Attorney Grievance v. Parsons

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Attorney Grievance Commission v. David Wayne Parsons Misc. Docket AG N o. 58, September Term, 2006. Opinion by Bell, C.J. ATTORNEY DISCIPLINE : Where R esponde nt made k nowing ly false statemen ts concerning his bar adm ission status, pro ceeded to act as gene ral counsel, a nd acted to mislead and defraud investors, he violated the Maryland Rules of Professional Condu ct, Rule 5.5, Unauthorized Practice of Law, and Rule 8.4, Misconduct. For these violations, Respondent is disbarred. IN THE COURT OF APPEALS OF MARYLAND Misc. Docket (Subtitle AG) No. 58 September Term, 2006 ATTORNEY GRIEVANCE COMMISSION OF MARYLAND v. DAVID WAYNE PARSONS Bell, C.J. Raker Harrell Battaglia Greene Wilner, Alan M. (Retired, specially assigned) Cathell, Dale R. (Retired, specially assigned) JJ. Opinion by Bell, C.J. Filed: April 15, 2008 The Attorney Grievance C ommissio n of M aryland, the petition er, by Bar Co unsel, acting pursuant to Maryland Rule 16-751,1 filed a Petition For Disciplinary or Remedial Action agains t David Wayne Parson s, the resp onden t. The petition charged that the respondent violated Rules 5.5, Unauthorized Practice of Law,2 and 8.4, M isconduc t,3 of the Maryland Rules of Professional Conduct, as adopted by Maryland Rule 16-812.4 We referred the case, pursuan t to Rule 16-752 (a), 5 to the Honorable Pamela L. North, 1 Maryland Rule 16-751, as relevant, provides: (a) Commencement of disciplinary or remedial action. (1) Upon approva l of the Commission. Upon approval or direction of the Commission, Bar Counsel shall file a Petition for Disciplinary or Remedial Action in the Court of Appeals. 2 Pursua nt to that Rule, A law yer shall not: (a) practice in a jurisdiction where doing so violates the regulation of the legal profession in that jurisdiction; or (b) assist a person who is not a member of the bar in the performance of activity tha t constitu tes the u nautho rized pr actice o f law. 3 Rule 8.4, as relevant, provides: It is professio nal miscon duct for a la wyer to: * * * * (b) com mit a crim inal a ct tha t refl ects adverse ly on the la wyer s ho nesty, trustworthiness or fitness as a lawyer in other respects; ( c) engage in conduct involving dishonesty, fraud, deceit or misrep resenta tion. (d) en gage in condu ct that is p rejudici al to the a dminis tration o f justice . * * * * 4 Another charge d Rule violation, Rule 8 .1, Bar Admission a nd Disciplinary Matters, was withdrawn at the hearing. 5 Rule 16-752 (a) provides: (a) Order. Upon the filing of a Petition for Disciplinary or Remedial Action, the Court of Appeals may enter an order designating a judge of any circuit court to hear the action and the clerk responsible for maintaining the record. The order of designation shall require the judge, after consultation of the Circuit Court for Anne Arundel County, for hearing pursu ant to Rule 16-757 (c).6 Although he properly was served with the petition by the petitioner, the respondent neither responded to the petition nor moved to vacate the Order of Default that the hearing court entered as a resu lt of that f ailure. Following a hearing, at which testimony and d ocumentary evidence were received and arguments offered, Judge North made findings of fact and drew conclusion s of law, as follows (f ootnotes an d citations to th e record om itted): False A ffidavit Respondent was admitte d to the M aryland b ar on N ovem ber 1, 19 79. ... On April 4, 1997, the Maryland Court of Appeals issued a Decertification Order prohibiting Respondent from the further p ractice of law in Maryland. ... T he Cou rt of App eals notified Respondent of the decertification in a letter dated April 8, 1997. ... Respondent was admitted to the practice of law in the District of Columbia on November 14, 1980. ... He was suspended from the prac tice of la w in the District o f Colu mbia o n Dec embe r 2, 199 1. ... with Bar Counsel and the attorney, to enter a scheduling order defining the extent of discovery and setting dates for the completion of discovery, filing of motions, and hearing. 