commercial real estate financing...

© Practising Law InstituteREAL ESTATE LAW AND PRACTICE

Course Handbook SeriesNumber N-641

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Commercial Real Estate Financing

2016

Co-ChairsJoshua Stein

Everett S. WardSteven R. Davidson

© Practising Law Institute

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Malpractice Prevention in Commercial Real Estate Financing

Peter L. Apostol

Senior Counsel Attorney Registration and Disciplinary Commission of the Supreme Court of Illinois

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Malpractice Prevention in Commercial Real Estate Financing

April 5, 2016

Peter L. Apostol Senior Counsel, ARDC

I. Recent Illinois Disciplinary Cases Involving Real Estate

Representing Buyer and Seller

In re David Richard Jordan, M.R. 26037, 2010 PR 64 (Ill. Sept. 26, 2013). Mr. Jordan, who was licensed in 1976, was suspended for one year and until further order of the Court. In two probate matters, he steered the sale of estate property to his relatives for a quick sale. He also made false statements to a probate court and others, engaged in conflicts of interest in representing both the buyers and the seller in the sale of estate property, and made false statements to the ARDC to impede an investigation into his conduct.

In re Shaveda Monique Scott, M.R. 25453, 2009 PR 102 (Ill. Sept. 18, 2012). Ms. Scott, who was licensed in 2001, was suspended for thirty days. She failed to properly disclose her financial interest as an agent for a title company in six different real estate transactions and she improperly represented both the seller and the buyer in four of those transactions.

In re Oscar Gallo, Jr., M.R. 25259, 2007 PR 110 (Ill. May 18, 2012). Gallo, who was licensed in Illinois in 1996, was suspended for three months. He engaged in a conflict of interest in representing both parties to a real estate transaction that appeared to involve a fraudulent mortgage scheme orchestrated by a mortgage broker. The broker was an acquaintance of his.

Loan Modification Issues

In re Byron Landau, M.R. 27635, 2014PR00174 (Nov. 17, 2015). Mr. Landau was suspended for three years and until further order of the Court. He owned Credence Law Group, a company run by non-lawyers who solicited distressed homeowners and claimed to offer legal assistance in obtaining loan modifications from their mortgage lenders. He allowed non-lawyers to solicit clients, give legal advice, and withdraw money from his client trust accounts. He also failed to monitor or maintain records of the activity in the client trust accounts. The two non-lawyers who ran the company, Scott Murakami and Ariyo Mackay, withdrew nearly $6,000,000 in client fees from the trust accounts while doing little or no work on the clients’ cases; Mr. Landau received about $62,000 of those fees.

In re Karim G. Duré, M.R. 26294, 2012 PR 137 (Ill. Nov. 20, 2013). Mr. Duré, who was licensed in 1999, was suspended for one year and until he makes certain restitution. He represented three different homeowners, all of whom were having difficulty paying their mortgage, in an effort to either modify the client’s mortgage terms and/or defend against a foreclosure action. In each instance, he received fees, but then failed to communicate with the clients, defend against any foreclosure action, or return unearned fees following the termination of his services.

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In re Rogelio Peña, M.R. 26119, 2011PR00050 (Ill. Sept. 26, 2013). Mr. Peña, who was licensed in 1985, was suspended for six months and until he completes the ARDC Professionalism Seminar. He formed an improper partnership with non-lawyers for the purpose of handling loan modifications for distressed homeowners, failed to explain matters to the client-homeowners, shared legal fees with non-lawyers and aided those same non-lawyers in the unauthorized practice of law.

In re Anthony Bayard DeVolo, M.R. 25980, 2013PR00020 (Ill. May 20, 2013). Mr. DeVolo was licensed in Illinois in 1999 and in California in 2000. He was suspended in California for one year, with the suspension stayed after ninety days by two years of conditional probation. He incompetently represented five clients in mortgage modification matters by failing to properly supervise his non-attorney staff who provided incompetent legal services to the clients. The Supreme Court of Illinois imposed reciprocal discipline and suspended him for one year, with the suspension stayed after ninety days by a two-year period of conditional probation.

In re Avny, M.R. 25577, 2011 PR 150 (Ill. Nov. 19, 2012). Mr. Avny, who was licensed in 1994, was suspended for thirty days. In 2009, while working as an independent contractor for a loan modification company, Respondent reviewed, signed and permitted the mailing of two letters to the company’s customers, each of which contained false and misleading information about his law practice, services provided to customers, the status of customer matters and outstanding balances. In re Laurel Sue Hickman, M.R. 25235, 2010 PR 91 (Ill. May 18, 2012). Hickman, who was licensed in 1989, was suspended for thirty days and until she makes restitution to certain clients of fees that they had paid her. She is also required to successfully complete the ARDC Professionalism Seminar. She neglected two loan modification matters, divided legal fees in those matters with a non-lawyer, and failed to refund unearned fees despite having agreed to do so if she could not obtain modifications of her clients’ loans. In re Jay Fernand Fortier, M.R. 25288, 2011 PR 151 (Ill. May 18, 2012). Fortier, who was licensed in Illinois in 2006, was disbarred on consent. In connection with a loan modification business, he shared attorney’s fees with non-attorneys, did not supervise non-attorney employees, distributed false and misleading advertisements, neglected client matters and failed to return unearned fees. He also provided false and misleading information to his clients and the Illinois Attorney General.

Failure to Disclose Financial Interest

In re Andrew Joseph Rukavina, M.R. 23585, 2007 PR 00096 (Ill. May 17, 2010). Rukavina, who was licensed in 1983, was suspended for five months and ordered to attend the Illinois Institute of Professional Responsibility. The progress of this case was closely monitored by the practicing real estate bar in Illinois. Over a three-year period, Rukavina mailed certain advertisements to individuals who were buying and selling residential real estate in the Chicago metropolitan area. The marketing fliers boasted a legal fee that was substantially lower than the fees charged by other lawyers in the Chicago area for representation in the purchase or sale of residential real estate. In truth, Rukavina would receive additional funds at the closing of a real estate transaction through other companies he owned or had a financial interest in, fees that could not be gleaned from his ads. The direct mailers typically provided as follows:

A PRIVATE INVITATION

TO SAVE HUNDREDS OF DOLLARS ON YOUR HOME CLOSING

OUR SPECIALIZED LAW FIRM WILL CLOSE YOUR HOME SALE FOR A FIXED LEGAL FEE OF $175

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COMPLETE START TO FINISH

CLOSING SERVICES AT ONE AFFORDABLE LOW FEE

INCLUDING BUYER/SELLER NEGOTIATIONS THROUGH CLOSING

CONTRACT REVIEW SURVEY ORDER

TITLE ORDER AND REVIEW COMPLETE DOCUMENT PREPARATION

SCHEDULE AND ATTEND CLOSING AS YOUR LEGAL REPRESENTATIVE

The advertisements were highly misleading as Rukavina never disclosed that title order and review fees would, indeed, be charged to the client at closing by a company called “Title Fees, LLC”, a company that Rukavina owned. Further, the client was charged a survey fee by an entity called ‘We Survey,’ another company in which Rukavina had an interest. These additional costs added up. For example, in one instance, a man named Britain contacted Rukavina by telephone regarding the sale of his homestead after receiving the marketing flier. Britain specifically inquired about the costs involved with regard to real estate selling for $555,000.00, and Rukavina offered to contact the title and survey companies and get back to Britain later that afternoon. Later, he charged Britain total fees of $2,540.50 for a closing which included $1,233 for title services, $300 for the survey, $832.50 for transfer stamps, and $175 for legal fees. At the conclusion of Britain’s telephone conversation with Respondent, Britain agreed to retain Rukavina. According to Britain, Rukavina never informed him that he had a financial interest in Title Fees, LLC. Further, Britain stated that Rukavina did not inform him that there were other title companies from which Britain could obtain title insurance.

