Insufficient Dinero Gets Attorney Disbarred

The June 2017 California Bar Journal reports on a recent disbarment

Kaplan appealed from a State Bar Court Hearing Judge’s decision that he be disbarred for failing to maintain client funds in a client trust account and intentionally misappropriating those funds, but the State Bar Court Review Department rejected his claim that he did not do so intentionally. Kaplan argued that he was grossly negligent in handling the funds during a time of personal and financial stress, but that he deserved only a two-year suspension. Placing the funds in a non-CTA account allowed his bank to seize the funds, leaving him unable to repay his client.

Both the judge and the Review Department found that Kaplan intentionally and dishonestly misappropriated client funds for his personal use and benefit. The disputed funds came from three clients who retained Kaplan to represent them in the sale of a movie script titled “Mucho Dinero” to a producer. The parties agreed on a sales price of $90,000. Kaplan placed the money in a Wells Fargo Bank checking account, not a CTA. He misrepresented to one of his clients that the money was not available for disbursement for several weeks, during which time Kaplan made more than 100 withdrawals for business and personal expenses including restaurant bills, airline tickets, credit care payments and a $15,000 payment to a resort. Kaplan made various excuses for his non-payment to the client for more than a year. The client’s sister, an attorney, demanded payment. Kaplan finally paid, three months after the State Bar filed a notice of charges against him. He testified that during this time he suffered from depressing, was getting a divorce and had significant financial and business problems. He admitted misappropriating the funds, but contended it was not intentional or dishonest and offered no plausible explanation for failing to pay the client what he was owed. In aggravation, he caused significant harm to his client, who had to liquidate stocks he had set aside for college funds and use his credit card to cover expenses while he waited for Kaplan to pay him.

Kaplan committed multiple acts of wrongdoing by making more than 100 withdrawals of the client’s funds for his own use. He showed a lack of candor and cooperation with his client. He did cooperate in the State Bar proceedings, attaining merit for entering into an extensive factual stipulation and for lack of prior discipline over 24 years in practice. He also submitted good character evidence. But he was accorded minimal mitigation for his claims of extreme emotional difficulties, because Kaplan did not show that his problems caused him to misappropriate the money. And he failed to prove that his difficulties no longer pose a risk of future misconduct.