6 Maryland Rule 16-757 (c) provides: (c) Findin gs and co nclusions. T he judge s hall prepare and file or d ictate into the record a statement of the judge's findings of fact, including findings as to any evidence regarding remedial action, and con clusions of law. If dictated into the record, the statement shall be promptly transcribed. Unless the time is extended by the Court of Appeals, the written or transcribed statement shall be filed with the clerk responsible for the record no later than 45 da ys after the con clusion of th e hearing. T he clerk sha ll mail a copy of the statement to each party. 2 On December 23, 1999 (date of docketing), Respondent filed an Application for Leave to Ap pear Pro H[a]c Vice in the United States District Court in the Northern District of Illinois in the matter captioned Securities & Exchange Commission v. Barzilay, et al., Case No. 99C5023. ... He requested perm issio n to repre sent Oleg Fe ldman, S tanis lus K amin sky, and Garri Zh igun in that c ase. On the application, R esponde nt stated he w as a mem ber in good standing in Maryland, the District of Columbia, and the United States District Court [for the District of] Maryland. Respondent signed the application and declared u nder the pe nalty of perjury that the foregoing is true and correct. He signed the application on December 7, 1999. In evidence is a letter from Willard Knox (Knox) on the letterhead of Paduano & Weintraub, LLP to P hilip J. Berko witz, Esqu ire, counsel f or the Na tional Asso ciation of Security Dealers, Inc. (NASD). ... Although nothing in the letter or on the letterhead specifically states so, it appears Knox was an attorney represe nting Res ponden t in his defense against a Post Co mplaint R ule 8210 Request for Information in an investigation of Respondent by the NA SD. In the letter, Knox stated Resp ondent's apparen t position that Respondent was una ware un til early 2004 that he had been decertified in M aryland. However, Knox further stated that Respo ndent me rely chose not to renew h is membe rship in the District of Columbia bar because it proved not to be worthwhile. Ex. l (BC Ex.8). Respondent admitte d the tru th of B C Ex.8 . The Court find s Respon dent, at a minimum, knew he was suspended from the practice 3 of law in the D istrict of Colu mbia when h e filed his ap plication for leave to appear pro h[a]c vice in December 1999. It is very likely Respondent also knew in December 1999 he was decertified in Maryland because the Court of Appeals sent Respondent a letter at his Maryland law office ad dress advis ing him of the decertific ation. He knew the information contained in his application was false at the time of filing. Consequently, Respondent violated Maryland Rules o f Prof essiona l Cond uct 8.4( b), 8.4(c ) and 8.4 (d). In pertinen t part Rule 8 .4 states: It is professio nal miscon duct for a la wyer to: * * * (b) commit a criminal act that reflects adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects; (c) engage in cond uct involving dishones ty, fraud, deceit or misreprese ntation; (d) engage in conduct that is prejudicial to the administration of justice[....] Respondent violated the provisions of 28 U.S.C. §1621 w hich in pertinent part [provides]: Whoeve r* * * (2) in any declaratio n, certificate, ve rification, or statement under penalty of perjury as permitted under section 1746 of title 28, United States Code, willfully subscribes as true any material matter which he does not believe to be true[,] is guilty of p erjury. ... 4 Respondent committed the crime of perjury and therefore committ[ed a] criminal act that reflects adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects. Rule 8.4(b)[.] Respondent misrepresented his status as a lawyer to the United States Distric t Court, and made a false statement under the penalty of perjury , a violation of Rule 8.4(c). When Respondent falsely stated he was a member in good standing in the D istrict of C olumb ia bar[,] he caused a United States District Court Judge, relying on Respondent's affirmation, to order on December 20, 1999, that Respon dent be pe rmitted to ap pear as cou nsel in that particular case. ... The adm inistration of ju stice requires a ll officers of the Court to speak truth fully in their professional capa cities. Re spon dent's false statement on the application prevented the United States District Court Judge from ruling appropriately because he was misled by Respon dent. Respondent's actions were, therefore, prejudicial to the administration of justice. He vio lated R ule 8.4( d). Unauthorized Practice of Law Rule 5.5. Unauthorized Practice of Law; Multijurisdictional Practice of