Criminal Conduct & Financial Institution Fraud

In re Karim Dure, M.R. 27320, 2015PR00016 (May 14, 2015). Mr. Dure was disbarred on consent following his conviction on federal wire fraud charges. He sent a letter to a mortgage lender falsely representing that he had represented Brandon Young in an estate matter and that Young had received $200,000 in estate assets, in order to assist Young in qualifying for a mortgage loan. In fact, he had never even met Young, much less represented him in an estate matter. Mr. Dure was sentenced to six months in prison and ordered to make $492,303 in restitution to the mortgage lender. In re Marguerite Dixon-Roper, M.R. 27561, 2015PR00061 (Sept. 21, 2015). Ms. Dixon-Roper was disbarred on consent, based on her guilty plea to federal mail fraud charges based on her involvement in fraudulent real estate transactions. She purchased and refinanced several properties as a nominee buyer for other co-defendants, submitting loan applications containing materially false information about her qualifications for the loans she was seeking. She received payment from the other co-defendants for her involvement in the fraudulent real estate transactions. In addition, she represented buyers and sellers in the course of the same transactions and knowingly caused false documents, including HUD-1 settlement statements, to be submitted to lenders. In re Mark David Singer, M.R. 26655, 2014PR00026 (May 16, 2014). The attorney was disbarred on consent. While operating his real estate investment business, Mr. Singer entered into a land contract to sell a Muskegon Heights, Michigan property to a prospective buyer. The contract provided that Mr. Singer’s company would retain legal title to the property until the buyer completed payments. The buyer obtained insurance coverage on the property and Mr. Singer obtained coverage as an additional insured. Before the land contract could be completed, the property was destroyed in a fire. The buyer made an

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insurance claim and obtained over $100,000 from the insurance company. At some point, Mr. Singer learned that the buyer had intentionally set the fire that destroyed the property, and that the arson had been committed at the direction of Mr. Singer’s father, Gerald Singer, who assisted Mr. Singer in managing the property. Despite that knowledge, Mr. Singer accepted about $32,000 in insurance settlement proceeds from the buyer. Mr. Singer did not face any criminal charges as a result of this incident, though his father, Gerald Singer, was convicted of arson, mail fraud, and tax fraud, and was sentenced to 55 years in federal prison.

In re Karris A. Bilal, M.R. 26353, 2009 PR 111 (Ill. Nov. 20, 2013). Mr. Bilal, who was licensed in 2000, was disbarred. He purposely took advantage of financially vulnerable clients in order to obtain excessive attorney’s fees in three different mortgage rescue matters.

In re James Merle Childs, M.R. 26302, 2009 PR 138 (Ill. Nov. 20, 2013). Mr. Childs, who was licensed in 1978, was suspended for one year and until further order of the Court. In connection with a sale-leaseback transaction where his financially unsophisticated client was about to lose his home for failing to pay real estate taxes, he allowed others to financially exploit the client.

In re Thaddeus Stanley Gauza, M.R. 26225, 2008 PR 98 (Ill. Nov. 20, 2013). Mr. Gauza, who was licensed in 1987, was suspended for five months and until he completes the ARDC Professionalism Seminar. Acting at the bequest of an acquaintance, he represented the purported sellers in a residential real estate transaction that turned out to be an attempted fraud on the true owners of the property. He also pled guilty to domestic battery and violated an order of protection.

In re George Alvin Brooks, M.R. 26109, 2010 PR 172 (Ill. Sept. 26, 2013). Mr. Brooks, who was licensed in 1983, was suspended for five months and until he makes restitution of $5,000 to former clients and completes the ARDC Professionalism Seminar. He breached his fiduciary duty and engaged in a conflict of interest when he was paid $5,000 to represent clients in what the clients believed to be a transaction to save their home from foreclosure, but which was, in fact, a sale of their home.

In re Soodong Choi, M.R. 26099, 2012 PR 152 (Ill. Sept. 26, 2013) Mr. Choi, who was licensed in 1997, was disbarred on consent. He made misrepresentations on a mortgage note, a loan modification agreement and a quitclaim deed, and made false statements to the ARDC in order to impede an investigation into his misconduct.

In re John Edward Glennon, M.R. 26211, 2009 PR 137 (Ill, Sept. 26, 2013). Mr. Glennon, who was licensed in 1977, was suspended for three years. He caused his consulting company to enter a sham agreement with a construction company in order to receive proceeds from bonds issued for a construction project. Mr. Glennon was convicted of misprision of a felony for failing to report the misapplication of the bond proceeds. He also failed to report to the ARDC the misconduct of another attorney.

In re Philip Andrew Igoe, M.R. 26186, 2013 PR 68 (Ill. Sept. 26, 2013). Mr. Igoe, who was licensed in Illinois in 1977, was disbarred on consent. He pled guilty to mail fraud in federal court. He devised and participated in a scheme to defraud and obtain money and property from thirteen different individuals in financial difficulty and facing a foreclosure sale of their residence by means of materially false and fraudulent pretenses, representations and promises.

In re Peter Angelo Palivos, M.R. 26127, 2005 PR 109 (Ill. Sept 26, 2013). Mr. Palivos, who was licensed in 1983, was suspended for three years, retroactive to January 31, 2006, the date of his interim suspension. He was convicted in the United District Court for the Northern District of Illinois of

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conspiracy to obstruct justice in a federal investigation into the sale of a restaurant of which he was a part owner.

In re Maryam Khan, M.R. 25990, 2012 PR 131 (Ill. May 20, 2013). Ms. Khan, who was licensed in 2005, was suspended for three years. She was convicted of one count of wire fraud based upon her participation in a scheme to defraud and obtain money and property from third-party mortgage holders.

In re Rory Dean Smith, M.R. 26031, 2013 PR 29 (Ill. May 20, 2013). Mr. Smith, who was licensed in 1983, was disbarred on consent. He made false statements about his income on a loan application submitted to a bank for the purpose of influencing the action of the bank on his loan application. In so doing, he violated federal law. After his conduct was discovered, he entered into an agreement with federal prosecutors to defer criminal prosecution. He was ordered to complete 100 hours of community service and pay restitution totaling $20,000 to the Federal Deposit Insurance Corporation.

