Bailey v. Bd. of Bar Examiners, Docket No. Cum–13–291.

Citation90 A.3d 1137,2014 ME 58
Decision Date10 April 2014
Docket NumberDocket No. Cum–13–291.
PartiesF. Lee BAILEY v. BOARD OF BAR EXAMINERS.
CourtSupreme Judicial Court of Maine (US)

OPINION TEXT STARTS HERE

Thomas A. Knowlton, Asst. Atty. Gen. (orally), Office of the Attorney General, Augusta, on the briefs, for appellant Board Of Bar Examiners.

Peter J. DeTroy, Esq. (orally), and Devin W. Deane, Esq., Norman, Hanson & DeTroy, LLC, Portland, on the briefs, for appellee F. Lee Bailey.

Panel: SAUFLEY, C.J., and LEVY, MEAD, GORMAN, JABAR and CLIFFORD, JJ.

Majority: LEVY, MEAD, GORMAN, and JABAR, JJ.

Dissent: SAUFLEY, C.J., and CLIFFORD, J.

LEVY, J.

[¶ 1] The Board of Bar Examiners appeals from the judgment of a single justice of the Supreme Judicial Court ( Alexander, J.) concluding that applicant F. Lee Bailey presently possesses the requisite good character and fitness required by M. Bar R. 7.3(j)(5) to be admitted to practice law in Maine.

[¶ 2] The Board advances several reasons in support of its position that the single justice erred in authorizing Bailey's admission to the Maine bar. 1 Because we conclude that the single justice erred with respect to the Board's principal assertion—that Bailey failed to prove by clear and convincing evidence that he recognizes the wrongfulness and seriousness of the misconduct that resulted in his disbarment—we vacate the judgment on that basis and do not reach the Board's other contentions.

I. BACKGROUND
A. Bailey's Representation of Claude Duboc

[¶ 3] In 1994, Bailey, who had practiced primarily as a criminal-defense attorney for many years, began defending Claude Duboc against charges of drug smuggling and money laundering and related claims for asset forfeiture in the United States District Court for the Northern District of Florida. Bailey was disbarred in Florida in 2001 due to misconduct in connection with his representation of Duboc, and was reciprocally disbarred in the state and federal courts of Massachusetts in 2003 and 2006, respectively. The Florida Supreme Court, in its decision ordering Bailey's disbarment, set out the following factual background based upon the findings of Circuit Judge Cynthia Ellis, who acted as the referee in the disbarment proceedings:

In 1994, Bailey represented Duboc in a criminal case filed against Duboc by the United States alleging violations of Title 21 of the United States Code, which prohibits drug smuggling. The indictment also included forfeiture claims under Title 18 of the United States Code. Bailey worked out a deal with the United States Attorneys (“U.S. Attorneys”) covering Duboc's plea, repatriation of assets, and payment of attorneys' fees. Under the agreement, Duboc would plead guilty and forfeit all of his assets to the United States Government. All of Duboc's cash accounts from around the world would be transferred to an account identified by the U.S. Attorney's Office. To deal with the forfeiture of Duboc's real and personal property, 602,000 shares of Biochem Pharma (“Biochem”) stock, valued at $5,891,352.00, would be transferred into Bailey's Swiss account. Bailey would use these funds to market, maintain and liquidate Duboc's French properties and all other assets....

The ultimate strategy employed by [Bailey] was that Duboc would plead guilty and forfeit all assets to the United States Government in the hopes of a reduction of sentence based on what Bailey described as “extraordinary cooperation.” First, Duboc would identify and transfer all cash accounts from around the world into an account identified by the United States Attorney's Office.

The forfeiture of the real and personal properties held in foreign countries presented some nettlesome problems. Duboc owned two large estates in France and valuable car collections, boats, furnishings and art works. Most of these properties were physically located in France. The two estates required substantial infusions of cash for maintenance.

The idea proposed by Bailey was to segregate an asset, a particular asset, one that would appreciate in value over time, so that when it came time for Duboc to be sentenced following entry of a plea of guilty, the United States Government would not argue in opposition to a defense claim that part of the appreciation in value was not forfeitable to the United States. Ultimately, the object was to sequester a fund which would not be entirely subject to forfeiture.

The identified asset was 602,000 shares of Biochem Pharma Stock. This would serve as a fund from which Bailey could serve as trustee and guardian of Duboc's French properties. Duboc's primary interest was to maximize the amount of forfeitures that would be turned over to the United States. This stock would provide a sufficient fund from which to market, maintain and liquidate the French properties and all other assets. Bailey explained that it would be prudent to hold the Biochem stock because the company was conducting promising research on a cure for AIDS, and the loss the government would suffer if large blocks of stock were dumped on the market.

