Petty Thievery And Bar Discipline

A repeat-offender shoplifting attorney should be suspended for two years, as proposed in a stipulated disposition of the California State Bar Court Hearing Department. 

Respondent committed multiple acts of shoplifting at large retail stores between October and December 2014. Each time, respondent was caught by store security and the items he attempted to steal were recovered. This misconduct is serious and demonstrates a conscious disregard for the law. While respondent’s misconduct did not involve the practice of law, respondent was convicted of four separate crimes involving moral turpitude, making a lengthy period of actual suspension appropriate.  Nevertheless, disbarment is not required to protect the public under these circumstances. Taking into account the mitigating credit for entering into a pre-trial stipulation, and limited mitigation for his emotional and mental health difficulties, the appropriate level of discipline is three years suspension, stayed, four years of probation, with a two-year actual suspension, thus requiring a showing under Standard 1.2(c)(1) to terminate the actual suspension. Additional conditions of substance abuse and mental health monitoring are also necessary for public protection.

The crimes are described in a stipulation

On November 5, 2014, respondent went into a Wal-Mart store in Garden Grove. Respondent went to the store’s hardware department where he removed a toolbox from a display rack, and then proceeded to place other items of merchandise inside the toolbox.

Respondent walked to another section of the store, where he took the items he placed in the toolbox and concealed them his front waistband. These items consisted of work gloves, bungee cords, tape, a laser pointer/level, padlocks and a para-cord survival bracelet, with a total retail value of $127.69.

Respondent exited the store without paying for the items concealed on his person.

Then

On October 13, 2014 respondent went into a Target store in Garden Grove. While in the store, respondent used a magnetic “merchandise key,” designed to remove security devices from retail items, to remove a video game from a loss-prevention device. He then hid the video game along with three DVD sets inside his waistband. This merchandise had a retail value of $137.96.

Next

On December 10, 2014 respondent went into a Home Depot store in Anaheim. Respondent walked through the store and picked up a cordless drill set packaged in a cardboard box with a retail value of $229. Respondent then ducked into an enclosure on another aisle, where he removed the drills and rechargeable batteries from the box and concealed them on his person, leaving the box and battery charger behind in the enclosure.

Respondent exited the store to the parking lot without paying for the drill set, where he put the drills and batteries into his car.

Respondent went back inside the store and returned to where he left the box from the drill set. Respondent removed the battery charger from the box and conceal it in his waistband. Respondent walked back outside the store to the parking lot, where two loss prevention employees detained him, having observed respondent’s conduct inside the store.

Finally

On October 24, 2014, Orange County Sherriff’s Deputies pulled over respondent in his car for a traffic stop in Yorba Linda, after respondent entered an intersection against a red light, proceeding straight from a left turn lane and into lanes for oncoming traffic. Other cars had to stop or swerve to avoid colliding with respondent.

Respondent told the deputies that he was looking at his phone and not paying attention to the road. He gave the deputies permission to search his car and his person. During the search, deputies found a small magnetic device used to apply and remove security devices on retail items, a lock pick set and a book on lock picking.

Respondent told the deputies he was going to meet a friend at a nearby motel, but text messages on his phone suggested that he was going to a nearby mail. The deputies were concerned that respondent was going to the mall to shoplift, having discovered respondent’s October 13, 2014 arrest at a Target store in Anaheim where respondent used a magnetic device to remove a security device from an item.

Notably, the stipulation identifies as a comparable prior case a matter that I mentioned in a recent blog post

At the lower end of the disciplinary range is Chadwick v. State Bar (1989) 44 Cal.3d 103, 106-107, where the attorney was found to have committed acts of moral turpitude for violating federal insider trading statutes and lying to the Securities Exchange Commission (“SEC”). Respondent was given mitigating credit for confessing his wrongdoing to the SEC, his remorsefulness and recognition of wrongdoing, having no prior record of discipline for eight years in practice prior to the misconduct, the five-year passage of time since the misconduct and from four character witnesses. (ld at 111-112.) The court noted that but for the attorney’s mitigation, disbarment may have been warranted, but instead a one-year actual suspension was imposed.

I am on record as viewing the Chadwick case and its companion District of Columbia cases (see here and here) as lenient in the extreme. 

I had argued for  three-year suspension in Hutchinson and advocated for joint consideration of the two cases in light of their effort to shift the blame on each other in the parallel proceedings.

Hutchinson had been a Supreme Court clerk and was a partner at a major firm. He had served as the Administrator of ERISA where Chadwick was his deputy. He then entered private practice.

From the District of Columbia en banc opinion

On January 21, 1982, Hutchinson received a telephone call from a close friend, a California attorney named William Chadwick, who told Hutchinson that he believed a tender offer was about to be made for the Brunswick Corporation. Chadwick said that he had invested in Brunswick, recommended that Hutchinson invest in it also, and offered to split any profits or losses if Hutchinson decided to buy Brunswick stock. When Hutchinson pressed for details, Chadwick said that he believed he did not have inside information and that his broker had verified this. Chadwick told Hutchinson that his conclusions about Brunswick were based on cocktail-party conversations and on independent analysis by him and a friend, whose identity he did not then disclose.

