The Core Objective

The Massachusetts Supreme Judicial Court has disbarred an attorney for his representation of a lucky lottery winner whose luck turned with the assistance of counsel

This proceeding concerns Hayes’s representation of Randal J. LaMarche, Jr. In August 2013, LaMarche won a one-million-dollar lottery prize. He opted to receive a lump sum payment of $650,000, which amounted to $455,000 after taxes. On or about August 26, 2013, LaMarche received a $455,000 check made payable to him from the Massachusetts Lottery. He immediately began spending some of his winnings. Among other things, he purchased a 2013 Dodge pickup truck, a used Corvette, and a motorcycle.

On August 29, 2013, after learning of LaMarche’s good fortune, Julie Kenney, who was LaMarche’s former girlfriend and the mother of his three children, filed a complaint for modification of a child support order that had been entered by the Probate and Family Court on March 31, 2010. LaMarche and Kenney had been involved since about 2003 in various proceedings in that court regarding paternity, custody, visitation, and child support relating to their three children. The March 31, 2010 order required LaMarche to pay $80.00 per month in child support going forward, plus $270 per month toward an arrearage. Kenney’s August 29 complaint for modification sought an increase in child support. Kenney also moved for the immediate entry of temporary orders that would require (a) LaMarche’s creation of a trust to hold some portion of the lottery winnings for child support payments going forward, (b) the recalculation of the previously-ordered child support amount, and (c) LaMarche’s payment of Kenney’s legal fees. In support of that motion, Kenney claimed that LaMarche had recently won $650,000 in the lottery and had since been posting on Facebook about spending his winnings wildly. She stated a concern that, absent the entry of the requested orders, the lottery money would be diminished partially or entirely while the modification case was being litigated. On August 30, 2013, the Probate and Family Court issued a temporary order prohibiting LaMarche from “spending, transferring, assigning, pledging, or in any other way disposing of any lottery winnings he has received.” In early September, LaMarche hired attorney Mary Beth Ayvazian to respond to the complaint for modification.

Around September 3, 2013, and no later than September 8, 2013, LaMarche also began consulting with Hayes about the Probate and Family Court matter and his recent lottery winnings. During his initial consultations, LaMarche told Hayes that he had won $455,000 after tax withholding and that Kenney was trying to obtain the winnings. He also shared that he suffered from mental health disorders, including bipolar and attention deficit hyperactivity disorders, that he received disability income, and that he had an eighth-grade education. Hayes advised LaMarche to conceal his lottery winnings from Kenney by claiming a prior verbal agreement with his brother, Jason Prestia, to share the money on a 50/50 basis. No such agreement existed, a fact known to Hayes. Although Hayes denied that the idea for the agreement with Prestia originated with him, claiming that Ayvazian had “signaled” that she had drafted an affidavit to that effect, the hearing committee discredited Hayes on this point and credited LaMarche’s testimony.  The board did not disturb this or any other credibility determination, and neither will I.

On or about September 8, 2013, while he was still represented by Ayvazian, LaMarche paid Hayes $4,500 to represent him in the Probate and Family Court proceedings as well as any matter concerning the lottery. The money was deposited in Hayes’s IOLTA account.

On September 10, 2013, Hayes created a trust (the Great Summertime Trust) to hold the lottery winnings. Prestia was the sole beneficiary, and Hayes was the trustee. Hayes advised LaMarche that naming Prestia as beneficiary could protect the winnings (the trust’s sole asset) from being reached by Kenney. At the time he gave the advice, Hayes knew that the winnings were subject to the August 30, 2013, order of the Probate and Family Court. He also knew there was no agreement between LaMarche and Prestia for a 50/50 split of the lottery winnings.

The Probate Court appointed a receiver who entered orders concerning the winnings

Nevertheless, Hayes advised LaMarche to transfer title to his new Dodge truck to another trust (the Mystical Motors Leasing Trust), created in November 2013, which Hayes controlled and in which LaMarche and Prestia were each fifty percent beneficiaries. The truck was sold, and the proceeds of $29,000 were paid into the Mystical Motors Leasing Trust.  The hearing committee did not credit Hayes’ s claimed ignorance of the court order regarding LaMarche’s vehicles. The hearing committee determined that Hayes advised LaMarche to transfer assets to the trust in order to conceal them from the court and from Kenney.

Then

On or about September 16, 2013, LaMarche gave Prestia $170,000 in lottery winnings, which Prestia transferred to Hayes the same day. Hayes deposited the money into his IOLTA account and subsequently transferred $45,000 to the Mystical Motors Leasing Trust bank account.

Next

Around September 19, 2013, Hayes directly inserted himself into the Probate and Family Court proceedings. He tried to convince Ayvazian to disobey court orders by refusing to turn over to the receiver or Kenney any of LaMarche’s lottery winnings. At that time, LaMarche was under a court order to pay $51,435 to Kenney’s lawyer. Rather than doing so, he paid the funds to Ayvazian. Thereafter, Hayes prepared a document to discharge Ayvazian from further work in the matter. LaMarche signed it, and she stopped work on the case.

On September 20, 2013, the same day he fired Ayvazian, LaMarche entered into a fee agreement with Hayes, “retroactive” to September 1. The fee agreement includes some shocking provisions, none of which Hayes explained to LaMarche, an unsophisticated client. Despite a recitation to the contrary in the agreement, the agreement was not explained to LaMarche; LaMarche was not informed that he should consult with independent counsel before agreeing to it; and he did not understand it. The agreement proclaimed in all capital letters: “THE CORE OBJECTIVE OF THIS ENGAGEMENT IS MAKING ALL OF CLIENT’S ASSETS NONFORFEITABLE. IT IS A CRISIS-DRIVEN, COLOSSAL TASK THAT MUST BE ACCOMPLISHED AT ONCE IN AN ATMOSPHERE OF CHAOS; CLIENT IS WILLING TO RELINQUISH ALL CONTROL OVER HIS ASSETS TO ATTORNEY IN ORDER TO ACCOMPLISH THE CORE OBJECTIVE.” With no apparent basis in fact, the agreement stated that “[r]eceivers, repo agents, investigators and others are lined up to seize $650,000 in lottery proceeds …. The existing claims are in a state of crisis with imminent irreversible forfeiture looming. A court-appointed receiver is working to seize all of Client’s money and property.” In furtherance of this “crisis-driven” engagement, the agreement gave Hayes “sole discretion” as to which of many matters he would provide representation to LaMarche. The agreement described a “rancorous” relationship between LaMarche and Kenney and reflected the client’s supposed direction that his interests would be “best advanced through thorough and dogged opposition at every opportunity in every stage of every dispute with Ms. Kenney.”

And

In furtherance of the scheme to conceal the lottery winnings, the agreement explicitly proscribed any “paper trail” such as invoices, bills, and bank statements.

…On the same day he signed the fee agreement, LaMarche signed a power of attorney, giving Hayes complete authority to make all financial and legal decisions for him.

The attorney then filed a chapter 13 bankruptcy

The petition prepared, filed, and signed by Hayes also contained numerous falsehoods, as detailed in the board’s memorandum…

Successor counsel eventually came in to deal with the situation.

Sanction

this case is no ordinary excessive-fee case. Hayes did not merely pad his bills, cf. Zankowski, supra (attorney billed for hundreds of hours for which no services were rendered), but preyed on a vulnerable, unsophisticated individual. He had LaMarche sign a shocking, predatory fee agreement and power of attorney, giving himself sole discretion to pay himself any amount he chose from LaMarche’s lottery winnings. While it appears Hayes did do a modicum of legal work, the fees he collected were grossly excessive in light of the amount of work performed, and in at least one case (the HIPAA matter), he collected a fee for a claim he never filed. Moreover, the terms of the fee agreement prohibited any paper trail, so Hayes never provided LaMarche any bill or other document that would have made him accountable or alerted LaMarche to the amount Hayes was collecting. Although the total amount of client funds taken by Hayes was less than the amount at issue in Goldstone, the gross dishonesty was the same. As the board observed, “[t]he entire engagement was imbued with fraud and greed.” Given all the circumstances found by the hearing committee, Hayes misused his client’s funds, with intentional deprivation ensuing. I agree with the board that this was theft. Under Schoepfer, disbarment is the presumptive sanction.

(Mike Frisch)