Disciplinary Counsel v. Crosby , 124 Ohio St. 3d 226 ( 2009 )

[Cite as Disciplinary Counsel v. Crosby, 124 Ohio St. 3d 226, 2009-Ohio-6763.]
DISCIPLINARY COUNSEL v. CROSBY.
[Cite as Disciplinary Counsel v. Crosby, 124 Ohio St. 3d 226, 2009-Ohio-6763.]
Attorneys — Misconduct — Failure to maintain separate account and to keep
complete records of trust account — Conduct adversely reflecting on
fitness to practice law — Twenty-four-month suspension.
(No. 2009-1172 — Submitted September 30, 2009 — Decided
December 29, 2009.)
ON CERTIFIED REPORT by the Board of Commissioners on Grievances and
Discipline of the Supreme Court, No. 08-018.
__________________
LANZINGER, J.
{¶ 1} Respondent, William Matthew Crosby of Cleveland, Ohio,
Attorney Registration No. 0002451, was admitted to the practice of law in Ohio in
1982. The Board of Commissioners on Grievances and Discipline recommends
that we suspend respondent’s license to practice for 24 months, based on findings
that he engaged in long-standing fraudulent trust account practices and deliberate
deceptions. We agree that respondent committed professional misconduct as
found by the board and accept the recommendation for a 24-month suspension.
{¶ 2} In April 2008, relator, Disciplinary Counsel, filed a three-count
complaint against respondent alleging multiple violations of the former Code of
Professional Responsibility and the current Rules of Professional Conduct,
effective February 1, 2007.1 Respondent filed an answer, and a panel of the board
held a hearing on the complaint in December 2008. The panel prepared written
1. Because respondent’s misconduct occurred both prior to and after the adoption of the Rules of
Professional Conduct on February 1, 2007, relator charged respondent under the applicable rules
of both the former Code of Professional Responsibility and the current Rules of Professional
Conduct. Relator, however, agrees that each listing constitutes only one violation.
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findings of fact, conclusions of law, and a recommendation that respondent be
suspended from the practice of law for two years with one year stayed on
conditions. The board adopted the panel’s findings of fact and conclusions of law
but recommended that respondent be suspended for 24 months.
Misconduct
{¶ 3} During 2005 and 2006, respondent practiced law as Crosby Law
Offices, L.L.C., and worked primarily in the areas of workers’ compensation,
personal injury, and tort law. Around December 2006, he ceased practicing as
Crosby Law Offices, L.L.C., and accepted a position as of counsel for his wife’s
law firm, Elizabeth A. Crosby and Associates. While he operated his solo
practice, respondent maintained two bank accounts, an Interest on Lawyers’ Trust
Accounts account (“IOLTA”) in the name of the Crosby Law Offices, L.L.C.,
and a general operating account in the name of the Crosby-Dodge Law Group,
L.L.C. (“operating account”). Respondent had amended the signature card for the
IOLTA to designate Carol Mazanec as an authorized signer on the account to
allow her authority to write checks. Mazanec provided clerical, administrative,
and paralegal services for respondent during the years 2005 and 2006 and wrote
and signed a number of checks from the IOLTA on behalf of and as authorized or
ratified by respondent.
{¶ 4} All of the violations alleged by relator arise from the use and
maintenance of respondent’s IOLTA.
Count I – Use of the IOLTA as a Personal and Operating Account
{¶ 5} From the testimony and exhibits admitted at the hearing, it is clear
that respondent used his IOLTA as a personal bank account and operating account
from January 2006 to May 2007. There were approximately 20 checks payable to
Mazanec, in a stipulated amount of $57,713, which represented wages or bonuses.
On 18 occasions, there were electronic withdrawals for the payment of phone bills
to Verizon, Ameritech, or AT&T. Approximately 16 checks were written by
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January Term, 2009
either respondent or Mazanec for office or personal bills owed to Dominion East
Ohio Gas, Gepetto’s Pizza, Home Depot, Plant Crafters, CVS, Wyatt Tractor,
Brooks Brothers, Web Office Solutions, and Cort Furniture Rental. The eight
checks written to respondent’s wife totaling $142,823.48 were for respondent’s
household expenses. Finally, respondent admitted that there were 68 checks
totaling more than $88,000 made payable to cash. Mazanec testified that these
funds went to respondent’s personal use.
