Hawai’ian Punch

An attorney who engaged in multiple ethics violations has been disbarred by the Hawai’i Supreme Court.

Respondent Castroverde engaged in prohibited conflicts of interest with multiple clients, representing three separate violations of HRPC Rule 1.7(a), by representing both the sellers and the buyers of the home at 722 Lalani Circle, in Wailuku, Maui, including by drafting and overseeing the execution of the Agreement of Sale, where the interests of the parties were directly adverse to each other…

We conclude Respondent Castroverde misappropriated client funds, in violation of HRPC Rule 1.15(c), by removing from his client trust account, between November 30, 2007 and December 18, 2007, at least $6,258.91 of the buyers’ funds to which he was not entitled, removing between December 18, 2007 and January 25, 2008 at least $12,912.91 of the buyers’ funds to which he was not entitled…

We conclude Respondent Castroverde violated HRPC Rule 1.5(a) by charging an unreasonable fee as follows: Pursuant to HRS § 449-3 (1996), Respondent Castroverde, as an attorney, was exempt from the regulation of escrow deposits if he did not charge an escrow fee. However, we find Respondent Castroverde did charge an escrow fee, as the buyers paid Respondent Castroverde $10,625.00 to arrange the transaction and escrow, and paid monthly charges of $104.17 and $5.00 to administer the escrow. By charging said fee, Respondent Castroverde was obligated to comply with the requirements of HRS Ch. 449 and, as he did not comply with those requirements and therefore could not justify the escrow fees he charged, those fees were unreasonable, in violation of HRPC Rule 1.5(a)…

With regard to a loan from the sellers to Respondent Castroverde of the $50,000.00 down payment held in Respondent Castroverde’s client trust account, Respondent Castroverde violated HRPC Rule 1.8(a) by engaging in a business transaction with the sellers where the transaction and terms on which Respondent Castroverde acquired an interest were not fair or reasonable to the sellers, where the loan was made without giving the sellers a reasonable opportunity to seek the advice of independent counsel regarding the transaction, and where Respondent Castroverde did not obtain from his clients, the sellers, written consent to the inherent conflicts.

By misappropriating all but, at most, $5.17 of the $50,000.00 for his use and benefit, Castroverde violated HRPC Rule 1.15(c). With regard to a separate $61,000.00 loan made by one of the sellers to Respondent Castroverde, Respondent Castroverde violated HRPC Rule 1.8(a) by entering into the $61,000.00 loan transaction with his client, the seller, where the transaction and its terms were not fair and reasonable to the seller, where Respondent Castroverde did not fully disclose in writing to the client the transaction or its terms, and did not provide the client with a reasonable opportunity to consult independent counsel concerning the transaction.

By misappropriating all but, at most, $5.17 of the borrowed $61,000.00, Respondent Castroverde violated HRPC Rule 1.15(c).

He also failed to cooperate in the bar investigation. (Mike Frisch)