Conditional Reinstatement Recommended

The Illinois Review Board has recommended reinstatement of an attorney, rejecting the Administrator’s contention that full restitution was a neccessary predicate for return to practice. 

The attorney 

Petitioner was admitted to practice in Illinois in 1983. After graduating from law school, he worked for Continental Bank, then Prudential Insurance Company, and a law firm. From 1998 until his disbarment, he worked for John Marshall Law School, where he was responsible for diversity and inclusion and strategic planning.

In 2005, Petitioner began to have family and financial problems. Among them, he incurred extensive debts for one daughter’s medical expenses and both daughters’ college tuition. Because his debts were greater than his income, he also fell behind in his real estate taxes.

In 2007, Petitioner sought several loans to alleviate his financial situation. His misconduct occurred in connection with these loans. In May 2007, he applied for a mortgage refinancing with Washington Mutual Bank, in the amount of about $685,000. On the loan application, he stated that his gross monthly income was about $25,000. Also in May 2007, he applied for a home equity loan with Harris Bank, in the amount of about $76,000, in order to cover the cash he needed to close on the mortgage refinancing. On the Harris Bank application, he stated that his gross monthly income was about $21,000. In actuality, his gross monthly income was about $14,000. The mortgage refinancing and the home equity loans closed simultaneously and Petitioner received the funds he sought.

In the criminal case

After the State Banc loan was denied, Petitioner filed for bankruptcy protection and a mortgage reorganization. He eventually told his bankruptcy attorney about the false statements on the loan applications, and his bankruptcy attorney recommended he hire a criminal defense attorney. Petitioner did so, and that attorney advised him to report his conduct to the FBI, which Petitioner did. Thus, in January 2013, Petitioner was charged with making a false statement to Washington Mutual Bank, and entered into a deferred prosecution agreement in which he admitted making the false statements on the loan applications as described above, and the U.S. Attorney’s Office agreed to defer his prosecution for 24 months to allow him to demonstrate good conduct.

Pursuant to the agreement, Petitioner was placed in a pretrial diversion program and complied with the conditions of the program, including completing 100 hours of community service at the Salvation Army and paying $20,000 in restitution to the Federal Deposit Insurance Corporation as successor to Washington Mutual Bank. Also as required by the deferred prosecution agreement, he reported his conduct to the ARDC and consented to disbarment. Accordingly, in December 2014, the charges against him were dismissed.

As to restitution

The Administrator argues that Petitioner’s inability to pay Harris Bank in full because of his insufficient financial resources does not excuse his failure to make restitution, and that he cannot be reinstated until he makes full restitution to Harris Bank. Petitioner, on the other hand, agrees with the Hearing Board’s suggestion that, in the event of a determination that Petitioner has not satisfied all restitution requirements, he be conditionally reinstated pending a showing that he and Harris Bank have reached a compromise on the Harris Bank debt or that he has entered into a payment schedule with Harris Bank. We find that the Hearing Board’s alternative recommendation is reasonable, just, and supported by precedent.

…we find compelling Petitioner’s argument that requiring him to complete restitution to Harris Bank before being reinstated would effectively bar him from being reinstated at all. As a hearing panel member stated, the Administrator’s position puts Petitioner in a “[C]atch-22. [He] can’t get a decent job because he isn’t a lawyer, and . . . because he doesn’t have a decent job, he can’t be a lawyer.” (Report of Proceedings at 485-86.) Notably, two of Petitioner’s character witnesses testified that, if he were reinstated to practice, they would hire him. (See Hearing Bd. Report at 11.) It seems to us irreconcilably illogical to bar Petitioner from being reinstated until he makes full restitution to Harris Bank given that Petitioner is far more likely to be able to repay his debt to Harris Bank if he is allowed to practice law again.

The Hearing Board clearly saw this “Catch-22” and tried to resolve it in a pragmatic and legally supportable way. While it found that Petitioner need not make additional restitution to Harris, it acknowledged that the Court may find differently, and therefore suggested that reinstatement could be granted conditionally, upon a showing that Petitioner has reached an agreement with Harris Bank to pay restitution.

(Mike Frisch)