Can’t Afford A Haircut

The Minnesota Supreme Court has disbarred an attorney who took advantage of a vulnerable client.

The self-dealing came to light when

In December 2016, G.C.’s healthcare agent, D.R., discovered that G.C. did not have enough money in her account to pay for a simple haircut. After unsuccessful attempts to contact Colosi, D.R. filed a petition in district court as G.C.’s healthcare agent to compel an accounting of the estate. The district court held a hearing on February 7, 2017, in which the court ordered Colosi to provide, within 30 days, a complete accounting of G.C.’s estate starting from August 2007.

His response to the accounting demand

The repetitive nature of the narratives and the lack of quarterly reconciling of accounts suggest that Colosi completed the accounting after the fact and failed to provide both the invoices required by his retainer agreement with G.C. and the quarterly accounting required by the power of attorney. Colosi failed to provide any bank statements, tax returns, receipts, title transfers, recorded documents, or any other documents to account for G.C.’s estate. After several unsuccessful attempts to communicate with Colosi directly, in June 2017, G.C.’s court-appointed attorney copied Colosi on a letter to the court requesting documentation of the sale of G.C.’s properties and copies of her tax returns. Colosi never provided these documents.

In October 2017, Integrity Financial Solutions, LLC, a professional fiduciary, petitioned for appointment as G.C.’s guardian and conservator. The petition was granted in February 2018. G.C. died on March 16, 2018. Because the guardian and conservatorship were never formally established, the court subsequently discharged Integrity Financial.

Responding to the bar investigation, Respondent asserted that the attorney-client privilege mandated no reply.

The court

Colosi argues that the referee abused his discretion in making several evidentiary rulings; namely, denying Colosi’s motions to exclude the Director’s expert witness, overruling Colosi’s attorney-client privilege objections, and improperly prohibiting him from testifying or presenting exhibits in his defense.

The court found no abuse of discretion in any of the asserted instances

Colosi billed G.C. excessively, both in terms of hours and rates, and freely paid himself from G.C.’s accounts without documentation or oversight over the span of at least 8 years. While trustees can charge reasonable compensation for their services, nothing about Colosi’s handling of G.C.’s assets was reasonable. The retainer agreement between Colosi and G.C. established Colosi’s $175 hourly rate only for “legal service[s] in [the trust amendment] matter and other matters,” but Colosi charged G.C. this rate for all his subsequent time, which mostly included social visits. These facts support the referee’s conclusion that Colosi put himself in a position in which his self-interest conflicted with G.C.’s interest and the interest of the trust beneficiaries, which is self-dealing.

Sanction

Colosi, acting as G.C.’s trustee and attorney-in-fact, paid himself over $260,000 from G.C.’s trust over the course of 8 years, while G.C. was cognitively impaired. Colosi also entered into business transactions (the sale of and repairs to G.C.’s home) that were favorable to his personal contacts at the expense of G.C., to whom he owed a fiduciary duty. Breach of fiduciary duties while acting as a trustee or attorney-in-fact is a serious disciplinary violation for which we have disbarred attorneys.

Add in failure to cooperate, lack of remorse and false statements

Colosi improperly drained substantial funds from G.C.’s trust by paying himself excessive fees from the trust’s assets. His handling of the sale of G.C.’s home lost her over $100,000. Not only is the value of G.C.’s estate still unknown because Colosi failed to provide a complete accounting to the district court or to the Director, that failure also inhibits the ability of the Director to fully evaluate the actions Colosi took on G.C.’s behalf and whether he engaged in additional misconduct. Colosi committed additional misconduct by consistently misusing his trust account and failing to cooperate with the Director’s investigation. His misconduct is aggravated by his victim’s vulnerability, his lack of remorse, and his false testimony at the hearing.

In sum, Colosi engaged in particularly egregious and wide-ranging misconduct over many years. His misconduct caused extensive harm. Several aggravating factors are present and there are no mitigating factors. Based on Colosi’s conduct and our precedent, we conclude that the appropriate discipline is disbarment.

(Mike Frisch)