Law. (a) A lawyer shall not practice law in a jurisdiction in violation of the regulation of the 1egal profession in that jurisdiction, or assist another in doing so. Rule 5.5(a). Respondent was never adm itted to practice law in any jurisdiction other than Maryland and the D istrict of Colu mbia. ... After April 4, 19 97, the date of his M aryland 5 decertification, Respondent was not licensed to practice law in an y jurisdiction. ... Yet, in 2001, Respondent acted as legal counsel for Dupont Direct Financial Holdings, Inc. in New York ..., for FA B Sec urities ..., fo r FAB Capita l ..., for Edward McCrann (McCrann) during McCrann's testimony in W ashington , DC in 19 99 during a NAS D investig ation ... and in numerous other cases between 1999 and 2001. ... Further, his own statements before the NASD indicate he was practicing law. ... Respondent's conduct violates Rule 5.5(a), which prohibits a lawyer from practicing law in a jurisdiction in violation of the regulation of the legal profession in that jurisdiction. This Rule was in effect at all pertin ent time s. Respondent's conduct violates N.Y. Jud. Law , Article 15, S ection 478 , which pro vides in pertinent part as follows: It shall be u nlaw ful f or an y natu ral perso n to p racti ce or appear a s an a ttorn eyat-law or as an attorney and coun selor-at-law for a person other than h imself in a court of record in this state, or to furnish attorneys or counsel or an attorney and counsel to render legal services, or to hold himself out to the public as being entitled to practice law as aforesaid, o r in any other m anner, or to assume to be an attorney or counselor-at-law, or to assume, use, or advertise the title of lawyer, or attorney and counselo r-at-law, or attorney-at-law or cou nselor-atlaw, or attorney, or counselor, or attorney and counselo r, or equivale nt terms in any language, in such manner as to convey the impression that he is a legal practitioner of law or in any manner to advertise that he either alone or together with any other persons or person has, owns, conducts or maintains a law office or law and collection office, or office of any kind for the practice of law, without having firs t been duly and regularly licensed and admitted to practice law in the courts of record of his state, and without having taken the constitu tional oa th. The facts show that even though Respondent was not admitted in the State of New York, and 6 did not have an active license to practice in any jurisdiction in the United States, he nonetheless held himself out as a general counsel to DuPont Direct Financial Holdings, Inc. and DuPont Securities Group, Inc. on numerous occasions and represented individuals and companies in arbitration proceedings on several occ asions in New York and in other states. On one occasion, he rep resented parties in a court proceeding in the Northern District of Illinois. Respondent was clearly practicing law in New York and elsewhere without being licensed to do so. Because he did not have a current license in any jurisdiction, he cannot claim reliance, whether such reliance would be misplaced or not, on licensure in any jurisdiction outside of the State of N ew York. T herefore, Respon dent violated Rule 5.5(a). Fraudulent Press Release On March 14, 2002, at 4:35 p.m. and on March 2002 at 12:27 a.m., DuPont Direct Financial Holdings, Inc., of which Respondent was pres ident and g eneral cou nsel, announced in a press release that monies under management by Wavecount Asset Management, LLC ( a wholly-owned su bsidiary of DIRX [an abbreviation for DuP ont Direct Financial Holdings, Inc.] ) in conju nctio n with D IRX 's investment affiliate, Native American Securities Company (a broker-dealer member of the NASD and SIPC) have exceeded $100 million. ... The statement in this press release was false. DuPo nt Direct Fin ancial Ho ldings, Inc. ha d only $20,00 0,000 w orth of assets u nder its m anage ment. ... Respondent approved the issuance of the press release of March 14, 2002. At the time he approved it, he was aware that the assets under the management of DuPont Direct Financial Holdings, Inc. were $20,000,000 and that the figure of $100,000,000 as stated in the press release was greatly inflated. The press releases were issued with the intention of inducing 7 potential investors to place their assets under the management of DuPont Direct Financial