Cincinnati Bar Assn. v. Schwartz - Ohio Supreme Court Opinion - Ohio Supreme Court Decision

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[Cite as Cincinnati Bar Assn. v. Schwartz, 98 Ohio St.3d 438, 2003-Ohio-1635.]

CINCINNATI BAR ASSOCIATION v. SCHWARTZ.
[Cite as Cincinnati Bar Assn. v. Schwartz, 98 Ohio St.3d 438, 2003-Ohio-
1635.]
Attorneys at law -- Misconduct -- Permanent disbarment -- Engaging in a
pattern of illegal conduct systematically misappropriating clients' money
and neglecting to safeguard clients' interests -- Failing to cooperate in
disciplinary investigation.
(No. 2002-2178 -- Submitted February 12, 2003 -- Decided April 16, 2003.)
ON CERTIFIED REPORT by the Board of Commissioners on Grievances and
Discipline of the Supreme Court, No. 02-13.
__________________

Per Curiam.
{¶1} Respondent, Allen Schwartz of Cincinnati, Ohio, Attorney
Registration No. 0001157, was admitted to the practice of law in Ohio on October
9, 1958. On January 8, 2002, the Hamilton County Grand Jury indicted
respondent on six counts of theft involving over $200,000 in funds from two
estates and a trust.
{¶2} On April 8, 2002, relator, Cincinnati Bar Association, filed a
complaint charging respondent with eight counts of misconduct in violation of the
Code of Professional Responsibility and one count of violating Gov.Bar R.
V(4)(G) by failing to cooperate in the disciplinary investigation. Respondent
failed to answer relator's complaint, and the Board of Commissioners on
Grievances and Discipline referred the cause to a master commissioner pursuant
to Gov.Bar R. V(6)(F)(2) to review relator's motion for default judgment. The
master commissioner made the following findings.

