IN THE MATTER OF THE REINSTATEMENT OF OTIS

IN THE MATTER OF THE REINSTATEMENT OF OTIS
2007 OK 82
175 P.3d 357
Case Number: SCBD-5281
Decided: 10/30/2007

THE SUPREME COURT OF THE STATE OF OKLAHOMA

IN THE MATTER OF THE REINSTATEMENT OF: JERRY E. OTIS TO MEMBERSHIP IN THE OKLAHOMA BAR ASSOCIATION AND TO THE ROLL OF ATTORNEYS.

PETITION FOR REINSTATEMENT

¶0 Petitioner Jerry E. Otis filed a petition for reinstatement to membership in the Oklahoma Bar Association (OBA). Through the Office of the General Counsel, the OBA opposes reinstatement. After a hearing, a Trial Panel of the Professional Responsibility Tribunal (PRT) recommended denial of reinstatement. After de novo review, we deny reinstatement.

PETITION FOR REINSTATEMENT IS DENIED; PETITIONER IS ORDERED TO PAY COSTS.

Stanley M. Ward, Woodrow K. Glass, Scott F. Brockman, Norman, Oklahoma, for Petitioner,
Janna Dunagan Hall, Assistant General Counsel, Oklahoma Bar Association, Oklahoma City, Oklahoma, for Respondent.

OPINION

WATT, Justice:

¶1 Petitioner Jerry E. Otis voluntarily submitted his resignation from membership to the Oklahoma Bar Association (the Bar) pending disciplinary proceedings on November 23, 1993. This Court found Otis had complied with the provisions of Rule 8.1, Rules Governing Disciplinary Proceedings (RGDP), 5 O.S. 1991, Ch. 1, App. 1-A

FACTS

¶2 Otis was admitted to the Oklahoma Bar Association on July 26, 1966. He practiced law in Antlers, Oklahoma, until August 1, 1993. Otis was appointed Conservator of the Mary L. Cothran Conservatorship on May 26, 1981. Over the course of approximately 10 years, Otis used funds from the conservatorship estate to pay his personal debts. Mary died on May 3, 1995. On or about August 30, 1996, Otis entered a plea of nolo contendere, with a plea agreement in the district court, to the charge of Embezzlement by Trustee,

¶3 An audit

¶4 Otis testified that after his resignation he first worked as a real estate agent for a short time. From February, 1995 until June, 2000, he was employed by a non-profit organization in Hugo, Oklahoma, Little Dixie Community Action Agency. The agency provided housing assistance to low income persons. He testified he disclosed his past to his employer. Following that employment, he worked for Goodland Presbyterian Children's Home, a place for long-term care for troubled boys, ages six through twelve. Otis served as Goodland's Assistant Director for Development, in a fundraising capacity until October 1, 2006. He testified that if his reinstatement petition is granted, he intends to do pro bono work for Legal Aid for lower income clients. He also testified that he will not put himself in the position again of being tempted with the money of other people. He has essentially retired and wants to restore his reputation as a lawyer.

TRIAL PANEL REPORT

¶5 The Trial Panel found Otis had presented evidence showing compliance with two of the three requirements of Rule 11.5, RGDP, 5 O.S. 2001, Ch. 1, App. 1-A.

Of great concern to the trial panel is the question of restitution. Admittedly Petitioner paid the sum of restitution of $33,272.13

Nonetheless, the OBA Board of Governor's (sic) determined and notified Petitioner Otis in January of 1998 that the victims (sic) claim was approved in the amount of $133,076.00. As stated, Petitioner has paid only $45,066.42

¶6 Although the Trial Panel found Otis repaid the Client Security Fund $45,066.24 as directed, and as required by Rule 11.1, RGDP,

STANDARD OF REVIEW AND BURDEN OF PROOF

¶7 This Court considers a petition for reinstatement by a de novo standard of review. Matter of Reinstatement of Massey,

¶8 Additionally, there are eight factors which this Court considers in determining fitness for reinstatement. They are: (1) applicant's present moral fitness, (2) demonstrated consciousness of the conduct's wrongfulness and the disrepute it has brought upon the legal profession, (3) the extent of rehabilitation, (4) the original misconduct's seriousness, (5) conduct after resignation, (6) time elapsed since the resignation, (7) applicant's character, maturity and experience when he resigned, and (8) present legal competence. Matter of Reinstatement of Blevins,

¶9 In Matter of Reinstatement of Smith,

While we have permitted attorneys to be reinstated after convictions of crimes, we do not agree to reinstatement without a thorough and critical review of the crimes committed and their effect on the legal profession. 'To this end the evidence must support a finding that the Applicant would not commit any serious crime if readmitted. Foremost consideration must be given to protecting the public welfare. Finally, there must be a determination that reinstatement would not adversely effect the Bar. Matter of Reinstatement of Cantrell,

Matter of Reinstatement of Smith,

CONTENTIONS

¶10 Otis contends he has fully reimbursed Mary's heirs for the funds he embezzled from her estate through his payments of $40,000.00

¶11 The Bar contends reinstatement should be denied. It contends Otis has failed to show by clear and convincing evidence that he had a demonstrated consciousness of the wrongfulness of his conduct and the disrepute it brought upon the legal profession, citing his testimony that he did not believe Mary was harmed by his misconduct because of her mental incapacity at the time.