Money was transferred immediately into a covert account identified by the United States Attorney's Office. Duboc provided written instructions to the various financial institutions and the orders were then faxed. On April 26, 1994, the Biochem stock certificates were transferred to Bailey's Swiss account at his direction. [Bailey] provided the account number.

On May 17, 1994, United States District Court Judge Maurice Paul held a pre-plea conference in his chambers. At the conference, the following arrangement as to attorneys' fees, including those for Bailey, was reached: “The remainder value of the stock which was being segregated out would be returned to the court at the end of the day, and from that asset ... a motion would be filed for a reasonable attorney's fee for Mr. Bailey.” Later in the day on May 17, Duboc pled guilty to two counts in open court and professed his complete cooperation with the U.S. Attorney's Office.

Florida Bar v. Bailey, 803 So.2d 683, 685–86 (Fla.2001) (per curiam) (quotation marks omitted) (alterations omitted).

[¶ 4] During the course of Bailey's management of Duboc's assets, the market value of the Biochem stock 2 increased significantly. After the stock was transferred to Bailey's Credit Suisse account in Switzerland, Bailey sold some shares and borrowed against the remaining shares, deriving over $4 million in proceeds. He then transferred over $3.5 million of the Biochem proceeds from the Credit Suisse account to his personal money market account, and by December 1995 he had transferred all but $350,000 of that amount to his personal checking account. From this personal account, Bailey wrote checks totaling over $2 million to his private businesses and nearly $1.3 million for personal expenses and purchases. Bailey also paid $138,946 from his money market account towards the purchase of a personal residence. Bailey used a substantial portion of the remaining funds to pay the expenses of maintaining and liquidating Duboc's French holdings.

[¶ 5] By late 1995, Duboc had become dissatisfied with Bailey's representation and filed a motion to substitute new counsel for Bailey. Five days before the scheduled hearing, Bailey sent a letter to Judge Paul without copying the prosecutors, Duboc, or Duboc's new attorneys. Bailey's letter referred to Duboc, in quotes, as a “multimillionaire druggie” and alleged, among other things, that Duboc's new attorneys had a conflict of interest and were giving Duboc harmful advice. At the end of the letter, Bailey acknowledged its ex parte nature: “I have sent no copies of this letter to anyone, since I believe its distribution is within Your Honor's sound discretion.”

[¶ 6] Following a hearing, Judge Paul entered an order on January 12, 1996, removing Bailey as Duboc's counsel. The order also froze all of Duboc's assets held by Bailey and required Bailey to submit a complete accounting of Duboc's money and property that he held in trust. Despite his knowledge of the January 12 order, Bailey thereafter spent over $300,000 of the Biochem proceeds for his own purposes. Judge Paul issued a second order on January 25, 1996, mandating that Bailey surrender all of the shares of the Biochem stock or any replacement assets, and prepare a full accounting of the assets he received from Duboc, including any disbursements he made from those assets. Bailey then notified the Swiss government that the Biochem shares and proceeds in his Swiss bank account were the fruits of drug trafficking, which resulted in the Swiss authorities freezing the account. As a result, Bailey did not surrender the stock or proceeds as he was required to do. Judge Paul subsequently scheduled a hearing to determine if Bailey should be held in contempt.

[¶ 7] At the contempt hearing held on February 2, 1996, Bailey testified under oath that he did not physically see the January 12 and January 25 orders until that very morning. Judge Paul held Bailey in contempt for violation of the orders, and ordered his incarceration until he could purge himself of contempt by producing the requested accountings and the stock, and repaying to the court the amount he had withdrawn. When Judge Paul determined that he had substantially complied with the court's contempt order, Bailey was released from incarceration after forty-four days.

[¶ 8] Ultimately, Judge Paul approved $1.2 million of the approximately $1.6 million in expenditures Bailey claimed to have made to manage Duboc's assets. Because Bailey had already spent more than the approved expenses, he was ordered to pay an additional $423,737 to the court. The court also ordered Bailey to return the sum that he had withdrawn from the Swiss account and spent for personal purposes. On appeal, the United States Court of Appeals for the Eleventh Circuit rejected Bailey's contention that Judge Paul was biased against him and should have been recused, and affirmed the court's allowance of...

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