire. Mr. Funk is a member of the Bar of the
Supreme Court of the State of Delaware. (Tr. 40:7-11) Mr. Funk testified that he
knows Respondent professionally, and Respondent has an excellent reputation
among members of the Bar who practice the area of real estate, and among other real
estate professionals. (Tr. 42:17-43:22) Mr. Funk also testified that Respondent has
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helped him with complex real estate issues for the benefit of his clients. (Tr. 41:19-
42:16)
III. STANDARD OF PROOF
Allegations of professional misconduct must be established by the ODC by
clear and convincing evidence. Delaware Lawyers’ Rules of Disciplinary
Procedure, Rule 15(c). Based upon Respondent’s admission of the material
elements of the violations in both his Answer and the Stipulation, the Panel finds
that the ODC has satisfied its burden.
IV. FINDINGS ON VIOLATIONS OF THE RULES
COUNT ONE: RESPONDENT FAILED TO SAFEGUARD CLIENT FUNDS
IN VIOLATION OF RULE 1.15(a)
Rule 1.15(a) requires that a lawyer holding the property of clients or third
persons shall identify and appropriately safeguard such property. By failing to
safeguard client funds in Account and Account , Respondent exposed
funds in these accounts to theft of $150,854.92 in violation of Rule 1.15(a).
(Stipulation ¶¶ I (32-33))
COUNT TWO: RESPONDENT FAILED TO MAINTAIN BOOKS AND
RECORDS IN VIOLATION OF RULE 1.15(d)
Rule 1.15(d) sets forth detailed and specific requirements for the maintenance
of attorneys’ books and records and handling of practice-related funds. Respondent
failed to properly maintain his books and records in violation of Rule 1.15(d) in that:
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(1) Respondent failed to prepare monthly bank reconciliations for Account ;
(2) Respondent failed to take steps to identify and contact the payees of more than
130 outstanding checks for Account ; (3) Respondent failed to comply with the
requirements of Supreme Court Rule 73 with respect to abandoned or unclaimed
trust funds for Account ; and (4) Respondent failed to promptly transfer earned
legal fees out of Account . (Stipulation ¶ I (34-35))
COUNT THREE: RESPONDENT ENGAGED IN CONDUCT INVOLVING
MISREPRESENTATION IN VIOLATION OF RULE 8.4(c)
Rule 8.4(c) provides that it is professional misconduct for a lawyer to “engage
in conduct involving dishonesty, fraud, deceit or misrepresentation.” By filing with
the Delaware Supreme Court in 2017 and 2018 Certificates of Compliance which
included inaccurate representations relating to the maintenance of Strata Law’s
books and records, Respondent engaged in conduct involving misrepresentation in
violation of Rule 8.4(c). (Stipulation ¶¶ I (36-37))
COUNT FOUR: RESPONDENT ENGAGED IN CONDUCT PREJUDICIAL
TO THE ADMINISTRATION OF JUSTICE IN VIOLATION
OF RULE 8.4(d)
Rule 8.4(d) provides that it is professional misconduct for a lawyer to “engage
in conduct that is prejudicial to the administration of justice.” The Delaware
Supreme Court relies upon the representations made by attorneys in the Certificates
of Compliance filed each year in the administration of justice governing the practice
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of law in Delaware. By filing with the Delaware Supreme Court in 2017 and 2018
Certificates of Compliance which included inaccurate representations relating to the
maintenance of Strata Law’s books and records, Respondent violated Rule 8.4(d).
(Stipulation ¶¶ I (38-39))
V. RECOMMENDED SANCTION
In their Stipulation, the ODC and Respondent submitted a Joint
Recommendation of Sanction, consisting of (1) a public reprimand, (2) a condition
requiring that, if Respondent serves as a Managing Partner in charge of books and
records of a firm, then for a period of two years, Respondent shall with his Certificate
of Compliance submit an affidavit of a licensed certified public accountant,
certifying that such firm’s law practice books, records, and accounts have been
maintained in compliance with Rule 1.15 and all payroll tax obligations of such firm
have been satisfied, and (3) Respondent’s prompt payment of costs of this
proceeding. (Stipulation § III)
The Panel agrees with the Joint Recommendation of Sanction. In addition,
the Panel proposes an additional condition, as part of the sanction: that Respondent
periodically report to the ODC on his efforts to contact payees of any outstanding
checks issued on the Strata Law Wells Fargo Trust Accounts, with such frequency
and in such detail as the ODC shall direct, and that Respondent continue to make
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good faith, reasonable efforts to expeditiously resolve any issues related to such
outstanding checks to the extent necessary to resolve such issues.