Holdin gs, Inc. ... On January 13, 2005, the Department of Enforcement of the NASD filed with the hearing officers an amended Complaint against DuPont Securities Group, Inc. and Respondent individually. The Complaint alleged in paragraphs 21 through 32 that Respondent's company had issued the press release described above and that of the $100,000,000 reportedly under the management of DuPon t Direct, at least $80,000,000 was not, in fa ct, unde r the ma nagem ent of D uPon t Direct. ... Respondent was repre sented by cou nsel in the N ASD proceedin g until April 14, 2005, the date on which an opposition to a Motion for Partial Summary Disposition filed by the De partme nt of E nforce ment w as due. ... Instead of filing an opposition, Respondent's cou nsel filed a n otice of w ithdrawal, citing the fact that counsel h ad been u nable to ad equately com municate with R espon dent. ... On April 25, 2005, the hearing officer issued a Show Cause Order requiring Respondent to show cause why Respon dent and h is compan y should not be held in default. Respo ndent d id not re spond . ... As a result of R esponde nt' s default, the allegations of the Complaint were deemed admitte d. ... As a result, the hearing officer found that Respondent had reviewed and approved a press release falsely stating that a ssets under manage ment of D uPont D irect and its operating subsidiaries exceeded $100,000,000. ... The hearing officer found that at least $80,000,000 8 was not, in fact, under the management of DuPont Direct. ... The hearing officer found Respondent acted with scienter, wh ich was d efined as a mental state e mbracing an intent to deceive, manipulate, or defraud.... The hearing officer found from Respondent's conduct that Respo ndent in tended to dece ive inve stors in D uPon t Direct. ... Re spon dent's conduct violates Rule 8.4(c), which prohibits attorneys from engaging in conduct involving dishonesty, fraud, deceit or misrepresentation. In this case, the evidence shows that Respondent, as president and general counsel of DuPont Direct, approved the issuance of a press release which was designed to deceiv e potential inv estors in his company by making the com pany appear more successfu l than it actually was. H is motive in doing so was to in duce pote ntial investors to buy stock in a company in which he served as president, director, and chief legal o fficer base d on false r epresentatio ns. His failu re to defend the NASD proceeding in w hich the press release was an issue reinforces these conclusions. His co nduct w as dece itful and violated Rule 8 .4(c). All of the above findings of fact and conclusions of law are based on clear and convin cing ev idence . The petitioner took no exceptions to the hearing court s findings of fact and conclusions of law. In fact, it is on the basis of those very find ings and c onclusion s that it makes its recommendation as to sanction. Emphasizing the facts the hearing court found and the conclusions it drew from those facts, the petitioner urges the respondent s d isbarm ent. Noting th at the respon dent was found to have ma de know ingly false statements, amounting to perjury, as to his bar status, and to have acted to mislead and defraud investors and, because the respondent did not participate in the proceedings, the absence of mitigating factors or 9 exceptional circumstances, it relies on Attorney Grievance Comm n v. Vanderlinde, 364 Md. 376, 418, 773 A.2d 463, 488 (2001) to justify its recommendation. For purposes of sanction, when there are no exceptions taken, we treat the findings of fact as established. Rule 16-759 (b) (2) (A). 7 See Attorney Grievance Comm'n v. Logan, 390 Md. 313, 319, 888 A .2d 359, 363 (200 5). Moreover, ou r de novo review of the hearing court s conclusions of law, Rule 1 6-759 (b) (1), 8 satisfies us that they follow from, and are supported by, the court s factual findings, which, again, have been established. The goal of attorney discipline is protection of the public, rather than the punishment of the e rring attor ney. See Attorney Grievance Comm n v. Goff, 399 Md. 1, 30-31, 922 A.2d 554, 571 (200 6); Attorney Grievance Comm n v. Mba-J onas, 397 Md. 690, 703, 919 A.2d 669, 677 (200 6); Attorney Grievance Comm'n v. Rees, 396 Md. 248, 254, 913 A.2d 68, 72 (2006); Attorney Grievance Comm'n v. Kreamer, 387 Md. 503, 534, 876 A.2d 79, 97 - 98 (2005). Imposing sanctions