DISCUSSION

¶12 This Court has held that restitution, by itself, is not a basis for imposing lenient discipline. See State ex rel. Oklahoma Bar Association v. Raskin,

¶13 In the case, Matter of Reinstatement of Massey, supra, a case involving misappropriation, this Court denied reinstatement, despite the payment of restitution in full. Massey embezzled money from his attorney trust account. He used the money to help operate his firm and to pay salaries. The misappropriation was widespread and affected multiple clients and instances of misconduct. Massey testified at his PRT hearing that he paid his own salary out of other cases he was working on rather than the embezzled funds, thus implying he did not personally benefit from his misconduct. In his brief filed later, however, he recognized the personal benefit from the standpoint that he was able to keep his office open and pay salaries, including his own. This Court did not have a "firm conviction or belief" that if readmitted, he would not commit similar misconduct.

¶14 Thus, while making full restitution to a lawyer's victims will not necessarily preclude disbarment or insure reinstatement, this Court is more concerned in the instant case with Otis's position that no further restitution is necessary. At the PRT hearing, Otis was asked who was harmed by his misconduct. He acknowledged Mary's heirs suffered because the money he took would have gone to them. He also included the Bar, his fellow lawyers, his family and himself as those who suffered by his misconduct. However, he also testified Mary never suffered because she lived in a nursing home and "she always was provided for." He acknowledged she was incapacitated and suffering from dementia at the time he disclosed his misconduct to her family. He thus implied Mary was not harmed because she was unable to comprehend his breach of her trust. He acknowledged Mary's family was frustrated knowing their aunt's money was being taken without her knowledge. Regardless of whether Mary's immediate needs were being met, which we assume was the case, and regardless of whether she knew her immediate needs were being met, Mary was harmed by Otis because her trust in him was abused. A person in need of assistance with financial matters entrusts his or her livelihood to a Conservator, knowing that there may be a time in the future when the Conservator alone will have to make decisions because of the Ward's incapacity. This is precisely when a Conservator is needed the most. The trust Mary gave to Otis was not returned to her when it mattered most. He essentially used Mary's funds as his own for almost ten years.

¶15 Otis also testified that he does not believe he owes any more money as restitution because he only embezzled approximately $75,000.00, and $85,000.00 was repaid. He testified he had made no attempt since the final accounting to determine what he owes Mary's heirs, how much was paid to himself or how much he paid to the taxing authorities on his own behalf. He further testified he did not pay himself a fee as Conservator of Mary's funds and that he believed his final accounting prepared for the court was truthful. However, we note that on the final accounting, the payments to himself for the years of 1982, 1983, 1984, and 1986, have the notation "Cons. Fee" next to his name, and in 1985, there is an expenditure with the notation "(fee- -Jan-Aug)" following his name.

¶16 Otis testified that no funds which he paid to Pate, Mary's brother, were kicked back to himself for his personal use. Apparently, he believes the checks made to Pate should not be included in the total sum of his misappropriation because he did not use those funds. However, this Court has defined three levels of culpability when evaluating the mishandling of funds in attorney disciplinary proceedings. They are:

1) commingling; 2) simple conversion; and 3) misappropriation, i.e., theft by conversion or otherwise. Commingling occurs when a client or third person's monies are combined with the attorney's personal funds. See State ex rel. Oklahoma Bar Ass'n v. Taylor,

. . .

The third, and most serious infraction, occurs when funds are misappropriated. This happens when an attorney purposefully deprives a client or third person of money by way of deceit and fraud. See State ex rel. Oklahoma Bar Ass'n v. Johnston,

State ex rel. Oklahoma Bar Association v. Parsons,

¶17 While misappropriation of client funds is the most serious of money-related professional misconduct, Matter of Reinstatement of Fraley,

¶18 The Bar's Application to Assess Costs against Otis pursuant to Rule 11.1(c) is granted. The Bar is entitled to be reimbursed in the amount of $1309.75.