VI. RATIONALE FOR THE RECOMMENDED SANCTION
In making its recommendation, the Panel utilized the four-part framework set
forth in the ABA Standards for Imposing Lawyer Sanctions (1991 as amended
February 1992) (“ABA Standards”). To promote consistency and predictability in
the imposition of disciplinary sanctions, the Delaware Supreme Court looks to the
ABA Standards. In re Doughty, 832 A.2d 724, 735-736 (Del. 2003) (citations
omitted). The ABA Standards’ framework considers: (1) the ethical duty violated;
(2) the lawyer’s state of mind; (3) the actual or potential injury caused by the
lawyer’s misconduct; and (4) aggravating and mitigating factors. Id.; accord In re
Goldstein, 990 A.2d 404, 408 (Del. 2010).
1. The Ethical Duties Violated
The ODC alleged, Respondent admitted, and the Panel determines that
Respondent committed misconduct in violation of Rules of Professional Conduct
1.15(a) (failing to safeguard client funds); 1.15(d) (failing to properly maintain
financial books and records); 8.4(c) (engaging in conduct involving dishonesty,
fraud, deceit or misrepresentation); and 8.4(d) (engaging in conduct that is
prejudicial to the administration of justice governing the practice of law in
Delaware). Under the ABA Standards, this misconduct constituted violations of
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duties owed by Respondent to clients (Rules 1.15(a) and (d)), and violations of duties
owed by Respondent to the legal system (Rules 8.4 (c) and (d)). See ABA Standards
4.0 and 6.0.
2. State of Mind
The Panel finds that Respondent’s conduct was negligent, which is defined in
the ABA Standards as “the failure of a lawyer to heed a substantial risk that
circumstances exist or that a result will follow, which failure is a deviation from the
standard of care that a reasonable lawyer would exercise in the situation.” ABA
Standards § III (DEFINITIONS).
With respect to Respondent’s violations of Rule 1.15, the ODC alleges, and
Respondent admits, negligent conduct. (See Stipulation ¶ I (32)) The Panel concurs
and finds that Respondent’s conduct was negligent with respect to Respondent’s
failure to maintain books and records as required by Rule 1.15.
As it relates to Respondent’s violations of Rule 8.4, the issue of Respondent’s
state of mind is a closer question. Respondent’s conduct in submitting Certificates
of Compliance in 2017 and 2018 that included misrepresentations comes close to
amounting to “knowing” violation of the Rules. See In re Stull, 2009 WL 4573243,
at *1, *6 (Del. Dec. 4, 2009) (disposition reported at 985 A.2d 391 (Table))
(approving Board determination of that attorney acted with “knowledge” when
attorney took “head in the sand” approach, despite being consciously aware of
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obligations to manage law office and accurately complete Certificates of
Compliance). Here, the Panel concludes that Respondent’s conduct with respect to
the Certificates of Compliance meets the standard of negligence. The Panel bases
its findings on Respondent’s testimony that in submitting his Certificates of
Compliance for 2017 and 2018, (1) he did not focus on the inclusion of the old Strata
Law accounts in addition to the new accounts he established for Strata Law-DE (Tr.
27:20-28:12), and (2) although he had not been involved with the Strata Law Wells
Fargo Trust Accounts during much of 2017 or for any part of 2018, he believed that
the accounts were being properly maintained and protected by the former principals
of Strata Law and the funds in the accounts were not at risk. (Tr. 28:19-29:6)
In reaching its conclusion that Respondent’s submission of the Certificates of
Compliance amounted to negligent as opposed to knowing conduct, the Panel
considered precedents in which comparable violations of Rule 8.4 with respect to
the submission of Certificates of Compliance to the Delaware Supreme Court have
been found to constitute negligent action by the sanctioned attorney. See In re
Dillon, 2017 WL 6506620, at *1, *7 (Del. Dec. 14, 2017) (disposition reported at
176 A.3d 716 (Table)) (adopting Board recommendation that respondent acted
negligently in connection with submission of Certificates of Compliance that
included misrepresentations); In re Castro, 2017 WL 1376411, at *1, *6 (Del. Apr.
12, 2017) (disposition reported at 160 A.3d 1134 (Table)) (same); In re Gray, 2016
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WL 7188110, at * 5, *7 (Del. Dec. 9, 2016) (disposition reported at (52 A.3d 581(Table)) (noting that ODC and respondent agreed that appropriate mental state was
negligence in case involving misstatements in Certificate of Compliance); In re
Woods, 143 A.3d 1223, 1232 (Del. 2016) (panel finding that the ODC failed to
establish a state of mind more culpable than negligence in connection with
submission of Certificates of Compliance that included misrepresentations).
