Ratcheted Up

The Illinois Review Board recommends a five-month suspension of an attorney for misconduct shortly after admission

Respondent was admitted to practice in Illinois in December 2010. As described below, the misconduct at issue in this matter took place beginning in January 2011, just weeks after his admission to the Illinois bar.

The facts regarding Respondent’s misconduct, which he does not contest, are set forth fully in the Hearing Board’s report. Briefly, Respondent started a business, LOP Capital, LLC (“LOP”), when he was in law school. LOP made higher-interest, short-term bridge loans to people who were seeking home financing. The borrowers would pay off the bridge loans as soon as they were able to obtain lower-interest conventional home loans. To help fund the start-up of the business, LOP took out a loan from American Community Bank.

The business did well from 2006 to 2008, but then ran into hard times during the recession that began in 2008, when home values plummeted and the borrowers became unable to pay off their bridge loans. By late 2009, American Community Bank was demanding more collateral for its loans to LOP, and LOP gave it an interest in property that LOP owned in Stephens County, Georgia. Unfortunately, LOP still fell behind in its payments to American Community.

In late 2009 or early 2010, Respondent found a lender, Prime Equity, Inc., which was willing to lend LOP $25,000 in return for an unsubordinated security interest in the Stephens County, Georgia property. Because Respondent knew that American Community Bank would not subordinate its interest in the same property to Prime Equity, he did not ask it to do so.

Rather, in January 2011, he fabricated a “Subordination Agreement” in which American Community Bank purportedly agreed to subordinate its interest in the Stephens County property to Prime Equity. Without authority, he signed the names of American Community Bank’s executive vice president and chief financial officer on the agreement. He then falsely notarized the document by using the notary stamp and signing the name of the attorney for whom he was working. He submitted the fabricated document to Prime Equity, which lent him $25,000 based on the purported subordination agreement. He caused the fabricated document to be filed with the office of the Clerk of the Superior Court for Stephens County, Georgia. He used the proceeds from the Prime Equity loan to pay past-due interest to American Community Bank.

A year and a half later, Respondent fabricated a second document, entitled “Cancellation of Subordination Agreement,” pursuant to which American Community Bank purportedly cancelled the January 2011 subordination agreement. Again, Respondent signed the name of American Community Bank’s executive vice president, and used the notary stamp and signed the name of the attorney who employed him. And again, he caused the second fabricated document to be filed with the office of the Clerk of the Superior Court for Stephens County, Georgia.

Sanction

 In aggravation, the Hearing Board noted that not only did Respondent fabricate two documents, each of which he knew he had no authority to execute and each of which purportedly affected the right of a lender in collateral pledged to secure its loan, but he also falsely notarized the two documents, which “ratcheted up the level of dishonesty.” (Hearing Bd. Report at 9). It also noted that preparing, executing, and notarizing each document involved a number of steps; that Respondent caused each false document to be filed with the office of the Clerk of the Stephens County Superior Court; and that Respondent prepared and filed the second false document a year and a half after he prepared and filed the first. It thus found that his misconduct was not a momentary lapse of judgment.

The Hearing Board was particularly troubled that Respondent breached his employer’s trust by taking the employer’s notary stamp and signing his name to falsely notarize the fabricated documents. But it was most troubled by the timing of Respondent’s misconduct in relation to the start of his professional career, stating: “Literally within weeks after receiving his law license, Respondent created and executed false documents, conduct he knew was wrong.” (Id. at 10.)

Based upon Respondent’s misconduct and the little mitigation and extensive aggravation, the Hearing Board recommended that Respondent be suspended for five months.

The Review Board agreed. (Mike Frisch)