In re Avalon e’lan Betts-Gaston, M.R. 23704, 2008 PR 5 (Ill. Nov. 19, 2012). Ms. Betts-Gaston, who was licensed in Illinois in 2000, was disbarred. Between 2004 and 2007, she engaged in multiple conflicts of interest, breach of fiduciary duty, overreaching, failure to advise, explain and consult with clients, and committed a criminal act that reflected adversely on her lawyer’s honesty, trustworthiness or fitness as a lawyer in other respects in connection with six separate instances of mortgage fraud/equity stripping through lease-buyback agreements. The conduct was not an isolated incident, but was part of a pattern and progression of misconduct over a three-year period, in which after witnessing and playing a supporting role in how two other fraudulent programs were operated, she developed her own similar scheme in which she played a principal and instrumental role. Ms. Betts-Gaston further aggravated her misconduct by causing harm to the banks who provided loans to the buyers, and by her refusal to acknowledge that she had done anything wrong. She also caused significant harm to her clients, all of whom were vulnerable and experiencing serious financial problems, because each one of them lost a significant amount of money, and all but one, lost their houses. Some of her clients were involved in protracted litigation in an effort to regain ownership of their homes. The Illinois Supreme Court suspended Mr. Betts-Gaston on an interim basis on June 29, 2011. In re John Farano, M.R. 25354, 2012 PR 36 (Ill. June 26, 2012). Mr. Farano, who was licensed in 1989, was suspended on an interim basis and until further order of the Court. After a nine-week jury trial, he was found guilty in federal court of wire fraud, mail fraud, and theft of public property. He and his co-defendants, including another Illinois lawyer, acquired residential properties in economically-depressed areas of Chicago with the intent of quickly reselling the properties at fraudulently-inflated prices.

In re Charles Murphy, M.R. 25458, 2012 PR 73 (Ill. Sept. 18, 2012). Mr. Murphy, who was licensed in 1974, was disbarred on consent. He was convicted in federal court of mail and wire fraud. He participated in a scheme wherein he and others fraudulently obtained mortgage loan proceeds by inflating the value of several residential properties, arranging sham real estate transactions, providing false and incomplete information to mortgage lenders and prospective purchasers, and using interstate wire and courier communication in furtherance of the scheme.

In re Norton Helton, M.R. 25236, 2012 PR 10 (Ill. May 4, 2012). Helton, who was licensed in 1993, was suspended on an interim basis and until further order of the Court. He was convicted in federal court of participating in a scheme to obtain money from homeowners facing foreclosure by means of materially false and fraudulent pretenses. In addition, he was convicted of wire fraud after he fraudulently obtained more than $1.6 million in mortgage loans through a “mortgage bailout” program. He was sentenced to a 180-month term of imprisonment and was ordered to make restitution of $3,277,475.00.

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In re Marc Robert Engelmann, M.R. 25211, 2012 PR 9 (Ill. March 2012). Engelmann, who was licensed in 1994, was disbarred on consent. He was found guilty by a federal jury on nine counts of conspiracy, bank fraud, and wire fraud. He was involved in a mortgage fraud scheme where mortgage loans were obtained for unqualified buyers on at least nine different properties in amounts in excess of the properties’ actual values. He was sentenced to a 36-month prison term. In re Mark Milos, M.R. 24760, 2010 PR 69 (Ill. September 2011). Milos, who was licensed in 2007, was suspended for ninety days and ordered to complete the ARDC Professionalism Seminar. He used his Wisconsin real estate broker’s license to enter a condominium owned by a law client’s opponent in litigation in order to obtain evidence that he later used in the litigation. He also made false statements to a police officer investigating the circumstances surrounding his entry into the property. In re Forrest David Laidley, M.R. 24305, 2010PR00162 (Ill. January 19, 2011). Laidley, who was admitted in 1978, was disbarred on consent. He pled guilty in federal court to attempted mail fraud and bank fraud and was sentenced to serve sixty months in prison. The charges stemmed from his fraudulently obtaining, retaining and using over 10 million dollars raised through the offer and sale of investments, and through bank financing and other financial transactions related to his real estate business, by misrepresenting to limited partners, promissory note holders, financial institutions, and others the expected return on investments, the risks associated with the investment, his ownership of property, his ownership of loan collateral, his financial condition, the status of investments and the use of the proceeds he obtained from investors. Laidley also created phony documents and forged signatures to obtain and retain funds, commingled the fraudulently-obtained funds and, at times, misappropriated them for his own benefit, to benefit unrelated real estate development projects and to make Ponzi-type payments to investors. A former Yale football player, Laidley was described in press accounts of his conviction as a, “prominent real-estate attorney who worked for the Archdiocese of Chicago.” He was suspended on an interim basis on December 28, 2010. In re Harry E. Defourneau, M.R. 24217, 2010PR00158 (Ill. February 4, 2011). Defourneau, who was licensed in 1985, was disbarred on consent. He was convicted in federal court on one count of mail fraud in connection with a real estate transaction that was part of a larger mortgage fraud scheme involving other defendants. The government had charged Defourneau and others with fraudulently obtaining loans to effectuate the sale of properties at inflated purchase prices to sham purchasers who had been paid by the conspirators to participate in the purported real estate transactions. The conspirators submitted loan application packages, real estate closing and mortgage documents to mortgage lenders that: contained false statements regarding straw purchasers’ income and employment, failed to disclose that they were paying fees from the real estate proceeds to straw purchasers to purchase the properties, and made false representations regarding the purchasers’ intent to reside in the properties in order to induce lenders to make loans that they otherwise would not have made. Through the scheme, Defourneau and the others were involved with approximately 150 fraudulent mortgage loans from which they fraudulently obtained more than $95 million in loan proceeds from mortgage lenders. Defourneau was sentenced to three years of probation, including six months of service at the Salvation Army. He and another defendant were ordered, jointly, to pay $8,654,188 in restitution to one of the defrauded lenders, First Franklin Financial Corporation.

In re James Cyril Kotz, M.R. 24829, 2011PR00081 (Ill. Sept. 20, 2011). Kotz, who was licensed in 1992, was disbarred on consent. He was convicted in federal court of creating a fictitious scheme to conceal the receipt of taxable income garnered through the sale of real estate. Specifically, in connection with an undercover mortgage fraud operation conducted by the Federal Bureau of Investigation and the Department of Housing and Urban Development, Kotz met with a confidential informant (“CI”). That informant was posing as the owner of real property, and sought to sell the property under the false identity of Robert Jessup to a nominee purchaser for the purpose of fraudulently obtaining the sales proceeds. At

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the meeting, the CI admitted to Kotz that he was not Jessup, and he was using the Jessup identity to buy and sell property. Kotz advised the CI that the Internal Revenue Service would discover the use of the Jessup identity because taxes were not being paid on the sales proceeds from the property closing, which would be disclosed to the IRS on Form 1099-S. Kotz suggested to the CI that he could create a fictitious corporation to conceal the flow of taxable income from the real estate transaction, and prepared a power of attorney and warranty deed in the name of Jessup for the CI to use at the closing. Kotz refused to have the CI’s signature, signing as Jessup, notarized at his office to prevent the transaction from being traced back to Kotz. In order to assist the CI in concealing from the IRS his receipt of sales proceeds, Kotz stated to the CI that, prior to the closing on the property, he could record a fictitious mechanics lien on the property in the name of the fictitious corporation, so that the real estate proceeds would flow to the corporation, and the CI could conceal his taxable income from the IRS. After this meeting, Kotz submitted documents to the Illinois Secretary of State to incorporate the fictitious corporation, First Choice Construction Company of Illinois, for the CI to use at the closing. Later, Kotz agreed to record First Choice with the Cook County Recorder of Deeds. Kotz also agreed to file a false lien on a property that the CI intended to sell before the closing, in order to allow the CI to fraudulently pay off the lien at the closing, and conceal the CI’s receipt of real estate proceeds from the IRS. Kotz recorded First Choice with the Cook County Recorder of Deeds. He received $300 from the CI for preparing the power of attorney and warranty deed and $500 for incorporating First Choice. The power of attorney, warranty deed and First Choice were not used in any transaction during the undercover operation and no liens were filed on any property. Kotz was sentenced to a three-year term of probation, with the first ninety days to be spent in home confinement with electronic monitoring. He also has a Wisconsin license. In re Douglas Ivan Milan, M.R. 24819, 2011 PR 97 (Ill. November 17, 2011). Milan was licensed in Illinois in 1972 and in Connecticut in 1976. He was reprimanded in Connecticut for falsely stating in an acknowledgement in a real estate closing that he had taken the acknowledgment in Connecticut when he had actually taken it in Florida. The Illinois Supreme Court imposed reciprocal discipline and reprimanded him.