3. Actual or Potential Injury
In this case, there was an “injury” in connection with the Strata Law Wells
Fargo Trust Accounts, in that fraudsters made off with over $150,000 that remained
in these accounts as of 2018. Respondent’s conduct did not cause this fraud.
However, Respondent’s lack of diligence in causing the Strata Law Wells Fargo
Trust Accounts to be expeditiously wound down after Strata Law’s closure in 2016
(along with a similar lack of diligence by Strata Law’s principals) left funds in the
accounts exposed. While the fraud amounts to an injury, the Panel notes that there
was no evidence of a substantial injury to any client of Strata Law, and that any
injury to the payees on outstanding checks is difficult to ascertain. The testimony at
the Hearing established that such payees were owed relatively modest amounts of
money, and for a variety of reasons did not cash checks that were issued to them
from the Strata Law Wells Fargo Trust Accounts years prior to the firm’s closure.
(Tr. 22:12-23:10) Further, there is no evidence that any party complained about not
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having received any payment that should have been made from the Strata Law Wells
Fargo Trust Accounts. (Tr. 37:22-38:10 (Respondent testifying that he received no
calls or inquiries concerning outstanding checks in the accounts)) It was likely that
substantial funds in the Strata Law Wells Fargo Trust Accounts may have been
escheated to the State due to inability to locate payees after reasonable effort. Those
payees that can be located with reasonable effort are now being paid by Respondent
out of personal funds.
4. Presumptive Sanction
In the Panel’s view, analysis of the ethical duties violated by Respondent,
Respondent’s state of mind and the potential for injury caused by Respondent’s
misconduct raise a presumptive sanction of public reprimand. The ethical duties
violated direct the Panel to the following factors contained in the ABA Standards:
4.1 (for violations of Rule 1.15(a) and (d)), and 6.1 (for violations of Rule 8.4(c) and
(d)). Where, as in this matter, the conduct involves negligent acts with injury or
potential injury, these provisions point generally to a public reprimand as an
appropriate sanction. See ABA Standards 4.13, 4.63, 6.13 and 7.3. The presumptive
sanction must then factor in the presence or absence of any mitigating or aggravating
factors.
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5. Aggravating and Mitigating Factors
(a) Aggravating Factors
ABA Standard 9.22 sets forth the following non-exhaustive list of aggravating
factors:
(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.
ABA Standard 9.22.
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The ODC and Respondent have stipulated that the following aggravating
factors are applicable in this case:
(1) Respondent has substantial experience in the practice of law, having
practiced continuously since his admission to the Delaware Bar in 1986. ABA
Standard 9.22(i). 5
(2) Respondent has engaged a pattern of violating the Delaware Lawyers’
Rules of Professional Conduct over an extended period of time, involving the Strata
Law books and records and Respondent’s Certificates of Compliance obligations.
ABA Standard 9.22(c).
(3) Respondent has prior discipline for the same or similar conduct, which
resulted in the issuance of a private admonition. ABA Standard 9.22(a).
The Panel finds, based on the evidence summarized above, that the foregoing
aggravating factors are applicable to consideration of the sanction in this proceeding.
(b) Mitigating Factors
ABA Standard 9.32 sets forth the following non-exhaustive list of factors to
be considered in mitigation:
(a) absence of a prior disciplinary record;
5
The Stipulation erroneously states Respondent’s date of admission in Section II as
1981. (Stipulation § II, Aggravating Factors ¶ 1) However, Respondent was
admitted to the Delaware Bar in 1986. (Stipulation ¶ I (1); Tr. 10:3-5)
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(b) absence of a dishonest or selfish motive;
(c) personal or emotional problems;
(d) timely good faith effort to make restitution or to rectify
consequences of misconduct;
(e) full and free disclosure to disciplinary board or cooperative attitude
toward proceedings;
(f) inexperience in the practice of law;
(g) character or reputation;
(h) physical disability;
(i) mental disability or chemical dependency including alcoholism or
drug abuse when: (1) there is medical evidence that the respondent is affected
by a chemical dependency or mental disability; (2) the chemical dependency
or mental disability caused the misconduct; (3) the respondent’s recovery
from the chemical dependency or mental disability is demonstrated by a
meaningful and sustained period of successful rehabilitation; and (4) the
recovery arrested the misconduct and recurrence of that misconduct is
unlikely;
(j) delay in disciplinary proceedings;
(k) imposition of other penalties or sanctions;
(l) remorse;
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(m) remoteness of prior offenses.
ABA Standard 9.32.