{¶ 6} Respondent acknowledged that he knew business expenses should
not be paid from his IOLTA. He also stated that he inadvertently wrote checks to
Brooks Brothers and Wyatt Tractor for personal expenses from the IOLTA.
{¶ 7} We accept the board’s finding that respondent violated DR 1-
102(A)(6) and its counterpart, Prof.Cond.R. 8.4(h) (prohibiting conduct that
adversely reflects on the lawyer’s fitness to practice law); DR 9-102(A) (requiring
all funds of clients paid to a lawyer to be deposited in one or more identifiable
bank accounts, in which no funds belonging to the lawyer shall be deposited); and
Prof.Cond.R. 1.15(a) (a lawyer shall hold property of clients separate from the
lawyer’s own property).
Count II – Failure to Properly Maintain and Safeguard the IOLTA
{¶ 8} At the hearing, respondent conceded that he did not properly train
Mazanec and did not properly supervise her with regard to the IOLTA. Although
respondent represented that he had had his accountant train Mazanec, she herself
testified that she was not given any training on how to use an IOLTA by either
respondent or his accountant. The panel found that Mazanec’s testimony was
more credible.
{¶ 9} Respondent stated that he was not aware that Mazanec had used
the IOLTA to pay telephone bills from Verizon, Ameritech, and AT&T or
personal expenses at Home Depot and CVS but that he later ratified her actions.
In addition, he was not aware that Mazanec used the IOLTA to negotiate a check
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written to her by her boyfriend. A simple review of the IOLTA statements would
have revealed the inappropriate electronic withdrawals for the telephone bills, but
respondent admitted that he did not personally reconcile the banking statements.
Instead, respondent stated that he held earned attorney fees in his IOLTA and
basically kept a running total of the amount owed to him in his head. During this
time period, the IOLTA incurred overdraft fees of $118.50.
{¶ 10} Finally, respondent testified that he was surprised at the extent of
moneys that he had intended to be deposited into his operating account that were
never deposited there. He also asserted that he kept a portion of his earned
attorney fees in his IOLTA to pay unexpected client expenses and that only
settlement moneys were deposited into the trust account. Finally, he stated that he
sometimes asked Mazanec for checks to pay his bills, that she would give him
IOLTA checks, and that he mistakenly used the IOLTA checks without realizing
the error. The panel found that respondent’s representations were not credible.
{¶ 11} We therefore accept the board’s findings that respondent violated
DR 1-102(A)(5) and its counterpart, Prof.Cond.R. 8.4(d) (a lawyer shall not
engage in conduct that is prejudicial to the administration of justice); DR 1-
102(A)(6) and its counterpart, Prof.Cond.R 8.4(h); DR 9-102(B)(3) (a lawyer
shall maintain complete records of all funds, securities, and other properties of a
client coming into the possession of the lawyer); Prof.Cond.R. 1.15(a);
Prof.Cond.R. 1.15(a)(3) (a lawyer shall maintain a record of each IOLTA); and
Prof.Cond.R. 5.3(b) (a lawyer shall take reasonable efforts to ensure that a
nonlawyer employee’s conduct is compatible with the professional obligations of
the lawyer).
Count III – Failure to Promptly Withdraw Earned Funds
{¶ 12} Between 2006 and 2007, respondent settled five cases. Although
he promptly paid each client the appropriate share of the award, respondent failed
to promptly withdraw his fee from the IOLTA. Instead, respondent would
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January Term, 2009
withdraw his fee in multiple checks over several weeks or months. Respondent’s
actions led to commingling of client funds with his personal funds in the IOLTA.
For example, respondent settled a matter at the end of April 2006. Throughout
May 2006, respondent disbursed funds to his clients and caused several checks of
various amounts to be issued. By the end of May, there was still $7,292.64 of
respondent’s personal funds in the IOLTA. Respondent then deposited a
settlement check for another client in early June 2006, resulting in the
commingling of funds. Relator contends that commingling occurred again in
November and December 2006.2
{¶ 13} Respondent explained that he did not immediately remove all his
earned attorney fees because he wanted to maintain a buffer in the event that
unexpected expenses related to a case arose. Mazanec testified that she could not
recall any unexpected expenses arising after settlement during the time she
worked for respondent. Respondent also acknowledged that he kept the funds in
his IOLTA because it was easier and that once he withdrew funds, it would be
considered income. By keeping his fees in his IOLTA, respondent was able to
shield the funds from judgment creditors and taxing authorities.
