Mitigation Sufficient For Suspension Rather Than Revocation

The Iowa Supreme Court imposed a suspension rather than the proposed license revocation of the Attorney Disciplinary Board

Jason Springer was admitted to practice law in Iowa in 2002. He resides in Madrid and is well regarded by other lawyers in the profession. He is active in a number of community activities, including volunteering for the Madrid Fire Department and coaching youth basketball and baseball. He is also active in his church. He suffered from alcohol abuse prior to seeking treatment in 2015. Prior to this proceeding, Springer practiced real estate and personal injury law and had no disciplinary history. His license to practice law, however, was suspended on November 9, 2016, in a separate action based on the conduct giving rise to this proceeding.

The conduct responsible for this proceeding relates back to 2008 when Springer assisted two clients in organizing a business that negotiated the sale of homes for financially distressed owners in lieu of foreclosure. His clients would first negotiate a price for the house that the lender would accept in settlement of the outstanding balance of the mortgage. Once the sale price was fixed, the clients would purchase the home for the short sale amount. Then, often the same day or a few days later, the clients would sell the home to a prearranged third party for a profit.

Springer assisted his clients in the two-part transaction. First, Springer and his office staff would perform the work needed to close the sale of the house between the parties to the foreclosure and his clients. This work included completing a HUD–1 form, disbursing the funds, and collecting a fee. Second, Springer and his office staff would perform the services necessary to close the second sale of the home to the third party. Again, this work included completing a HUD–1 form, disbursing the funds, and collecting a fee. From 2009 to 2011, Springer assisted his clients in approximately forty such transactions.

In seven of the transactions, however, Springer’s clients were without sufficient funds to purchase the homes secured by the delinquent mortgages. During such transactions, to complete the first sale, Springer would falsely represent to the lender on the HUD–1 form that his clients paid cash at the short sale closing. The clients would present Springer with a check made payable to the lender for the purchase price, which Springer would hold to deposit until the second sale was closed. Springer would then disburse the sale proceeds from
the second sale to his clients by depositing the proceeds into their account. Once the funds were secured, he would deposit the check representing the sale price in the first transaction drawn on the account from his clients to the mortgage lender.

The false documents prepared by Springer and his staff in the course of the transaction concealed from the lender that Springer’s clients did not have sufficient funds to purchase the home. The documents further concealed that the clients used the proceeds from the second sale to finance the first sale.

In 2011, Springer learned while attending a continuing legal education seminar that the short sale transactions violated federal law. He stopped performing the services for his clients a short time later.

In 2015, Springer was convicted in federal court of seven counts of bank fraud for knowingly executing a scheme to defraud a financial institution in violation of 18 U.S.C. § 1344(1) (2012). He was ultimately sentenced to four months in prison, placed on probation for two years, and fined in the amount of $15,000. He served the sentence in 2016 and 2017.

Mitigation prevented revocation

Overall, the sanction in this case falls between the revocation imposed in Nelsen and Engelmann and the six-month suspension imposed in Bieber and Wheeler. While Springer’s conduct more resembles the conduct in Nelsen and Engelmann, it is apparent that Springer lacked the specific intent to convert funds. Considering all the circumstances, we conclude Springer’s license to practice law in Iowa should be suspended for a period of two years.

Note the improvement of the Iowa Supreme Court’s web page that now provides access to briefs and oral argument, if held. (Mike Frisch)