The ODC and Respondent have stipulated that the following mitigating
factors are applicable in this case:
(1) Respondent did not have a dishonest of selfish motive. ABA Standard
9.32(b).
(2) Respondent had personal or emotional problems involving the loss of
employment by his former firm, and the lack of cooperation from his former firm in
managing the accounts. ABA Standard 9.32(c).
(3) Respondent made a timely and good faith effort to make restitution and
to rectify the consequences of his misconduct, including by using his own time and
funds to make disbursements to payees on behalf of his former firm where such
payees can be located. ABA Standard 9.32(d).
(4) Respondent made a full and free disclosure to the ODC and was
cooperative toward the proceedings. ABA Standard 9.32(e).
(5) Respondent has good character and reputation in the Delaware Bar.
ABA Standard 9.32(g).
(6) Respondent has suffered other penalties and sanctions, in particular
through use of his own time and funds to disburse escrow funds without cooperation
or contribution from his former firm. ABA Standard 9.32(k).
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(7) Respondent has demonstrated genuine remorse for his misconduct.
ABA Standard 9.32(l).
(8) Respondent’s prior disciplinary offense is remote in time, having
occurred in 2005 and 2006. ABA Standard 9.32(m).
The Panel finds, based on the evidence summarized above, that the foregoing
mitigating factors are applicable to consideration of the sanction in this proceeding.
6. Precedent
The Panel believes that recommending a public reprimand in this matter is
consistent with Delaware Supreme Court precedent. “[T]he objectives of any lawyer
sanction should be to protect the public, to advance the administration of justice, to
preserve confidence in the legal profession, and to deter other lawyers from similar
misconduct.” In re Doughty, 832 A.2d at 735-736 (citations omitted).
The sanction of a public reprimand and the related condition as proposed by
the ODC and Respondent is consistent with precedent in other cases involving
disciplinary proceedings under Rule 1.15 and Rule 8.4. See In re Benson, 774 A.2d
258, 262-263 (Del. 2001) (issuing public reprimand with probation and conditions
for record-keeping violations and submission of inaccurate Certificates of
Compliance); In re Dillon, 2017 WL 6506620, at *1 (approving public reprimand
and two-year probation with conditions as proposed by panel); In re Castro, 2017
WL 1376411, at *1 (same); In re Gray, 2016 WL 7188110, at * 1 (approving public
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reprimand and two-year probation); In re Woods, 143 A.3d at 1226 (approving
recommendation of public reprimand for violations of Rules 1.15 and 8.4).
VII. CONCLUSION
Based upon the facts and related issues stipulated to by the ODC and
Respondent, the evidence presented at the Hearing, and the considerations
summarized above, the Panel recommends as the action of the Board that
Respondent be sanctioned as follows:
1. Public Reprimand. That Respondent be publicly reprimanded for his
violation of Rule 1.15(a), Rule 1.15(d), Rule 8.4(c) and Rule 8.4(d) of
the Delaware Lawyers’ Rules of Professional Conduct.
2. Condition No. 1. That, if Respondent is going to be Managing Partner
in charge of books and records of a firm. Respondent shall notify the
ODC immediately, and thereafter shall submit to the ODC, with his
Certificate of Compliance on the first day of March after becoming
Managing Partner, an affidavit by a licensed certified public accountant
certifying that all of the firm’s law practice books, records and bank
accounts have been maintained during the preceding year in full
compliance with Rule 1.15, and that the firm’s payroll tax obligations
for the preceding year have been satisfied in compliance with
applicable law. Respondent shall provide the above-referenced
affidavit for the immediate two years after becoming Managing Partner.
3. Condition No. 2. That Respondent be required to report periodically to
the ODC (with the frequency and content of reports to be determined
by the ODC) on his efforts to locate and pay payees of outstanding
checks issued on the Strata Law Wells Fargo Trust Accounts, and to
provide such information as the ODC may request, until the ODC
determines that all reasonable efforts resolve any open issues related to
the accounts have been exhausted.
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4. Costs. That Respondent be directed to pay the cost of this proceeding.
Pursuant to Rule 27 of Rules of Disciplinary Procedure, Respondent
shall pay the ODC’s costs promptly upon the presentation of a
statement of costs by the ODC. Respondent shall also pay the costs of
the audit performed by the auditor for LFCP, promptly upon
presentation of a statement of such costs.
Respectfully submitted,
/s/ Joseph C. Schoell
Joseph C. Schoell, Chair
Date: January 8, 2021
/s/ Carolyn M. McNeice
Carolyn M. McNeice
Date: January 8, 2021
/s/ Theresa Ballard
Theresa Ballard
Date: January 8, 2021
ACTIVE.125500546.02
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