The Wrong Spot

The Vermont Professional Conduct Board recently decided a bar discipline case involving the following facts:

Respondent is asole practitioner with one non-lawyer employee.  His practice focuses on realestate transactions and personal injury work. Respondent was admitted to theVermont Bar in 1987. Respondent maintains a pooled interest bearing clienttrust account which has been at TD Banknorth for all times relevant to thiscase.

            In February of 2006,Respondent conducted a closing for clients who were purchasing property inBarre.  The clients had been renting the property under a “rent-to-own” plan inwhich a percentage of the rent they had paid was to be applied as a down paymenttowards the purchase.  In anticipation of the closing, Respondent used asoftware program to prepare a HUD settlement statement.  In doing so,Respondent mistakenly entered his clients’ rent payments in the wrong spot.  Asa result, the final HUD statement credited the seller with approximately$7300.00 more that he should have received.  No one, not Respondent, seller’sattorney, the realtor nor the parties noticed the mistake.  During the closing,Respondent issued several checks drawn on his trust account.  One of the checkswas payable to the seller, and due to the mistake on the HUD statement, was foran amount that exceeded what the seller should have received by approximately$7300.00.  Nearly two years later, Respondent’s bank notified him that his trustaccount was overdrawn.  On receipt of the notice, Respondent reviewed his trustaccount records back to the year 2000 and discovered that in several closingshe had made the same error that he had made in February of 2006: failing toenter the buyer’s down payment in the proper spot on the HUD settlementstatement.  Respondent determined that, over time, his errors caused him todisburse from his trust account approximately $11,000.00 more than should havebeen disbursed.  Respondent immediately took out a loan and deposited the moneyinto his trust account to ensure that his clients’ interests were protected.

The board rejected a proposed public reprimand and directed that the attorney be admonished. As a result, the identity of the lawyer remains confidential. (Mike Frisch)