Theft Of Fiduciary Funds Merits Permanent Disbarment
The Kentucky Supreme Court has permanently disbarred an attorney
On September 20, 2024, an information was filed against Worthington in the United States District Court, Western District of Kentucky. Worthington entered a plea of guilty to wire fraud one month later, admitting to a violation of 18 U.S.C. § 1343.2 Worthington acknowledged unlawfully taking money from six client accounts totaling $606,004.3 The federal court sentenced Worthington to serve 41 months’ imprisonment and ordered him to make restitution in the amount of $585,028.91.4 Worthington represents he has made payment of $340,000 toward this obligation as of the filing of this motion.
He had filed a motion to resign under terms of permanent disbarment
Given the egregious nature of Worthington’s conduct, permanent disbarment is the appropriate sanction. We have previously ordered permanent disbarment for theft of smaller sums of client funds by an attorney serving in a fiduciary capacity. See, e.g., In re Tabler, ___ S.W.3d ___, 2024 WL 5174343 (Ky. Dec. 19, 2024) (theft of over $200,000 by administrator of estate); Wheeler v. Kentucky Bar Ass’n, 677 S.W.3d 361 (Ky. 2023) (theft of $20,000 from client’s trust fund); Kentucky Bar Ass’n v. Edwards, 377 S.W.3d 557 (Ky. 2012) (theft of $78,000 of disabled ward’s funds); Kentucky Bar Ass’n v. Christian, 320 S.W.3d 687 (Ky. 2010) (theft of $13,000 by executor); Kentucky Bar Ass’n v. Cameron, 262 S.W.3d 643 (Ky. 2008) (misappropriation of $13,490 by court-appointed conservator). Considering Worthington misappropriated nearly $600,000 from his clients, we have no doubt permanent disbarment is called for here.
An unrelated federal fraud conviction resulted in the same sanction
On October 8, 2021, an indictment was filed against Hawkins in the United States (U.S.) District Court, Eastern District of Kentucky. United States of America v. Douglas Hawkins, Case No. 5:21-CR00110. The indictment alleged one count of investment advisor fraud in violation of 15 United States Code (U.S.C.) § 80b–6 (Count 1); one count of securities fraud in violation of 15 U.S.C. § 78j(b) (Count 2); and two counts of mail fraud in violation of 18 U.S.C. § 1341 (Counts 3 and 4).
A jury verdict of guilty on all charges was affirmed on appeal.
Following his conviction, the KBA initiated seven other disciplinary actions against Hawkins each concerning clients who had, following his indictment but prior to his conviction, prepaid Hawkins for legal services which remained unperformed as of his incarceration. On December 8, 2023, six of those “client matters” were consolidated into File No. 23-DIS-0069. The six consolidated action were Files 23-DIS-0069 (King), 23-DIS-0098 (Juett), 23DIS-0099 (Boone), 23-DIS-0119 (Garrard), 23-DIS-0149 (Osborne), and 23DIS-0153 (Roberts). An additional client-related action was subsequently initiated in File No. 24-DIS-0008 (Hunt).
In his motion for permanent disbarment, Hawkins states that he “acknowledges that his conduct that led to the U.S. District Court indictment and subsequent guilty verdict . . . constituted unethical conduct in violation of the Rules of Professional Conduct,” and that he desires to terminate all pending disciplinary proceedings by resigning under terms of permanent disbarment. Hawkins also affirms his “understand[ing] that he cannot be reinstated to practice from permanent disbarment” and “will never again engage in the practice of law in the Commonwealth of Kentucky.”
A press release of the United States Attorney’s Office for the Eastern District of Kentucky provides details
According to the evidence at trial, while operating as an investment advisor, Hawkins encouraged his clients to invest in securities that were properties in Jackson, Mississippi. Clients invested over $2 million in the properties. While encouraging these investments, Hawkins withheld vital information about the properties from his clients, including that many were uninhabitable, had burdensome rent collection, and were often subject to theft and vandalism. He also failed to inform his clients that their investment money would be used for purposes other than their properties, including paying other investors and buying a Harley Davidson for an employee.
Hawkins was convicted in February 2023.
In addition to his prison sentence, Hawkins was ordered to pay $1,588,048.50 in restitution. Under federal law, Hawkins must serve 85 percent of his prison sentences. Upon his release from prison, Hawkins will be under the supervision of the U.S. Probation Office for three years.
(Mike Frisch)