SUPREME COURT OF OHIO
{¶3} On March 27, 2000, respondent was appointed executor of an
estate. Respondent also acted as attorney for the estate and was appointed the
trustee of a trust established by his client. In July 2001, respondent abandoned his
law practice and disappeared. An attorney who had shared office space with
respondent prior to his disappearance received a letter from respondent on July
25, 2001, in which respondent admitted to misappropriating money from this
client.
{¶4} As a result of respondent's abandonment of his law practice and
disappearance, the Hamilton County Probate Court removed respondent as
executor of the estate and appointed a new administrator. The final accounting of
the estate revealed that respondent had converted money from the estate for his
own personal use and that his failure to invest any of the estate funds resulted in
lost interest income to the estate. On December 5, 2001, the probate court found
that respondent had violated his fiduciary and professional duties as executor and
attorney for the estate by misappropriating $111,427. The probate court also
found that respondent had violated his duties as trustee and attorney by
misappropriating $26,296.10 from the trust.
{¶5} Relator initiated a second investigation into respondent's conduct
as executor and attorney for the estate of another client. In August 2001, the
probate court removed respondent as fiduciary for this estate. The probate court
found that respondent had misappropriated $233,600 from the estate.
{¶6} In 1971, respondent represented another client in a divorce action.
As part of the divorce, the client's home was sold and respondent undertook to
invest the proceeds from the sale for his client's benefit. Respondent did not
provide an accounting of the proceeds.
{¶7} On September 24, 1994, respondent entered into a trust agreement
with this client. The agreement indicated that funds totaling $49,406.22 were
being held by respondent as trustee and that he would invest the funds on his
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January Term, 2003
client's behalf. On June 5, 1999, the client confronted respondent about the status
of her money. Respondent failed to deliver any funds to his client at this time
and, instead, presented her with a handwritten accounting of her funds and a
promissory note for $29,876. Respondent failed to remit any additional money to
this client prior to his disappearance and failed to prepare an accounting of his
client's money.
{¶8} A fourth grievance stems from 1967, when two of respondent's
clients, a married couple, were involved in a commercial airline accident. The
husband was killed in the accident and the wife was severely injured. The
husband's estate was valued in excess of $1,100,000. An additional $600,000
was added to the estate from the wrongful death settlement, and the wife received
$300,000 for injuries she suffered in the accident. Respondent handled the
husband's estate and, beginning in 1967, maintained custodial control of the
wife's assets.
{¶9} Because he was a close friend of the family, respondent's handling
of the estate and the wife's personal injury settlement was not initially questioned.
For many years, respondent sent regular monthly checks to the wife. However, in
December 1996, the wife requested an accounting of her assets. Respondent
presented her with a handwritten document purporting to be an accounting and
informed her that she had $355,000 remaining, mainly in bond investments.
Following the accounting, the wife did not spend any of the principal but
continued to receive monthly payments from respondent until May 2001, when
payments ceased. In April 2001, the wife's son confronted respondent, and
respondent claimed that the assets were lost due to bad investments.
{¶10} As a result of respondent's conduct, the master commissioner
concluded that respondent had violated DR 1-102(A)(3) (engaging in illegal
conduct involving moral turpitude), 1-102(A)(4) (engaging in conduct involving
dishonesty, fraud, deceit, or misrepresentation), 6-101(A)(3) (neglecting an
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SUPREME COURT OF OHIO
entrusted legal matter), 7-101(A)(1) (failing to seek the lawful objectives of the
client), 7-101(A)(2) (failing to carry out a contract of employment), 7-101(A)(3)
(prejudicing or damaging clients in the course of the professional relationship), 9-
102(B)(3) (failing to maintain records of client's funds), and 9-102(B)(4) (failing
to promptly pay or deliver client's funds). The master commissioner also
determined that respondent had violated Gov.Bar R. V(4)(G) by not cooperating
in relator's investigation into the allegations of misconduct against him.
{¶11} The master commissioner recommended that respondent be
disbarred. In making the recommendation, the master commissioner considered
as aggravating factors that respondent had a dishonest or selfish motive,
respondent's actions involved a pattern of misconduct, there were multiple
offenses, and respondent did not cooperate in the disciplinary process. The
master commissioner further considered as aggravating the vulnerability of and
resulting harm to the victims of respondent's misconduct and his failure to make
restitution.
{¶12} In mitigation, the master commissioner considered statements
made by respondent in his July 2001 letter. In the letter, respondent
acknowledged the wrongful nature of his misconduct and authorized the
collection of certain outstanding fees, which respondent conceded may be
inadequate to repay his debts. Respondent claimed that his gambling accounted
for his financial problems, and that he is physically and mentally ill. Finally,
respondent asserted in the letter that the assets from his friend's estate were
depleted approximately 15 years ago and respondent had been paying the wife
from his own funds.
{¶13} The board adopted the master commissioner's findings of fact and
conclusions of law, and recommended the sanction of disbarment.
{¶14} On review, we find that the evidence of record supports the board's
findings of misconduct and recommended sanction. Respondent has on several
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January Term, 2003
occasions breached his duties as attorney, fiduciary, and trustee. Respondent has
engaged in a pattern of illegal conduct whereby he has systematically
misappropriated clients' money and neglected to safeguard clients' interests.
While respondent candidly admitted to his misconduct, he has shown no remorse
for his actions, has failed to make restitution, has abandoned his law practice and
disappeared, and stated in his July 2001 letter that he "won't return of [his] own
volition." Moreover, respondent has preyed on the vulnerability and trust of his
clients in order to achieve his own selfish motives.
{¶15} When a lawyer knowingly converts client funds, the appropriate
discipline is disbarment. Cleveland Bar Assn. v. Belock (1998), 82 Ohio St.3d 98,
100, 694 N.E.2d 897. Respondent's conduct of neglecting entrusted legal matters,
engaging in a continuous course of deceit involving the misappropriation of
clients' funds, failing to make restitution, and failing to cooperate in the
investigation of grievances warrants disbarment.
{¶16} Accordingly, respondent is permanently disbarred from the
practice of law in Ohio. Costs are taxed to respondent.
Judgment accordingly.

MOYER, C.J., RESNICK, F.E. SWEENEY, PFEIFER, COOK, LUNDBERG
STRATTON and O'CONNOR, JJ., concur.
__________________

Edwin W. Patterson III and Jack S. Healy, for relator.
__________________
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