ATTORNEYS FOR THE RESPONDENT ATTORNEYS FOR THE INDIANA SUPREME COURT
Kevin P. McGoff DISCIPLINARY COMMISSION
James J. Bell Donald R. Lundberg, Executive Secretary
Indianapolis, Indiana Seth T. Pruden, Staff Attorney
Indianapolis, Indiana
______________________________________________________________________________
In the
0B
FILED
Indiana Supreme Court
1B
Jun 13 2008, 10:00 am
_________________________________
CLERK
of the supreme court,
No. 82S00-0402-DI-90 court of appeals and
tax court
IN THE MATTER OF:
DOUGLAS W. PATTERSON,
Respondent.
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Attorney Discipline Action
Hearing Officer Phyllis Kenworthy
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June 13, 2008
Per Curiam.
This matter is before the Court on the report of the hearing officer appointed by this
Court to hear evidence on the Indiana Supreme Court Disciplinary Commission's "Verified Com-
plaint for Disciplinary Action," and on the post-hearing briefing by the parties. We find that Re-
spondent, Douglas W. Patterson, engaged in attorney misconduct by his conversion of client
funds, deceit in concealing his misconduct, and dishonesty with the Disciplinary Commission.
The Respondent's 1989 admission to this state's bar subjects him to this Court's discipli-
nary jurisdiction. See IND. CONST. art. 7, § 4. For his misconduct, we find that Respondent
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should be suspended from the practice of law in this state for at least three years.
Background
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The Findings Of The Hearing Officer. Attorney Maurice Doll ("Doll") was a principal
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and Respondent was an associate in a law firm ("the old law firm"). The old law firm maintained
an account for holding client funds ("the Trust Account"). In December 1999, Doll and
Respondent formed a new law firm ("the new law firm"), which maintained two offices—one in
Evansville primarily operated by Respondent and one in Vincennes primarily operated by Doll.
The new law firm did not immediately establish a new trust account, but continued to use the
Trust Account until a new trust account was opened in May 2000.
The bookkeeper for the new law firm was responsible for closing the Trust Account.
Based upon the testimony of Doll and the bookkeeper, the hearing officer in this case found the
Trust Account was used only to hold client funds. In May 2000, the bookkeeper transferred a
portion of the client funds held in the Trust Account to the new trust account, but did not close
the Trust Account until all client funds were accounted for. The bookkeeper advised Respondent
to cease making deposits into the Trust Account and to destroy the old checks or turn them over
to her. Unbeknownst to the bookkeeper or Doll, Respondent continued to use the Trust Account.
On August 17, 2000, the bookkeeper discovered that Respondent had written five checks to
himself or on his behalf from that account in July 2000.
When Doll confronted Respondent about the matter, Respondent initially denied
knowledge of the checks and suggested to Doll that someone on the staff had forged them.
When Doll told Respondent that they should report the matter to the police, Respondent admitted
that he had written the checks, adding spontaneously that "he did not have a gambling problem."
Upon further inquiry by Doll, Respondent told Doll that the only checks he had written to
himself from the Trust Account were the July 2000 checks. In fact, a later audit revealed that
Respondent had written three checks to himself in April and May 2000. The total of all these
checks was $10,500 ("the converted funds").
In addition to these checks, there was an unusual transaction in January 2000 in which
Respondent deposited his own funds into the Trust Account and immediately wrote a check for
that amount ($3,412.90) to a church daycare center (“daycare transaction”). In his testimony,
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Respondent explained he wanted to reimburse the daycare for a tax debt it owed due to a mistake
he had made in handling the payroll. He passed his own money through the Trust Account so
church members who opposed the daycare center would not discover the source of the
reimbursement.
After the new law firm concluded that there was a single client to whom most of the
converted funds belonged, the firm notified that client and replaced the money. Respondent
eventually repaid the money he had converted.
In his response to the Disciplinary Commission’s investigation of this matter, Respondent
stated that the first time he wrote checks to himself from the Trust Account was in July 2000 and
that he believed the funds he removed did not belong to clients. The hearing officer found these
statements had been knowingly false. In addition, the hearing officer found Respondent had
made knowingly false statements regarding this matter at the hearing. With respect to the
daycare transaction, the hearing officer concluded “it is a misuse of a trust account to launder
funds for private dealings with a third non-client party for Respondent's own benefit.” Findings
at 12.
Respondent’s Arguments. Respondent admits he commingled client and personal funds
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in the Trust Account in the Daycare transaction. He contends, however, that the Commission
failed to meet its burden of proof with respect to the other charges. In brief, he argues:
The Trust Account contained not only client funds, but also attorney funds and
unknown funds. Respondent points to evidence that funds were occasionally
deposited in the wrong account and that the Trust Account was not properly
monitored. He states that a former partner of the old law firm told him there were
non-client funds in the Trust Account. He suggests that there could have been
over $10,500 in non-client funds in the Trust Account at the time he exerted
control over the funds in this amount.
The Disciplinary Commission improperly shifted the burden of proof to
Respondent to prove that the funds he removed from the Trust Account were non-
client funds.
