FOR THE RESPONDENT FOR THE INDIANA SUPREME COURT
DISCIPLINARY COMMISSION
Marce Gonzales Donald R. Lundberg, Executive
Secretary
1000 E. 80th Place, Suite 502 North 115 West Washington Street,
Suite 1165
Merrillville, IN 46410 Indianapolis, IN 46204
IN THE
SUPREME COURT OF INDIANA
______________________________________________________________
IN THE MATTER OF )
) Case No. 45S00-0007-DI-445
GEORGE C. PARAS )
__________________________________________________________________
DISCIPLINARY ACTION
__________________________________________________________________
February 26, 2001
Per Curiam
The respondent, George C. Paras, delegated to his secretary
responsibility for making deposits to and withdrawals from his office and
attorney trust accounts. As a result of his failure to supervise her in
that task, numerous errors occurred in the handling of those accounts,
causing damage to some of the respondent’s clients. Today we approve a
Statement of Circumstances and Conditional Agreement for Discipline between
the respondent and the Disciplinary Commission calling for a public
reprimand of the respondent, his participation in classes on trust account
management, and the monitoring of his trust accounts for that misconduct.
Having been admitted to the bar of this state in 1980, the respondent
is subject to this Court’s disciplinary jurisdiction. The agreed facts
show that the respondent collected a personal injury settlement on behalf
of a client and agreed to pay certain medical bills the client had
incurred. Although the respondent issued a $710 check to one such creditor
in 1992, the creditor never received the check. The respondent learned of
the omission in 1996 when his client, facing a lawsuit based on the
outstanding debt, contacted him about the non-payment. The respondent
failed to take any action in response to that information until 1998, when
he determined the check had never been cashed. The respondent subsequently
agreed to settle the matter with the creditor.
Between the date the check to the creditor was issued and the date of
actual payment six years later, the balance in the respondent’s trust
account dropped below the $710 necessary to satisfy the obligation to the
client’s creditor. In fact, the secretary allowed funds belonging to many
of the respondent’s clients to be used for purposes other than the clients’
benefit. Specifically, from February 1995 to June 1997, ten overdrafts of
the trust account occurred. Although one of these overdrafts was due to
bank error, five overdrafts resulted from the secretary’s failure to
reconcile the monthly bank statements and her trust account records.
Another overdraft occurred because the secretary deposited a client
settlement check into the respondent’s office checking account, rather than
the trust account. Upon discovering the error, the secretary transferred
only part of the settlement from the office account into the trust account.
She disbursed from the trust account the respondent’s full fee from that
settlement, although the funds needed to pay those fees were still in the
office account.
Unbeknownst to the respondent, the Internal Revenue Service placed two
levies against the trust account in 1996 for the respondent’s unpaid taxes.
Those levies caused further misappropriation of client funds and only came
to the respondent’s attention after a client informed him of problems in
negotiating a check drawn on the trust account. The respondent also left
large sums representing his earned fees in the trust account during 1993
and 1994.
The respondent did not learn of these irregularities promptly because
he never reconciled his trust account or examined the check register or
monthly bank statements to check for any discrepancies. He also failed to
take any action to ensure that his secretary or an independent examiner
conducted regular reviews.
We find that the respondent violated Ind. Professional Conduct Rule
5.3(b) by failing to take reasonable efforts to ensure that his secretary’s
conduct was compatible with his professional obligations as a lawyer.[1]
The respondent was obligated to maintain client or third party funds in a
separate account from his own. Prof.Cond.R. 1.15(a). He also had the
duty to promptly deliver to the third party the $710 owed it.
Prof.Cond.R. 1.15(b). Moreover, he was required to safeguard the property
of his clients with the care required of a professional fiduciary. See
Official Comment to Prof.Cond.R. 1.15. All of those professional
obligations were compromised by his failure to ensure that his secretary’s
conduct was compatible with the provisions of Prof.Cond.R. 1.15. The
respondent admittedly provided no oversight of the delegated functions,
prompting long delays in his discovery of the account’s mismanagement.
Accordingly, we also find the respondent violated Prof.Cond.R. 1.15(a)
by allowing significant sums of earned fees to accumulate and remain in his
attorney trust account for extended periods.[2] Although the secretary’s
mismanagement of the accounts directly prompted the misconduct, the
respondent nonetheless is culpable. A lawyer is responsible for all of the
professional actions of a legal assistant performing legal assistant
services at the lawyer’s direction. Use of Legal Assistants, Guideline
9.1, Rules of Professional Conduct.
We must now determine an appropriate sanction. In doing so, we
consider the misconduct, the respondent’s state of mind underlying the
misconduct, the duty of this court to preserve the integrity of the
profession, the risk to the public in allowing the respondent to continue
in practice, and any mitigating or aggravating factors. Matter of Mears,
723 N.E.2d 873 (Ind. 2000).
We note as a mitigating circumstance that the respondent has not been
professionally disciplined previously. Moreover, the respondent terminated
his secretary’s employment immediately upon learning of her funds
mismanagement. Immediately thereafter, the respondent assumed sole control
over his trust account transactions and remains the only authorized
signatory on the trust account. The respondent also has hired an
accountant who reconciles the trust account on a monthly basis. Finally,
the respondent cooperated fully with the Commission throughout its
investigation and has expressed remorse with regard to his misconduct. We
note that the respondent’s actions reflect his recognition of his
wrongdoing and his willingness to adjust his conduct to conform to the
Rules of Professional Conduct. Moreover, this case does not involve
allegations of purposeful mishandling of client funds by the respondent or
the loss of any funds to the respondent’s clients or third parties.
Therefore, we approve the agreed sanction of a public reprimand and the
further requirements that the respondent obtain instruction on trust
account management and submit his trust account to independent auditing for
one year.
Accordingly, the respondent, George C. Paras, is hereby reprimanded
and admonished for the misconduct described above. We further order that
the respondent attend a continuing legal education course on trust account
management within six months after the date of this opinion and certify in
writing to the Executive Secretary of the Commission within 30 days after
attendance that he has completed the course. We also order the respondent
to submit his trust account to audit by an independent certified public
accountant on at least a quarterly basis for a period of one year following
the date of this opinion. The respondent shall promptly submit copies of
each audit report to the Executive Secretary of the Commission. Any
irregularities noted in the audit reports may provide, if warranted, the
basis for new disciplinary charges against the respondent.
The Clerk of this Court is directed to provide notice of this order in
accordance with Admis.Disc.R. 23(3)(d) and to provide the Clerk of the
United States Court of Appeals for the Seventh Circuit, the Clerk of each
of the United States District Courts in this state, and the Clerk of each
of the United States Bankruptcy Courts in this state with the last known
address of the respondent as reflected in the records of the Clerk.
Costs of this proceeding are assessed against the respondent.
Shepard, C.J., and Boehm, and Rucker, JJ., concur.
Dickson and Sullivan, JJ., dissent, believing the sanction to be
inadequate.
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[1] Prof.Cond.R. 5.3 provides in relevant part:
With respect to a nonlawyer employed or retained by or
associated with a lawyer: . . .
(b) A lawyer having direct supervisory authority over the
nonlawyer shall make reasonable efforts to ensure that the
person’s conduct is compatible with the professional
obligations of the lawyer . . .
.
[2] Prof.Cond.R. 1.15(a) provides in relevant part:
A lawyer shall hold property of clients or third persons that
is
in a lawyer’s possession in connection with a representation
separate from the lawyer’s own property. Funds shall be kept
in a separate account . . . .