Seth Jarad Johnston v. Kentucky Bar Association

TO BE PUBLISHED
Sujarrnir C.lourf of rufurkg
2014-SC-000288-KB
SETH JARAD JOHNSTON MOVANT
V. IN SUPREME COURT
KENTUCKY BAR ASSOCIATION RESPONDENT
OPINION AND ORDER
Movant, Seth Jarad Johnston, KBA No. 91030, 1 petitions this Court to
resign under the terms of permanent disbarment. The Kentucky Bar
Association (KBA) has no objection to Johnston's motion. Movant was
temporarily suspended pursuant to SCR 3.166(1) 2 on October 31, 2013.
1 Movant was admitted to the practice of law in Kentucky on October 14, 2005,
and his bar roster address is 250 W. Main Street, Suite 300, Lexington, Kentucky,
40507.
2 SCR 3.166(1)provides that: "Any member of the Kentucky Bar Association
who pleads guilty to a felony, including a no contest plea or a plea in which the
member allows conviction but does not admit the commission of a crime, or is
convicted by a judge or jury of a felony, in this State or in any other jurisdiction, shall
be automatically suspended from the practice of law in this Commonwealth. "Felony"
means an offense for which a sentence to a term of imprisonment of at least one (1)
year is authorized by law. The imposition of probation, parole, diversion or any other
type of discharge prior to the service of sentence, if one is imposed, shall not affect the
automatic suspension. The suspension shall take effect automatically beginning on
the day following the plea of guilty or finding of guilt by a judge or jury or upon the
entry of judgment whichever occurs first. The suspension under this rule shall remain
in effect until dissolved or superseded by order of the Court. Within thirty (30) days of
the plea of guilty, or the finding of guilt by a judge or jury, or entry of judgment,
whichever occurs first, the suspended attorney may file a motion with the Clerk of the
Supreme Court of Kentucky setting forth any grounds which the attorney believes
justify dissolution or modification of the suspension."
I. BACKGROUND
Movant entered a guilty plea in the U.S. District Court for the Eastern
District of Kentucky in the matter of United States v. Seth J. Johnston, Case No.
13-CR-00142-JMH to the following criminal charges contained in an
information filed by the U.S. Attorney's office: two counts of mail fraud (18
U.S.0 .§ 1341); one count of wire fraud (18 U.S.0 § 1343); one count of
obstruction of justice (18 U.S.0 § 1512(k)); one count of distribution of
controlled substance analogues (21 U.S.0 § 846); and one count of Tax Fraud
(26 U.S.0 § 7201). The maximum cumulative sentence for these offenses
includes imprisonment for up to forty-five years and fines of up to
$1,350,000.00. Movant had not been sentenced on the charges as of the date
of the filing of this petition. At present, although the KBA is investigating all of
the offenses, the Inquiry Commission has not yet returned formal disciplinary
charges.
H. KBA FILE 21299
KBA File 21299 relates to Count 1 and Count 3 of the information.
charges. Count I charged that Movant committed mail fraud in connection
with a lawsuit brought in the wake of the well-known, and notorious, Fen-phen
litigation to recover funds wrongfully diverted from the Fen-phen plaintiffs.
Movant devised a scheme to divert to his own personal accounts, S 14,963.05
that his firm collected for the Fen-phen clients.
Count III of the information charged Movant with committing wire fraud
by devising a scheme by which he fraudulently gained access under false
pretenses to a bank account of his associate, Angela Ford, and stole money
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from her. Movant used that money to cover amounts he had stolen from
Clients, and which he had diverted to his personal use, including his role in a
conspiracy to illegally distribute synthetic marijuana as set out in Count 5.
Movant acknowledges that the foregoing facts would support disciplinary
charges for violations of SCR 3.130-8.4(b) (criminal act reflecting adversely on
lawyer's honesty, trustworthiness or fitness as a lawyer in other respects) and
SCR 3.130-8.4(c) (conduct involving dishonesty, fraud, deceit or
misrepresentation).
III. KBA FILE 21600
KBA File 21299 relates to Counts 2, 4, 5, and 6 of the information.
Count 2 alleged that Movant had committed mail fraud in connection with his
representation of the Estate of Cecil Rowlett. Movant defrauded the residual
heirs of the estate by hiding estate assets and diverting to his own benefit, and
to the benefit of the executor of the estate, Brett Rowlett. In furtherance of his
scheme, Movant misrepresented the value of the cash assets of the estate to
the Harlan District Court, and then diverted the unreported amounts for his
own benefit and for the benefit of the executor of the estate, Brett Rowlett, and
that the scheme involved the use of the U.S. Postal Service.
Count 4 of the information charged Movant with obstruction of justice in
connection with his efforts to influence a witness, Stacey Birden, to destroy or
conceal documents with the intent to impair their availability for use in the
federal grand jury's investigation of Movant.
Count 5 of the information charged Movant with conspiracy to import
synthetic marijuana into Fayette County for distribution and sale in his co-
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conspirators' various convenience stores. Appellant admits that he
participated in this conspiracy by transferring $100,000.00 to his co-
conspirators to finance the illegal scheme.
Count 6 of the information charged Movant with tax fraud for
underreporting his taxable income for the 2011 tax year. Movant admits that
he filed a false tax return reflecting $26,372.00 in taxable income when his
actual taxable income for that year was 208,950.00; Movant further admits
that this failure to report his entire amount of income was done knowingly and
willfully and that over $10,000.00 of the money he obtained in calendar year
2011 was from criminal activity.
Movant acknowledges that the facts of these counts would support
disciplinary charges for violations of SCR 3.130-3.3(a)(1) (false statement of
material fact to tribunal); SCR 3.130-8.4(b) (criminal act reflecting adversely on
lawyer's honesty, trustworthiness or fitness as a lawyer in other respects); and
SCR 3.130-8.4(c) (conduct involving dishonesty, fraud, deceit or
misrepresentation).
IV. DISCIPLINE
Movant admits that his actions violated the above referenced Rules of
Professional Conduct. Therefore, he requests that the Court grant him leave to
resign from the KBA under terms of permanent disbarment pursuant to SCR
3.480(3). 3 We agree that Movant's motion to withdraw his membership is
appropriate pursuant to SCR 3.480(3). Therefore, it is hereby ORDERED that:
3 SCR 3.480(3) provides in pertinent part:
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1. Movant, Seth Jared Johnston, is permanently disbarred from the practice of
law;
2. In accordance with SCR 3.450, Movant shall pay all costs associated with
these proceedings, said sum being $135.40, for which execution may issue
from this Court upon finality of this Opinion and Order;
3. Pursuant to SCR 3.390, Movant shall, within ten days from the entry of this
Opinion and Order, if he has not already done so, notify all clients, in writing,
of his inability to represent them; notify, in writing, all courts in which he has
matters pending of his disbarment from the practice of law; and furnish copies
of all letters of notice to the Office of Bar Counsel; and
4. If he has not already done so, to the extent possible, Movant shall
immediately cancel and cease any advertising activities in which he is engaged.
All sitting. All concur.
ENTERED: August 21, 2014.
Any member who has been engaged in unethical or unprofessional conduct and
desires to withdraw his membership under terms of permanent disbarment
shall file a verified motion with the Court stating as follows:
(a) He/she has violated the Rules of Professional Conduct, or his/her
conduct fails to comply with those rules, the specifics of which shall
be detailed in the motion.
(b) He/she will not seek reinstatement and understands the provisions of
SCR 3.510 and SCR 3.520 do not apply.
(c) He/she will not practice law in the Commonwealth of Kentucky
subsequent to the peimanent disbarment order.
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