The false statement to Doll denying writing the checks is of minimal importance
because he corrected it almost immediately. His misstatement to the Disciplinary
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Commission about the dates of the checks was a scrivener’s error by one of his
lawyers.
Respondent asks for consideration of the following mitigating facts: (1) Respondent has
not been the subject of any other disciplinary proceeding since the events at issue in this case; (2)
all of the funds in question were reimbursed; and (3) Respondent has revised his bookkeeping
systems for his trust account.
Discussion
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Findings Of Fact. The Court agrees with the hearing officer’s rejection of Respondent’s
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arguments. Respondent's justification of his withdrawal of funds from the Trust Account is that
he believed the firm owed him additional compensation and that one check was repayment of a
loan. Yet he took the funds out secretly, did not use the established procedure for taking funds
out of the Trust Account, took steps to conceal the withdrawals, and initially lied to his partner
about writing the checks. His actions are not consistent with how a partner would assert a claim
for additional compensation from his firm. We find that there is overwhelming evidence of
Respondent’s conversion of funds in the Trust Account.
We also find that the hearing officer did not improperly presume the converted funds
were client funds and thus shift to Respondent the burden of proving they were not. The hearing
officer cited the following evidence that the converted funds were client funds: (1) Respondent
knew that only client funds were supposed to be held in the Trust Account; (2) the bookkeeper
denied Respondent's contention that she told him there were firm funds in the Trust Account; (3)
the bookkeeper believed there were only client funds in the Trust Account at all relevant times;
and (4) Respondent did not try to confirm the alleged statement by a former partner of the old
law firm that there were non-client funds in the Trust Account.
The hearing officer found that Respondent's statement that he believed the money he
removed from the Trust Account was not clients funds was false. This finding is supported by
clear and convincing evidence. Even if some of the funds in the Trust Account were not client
funds, however, it does not change the character of Respondent's withdrawals. They still
constitute conversion, only from the firm or a third party other than clients.
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Although Respondent quickly corrected his lie to Doll, he did so only because Doll was
about to call the police to investigate the matter, and even then he did not tell Doll the entire
truth. He did not tell Doll about all the checks and he made no claim at the time to be owed
additional compensation. And despite Respondent’s contention that the misrepresentations to the
Disciplinary Commission were unintentional, there is sufficient evidence to support the hearing
officer's rejection of Respondent's credibility on this point, especially in light of his pattern of
misrepresentations from Doll's first inquiry about the converted funds through his testimony at
the hearing.
Violations.
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Conduct prohibiting the following misconduct:
Rule 1.15(a): Failure to hold property of clients properly in trust.
Rule 8.4(b): Committing a criminal act that reflects adversely on the lawyer's honesty,
trustworthiness, or fitness as a lawyer in other respects.
Rule 8.4(c): Engaging in conduct involving dishonesty, fraud, deceit or
misrepresentation.
Sanction. Respondent’s misconduct in converting client funds, deceit in concealing his
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misconduct, and dishonesty with the Commission are among the most serious of ethical
breaches.
Misappropriation of client funds is a grave transgression. It demonstrates
a conscious desire to accomplish an unlawful act, denotes a lack of virtually all
personal characteristics we deem important to law practice, threatens to bring
significant misfortune on the unsuspecting client and severely impugns the
integrity of the profession.
Matter of Hill, 655 N.E.2d 343, 345 (Ind. 1995) (converting estate funds warranted disbarment).
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The Court notes that most of the misconduct occurred in 2000 and Respondent has apparently
avoided ethical lapses in the intervening years. We give this little weight in mitigation, however,
because Respondent to this date still denies his most serious misconduct and thus has shown no
insight into why it happened or how to prevent a recurrence. And his knowingly false statements
during the course of these proceedings constitute facts in aggravation.
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For these reasons, we conclude that Respondent should be suspended from the practice of
law for at least three years, after which time he may be reinstated only if he satisfies the
requirements of Admission and Discipline Rule 23(4). This includes demonstrating that his
attitude towards his misconduct is one of genuine remorse and that he can safely be
recommended to the legal profession, the courts and the public as a person fit to act in matters of
trust and confidence. See Admis. Disc. R. 23(4)(4) and (7).
Conclusion
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Respondent violated Rule 1.15(a), Rule 8.4(b), and Rule 8.4(c) of the Rules of
Professional Conduct. For this professional misconduct, the Court suspends Respondent from
the practice of law in this state for a period of not less than three years, beginning July 31, 2008.
Respondent shall not undertake any new legal matters between service of this opinion and the
effective date of the suspension, and Respondent shall fulfill all the duties of a suspended
attorney under Admission and Discipline Rule 23(26). At the conclusion of that period,
Respondent may petition this Court for reinstatement to the practice of law in this state, provided
he pays the costs of this proceeding, fulfills his duties as a suspended attorney, and satisfies the
requirements for reinstatement of Admission and Discipline Rule 23(4).
The costs of this proceeding are assessed against Respondent. The hearing officer
appointed in this case is discharged.
The Clerk of this Court is directed to give notice of this opinion to the hearing officer, to
the parties or their respective attorneys, and to all other entities entitled to notice under
Admission and Discipline Rule 23(3)(d).
All Justices concur.
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