CONCLUSION

¶19 For reinstatement to be warranted, we must have a firm conviction that the petitioner would not engage in similar misconduct, i.e., the evidence must be clear and convincing. Matter of Reinstatement of Massey,

REINSTATEMENT IS DENIED; PETITIONER IS ORDERED TO PAY COSTS

WINCHESTER, C.J., EDMONDSON, V.C.J., HARGRAVE, KAUGER, WATT, TAYLOR, COLBERT, JJ. - CONCUR

OPALA, J. - NOT PARTICIPATING

FOOTNOTES

1 Rule 8.1, RGDP, currently cited at 5 O.S. 2001, Ch.1, App. 1-A, has not changed since Otis resigned. It provides:

A lawyer who is the subject of an investigation into, or a pending proceeding involving, allegations of misconduct may resign membership in the Oklahoma Bar Association, and thereby relinquish the right to practice law, only by delivering to the Commission an affidavit stating that the lawyer desires to resign and that:

(a) The resignation is freely and voluntarily rendered, the lawyer is not being subjected to coercion or duress, and the lawyer is fully aware of the consequences of submitting the resignation;

(b) The lawyer is aware that there is presently pending an investigation into, or proceedings involving, allegations that there exist grounds for discipline, specifying particularly the misconduct alleged;

(c) The lawyer agrees that he may be reinstated only upon full compliance with the conditions and procedures prescribed by these Rules, and no application for reinstatement may be filed prior to the lapse of five years from the effective date of the resignation.

2 Otis testified that his father paid the $33,062.13 on his behalf.

3 At the request of Tom Cothran and Mary Jo Thompson, the CPA firm of Cross & Robinson of Tulsa, Oklahoma, created an "Accountants' Report" on November 11, 1994. The report addressed to Tom Cothran provides:

At your request, we have applied the agreed-upon procedures described in Schedule A to the accounting records and financial documents of Mary L. Cothran for the period beginning January 1, 1982 and ended December 31, 1992. It is understood that this report is solely for your information and is not to be referred to for any purpose or distributed to anyone who did not participate in determining the procedures without our consent. Our procedures and findings are described in Schedule A of this report.

Because the procedures described in Schedule A do not constitute an audit made in accordance with generally accepted auditing standards, we do not express an opinion on any of the accounting records or financial documents referred to above. In connection with the procedures we applied, no matters came to our attention that caused us to believe that the records or documents specified in Schedule A should be adjusted other than those adjustments described in Schedule A. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. This report relates only to the records and documents specified in Schedule A and does not extend to any financial statements of Mary L. Cothran taken as a whole.

4 Otis testified he did not receive a day in court to respond to the claim against the Client Security Fund. He stated he did not get "a full-blown due process type thing. . . ." However, the record shows Otis responded in writing on July 29, 1997, to the claim against him. He asserted, inter alia, as a defense to the claim brought by Mary Jo Thompson that she was not his client and therefore lacked capacity and standing to bring the claim.

5 He remarried on March 16, 2002, to his present wife, Kay. Before their marriage, Kay offered to repay the funds owed to the Clients Security Fund on his behalf. Although he initially declined, he eventually accepted her offer.

6 Rule 11.5, RGDP, provides:

At the conclusion of the hearing held on the petition for reinstatement, the Trial Panel of the Professional Responsibility Tribunal shall file a report with the Supreme Court, together with the transcript of the hearing. Said report shall contain specific findings upon each of the following:

(a) Whether or not the applicant possesses the good moral character which would entitle him to be admitted to the Oklahoma Bar Association;

(b) Whether or not the applicant has engaged in any unauthorized practice of law during the period of suspension, disbarment or resignation;

(c) Whether or not the applicant possesses the competency and learning in the law for admission to practice law in the State of Oklahoma . . . .

7 This amount includes costs assessed in his criminal case in the amount of $210.00.

8 The correct amount is $45,066.24.

9 Rule 11.1, RGDP, provides, in part:

A person whose name has been stricken from the Roll of Attorneys for non-payment of dues, or who has been suspended from the practice of law for a period of longer than two (2) years or disbarred, or who has resigned membership in the Association, may be readmitted to the practice of law only through the following procedures:

. . .

(b) If any funds of the Client's Security Fund of the Oklahoma Bar Association have been expended on behalf of the applicant, the applicant must show the amount paid and that the same has been repaid to the Oklahoma Bar Association to reimburse such Fund.

10 Rule 11.4, RGDP, provides in pertinent part:

An applicant for reinstatement must establish affirmatively that, if readmitted or if the suspension from practice is removed, the applicant's conduct will conform to the high standards required of a member of the Bar. The severity of the original offense and the circumstances surrounding it shall be considered in evaluating an application for reinstatement. The burden of proof, by clear and convincing evidence, in all such reinstatement proceedings shall be on the applicant. An applicant seeking such reinstatement will be required to present stronger proof of qualifications than one seeking admission for the first time. . . .

11 This amount represents a payment of $33,062.13 to the Johnson County District Attorney Restitution Fund, as ordered by the district court in Otis's criminal case, and the $6,937.87 from his law firm.

12 From the audit prepared at the Heirs' request, we calculate a total of $30,474.07 was paid to Pate Cothran from 1982 to 1991.

13 See ¶13, infra, for more discussion on this issue.

14 Our review of the testimony of witnesses Jackson and Yandel indicate Otis informed them of his problems to a certain extent, i.e., that he had lost his law license due to the way money was handled for an elderly woman. However, it appears Otis failed to inform them of his personal use of the money and his plea of nolo contendere to the crime of embezzlement by trustee.

15 We stated in Raskin, at page 267: