Deliberate Omissions Violate Duty To Respond To Bar Complaint

The District of Columbia Court of Appeals has imposed a six-month suspension of an attorney

The Board on Professional Responsibility recommends that we suspend respondent Benjamin M. Soto from the practice of law for six months based on his conduct in a real estate transaction and the ensuing disciplinary investigation. The Board found that Soto had violated D.C. R. Prof. Conduct 8.1(a), 8.4(c), and 8.4(d). Soto takes exception to the finding that he violated Rule 8.1(a); he also argues that a lesser sanction is appropriate in any event. Disciplinary Counsel contends that a one-year suspension is warranted. We agree with the Board that Soto violated all three Rules and, because a six-month suspension is within the range of sanctions imposed for misconduct of this magnitude, we accept the Board’s recommendation and suspend Soto for six months.

Admitted misconduct involved an altered deed

Since 2002, Soto has owned and operated a real estate settlement company. In 2012, William Duggan hired Soto’s company to help him obtain legal title to a property located at 2461 18th Street NW (the Property) where Duggan operated a bar and restaurant. Duggan wanted to use the Property as collateral for a bank loan to his soon-to-be formed company—Lenjeswil, LLC—but he could not do so because the Estate of Jack Littlejohn held title to the Property. This was a complicated transaction that included preparation of a deed in lieu of foreclosure because various loans made to Jack Littlejohn and secured by the Property had not been repaid. Over time, the resulting defaulted notes changed hands on multiple occasions. By the time Duggan sought to acquire title to the property, he asserted that he had purchased the right to collect the balances due on the outstanding loans.

The restaurant has the interesting name of Madams Organ (a play on words derived from its location in the Adams Morgan neighborhood).

The Littlejohn Estate was then reopened so that the Property could be transferred. In December 2012, the Estate’s personal representative—Homer Littlejohn—signed the deed and a related tax form. Homer’s attorney—Ara Washington—also signed as a witness, and the signatures were notarized. Following his practice in foreclosures of this type, Soto prepared a deed which stated that the Property was being transferred from the Littlejohn Estate to Lenjeswil for “no consideration.” The deed was not recorded at the time it was signed, however. When Duggan later reviewed the documents, he angrily objected to the recital of “no consideration” because (for complicated reasons we need not explain) it would increase the amount of transfer and recordation taxes he would have to pay.

After consulting the D.C. tax code and speaking with the Recorder of Deeds, Soto agreed with Duggan that the consideration figure could be changed. On February 19, 2013, Soto directed his employee to change the amount of consideration shown on the documents. To implement the change, a new first page of the deed was created that revised the amount of consideration from “no consideration” to $450,000 and removed all references to a substitute trustee (a third party exercising the right to foreclose on the deed of trust who should have remained on the new deed for legal reasons). The original second page—containing the notarized signatures of Homer Littlejohn and Ara Washington—was then attached to the newly created first page. The second page of the tax form was also revised to reflect the new amount of consideration and the recalculated (lower) amount of taxes due. Soto did not obtain authorization from the signatories and the notary before making these changes.

On April 3, 2013, the altered documents were recorded.

Respondent contested the finding that he had falsely responded to the bar complaint

We agree with the Board’s conclusion that Soto violated Rule 8.1(a) because he (1) knowingly made a false statement to Disciplinary Counsel and (2) omitted critical details of a complex transaction to obscure his actions in altering the deed and tax form. Rule 8.1(a) states that “a lawyer in connection with . . . a disciplinary matter, shall not: [k]nowingly make a false statement of fact.” Comment 1 to Rule 8.1 explains that “[l]ack of materiality does not excuse a knowingly false statement of fact. . . . [I]t is a separate professional offense for a lawyer knowingly to make a misrepresentation or omission in connection with a disciplinary investigation of the lawyer’s own conduct.” D.C. R. Prof. Conduct 8.1 cmt.[1]. “Knowingly” means “actual knowledge of the fact in question. A person’s knowledge may be inferred from circumstances.” D.C. R. Prof. Conduct 1.0(f).

Soto’s 2015 response would lead a reasonable person to conclude that what transpired was a simple real estate transaction between Lenjeswil (the lender and buyer) and Jack Littlejohn. In reality, the transaction was complex and involved multiple parties over an extended period of time. We need not repeat all of the Hearing Committee’s and Board’s detailed factual findings.

Omissions violated the Rule

Soto’s deliberate omissions concealed facts that would have aided Disciplinary Counsel in determining whether the altered document was actually a deed in lieu of foreclosure, whether the formula used for estimating the amount of consideration was proper, and whether the resulting tax calculations were accurate. All of these matters were within the scope of Disciplinary Counsel’s inquiry. Thus, because of Soto’s knowingly false statements and deliberately misleading omissions, we agree with the Board’s conclusion that Soto violated Rule 8.1(a).

The Court accepted the board’s proposed sanction notwithstanding objections of both sides. (Mike Frisch)