{¶ 14} We accept the board’s finding that respondent violated DR 1-
102(A)(5) and its counterpart, Prof.Cond.R. 8.4(d); DR 1-102(A)(6) and its
counterpart, Prof.Cond.R. 8.4(h); DR 9-102(A); DR 9-102(B)(3); Prof.Cond.R.
2. Although respondent was not charged with misuse of client funds, a review of the IOLTA bank
statements reveals some disturbing facts during this time period. At the end of September 2006,
respondent settled a case for $25,000. According to the disbursement statement, $10,000 was to
be paid to the client, $6,000 was to be paid to co-counsel, and $5,000 was to be retained for
possible expenses. The remaining $4,000 represented respondent’s attorney fees. A check was
written to the client for $10,000 on September 30, but the $6,000 co-counsel’s fee and the $5,000
amount held for expenses were not paid until February 2007. At the end of October 2006, the
balance in respondent’s IOLTA was only $3,136.42, when the account should have held at least
$11,000. After respondent settled another matter in November, the balance of the IOLTA at the
end of the month was $5,468.29. Another settlement in December resulted in the IOLTA having
an ending balance of $36,019.01.
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1.15(a); Prof.Cond.R. 1.15(a)(2) (a lawyer shall maintain a record for each client
on whose behalf funds are held); and Prof.Cond.R. 1.15(a)(3).
Sanction
{¶ 15} Even before the General Assembly authorized the creation of
IOLTAs in R.C. 4705.09, we explained that the “mishandling of clients’ funds
either by way of conversion, commingling, or just poor management,
encompasses an area of the gravest concern of this court in reviewing claimed
attorney misconduct.” Columbus Bar Assn. v. Thompson (1982), 69 Ohio St. 2d
667, 669, 23 O.O.3d 541, 433 N.E.2d 602. We have also reiterated a number of
times that “it is ‘of the utmost importance that attorneys maintain their personal
and office accounts separate from their clients’ accounts’ and that any violation of
that rule ‘warrants a substantial sanction whether or not the client has been
harmed.’ ” Disciplinary Counsel v. Wise, 108 Ohio St. 3d 381, 2006-Ohio-1194,
843 N.E.2d 1198, ¶ 15, quoting Erie-Huron Counties Joint Certified Grievance
Commt. v. Miles (1996), 76 Ohio St. 3d 574, 577, 669 N.E.2d 831. See also
Disciplinary Counsel v. Morgan, 114 Ohio St. 3d 179, 2007-Ohio-3604, 870
N.E.2d 1171, ¶ 10; Disciplinary Counsel v. Freeman, 119 Ohio St. 3d 330, 2008-
Ohio-3836, 894 N.E.2d 31, ¶ 19.
Aggravating and Mitigating Circumstances
{¶ 16} To determine the appropriate sanction, the court looks at a
nonexhaustive list of aggravating and mitigating circumstances, which is found in
Section 10(B) of the Rules and Regulations Governing Procedure on Complaints
and Hearings Before the Board of Commissioners on Grievances and Discipline
("BCGD Proc.Reg."). In mitigation, the board noted that respondent had no prior
disciplinary record, BCGD Proc.Reg. 10(B)(2)(a), and that there was no evidence
that a client failed to receive all of money due, BCGD Proc.Reg. 10(B)(2)(h).
{¶ 17} As for aggravating factors, the board determined that respondent
displayed a dishonest and selfish motive by using his trust account to keep funds
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January Term, 2009
safe from collection procedures by taxing authorities and judgment creditors.
BCGD Proc.Reg. 10(B)(1)(b). It found that respondent’s misuse of his trust
account continued over several years and represented a pattern of misconduct.
BCGD Proc.Reg. 10(B)(1)(c). Finally, respondent did not fully cooperate in the
disciplinary process and lied about his reasons for the “unorthodox” manner in
which he used his IOLTA. BCGD Proc.Reg. 10(B)(1)(e) and (f).
{¶ 18} Respondent objected to the use of the evidence of tax issues and
outstanding judgments and also disputed that he failed to cooperate in the
disciplinary process. Based on our review of the record, we agree with the board
regarding the mitigating and aggravating factors.