Assisting a Client in Fraudulent Conduct In re Ted Maurice Word, M.R. 24013, 2009PR00084 (Ill. September 22, 2010). Word, who was licensed in 1998, was censured, ordered to attend and successfully complete the Professionalism Seminar of the Illinois Professional Responsibility Institute, and required to deposit certain funds with the Clerk of the Circuit Court of Cook County pending the resolution of a civil matter. He participated in the purported sale of two Chicago properties at the request of someone whom Word believed to be the property owner’s daughter, but who, in fact, was a fraud artist who had stolen the owner’s identity. Rather than verify the fraud artist’s claims, Word held himself out as having the owner’s authority to act on her behalf, when, in fact, he did not, and he completed the closing relating to the purported sales. In re Larry E. Smith, M.R. 24275, 2007PR00071 (Ill. January 19, 2011). Smith, who was licensed to practice law in Illinois in 1994, was suspended for nine months. In connection with a real estate transaction, he improperly notarized several documents which facilitated the improper transfer of the property. Specifically, a woman named Tijuana Atwood came to Smith, told him that her uncle, one Mr. Nicholson, had died, and asked him to draft a small estate affidavit for her. He did so. Tijuana later returned to him with a request that he draft deeds by which a woman named Robinson and a woman named Mason, both of whom were related to. Nicholson, would transfer to Tijuana the building in which Nicholson had lived. Smith prepared warranty deeds conveying, in consideration for ten dollars, the women’s interests in the building to Tijuana. He also prepared Grantor/Grantee statements memorializing the transfers. He notarized signatures purporting to be those of the women on the deeds and Grantor/Grantee statements. Critically, he never witnessed the women sign the documents. He did not otherwise verify that signatures were the signatures of the women. He did not care that some of the

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signatures on the documents were spelled differently than the printed names on the documents. Tijuana later sold the property and kept the money from the sale. Smith is a recidivist. In re George Angelo Palivos, M.R. 24474, 2004PR00087 (Ill. May 18, 2011). Palivos, who was licensed in 1987, was disbarred. He failed to appear at his disciplinary proceeding. Palivos and others devised a scheme to misrepresent the terms of an agreement to sell the Waterfalls Restaurant in Antioch, Illinois, by misrepresenting the source of the funds used by the buyer, and to create the materially false pretense that the buyer had satisfied conditions required by The Money Store and the United States Small Business Administration. Palivos was a shareholder in the company that was selling the Waterfalls. He was suspended on an interim basis and until further order of the Court on August 29, 2005. In re Bernard James Conway, M.R. 24809, 2009 PR 71 (Ill. November 17, 2011). Conway, who was licensed in 1987, was suspended for ninety days. After issuing a check drawn on insufficient funds to his landlord, he was charged in the Circuit Court of Berrien County, Michigan, with having presented an NSF check in an amount over $500. He was convicted of the charge and sentenced to one year of probation with the condition that he make restitution and pay a fine. He complied with the terms of his sentence and his conviction was later expunged, but he failed to notify the ARDC of the conviction. In re Mark James McCombs, M.R. 25072, 2011 PR 137 (Ill. January 13, 2012). McCombs, who was licensed in 1984, was disbarred on consent. He was appointed to be counsel for the Village of Calumet Park, Illinois and provided legal services in relation to the Village’s Tax Increment Financing Districts and economic development issues. He over-billed the Village approximately $600,000 to $800,000 for legal services he never performed. He pled guilty to theft of over $100,000 and was later sentenced to a six-year prison term. In re Michael Lee Tinaglia, M.R. 24623, 2010PR00110 (Ill. Sept. 26, 2011). Tinaglia, who was licensed in Illinois in 1977, was censured and ordered to complete the ARDC Professionalism Seminar. Greg Stec, his business partner and two corporations with which they were affiliated partnered to develop a supportive care facility for seniors on a parcel of land in Maywood, Illinois. To fund the project, they solicited two investors for personal loans totaling 2.4 million dollars, with the Maywood property as the collateral. Tinaglia later agreed to represent Stec in a mortgage foreclosure suit that had been filed against Stec, his business partner and the two corporations for their failure to meet their loan obligations. As part of the settlement of the mortgage foreclosure action, Stec and his partner applied for a loan from a bank, and executed two notes and payment guaranty agreements in favor of the investors. In order to obtain the loan, the bank required that the two men and their wives execute a note and payment guarantee agreement. Tinaglia was to represent the men and their wives in the closing on the loan transaction. Stec contacted Tinaglia and advised him that, due to his wife’s work schedule, she would be unable to attend the closing that was scheduled for the next day. Tinaglia drafted a power of attorney that would allow Stec to execute documents for his wife, and gave it to Stec for his wife to sign. Stec returned the document and, at the time Stec returned the document, it contained Stec’s wife’s purported signature. Stec told the lawyer that his wife had signed the power of attorney. Thereafter, Tinaglia notarized Stec’s wife’s purported signature on the power of attorney, despite not having seen her sign the document and without making any attempt to determine whether she actually signed it. In fact, Stec’s wife had not signed the power of attorney. Unsurprisingly, Stec and his business partner defaulted on the notes and guarantee agreements, and, as a result, the investors filed a complaint and action for confession of judgment against the men and their wives. A court entered judgments against the defendants totaling approximately $258,000, and the investors filed citations to discover the defendants’ assets. Tinaglia agreed to represent the defendants in the matter, but never met or spoke with Stec’s wife about any issues relating to the citation to discover assets. At some later point, after reviewing her husband’s e-mails to his business partner and co-defendant in the case, Stec’s wife learned for the first time of the existence of notes and guarantees and the citation proceeding against her. She retained another attorney to represent her in the

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matter, and, after she succeeded in reopening the original judgment, her financial obligation to the investors was extinguished.

Conversion or Mismanagement of Escrow Funds

In re Alfred Stanley Dynia, M.R. 27239, 2014PR00079 (Mar. 12, 2015). Mr. Dynia was suspended for five months, with the suspension stayed after 30 days in favor of a one-year period of probation subject to conditions. He failed to maintain $41,509.72 he was holding in connection with various real estate matters, when he drew the balance in his client trust account below the amount he was holding for clients by making distributions to clients and third parties without first having made a deposit relating to those transactions, or inadvertently paying some clients and third parties more than they were due. He did not benefit from the misuse of the trust account, because the money was paid to other clients or third parties, and not to him. Mr. Dynia obtained his undergraduate degree in accounting, worked at an accounting firm for several years between college and law school, and had passed the CPA exam at the time of his misconduct. However, in the course of his disciplinary proceeding, he expressed remorse and implemented appropriate bookkeeping practices.

