Home Shopping Gets Lawyer In Hot Water

An attorney who represented clients in a Chapter 13 bankruptcy has been charged with a conflict of interest in purchasing the clients’ home in the foreclosure sale.

The Illinois Administrator filed a complaint alleging

At the sale proceeding on July 10, 2012, pursuant to his agreement with [bank vice president] Royal, Respondent bid $60,000 for the Baldwins’ home and issued a check in the amount of $6,000 as an earnest deposit and down payment. There were no other bidders, and Duvendack accepted Respondent’s bid. Respondent and Duvendack signed a “memorandum of agreement of purchase at foreclosure sale” that reflected the transaction.

Respondent’s purchase of the Baldwins’ home for the amount of $60,000 subjected the Baldwins to a deficiency judgment of at least $20,000, and Respondent knew of that fact at the time of his purchase.

In bidding for and agreeing to purchase the Baldwins’ home at the foreclosure sale, Respondent placed his own financial interests in direct conflict with the financial interests of his clients.

At no time before he bid for and agreed to purchase their home at the foreclosure sale did Respondent inform either of the Baldwins that he would attempt to purchase their home. At the time of the foreclosure sale, neither Heath Baldwin or Trina Baldwin was aware that Respondent would bid for and attempt to purchase their home at the sale.

On July 11, 2012, in case number 11-CH-64, Jacksonville Savings Bank filed a motion to approve the sale of the Baldwins’ home to Respondent, along with the Sheriff’s report of sale and other records. In the motion, the bank requested that the court issue a judge’s deed conveying the property to Respondent and enter a deficiency judgment against the Baldwins in the amount of $25,824.31. The motion to approve the sale was set for hearing on July 30, 2012. The bank served the above-described pleadings and notice of the July 30, 2012 hearing on Respondent as counsel for the Baldwins.

On July 11, 2012, Respondent informed the Baldwins that he had bid $60,000 for their home at the foreclosure sale and the bid was accepted. Respondent offered to sell the property back to the Baldwins for the same price, but he did not offer the Baldwins the same financing arrangement that he had obtained or any financing arrangement. The Baldwins declined to repurchase the home from Respondent.

At no time did Respondent advise Heath Baldwin or Trina Baldwin that, in relation to his pending acquisition of the home, his interests conflicted with their interests.

At no time did Respondent inform either of the Baldwins, in writing or otherwise, that they were entitled to seek the advice of independent legal counsel and have a reasonable opportunity to do so, in relation to his purchase of their home.

At no time did Respondent obtain the Baldwins’ informed consent, in a writing signed by the Baldwins, to the essential terms of the transaction by which he was purchasing their home and Respondent’s role in the transaction, including whether he was representing them in the transaction.

At no time did Respondent advise the Baldwins of their right to object to the bank’s motion to approve and confirm the foreclosure sale and for deficiency judgment.

At no time did Respondent withdraw or seek leave to withdraw as the Baldwins’ attorney in their foreclosure case number 11-CH-64. Respondent’s attorney-client relationship with the Baldwins endured at least through the completion of the foreclosure proceeding by entry of final judgment on July 30, 2012.

Respondent, as the Baldwins’ attorney, filed no objection to the bank’s motion to approve and confirm the foreclosure sale and for deficiency judgment against the Baldwins. On July 30, 2012, the court entered an order that approved and confirmed the foreclosure sale. The order included a deficiency judgment in the amount of $26,250.57 against the Baldwins and in favor of Jacksonville Savings Bank. (The judgment amount included interest that had accrued since the date on which the motion to confirm was filed.) Also on July 30, 2012, the court entered a judge’s deed that conveyed title to the Baldwins’ home from the Baldwins to Respondent.

The attorney  is charged with violations of Rule 1.7 and 1.8(a) and (i).

The State Journal-Register had noted a previous suspension of six months for misconduct in two criminal matters.

A hearing board meeting in October found that G. Ronald Kesinger revealed confidential information told to him by a client in 2009 concerning the client’s actions in a 2008 Rantoul murder, resulting in Kesinger’s client being convicted of felony murder.

Kesinger also breached his fiduciary duty to another Champaign County client in an attempt to obtain a larger fee for himself, then converted $4,000 of the client’s bond refund to himself.

(Mike Frisch)