Comparable Cases
{¶ 19} For attorneys who have commingled funds or failed to properly
maintain their IOLTAs, the sanction has ranged from a stayed six-month
suspension, Disciplinary Counsel v. LaRue, 122 Ohio St. 3d 445, 2009-Ohio-3604,
912 N.E.2d 101, to an indefinite suspension, Wise, 108 Ohio St. 3d 381, 2006-
Ohio-1194, 843 N.E.2d 1198. The panel looked at Wise, Morgan, 114 Ohio St. 3d
179, 2007-Ohio-3604, 870 N.E.2d 1171, and Disciplinary Counsel v.
Vogtsberger, 119 Ohio St. 3d 458, 2008-Ohio-4571, 895 N.E.2d 158. In
Vogtsberger, the respondent admitted that he deposited personal funds into his
client trust account to shield them from creditors. Id. at ¶ 4. Vogtsberger also had
been suspended in May 2006 from the practice of law for failure to comply with
continuing legal education (“CLE”) requirements. Id. at ¶ 5. Based on these
circumstances, we imposed a two-year suspension with one year stayed on
conditions. Id. at ¶ 11. The same suspension was given to the respondent in
Morgan, 114 Ohio St. 3d 179, 2007-Ohio-3604, 870 N.E.2d 1171, ¶ 13. Although
Morgan did not have a prior disciplinary record, he engaged in a pattern of
misconduct and failed to participate in the disciplinary proceedings. Id.
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{¶ 20} In Wise, the respondent failed to maintain client ledgers, records,
or receipts for funds deposited into his IOLTA and also used his IOLTA as a
personal checking account. 108 Ohio St. 3d 381, 2006-Ohio-1194, 843 N.E.2d
1198, ¶ 4-6. Although there was no evidence that a client had been harmed, we
determined that Wise’s prior disciplinary offenses, his extended misuse of the
IOLTA, his multiple overdrafts, and his lack of candor and sense of responsibility
warranted an indefinite suspension. Id. at ¶ 16.
{¶ 21} Respondent’s extended misuse of his IOLTA and his failure to
maintain adequate records is similar to the actions in Wise. The aggravating
factors are also substantially similar; however, respondent does not have any prior
disciplinary proceedings. Although we do not believe an indefinite suspension is
required, we do find that an actual suspension is warranted.
{¶ 22} Respondent is therefore suspended from the practice of law in
Ohio for 24 months. We condition respondent’s reinstatement on his (1)
satisfactorily completing 6 hours of additional CLE in law-office management
and accounting and (2) fully paying or providing evidence of a compromise of the
following obligations:
{¶ 23} (a) Certificate of Judgment No. ST00069639 in the principal sum
of $6,717.51;
{¶ 24} (b) Certificate of Judgment No. ST98045500 in the principal sum
of $5,729.50;
{¶ 25} (c) Certificate of Judgment No. ST02085583 in the principal sum
of $4,262.04;
{¶ 26} (d) Certificate of Judgment No. ST03091227 in the principal sum
of $3,761.74;
{¶ 27} (e) West Publishing Corp. v. Crosby, case No. 1999 CVF 013387
judgment in the principal sum of $2,408.44;
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January Term, 2009
{¶ 28} (f) National City Bank v. Crosby, case No. 01 CVF 647, judgment
in the principal sum of $1,349.42;
{¶ 29} (g) Certificate of Judgment No. ST96022309 in the principal sum
of $386.54;
{¶ 30} (h) Imagenet v. Crosby, case No. 2000 CV1 2786, judgment in the
principal sum of $362.43;
{¶ 31} (i) Certificate of Judgment No. ST97027119 in the principal sum
of $315.37;
{¶ 32} (j) Certificate of Judgment No. ST96022308 in the principal sum
of $164.20;
{¶ 33} (k) Certificate of Judgment No. ST99051486 in the principal sum
of $142.72; and
{¶ 34} (l) Certificate of Judgment No. ST98040329 in the principal sum
of $129.13.
{¶ 35} Costs are taxed to respondent.
Judgment accordingly.
MOYER, C.J., and LUNDBERG STRATTON, O’CONNOR, O’DONNELL, and
CUPP, JJ., concur.
PFEIFER, J., concurs in the suspension of the respondent for 24 months but
would stay 12 months of the suspension.
__________________
Jonathan E. Coughlan, Disciplinary Counsel, and Robert R. Berger,
Assistant Disciplinary Counsel, for relator.
Lester S. Potash, for respondent.
______________________
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