452 P.3d 265 (Colo.O.P.D.J. 2019), 18PDJ069, People v. Dalmy

Docket Nº:18PDJ069
Citation:452 P.3d 265
Opinion Judge:WILLIAM R. LUCERO, PRESIDING DISCIPLINARY JUDGE
Party Name:The PEOPLE of the State of Colorado, Complainant v. Diane Dishlacoff DALMY, #18758, Respondent
Case Date:June 26, 2019
Court:Office of the Presiding Disciplinary Judge of the Supreme Court of Colorado
 
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452 P.3d 265 (Colo.O.P.D.J. 2019)

The PEOPLE of the State of Colorado, Complainant

v.

Diane Dishlacoff DALMY, #18758, Respondent

No. 18PDJ069

Office of the Presiding Disciplinary Judge of the Supreme Court of Colorado

June 26, 2019

OPINION AND DECISION IMPOSING SANCTIONS UNDER C.R.C.P. 251.19(c)

WILLIAM R. LUCERO, PRESIDING DISCIPLINARY JUDGE

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Diane Dishlacoff Dalmy ("Respondent") pleaded guilty to a felony charge of conspiracy to commit wire fraud. She was sentenced to prison for thirty-six months. Respondent’s crime reflected adversely on her honesty, trustworthiness, or fitness as a lawyer in other respects and thus violated Colo. RPC 8.4(b) and C.R.C.P. 251.5(b). Respondent will be disbarred for her misconduct.

I. PROCEDURAL HISTORY

On October 30, 2018, the Office of Attorney Regulation Counsel ("the People") filed a complaint with the Presiding Disciplinary Judge ("the Court") and sent copies via certified mail the same day to Respondent’s then-counsel. When the due date for Respondent’s answer had passed, the People sent her a reminder letter on December 10, 2018. On December 21, 2018, Respondent was granted an extension of time to answer the complaint until January 18, 2019. On that day, her lawyer moved to withdraw as counsel, and the People moved for entry of default because Respondent had not filed an answer. On February 12, 2019, the Court granted Respondent’s counsel’s motion to withdraw, denied the People’s motion for default, and gave Respondent until March 5, 2019, to answer the People’s complaint. She still did not file an answer.

The People again moved for entry of default. When Respondent failed to respond, the Court granted the People’s motion on April 16, 2019. Upon the entry of default, the Court deemed all facts set forth in the complaint admitted and all rule violations established by clear and convincing evidence.1 The Court set a sanctions hearing for June 21, 2019.

On June 10, 2019, the People filed a status report and a motion to permit Respondent to appear at the hearing by telephone. The People stated that Respondent only recently learned of the hearing, yet she was willing to go forward and to appear by telephone from the prison in Arizona where she is housed. The Court authorized Respondent’s telephone testimony.

At the sanctions hearing held under C.R.C.P. 251.15(b) on June 21, 2019, Kim E. Ikeler represented the People. Respondent appeared pro se by telephone. The Court admitted the People’s exhibits 1-4 and heard testimony from Respondent.

II. FACTUAL FINDINGS AND RULE VIOLATIONS

Facts and Rule Violations Established on Default

Respondent was admitted to practice law in Colorado on October 25, 1989. She is thus subject to the Court’s jurisdiction in this disciplinary proceeding.2

Respondent, a specialist in securities law, performed securities-related legal work for several public companies ("subject companies"). Between about January 2009 and July 2016, Respondent knowingly and willfully conspired with others (the "co-conspirators") to carry out a wire fraud scheme to defraud investors who had purchased stock in the subject companies. Respondent was aware that these companies were under the control of the co-conspirators, who were running fraudulent stock promotions for the companies.

The co-conspirators disseminated materially false information of a positive nature about one or more of the subject companies through email marketing blasts, telephone solicitations, press releases, and other media. As a result, share prices for company stock were artificially inflated. The co-conspirators then sold their stock holdings at a profit, stopped the fraudulent stock promotions, and

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allowed share prices to plummet, leaving investors with worthless stock. Respondent participated in the stock promotion aspect of the conspiracy by helping the co-conspirators gain access to lists of investors who were solicited during the fraudulent stock promotion campaigns. Funds were wired into Respondent’s trust account as payment for facilitating the co-conspirators’ acquisition of the investor list.

In addition, Respondent participated in the conspiracy by writing, and permitting a co-conspirator to write in her name, fraudulent opinion letters that were used to unrestrict the co-conspirators’ stock so it could be freely traded on the open market. These letters permitted the co-conspirators to sell their shares at times of their choosing, including to coincide with their fraudulent stock promotion campaigns, without concern for various federal securities rules.

Respondent also ghost-wrote fraudulent opinion letters for the subject companies in another attorneys name and permitted a co-conspirator to do so. Some of the letters were of the type used to un-restrict stock. Others were "adequacy" letters that were posted on a website maintained by an electronic securities marketplace that had earlier prohibited Respondent from...

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