Within five minutes after talking with Chadwick, Hutchinson purchased forty Brunswick call options. The next day he bought one hundred more options through the same broker and attempted (unsuccessfully) to buy yet another fifty through a second broker in Florida. He also decided to pass along the recommendation to invest in Brunswick to another friend, Robert Chaloupka. Hutchinson first tried to call Chaloupka on Friday, January 22, but he was unable to reach him until Monday morning, January 25. By then trading in Brunswick stock had been suspended, although Hutchinson did not know this at the time. Chaloupka never bought any Brunswick stock or options.

On Monday, January 25, the Whittaker Corporation publicly announced its takeover of Brunswick, and trading in Brunswick stock was temporarily suspended. On the same day, an SEC attorney called Hutchinson’s office to ask whether his law firm represented either Brunswick or Whittaker. Hutchinson was out of the office, but through his secretary he later sent word to the SEC attorney that his firm represented neither company. On January 26 Hutchinson himself called the SEC attorney and confirmed this. During that call he was asked to participate in an informal SEC inquiry and to answer questions about his personal trading in Brunswick options, and he agreed to do so.

The next day, January 27, Hutchinson called Chadwick to tell him that he had agreed to testify before the SEC about his Brunswick trading. Chadwick then told Hutchinson, for the first time, that his information about Brunswick had come not from his own analysis or that of his broker but from Martin Cooper, an officer of a Los Angeles bank in charge of the Whittaker account (the unidentified “friend” mentioned in the first telephone call). Chadwick said that both he and Cooper would be “sunk” if Hutchinson revealed their January 21 conversation to the SEC because the information from Cooper would undoubtedly be regarded as inside information, and trading on it would constitute insider trading, which is illegal. After some discussion, Hutchinson agreed to lie to the SEC about the nature and source of his information about Brunswick if he was asked about it.

Hutchinson was deposed under oath by the SEC staff on February 2, February 16, March 29, April 1, and April 30, 1982. At the first two meetings, at which he was not represented by counsel, Hutchinson denied that he had discussed his purchase of Brunswick options with Chadwick or with anyone other than his own broker and denied that he had recommended the purchase of Brunswick stock to anyone else. He also said that he first learned of the tender offer for Brunswick from his broker on January 25, the date of the public announcement by Whittaker of the takeover bid. He denied having had any information before January 25 that a tender offer might be made for Brunswick. He told the SEC investigators that his sudden interest in Brunswick had resulted from his own research in the financial press and his personal strategy of purchasing low-priced options on stock which had recently traded at or below the option price.

Sometime between February 2 and February 16, Hutchinson unsuccessfully tried to convince Chadwick to agree to let him tell the truth to the SEC. Finally, on March 12, Hutchinson met with Chadwick and Chadwick’s attorneys, and all of them agreed that Hutchinson and Chadwick would both contact the SEC and tell the whole truth. After that meeting, Hutchinson for the first time retained his own counsel, who got in touch with the SEC and made arrangements for Hutchinson to correct and supplement his earlier statements.

At the depositions in March and April, Hutchinson recanted his prior testimony and testified truthfully about his conversations with Chadwick, his agreement with Chadwick to lie to the SEC, and his efforts to relay the advice about Brunswick to Robert Chaloupka. In addition, on April 29, 1982, he voluntarily deposited all the profits he had made from trading in Brunswick options into an escrow account.

The SEC then brought a civil enforcement action against Hutchinson, Chadwick, and Cooper in the United States District Court for the Central District of California. In that proceeding, without admitting or denying the allegations in the SEC’s complaint, Hutchinson agreed in a consent order to surrender the profits he had made (approximately $72,000) from his trading in Brunswick securities. This money was eventually distributed to other sellers of Brunswick options. The consent order, which was entered on July 15, 1982, also provided for certain injunctive relief against Hutchinson.

About a year later, in the United States District Court for the District of Columbia, Hutchinson was convicted of a criminal violation of the federal securities laws.

Note how the D.C. court accepts the fact that Chadwick was the author of the plan to perjure that Hutchinson reluctantly accepted. 

Contrast with the California court

Petitioner [Chadwick] further testified that prior to his conversation with the SEC he did not believe that he had violated the law, and that his agreement to lie for Hutchinson was due to a “misguided sense of loyalty.”

As I mentioned, District of Columbia Bar Counsel (by my former  and late colleague Jackson H. Rose) had charged the two as co-respondents and was ordered to stay the Chadwick charges by the Board on Professional Responsibility.

When I inherited the case from Jack, I moved to vacate the stay without success, although the board expressed some buyer’s remorse of the earlier order. 

I suppose there is some irony in the fact that 25 years later the Chadwick disposition is relied on as precedent in a matter involving a petty thief. (Mike Frisch)