Trust But Verify

The Ohio Supreme Court has publicly reprimanded a highly-experienced bankruptcy trustee who had failed to properly supervise a thieving employee

Respondent, David William Davis, of Bridgeport, Ohio, Attorney Registration No. 019639, was admitted to the practice of law in Ohio in 1973. Davis served for 32 years as a part-time judge of the Belmont County Court and for 30 years as a bankruptcy trustee.

In 2017, Davis’s longtime bookkeeper was convicted of stealing funds from Davis’s client trust account. Relator, disciplinary counsel, thereafter charged Davis with failing to perform the required monthly reconciliations of his client trust account and failing to adequately supervise his staff. Based on the parties’ stipulations and Davis’s hearing testimony, a panel of the Board of Professional Conduct found that he had engaged in the charged misconduct and recommended that he be publicly reprimanded. The board issued a report adopting the panel’s findings of fact, conclusions of law, and recommended sanction. The parties have jointly waived objections and requested that we adopt the board’s report.

Details

In 1980, Davis’s then law firm hired Jayne Sliva as a legal secretary. In 2001, Davis established a solo law practice and retained Sliva to serve as his secretary, bookkeeper, and office manager. In 2003, Sliva began stealing from Davis. Specifically, Davis practiced bankruptcy law and received significant amounts of cash payments from clients, either for legal fees or court costs. Although Sliva recorded those payments on a client ledger, she regularly converted all or a portion of the funds for her own use, rather than depositing the money into Davis’s client trust account or his law firm’s general operating account. In other words, Sliva skimmed money from client cash payments that she should have deposited into one of Davis’s bank accounts.

In 2012, Sliva left Davis’s office to pursue other employment, and in 2014, he decided to merge his law practice with another attorney’s. In preparing to close his solo practice, Davis audited his books and discovered that money was missing from both his client trust account and his operating account. In January  2015, he filed a police report, which led to the Ohio Attorney General’s office conducting a forensic audit of the accounts. The attorney general determined that between 2003 and 2012, Sliva had embezzled $185,365.75 from Davis: $125,948 that should have been deposited into his operating account and $59,417.75 that should have been deposited into his client trust account.

In 2017, Sliva pleaded guilty to aggravated theft by deception and tampering with records. The Belmont County Court of Common Pleas sentenced her to 36 months of incarceration and ordered her to make restitution to Davis for the amount stolen. In September 2017, Sliva paid Davis an initial $100,000. He also received $10,000 from a bonding company.

Reprimand sufficient but

We reiterate that although “[d]elegation of work to nonlawyers is essential to the efficient operation of any law office,” “delegation of duties cannot be tantamount to the relinquishment of responsibility by the lawyer” and “[s]upervision is critical in order that the interests of clients are effectively safeguarded.”

WTOV 9 Fox had the story of the  criminal case. (Mike Frisch)