In re Kathleen Irene Niew, M.R. 26310, 2012 PR 162 (Ill. Nov. 20, 2013). Ms. Niew, who was licensed in 1981, was disbarred. She was entrusted with $2.34 million belonging to a couple that she represented pending their purchase of three buildings. She misappropriated all of the funds and then made multiple misrepresentations to her clients, the sellers of the properties, and the sellers’ attorneys and real estate agents regarding the status of the funds. She was suspended on an interim basis on May 7, 2013.

In re Robert James Kennedy, M.R. 26334, 2012 PR 28 (Ill. Nov. 20, 2013). Mr. Kennedy, who was licensed in 1971, was suspended for thirty days and must successfully complete the ARDC Professionalism Seminar. He deposited the proceeds from the sale of a client’s real property into his operating account, instead of a client fund account, and then used some of the proceeds for his own business and personal purposes.

In re Peter George Limperis, M.R. 26085, 2010 PR 126 (Ill. Sept 26, 2013). Mr. Limperis, who was licensed in 1990, was suspended for thirty days and was ordered to complete a law office management course. While representing the buyer of a restaurant, he agreed to hold certain funds in connection with the sale, but later commingled $2,760 of those funds.

In re Gregg Alan Wolpoff, M.R. 26215, 2013 PR 10 (Ill. Sept. 26, 2013). Mr. Wolpoff, who was licensed in 1991, was suspended for ninety days. He failed to preserve the identity of $1,376 that he agreed to hold in escrow in connection with a real estate closing.

In re Joel S. Alpert, M.R. 26028, 2009 PR 104 (Ill. May 23, 2013). Mr. Alpert, who was licensed in Illinois in 1987, was suspended for two years. He converted approximately $48,000 in escrow funds that he had agreed to hold in six different real estate transactions.

In re James Edward Musial, M.R. 25801, 2012 PR 33 (Ill. May 23, 2013). Mr. Musial, who was licensed in 1982, was suspended for sixty days and until he makes certain restitution. While acting as an escrowee in a real estate transaction, he converted nearly $1,000 in earnest money funds.

In re Dorothy Jean Mitchell, M.R. 25344, 2011 PR 111 (Ill. Sept. 18, 2012). Ms. Mitchell, who was licensed in Illinois in 1985, was suspended for ninety days. She mismanaged $1,380 that she had agreed

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to hold in escrow in relation to a client’s real estate transaction. The suspension is effective on October 8, 2012.

In re William Charles Chesbrough, M.R. 23991, 2009 PR 133 (Ill. September 2010). Chesbrough, who was licensed in 1980, was disbarred. He misappropriated more than $113,000 that he was holding for a client in connection with the client’s deceased mother’s estate. In addition, in two separate real estate matters, he converted more than $28,000 that he was holding either as earnest money or to pay real estate taxes.

In re Joseph Michael Pisula, M.R. 24722, 2009 PR 13 (Ill. September 2011). Pisula, who was licensed in 1980, was suspended for nine months. While serving as the president of a title insurance company, he failed to segregate title premium funds for the benefit of the underwriter. He also failed to timely remit the funds to the underwriter and converted approximately $81,000 of the funds for his own business purposes. In re Ellen Frances Lang, M.R. 24759, 2010 PR 120 (Ill. September 2011). Lang, who was licensed in 1990, was disbarred. She induced her mother to purchase a home in Evanston by falsely claiming that she, Ms. Lang, had been diagnosed with cancer and that she needed to live near to where she was receiving cancer treatments. She caused the home’s sellers to execute a warranty deed conveying title of the property to Ms. Lang, rather than her mother, and then concealed from her mother the fact that she held title to the property. She then obtained a mortgage on the property and used the $150,000 loan proceeds for her own benefit. She failed to cooperate with the ARDC investigation into her misconduct. In re Becky Lynn Dahlgren, M.R. 24588, 2007 PR 91 (Ill. September 2011). Dahlgren, who was licensed in 1976, was suspended for nine months and until she completes courses in professionalism and law office management. She made false statements regarding assets in her personal bankruptcy proceeding. Further, in four separate real estate matters, she misappropriated a total of approximately $12,500 in escrow funds belonging to clients and third persons. In re William G. Wells, M.R. 25123, 2011 PR 157 (Ill. March 20, 2012). Wells was admitted in Illinois in 1955 and in California in 1959. The Supreme Court of California disbarred him for repeatedly lying under oath, misappropriating more than $88,000 in settlement proceeds belonging to his secretary and converting an additional $60,000 security deposit from a tenant of the secretary’s property, and for filing an unjust action against his secretary alleging that Mr. Wells’ wife had a community property interest in the secretary’s property when Mr. Wells knew that neither he nor his wife had any interest in the property. The supreme Court of Illinois imposed reciprocal discipline and disbarred him. In re Robert James Kennedy, M.R. 25070, 2011 PR 15 (Ill. March 20, 2012). Kennedy, who was licensed in 1971, was suspended for one year and until he makes certain restitution with interest. He commingled escrow funds that he had been holding for two separate clients to pay their pro rata shares of property taxes and failed to promptly deliver the funds when requested. In one instance, he also converted $6,584 in escrow funds he was holding and failed to return the entire amount to the client. In re Adalbert Paul Wojewnik, M.R. 24563, 2010PR00007 (Ill. May 18, 2011). Wojewnik, who was licensed in 1992, was disbarred. He misappropriated approximately $5,000 in escrow funds that he had agreed to hold in connection with a client’s real estate transaction and failed to cooperate with the disciplinary investigation. He also failed to appear at his disciplinary hearing.

In re Mahendra R. Mehta, M.R. 24461, 2008PR00084 (Ill. May 18, 2011). Mehta, who was admitted in 1970, was disbarred. He misappropriated over $100,000 in real estate escrow funds and used most of those funds to pay sanctions entered against him by a bankruptcy court in Houston, Texas. He later falsely

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testified in court proceedings that he had been authorized by the parties to the real estate transaction to take the escrow funds, and that his client told him to take the funds as payment for attorney’s fees. He was suspended on an interim basis and until further order of the Court on December 29, 2010.

Neglect

In re Dean Lloyd Sutton, M.R. 26134, 2012 PR 156 (Ill. Sept. 26, 2013). Mr. Sutton, who was licensed in 1979, was suspended for ninety days. He neglected to transfer certain properties owned by the client into a limited liability company. When he did act to transfer ownership of the properties, he advised the client to falsify the execution dates on three quitclaim deeds in an effort to affect the date at which the client’s wife would become eligible for Medicaid benefits.

In re James P. Regan, M. R. 24382, 2008PR00003 (Ill. March 21, 2011). Regan, who was licensed in 1995, was suspended for ninety days, with the suspension stayed in its entirety by a one-year period of conditional probation. He failed to forward payment of a client’s property taxes for the client’s business, an animal hospital, resulting in the client’s loss of his property to a tax purchaser. In re Ronald Steven Gertzman, M.R. 24622, 2009 PR 100 (Ill. September 2011). Gertzman, who was licensed in Illinois in 1972, was suspended for two years and until further order of the Court. He neglected a client’s commercial foreclosure defense matter, failed to keep the client informed about the status of the matter, charged an unreasonable fee of $10,000 in the case, and failed to promptly refund the unearned portion of the fee when the client discharged him.

