Beyond Distasteful

A justice of the Massachusetts Supreme Judicial Court ordered an indefinite suspension of an attorney  who took advantage of clients facing foreclosure

On one of his loan applications, the respondent falsely misrepresented that he planned to use the property as a second. home. In six of the transactions the respondent’s firm represented the lender, and he failed to disclose to his lender fue conflict of interest, or to secure the client’s informed consent. He concealed the underlying nature of the transactions as sale/lease-backs with options to purchase, and misrepresented to the lenders that the premises would be . unoccupied. One lender specifically instructed that all brokers’ fees had to be disclosed on the HUD-1 forms. On none of the HUD-1 forms that the respondent signed did he disclose any of the fees paid to himself or to his father. He falsely certified as to each transaction that he brought . cash to the table and that the homeowner-sellers received cash. He caused his associates to make false certifications on the HUD-1 forms.

There were criminal consequences

The board found that the respondent pleaded guilty in the United States District Court for the District of Massachusetts to twelve counts of giving real estate kickbacks and giving and receiving unearned fees, in violation of 12 U.S.C. § 2607(a).

Justice Spina

The respondent’s express financial interest in the transactions and his conflict of interest…warrant a further sanction. The cumulative sanction exceeds four years. I am satisfied that an indefinite suspension is the appropriate sanction in this case. The respondent’s conduct was, as the board found, beyond distasteful. He violated rules of professional conduct in a particularly offensive manner. He used his professional training and experience to devise a sophisticated plan that both took advantage of unsophisticated homeowners in financial distress, and concealed the true nature of his venture from his lender clients. He also was convicted of criminal acts for which he was sentenced to a term of imprisonment. The primary factor in determining the appropriate sanction in bar discipline cases “is the effect upon, and perception of, the public and the bar…Sadly, the respondent’s use of his professional skills was motivated by greed, as the board found.

(Mike Frisch)