that are commensurate with the nature and gravity of the violations and the intent with which they were committed is consistent with , and in fact furthers, that pur pose, Attorney Grievance Comm n v. Awuah, 346 Md. 420, 435, 697 A.2d 446, 454; Attorney Grievance Comm'n v. Glenn, 341 Md. 448, 484, 671 A.2d 463, 480 7 Maryland Rule 16-759 (b) (2) (A) provides: (A) If No Exceptions Are Filed. If no exceptions are filed, the Court may treat the finding s of fact as e stablished fo r the purpo se of determ ining appro priate sanc tions, if a ny. 8 Maryland Rule 16-759 (b) (1) provides: (1) Conclusions of Law. The Co urt of Ap peals shall rev iew de no vo the circu it court ju dge's co nclusio ns of la w. 10 (1996); Attorney Grievance C omm'n v. M yers, 333 Md. 440, 447, 635 A.2d 1315, 1318 (1994), in that such sa nctions promo te gene ral and s pecific deterre nce, Attorney Grievance Com m'n v. Sliffman, 330 Md. 515, 529, 625 A.2d 314, 321 (1993); Attorney Grievance Com m'n v. Berger, 326 Md. 129, 131, 604 A.2d 58, 58 (1992) (citing Atto rney G rievance Com m'n v. Owrutsky, 322 Md. 334, 355, 587 A.2d 511, 521 (1991)), protect the integrity of the legal pro fession , Attorney Grievance Comm'n v. Cassidy, 362 Md. 689, 698, 766 A.2d 632, 637 (200 1), further the public's confiden ce in the lega l profes sion, Attorney Grievance Comm'n v. Christopher, 383 M d. 624, 639 , 861 A.2d 692, 701 (2004); Attorney Grievance Comm n v. Stein, 373 Md. 533, 537, 819 A.2d 372, 375 (2003); Attorney Grievance C omm n v. Powell, 369 Md. 462, 474, 800 A.2d 782, 789 (2002), and take account of the facts and circumstances of eac h particu lar case , including any mitig ating fa ctors. See Attorney Grievance Comm'n v. Atkinson, 357 M d. 646, 6 56, 745 A.2d 1086, 1092 (2000); Attorney Grievance Comm 'n v. Gavin , 350 Md. 176, 197-98, 711 A.2d 193, 204 (1998). Given the importance we place on maintaining the public s confidence, the attorney's prior grievance history[,] ... the attorney's remorse for the misconduct, and the likelihood of the conduct being repeated are relevant considerations, as well. Attorney Grievance Comm'n v. Post, 379 Md. 60, 71, 839 A.2d 718, 724-25 (2003). As to the latter consideration, the likelihood of repetition, we hav e recogniz ed that conduct, although an aberration, can be so egregious as to warra nt the im position of a sig nifican t sanctio n. See Attorney Grievance Comm'n v. Franz, 355 Md. 752, 762, 736 A.2d 339, 344 (1999) (offering Attorney Grievance Comm'n v. 11 Protokowicz, 329 Md. 252, 263, 619 A.2d 100, 105 (1993), as an exam ple of such cond uct). As the hearing court foun d, the petitioner emphasizes, and the respondent does not refute, the respondent made statements that were knowingly false, amounting to perjury, as to his bar status, and acted to mislead and defraud investors. In Vanderlinde, we made clear: [u]nlike matters relating to competency, diligence and the like, intentional dishonest conduct is closely entwined with the most important matters of basic character to such a degree as to make intentional dishonest conduct by a lawyer almost beyond excuse. Honesty and dishonesty are, or are not, present in an attorney's character[,] 364 Md. at 418, 773 A.2d at 488, and concluded that [d]isbarment ordinarily should be the sanction for intention ally dishonest conduct. Id. In addition to being dishonest - perjurous and fraudulent - the respondent s condu ct is unmitigated, never mind the standard Vanderlinde and its predecessors require . See Vanderlinde, 364 Md. at 413, 773 A. 2d at 485, (requiring the showing of compelling extenuating circumstances to mitigate intentional dishonest conduct). Moreover, tolerating such conduct by imposing other than a significant sanction would n ot protect the in tegrity of the legal profession and, rather than further the public s confidence in the legal profession, would u ndermine its confiden ce. That w ould be the case whate ver the r espon dent s p rior disc iplinary his tory. We agre e with the petitioner; the approp riate sanction in this case is d isbarmen t. IT IS SO ORDERED; RESPONDENT SHALL PAY ALL COSTS AS TAXED BY THE CLERK OF THIS COURT, INCLUDING COSTS OF ALL 12 TRANSCRIPTS, PURSUANT TO MARYLAND RULE 16-761, FOR WHICH SUM JUDGMENT IS ENTERED IN FAVOR OF THE ATTORNEY GRIEVANCE COMMISSION AGAINST DAVID WAYNE PAR SONS. 13

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