Unauthorized Settlement in a Builder Dispute In re Steven Sam Koukios, M.R. 21888, 05 CH 37 (Ill. November 20, 2007). Koukios, who was licensed in 1986, was censured. Koukios agreed to represent Brian and Cindy Powers in a dispute with a builder who had done work on their home and, without their permission, he delegated the responsibility to another attorney to attend an arbitration hearing and negotiate a settlement. Koukios then approved a settlement for $12,500, although the Powers had only given him authority to offer $10,000 to settle the case. An arbitration award was entered against his clients, which Koukios rejected, but he failed to take any further action, and a judgment was entered against them. He failed to advise his clients of the arbitration award and the judgment, and he stopped returning their phone calls, forcing them to hire another attorney, who obtained an order vacating the earlier judgment. A hearing panel concluded that Koukios did not have a dishonest motive

Improper Business Relations with a Client

In re Robert Carl Gebert, M.R. 26128, 2011 PR 154 (Ill. Sept. 26, 2013). Mr. Gebert, who was licensed in 1986, was censured and ordered to complete the ARDC Professionalism Seminar. While representing a nonprofit company in various matters, he entered into agreements to lease and sell real property to that company on behalf of a separate company in which he had an ownership interest. His law firm later made a $25,000 loan to the nonprofit company’s executive director. In none of those transactions did he ever disclose that his interests in the transactions could be inconsistent with the client’s interests.

In re Edward Allen Gregory, M.R. 22102, 06 CH 17 (January 23, 2008). Gregory was disbarred for various misconduct including conflict of interest, overreaching and fraud related to a foreclosure rescue scheme. Gregory was retained to represent June Calhoun in the defense of a foreclosure action. Unbeknownst to Calhoun, Gregory neglected the foreclosure case. He then recommended to Calhoun that he create and implement an “investment plan” to protect her interests in her property. As part of the

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scheme, Gregory advised Calhoun that he found a group of investors operating under the name Propertycor, Inc. to purchase her property. Propertycor, Inc. was a purported real estate investment business incorporated and controlled by Gregory. He presented an investment plan to Calhoun which he said would allow her to remain on the property and eventually repurchase the property from Propertycor. Gregory explained to Calhoun that she and Propertycor would enter into Articles of Agreement setting forth a purchase price for the property, payment terms and conditions. Upon satisfaction of the payment terms and conditions, Propertycor would convey title back to Calhoun. Calhoun gave Gregory a check in the amount of $6,500 made payable to Propertycor for earnest money to get the process started. Gregory deposited the $6,500 check into the Propertycor bank account. Propertycor did not purchase the 89th Street property and used the money for his own benefit.

Breach of Fiduciary Duty/Conflict

In re Alvin George Brooks, Jr., M.R. 26313, 2012PR00067 (Nov. 20, 2013). Mr. Brooks was suspended for one year. In 2003, a so-called real estate consultant approached Brooks’ 73 year-old client, Lavoren Blakely, regarding the proposed sale of a multi-unit building Blakely owned in Chicago. Mr. Brooks agreed to represent Blakely in the sale of the Chicago property. The real estate consultant sent a contract reflecting that $370,000 in earnest money funds had been paid, that the purchase price was $1,800,000, and that the contract had been executed by the buyer, and, purportedly, by Blakely. In fact, Blakely had not seen nor signed the contract, and Mr. Brooks did not review or confirm the terms of the contract with Blakely. Mr. Brooks also did not confirm with Blakely or anyone involved with the transaction that $370,000 in escrow funds had been paid. At the closing, Mr. Brooks allowed the buyers to present various HUD-1s which contained changes to the escrow amount and the payoff amount to a purported mortgage holder. Mr. Brooks knew that the buyers were changing these amounts in order for the transaction to be fully funded by the mortgage loan taken by one of the buyers. Thereafter, Mr. Brooks allowed the closing to proceed, even though he knew, from his review of the title commitment, that the HUD-1 contained false information, including the payoff of liens that did not exist, and escrow money that had never been paid. When the buyer ultimately failed to make the required mortgage payments, the lender filed a lawsuit alleging that the buyer, Blakely, Mr. Brooks, and others had conspired to artificially inflate the value of the property and fraudulently obtain loan proceeds. As a result, Blakely, who was ultimately found not to have engaged in fraud, had to retain counsel to defend him and to pursue a malpractice action against Mr. Brooks.

In re Pater David Caminiti, M.R. 24653, 2008 PR 49 (Ill. September 2011). Caminiti, who was licensed in 1985, was suspended for ninety days. He engaged in a conflict of interest when he drafted trust documents for a client providing for a $25,000 bequest to each of his two children. He also failed to timely initiate probate proceedings after the client’s death and, after opening the estate, he continued to dissipate estate funds to pay the rent on property held by the testator at the time of her death. In re Mark Edward Vietzen, M.R. 25163, 2011 PR 23 (Ill. March 20, 2012). Vietzen, who was licensed in 1996, was disbarred. He induced a client, in her capacity as an estate executor, to lend him $375,000 in estate funds to purchase a home for himself without making appropriate conflict of interest disclosures, and then failed to repay those funds. He also neglected a real estate matter for the same client when he did not appear at the closing and he was dishonest when he gave her his reasons for failing to appear at closing. He did not participate in his disciplinary hearing.

Improper Advertisement

In re Andrew Joseph Rukavina, M.R. 24818, 2010 PR 99. (Ill. September 2011). Rukavina, who was licensed in 1983, was suspended for six months. He mailed a false and misleading advertisement and

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failed to disclose to prospective real estate clients that he would be receiving additional fees for issuing title insurance and performing a title review.

Aiding in the Unauthorized Practice of Law

In re Thomas George Macey and In re Jeffrey John Aleman, M.R. 27212, 2012PR00057 and 2012PR00058 (May 14, 2015). Mr. Macey and Mr. Aleman were suspended for two years. Both attorneys formed a debt settlement law firm called Legal Helpers Debt Resolution, LLC. Legal Helpers contracted with non-attorney debt settlement companies, which would market the law firm’s services and refer clients to the law firm. After the law firm approved a client, the client would be referred back to the debt settlement company for “law-related services,” which included managing the client’s file and negotiating the client’s debts with creditors. Legal Helpers would require clients to stop paying their creditors and instead enroll in Legal Helpers’ monthly payment program. Legal Helpers represented that it would negotiate a minimum 35% reduction of the original face value of the clients’ debts. In order to accumulate funds to pay the settlements, clients authorized monthly electronic payments from their bank accounts to accounts controlled by Global Client Solutions. Global would then pay Legal Helpers and the non-attorney debt settlement companies their fees into accounts set up at Global. Legal Helpers would take a retainer fee of $500 and the debt settlement companies would take service fees of 15%, both of which would get paid up front. In many instances, most of the clients’ monthly payments for approximately the first year of enrollment went toward retainer and service fees, as opposed to debt settlement. The non-attorney employees of the debt settlement companies would perform client intake tasks, manage client files, and negotiate debts, with little or no involvement by the Legal Helpers attorneys. The ARDC Hearing Board found that the attorneys did not consult with clients regarding the means by which the objectives of the representation were to be accomplished, nor did they properly supervise the non-attorney debt settlement firm personnel, who were not under their direct control. Finally, the Hearing Board found that Mr. Macey and Mr. Aleman facilitated the unauthorized practice of law by the non-attorney debt settlement personnel, by creating and approving the business model that delegated to the non-attorneys all responsibility for explaining the debt resolution program and the terms of legal representation. In re Steven Lee Popuch, M.R. 24323, 2009PR00003 (Ill. March 21, 2011). Popuch, who was licensed in 1977, was suspended for twelve months. He aided the unauthorized practice of law by Marc Levine, a friend of his who had been disbarred for converting funds from clients. During that time, Levine represented clients in seventeen real estate transactions. When Popuch was contacted by the ARDC about Levine’s alleged participation in one of those real estate transactions, Popuch wrote a letter falsely claiming that he, not Levine, had been handling the transaction in question. Later, he appeared at a sworn statement and told a number of lies in an effort to cover up the fact that he had assisted Levine in the unauthorized practice of law.

