Caveat Emptor

The Missouri Supreme Court has disbarred an attorney

Because Crump loaned himself money from the client trusts without the knowledge or approval of H.G., H.G.’s guardian, or the beneficiaries, the presumptive discipline is disbarment pursuant to ABA Standards 4.11 and 4.61. Because Crump did not disclose the 2017 loans or seek the beneficiaries’ approval, falsely reported interest payments on the Scottsvale loan, and recharacterized multiple loan payments, the presumptive discipline is disbarment pursuant to ABA Standards 4.61 and 5.11(b). The evidence reflects not just a single incident of intentional conduct involving dishonesty, fraud, deceit, or misrepresentation that seriously adversely reflects on the lawyer’s fitness to practice, but a pattern of such conduct. Under this Court’s precedent, “[d]isbarment is the presumptively appropriate discipline for misappropriating client funds.” Farris, 472 S.W. 3d at 563…

“Disbarment is typically reserved for clear cases of gross misconduct, those in which the attorney is demonstrably unfit to continue the practice of law.” McMillin, 521 S.W.3d at 610 (internal quotation omitted). Crump violated multiple professional rules for which the presumptive discipline was disbarment, his misconduct is aggravated by several factors, and no compelling mitigating factors exist to justify departing from the presumptive discipline.

Facts

Crump received a bachelor’s degree in accountancy from the University of Missouri in 1994. Crump was licensed to practice law in Missouri in October 1997 and has no prior disciplinary history.

Crump’s practice primarily consists of estate planning and probate work. He has served as municipal judge for the city of Rolla for the past 11 years. Crump owns a business, Caveat Emptor, L.L.C, which holds a piece of property on Highway 72. Crump was the sole shareholder, officer, and board member of his law firm, James T. Crump P.C. The Missouri Secretary of State dissolved James T. Crump, P.C., in January 2012 following the entity’s failure to pay state employee withholding taxes.

Crump’s client, C.G., was the trustee for two trusts: the C.G. Trust and H.G. Trust (collectively, “client trusts”). H.G. was C.G.’s wife. C.G. made Crump the successor trustee to both trusts.

In 2010, C.G. made a loan to Crump’s business, Caveat Emptor, from the H.G. Trust in the amount of $80,760.95 secured with a deed of trust for a property on Highway 72 (the “Highway 72 loan”). In 2013, C.G. made a second loan from the C.G. Trust to Crump and his wife in the amount of $175,000 secured with a deed of trust for a property in Scottsvale (the “Scottsvale loan”).

After C.G. died in 2015, H.G. became the lifetime beneficiary of the C.G. Trust, and Crump became the trustee for both client trusts. At the time of C.G.’s death, Crump was current on loan payments for the Highway 72 loan and Scottsvale loan. In 2016, H.G. was legally determined to be incapacitated, and one of her daughters was appointed her guardian.

In addition to the loans C.G. made to Crump and his business, C.G. made several other loans from the C.G. Trust during his lifetime. At the time of C.G.’s death, the client trusts had approximately $1 million in outstanding loans.

Crump had developed an accounting system in which he would place earned funds from his law firm, funds belonging to the client trusts, and funds from clients in the same IOLTA account. Crump used an accounting program to create subfolders within the IOLTA account, instead of maintaining separate IOLTA and operating accounts. Crump would transfer money from client subfolders to his firm subfolder to pay his earned fees. Similarly, Crump would transfer money from his firm subfolder to the client trusts subfolder to make payments on the Highway 72 loan and Scottsvale loan.

In 2017 Crump made two loans to himself from the client trusts (the “2017 loans”). In May 2017, Crump loaned himself $42,383.70 by moving money from the client trusts subfolder to the law firm subfolder to pay overdue payroll taxes. In December 2017, Crump made a second loan of $18,292.88 from the client trusts subfolder to the law firm subfolder to pay federal payroll taxes. Crump did not inform H.G., her guardian, or any other beneficiaries that he made either loan. Crump created a promissory note and security agreement for each loan. Without a witness present, Crump signed the note and security agreement related to each loan but never perfected either security agreement.

H.G. died in August 2019. After H.G.’s death, the client trusts were to be terminated and the assets distributed to the beneficiaries. As trustee, it was Crump’s responsibility to disburse the assets.

In May 2020, Crump sent a letter to the beneficiaries listing the outstanding loans made by C.G. from the client trusts. Crump included the Highway 72 loan and Scottsvale loan in the list but did not disclose the 2017 loans. Crump falsely reported the status of the Highway 72 loan was “current” and attached a payment ledger reflecting interest payments made to the Scottsvale loan from 2016 to 2020. The payment ledger for the Scottsvale loan was false. Crump reported the payments he had made on the 2017 loans as payments on the Highway 72 loan. While Crump had made sporadic principal payments on the Scottsvale loan after C.G.’s death in 2015, Crump had not made interest payments on the Scottsvale loan since C.G.’s death.

Crump testified he did not report the 2017 loans because he thought he had repaid those. Crump, however, had paid only about $34,000 of the $60,676.58 balance.

In July 2020, Crump sent the beneficiaries a second letter that failed to disclose the 2017 loans. The day before sending the second letter, Crump moved $51,870.72 from his operating subfolder to the client trusts subfolder to pay the interest on the Scottsvale loan.

Four of the beneficiaries hired an attorney (“Counsel”) to assist them in reviewing documents necessary to close the client trusts. Counsel sent a letter to Crump in January 2021 requesting documents he needed to review the client trusts. Crump testified he stalled Counsel for a while.

Before responding to Counsel and disclosing the existence of the 2017 loans, Crump recharacterized payments in his records so he could report to Counsel the 2017 loans were repaid. Crump moved payments he had previously made on the Highway 72 loan and Scottsvale loan and applied them to the 2017 loans. By moving the payments he made on the Highway 72 loan and Scottsvale loan to the 2017 loans, Crump created an arrearage. Recharacterizing the payments resulted in no monthly payments being recorded in Crump’s records on the Scottsvale loan from October 2015 until January 2020, with the exception of three interest payments in 2017. The recharacterization also resulted in Crump’s records showing no monthly payments made on the Highway 72 loan from October 2015 to July 2020, with the exception of three interest payments.

Crump then spoke to Counsel and said he had mistakenly believed he was current on the Highway 72 loan and Scottsvale loan but had discovered this was incorrect and both were in arrearages. Crump disclosed the 2017 loans to Counsel and said those loans were repaid. If Crump had not recharacterized previous payments prior to speaking with Counsel, the 2017 loans would have had a balance of more than $25,000. Counsel filed a complaint against Crump with OCDC.

Crump resigned as trustee of the client trusts in February 2021. The Scottsvale loan was paid off in April 2021 after Crump refinanced it through a credit union. The Highway 72 loan was paid off in March 2022 through a loan from Crump’s father.

OCDC opened an investigation and conducted an audit of Crump’s IOLTA account.

(Mike Frisch)