II. Illinois Disciplinary Cases Involving Direct Communication with Represented Parties

In re Ditkowsky, 1989PR00389 (Ill. Reprimand Administered on December 11, 1997). Reprimand administered for communicating with a corporation involved in a dispute with Ditkowsky’s client without authorization from the corporation’s lawyer. Ditkowsky claimed that he sent the letter to the corporation without authorization from the corporation’s lawyer to comply with his responsibilities under Rule 11 of the Federal Rules of Civil Procedure and Supreme Court Rule 137 to conduct an inquiry and investigation of facts in any filed lawsuit.

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In re Kyles, 1997PR00043 (Ill. Reprimand Administered on December 11, 1997). Reprimand administered after Kyles sent written correspondence directly to the opposing party in a civil matter when the lawyer knew the party to be represented. The recipient, an ill woman in her eighties, was a member of a vulnerable class. The communication Kyles sent threatened to bring criminal charges if the party did not respond to the communication and caused the woman much distress. In addition, Kyles was charged with making statements which could have been interpreted as misrepresentations to the media about criminal action pending against the parties to the litigation.

In re John T. Gonnella, M.R. 17337, 2000PR00043 (Ill. March 22, 2000). In 1999, while representing a father in a child protection proceeding, Mr. Gonnella met with his client’s ten-year-old son at Maryville without permission from the child’s attorney at the Public Guardian’s office. Mr. Gonnella was censured.

In re Phillip Richard Torf, 2008PR00089 (Ill. Reprimand Administered on April 29, 2009). In addition to being a lawyer licensed to practice law in Illinois 1984, Torf was an Illinois licensed pharmacist since 1976. In the spring of 2005, attorney Robert Allan Holstein contacted Torf, told Torf that he had a case involving the drug Neo-Synephrine, and inquired about Torf’s knowledge regarding that drug. At that time, Neo-Synephrine was a non-prescription drug manufactured by Bayer Corporation. Holstein was one of the plaintiff’s lawyers in the case entitled, Kathi Orso [sic], Urso individually and on behalf of all persons similarly situation v. Bayer Corp., Case No. 04 CV 0114 (N. D. Ill. 1984), a putative class action relating to Neo-Synephrine. In the complaint, the plaintiff alleged that she suffered injuries from using Neo-Synephrine, an over-the-counter nasal decongestant manufactured by Bayer, because she allegedly could not breathe without the use of a topical nasal decongestant after three days of using Neo-Synephrine. After some discussion, Torf told Holstein that he would do some research into Neo-Synephrine. On June 17, 2005, Torf contacted Bayer at the consumer help line number that was listed on the purchased package of extra-strength Neo-Synephrine and also on Bayer’s web site. Torf left a voicemail message on the consumer help line that was listed on the purchased package for Bayer in which he identified himself as a pharmacist and asked whether Bayer had any information or articles on addiction and rebound congestion, the issues at stake in the case. At no time during the voicemail message did Torf identify himself as a lawyer. On June 20, 2005, Eileen Barry, the Senior Associate Director of Drug Safety, returned Torf’s telephone call. Because Torf had identified himself as a pharmacist, Ms. Barry believed that Torf was a pharmacist inquiring on behalf of a customer, and she left a message on his voice-mail answering his initial questions about rebound congestion and Neo-Synephrine. On June 20, 2005, Torf again telephoned Bayer and left a voicemail message asking further questions regarding Neo-Synephrine. Again, Torf identified himself only as a pharmacist, not as a lawyer, during that voicemail message. On June 28, 2005, Jadine Stephan, the Manager of Drug Safety for Bayer HealthCare LLC, Consumer Care Division, a subsidiary of Bayer, and a member of Bayer’s control group, retrieved the voicemail message from Torf and returned his telephone call. Believing that Torf was a pharmacist inquiring on behalf of a customer, Ms. Stephan provided Torf with information about discontinuance of nasal decongestants from the Textbook of Internal Medicine 5th Edition. At no time during the telephone conversation did Torf disclose that he was an attorney, or that he was consulting with or had been requested to assist other attorneys in any way involving the case. On June 30, 2005, Torf called Ms. Stephan and requested that she respond in writing to five specific questions regarding Neo-Synephrine as follows:

1) how does Neo-Synephrine work, pre or post-synaptically; 2) what causes rebound congestion; 3) how is rebound congestion treated; 4) are there any printed materials about Neo-Synephrine for health professionals;

and 5) was the 1% solution ever a prescription product.

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Torf also asked Ms. Stephan to telefax the answers to these questions to (847) 291-3436. At no time during the telephone conversation did Torf disclose that he was an attorney, or that he was consulting with or had been requested to assist other attorneys in any way involving the case. Nor did Torf inform Ms. Stephan that the telefax number he gave her was the telefax number for his law practice or that the telefax would be sent to a lawyer’s office. On July 12, 2005, believing that Torf was a pharmacist inquiring on behalf of a customer, Ms. Stephan telefaxed written responses to the questions to Torf at the telefax number he had provided to her. Torf knew that Bayer was represented by attorneys in the case and at no time did Torf obtain the consent of lawyers from Bayer in the case to contact Bayer’s employees directly. Based on the information he had obtained from Bayer and from Ms. Stephan in particular, Torf assisted Holstein in drafting an Amended Complaint in the case. On July 27, 2005, fifteen days after Torf received the telefax from Ms. Stephan, Holstein, on behalf of the plaintiff, filed an amended complaint. The amended complaint made use of the information that Torf had obtained from Bayer. Torf’s name was listed as one of the plaintiff’s attorneys on that pleading, although he did not file a formal appearance in the case until August 2, 2005. Based on the information Torf had obtained from Bayer, the amended complaint included a new legal theory of an alleged common law duty owed by Bayer to the plaintiff to warn physicians of the dangers of overuse of Neo-Synephrine or, in the alternative, to warn consumers that it was not advising physicians about Neo-Synephrine’s dangers on its labeling. The amended complaint also included a new theory regarding an alleged design defect of Neo-Synephrine because it contained a neurotransmitter that affected the body’s reaction to other neurotransmitters after limited exposure. The First Amended Complaint alleged that exposure to Neo-Synephrine and to the neurotransmitters allegedly caused plaintiff’s injuries. On October 17, 2005, Bayer filed a motion to dismiss the plaintiff’s First Amended Complaint. On February 7, 2006, Torf, on behalf of the plaintiff, filed Plaintiff’s Response to [Bayer’s] Motion to Dismiss Amended Complaint. In that Response, Torf stated that the new legal theory of a common law duty “was pleaded based on newly acquired information obtained by Plaintiff’s counsel. The newly acquired facts are set forth in Exhibit B, a letter from [Bayer] containing numerous admissions.” Exhibit B was a copy of the letter that Ms. Stephan had telefaxed to Torf on July 12, 2005, answering the questions that Torf had posed to her. Torf signed the Response. Upon reviewing plaintiff’s Response, Bayer’s attorneys, Pamela L. Gellen and Kevin J. Clancy, first learned of Torf’s unauthorized contacts with Bayer. On March 6, 2006, attorneys Gellen and Clancy filed, on behalf of Bayer, a “Motion by Defendant Bayer Corporation for Sanctions Because Plaintiff’s Attorneys had Ex Parte Contacts with Bayer.” In that motion, Bayer requested, inter alia, that the court should strike “all references to Exhibit B or the information contained in that exhibit” in the plaintiff’s Response as a sanction for Torf’s unauthorized contacts with Bayer while Torf knew that Bayer was represented by counsel. On September 27, 2006, the Honorable Joan B. Gottschall entered a Memorandum Opinion and Order in the case in which she, inter alia, denied Bayer’s motion for sanctions, but granted Bayer’s request that Exhibit B be stricken. In that Opinion, Judge Gottschall stated:

[Torf’s] conduct in light of these two cases is extremely troubling, and the court might well be able to justify an award of sanctions. Although [Torf] may not have been Urso’s legal counsel at the time of the communication, he was nevertheless an attorney who was performing a quasi-legal function and who should have been on notice of Local Rule 83.54.2 [of the United States District Court for the Northern District of Illinois]. Regardless of whether he was working independently or at the behest of Urso’s attorneys when he contacted Bayer, his communication was motivated by the litigation. In responding to the motion for sanctions, Urso makes clear that [Torf] knew he was being consulted about litigation because he (or at least Urso) says he was conducting Rule 11 diligence. The fact that he may not have known the finer points of the litigation is irrelevant since he clearly knew that he was being asked for information to assist with pending or planned litigation. He should have also known that Bayer was a party that would be represented by counsel. Additionally, [Torf] received enough information from Urso’s attorneys that he knew the right questions to ask Bayer. Any attorney should have

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known that there was some type of dispute in which Neo-Synephrine, and therefore Bayer, was implicated.

Local Rule 83.54.2 of the United States District Court for the Northern District of Illinois is identical to Rule 4.2 of the Illinois Rules of Professional Conduct. In re Angela E. Peters, M.R. 21252, 2004PR00127 (Ill. Reprimand Administered on January 12, 2007). Ms. Peters, who was admitted in 1985, caused her divorce client to communicate directly with the client’s spouse, who was represented by counsel, to secure modifications to a draft settlement agreement. Those modifications had been rejected by the wife’s attorney and Ms. Peters had been denied permission to talk to the client’s spouse about the proposed modifications. In re Amy Tsung-Mien Ho, M.R. 24554, 2009PR00129 (Ill. May 18, 2011). Ms. Ho, who was licensed in 2005, was suspended for five months. During a divorce proceeding, she caused a client to present documents to the client’s wife for the wife’s signature, knowing the wife was represented in the divorce by another attorney. She also provided false information to the ARDC about her conduct in order to impede inquiry into her misconduct. In re Lori Jo Kieffer, M.R. 24744, 2011PR00072 (Ill. September 20, 2011). Ms. Kieffer was licensed in Illinois in 2001 and in Iowa in 2002. She was reprimanded in Iowa for communicating with an opposing party without obtaining the permission of the attorney who was representing that party.

In re Herb N. Elesh, M.R. 24571, 2009PR00134 (Ill. September 20, 2011). Mr. Elesh, who was licensed in 1996, was suspended for six months. He sent threatening and harassing demand letters directly to a drug treatment center where his client had been a patient, despite receiving repeated notifications from the center’s attorney that it was represented in the matter. The suspension is effective on October 11, 2011.

III. Malpractice Claims

Top Four reasons for malpractice claims:

Poor communication between lawyer and client, resulting in disparate understandings of the arrangement

Missed deadlines through bad calendaring or failure to know deadlines Poor investigation that misses basic facts Failure to catch errors in work delegated to assistants.

Types of cases most often associated with malpractice claims:

Plaintiff Personal Injury Real Estate Family Law Probate

Top Ethics Issues in Malpractice Cases:

Confusion about client identity Confusion about scope of representation Conflicts of interest Business transactions with a client

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Getting paid and getting out In Illinois, a complaint against a lawyer for professional misconduct can be grounded in contract (for breach of contract) or tort law (for negligence) and recovery may be sought in the alternative. No punitive, exemplary, vindictive, or aggravated damages are permitted under either theory, unless the cause of action is alleging fraud. In Illinois, an action must commenced within two years from the time the person bringing the action knew or should have known of the injuries for which damages are sought.

In a contract action, a plaintiff must assert a contract, a breach of that contract, and damages. In a tort action, the plaintiff must prove a duty, a breach of that duty, causation, and damages. Because a duty must be alleged, privity must typically exist between the lawyer and the plaintiff.

In Illinois, the burden of proof in a malpractice case not alleging fraud is preponderance of the evidence. It is clear and convincing for fraud. Expert testimony is required to make a prima facie case for negligence and a successful plaintiff must prove a ‘case within a case’ to be successful. A plaintiff must establish that, “but for” the lawyer’s conduct, the harm would not have occurred.

A significant portion of lawyers are disciplined not for the malpractice, but because they tried to hide their malpractice.

As to insurance, a lawyer buys two duties. A duty to defend and a duty to indemnify. There are two commonly available policies available to professionals:

Occurrence - Provides coverage regardless of when a claim is brought, provided the act, error or

omission happens during the policy period; or Claims Made (the most popular) - Provides coverage regardless of when the act, error or

omission occurred, providing that the misdeed is discovered and a claim for indemnity is made during a policy period.

Read the policy! Understand the need to provide NOTICE of when a claim MAY result. Moral

hazards are exclusions, as are public official acts, fiduciary work, non-legal or business activities, not-for-profit work, pension and profit sharing matters. Also, no policy will allow radioactive waste in a law office. Check the policy to see if professional discipline defense is covered.

As to large-firm malpractice trends, ALAS is the insurer for firms of significant size, usually 200

or more lawyers. According to an ALAS report produced by Brian Redding, one of the ALAS management hierarchy, on February 14, 2006, he noted the four following trends in his practice:

1. Over the past several years, ALAS has seen a troubling growth of lawyer mistakes,

usually scrivener’s errors. Sloppiness appears to be at play, with lack of supervision and editing and the ease of copying and pasting in word processing documents or the use of canned forms;

2. Lawyers are being sued more and more in negligence for ‘allowing’ clients to make poor

business decision…”My lawyer didn’t warn me enough”;

3. Unworthy Clients; and

4. Conflicts….nothing changes.

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Peter L. Apostol is employed as Senior Counsel at the Attorney Registration and Disciplinary Commission of the Supreme Court of Illinois, where he investigates and prosecutes charges of lawyer misconduct. He has given presentations on legal ethics issues to the Illinois State Bar Association, Chicago Bar Association, Practising Law Institute, and Chicago-area law schools. He served as the Vice-Chair of the Chicago Bar Association Professional Responsibility Committee between 2015 and 2016. Mr. Apostol graduated from the University of Illinois at Urbana-Champaign with a B.A. in Political Science in 2003, and he received his law degree from Loyola University of Chicago in 2006. While attending law school, he worked as a law clerk at the ARDC and as an extern for Judge Charles P. Kocoras, then the Chief Judge of the U.S. District Court for the Northern District of Illinois. Mr. Apostol is a member of the Chicago Bar Association, Hellenic Bar Association of Illinois, and the National Organization of Bar Counsel.

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