Disciplinary Action against Anderley, In re

• Decision Date: 13 March 1992
• Docket Number: No. C5-91-801,C5-91-801
• Parties: In re Petition for DISCIPLINARY ACTION AGAINST David V. ANDERLEY, an Attorney at Law of the State of Minnesota.
• Court: Minnesota Supreme Court

Page 366

481 N.W.2d 366

In re Petition for DISCIPLINARY ACTION AGAINST David V. ANDERLEY, an Attorney at Law of the State of Minnesota.

No. C5-91-801.

Supreme Court of Minnesota.

March 13, 1992.

Syllabus by the Court

Disbarment is appropriate sanction for attorney who defrauded his client by fabricating and collecting a claim against his insurance company client and converting the settlement proceeds to his personal use.

William J. Wernz, Director of the Office of Lawyers Professional Responsibility, Kenneth L. Jorgensen, Sr. Asst. Director, St. Paul, for appellant.

Jack S. Nordby, Meshbesher & Spence, Ltd., Minneapolis, for respondent.

Heard, considered, and decided by the court en banc.

OPINION

PER CURIAM.

On June 7, 1991, we temporarily suspended respondent David V. Anderley from the practice of law pending a final determination in these disciplinary proceedings. A referee's hearing was held in July 1991 on the two charges of misconduct, viz (1) fraud, theft and forgery, and (2) trust account violations. The matter is now before us on the referee's report and recommendation of disbarment.

Respondent was admitted to the Minnesota bar in 1979. He first worked as an associate in a general practitioner's office. From 1980 to 1985, he was general counsel to Lakeland Insurance Company. He then was in-house counsel for Western National Insurance Company for two months. In mid-1985, respondent began a solo practice consisting primarily of insurance defense matters for Lakeland and Western National.

In September 1990, respondent devised an elaborate scheme to defraud Lakeland Insurance Company. Using information and documents from Lakeland and Western National files in his possession, respondent fabricated a fire loss claim against one of Lakeland's insureds. Respondent based the claim on an actual lawsuit against Western National which he had handled in 1987.

Respondent made many alterations to documents, misrepresentations, and forgeries. He fabricated a summons and complaint and forged the signature of the plaintiffs' attorney on the documents. He falsely represented to Lakeland that the defendant's leaving Minnesota after the fire had tolled the statute of limitations, and thus the claim was not time-barred. He fabricated papers for a third-party claim. He altered answers to interrogatories, depositions, the fire investigation report, and other documents from the 1987 suit to conform to the fabricated claim.

Lakeland gave respondent authority to settle the case, and in October 1990 respondent told Lakeland that he had settled the claim for $48,500. Respondent forged the signatures of the plaintiffs and their attorney on the settlement check and deposited it into his trust account. He then altered the release papers by substituting the signature pages from the signed release in the earlier 1987 case. Respondent also billed Lakeland $974 for services and costs in handling the fictitious claim. Respondent used the settlement proceeds to pay his office expenses and to retire a $12,800 note he owed to a creditor of a restaurant in which he had an ownership interest.

Respondent's fraud was uncovered in April 1991 when, as part of an internal audit, Lakeland wrote the purported plaintiffs for verification of the settlement. Initially, respondent denied any wrongdoing and attempted to put the blame first on a fictitious associate, and then on another attorney who had formerly worked in the same office building and had been disbarred. Lakeland filed an ethics complaint against respondent and forwarded the matter to law enforcement authorities. On April 30, 1991, respondent made partial restitution of $40,000. Subsequently, respondent pled guilty to mail fraud in federal court and was sentenced to three years of probation (upon certain conditions, including full restitution and participation in substance abuse programming).

The second count of misconduct relates to trust account violations. The referee found that, since 1985, respondent had failed to maintain client subsidiary ledgers. Moreover, while respondent did maintain a separate cash receipts and disbursements journal, he has not reconciled the trust account for at least 2 years. During this period, respondent commingled personal funds and client funds by often keeping a "buffer" of about $2,000 of his own funds in the trust account. Since 1985, respondent has falsely certified on his annual attorney registration statement that he has kept the required trust account books and records.

Respondent puts forth as mitigating factors his alcohol abuse and financial difficulties. Respondent testified that he started drinking while in high school and since college has been drinking very heavily. He tried to cut back a few times, but failed. Over the past few years, respondent says he went to a bar near his office daily and usually stayed until closing; however, he did not drink at home or at his office, he did not drive after drinking, he never blacked out, and he never missed a legal deadline or had a client complain due to his alcohol abuse.

In late 1989, respondent and a business partner opened a bar and restaurant. A year later, respondent began getting letters from creditors and discovered that his partner had not been paying the business debts and was keeping two sets of books. Some creditors filed suit. Respondent had personally guaranteed some of the loans, and he testified that he thought he needed a lot of money to pay off the club's debts. Respondent was not behind in his own expenses (car payments, mortgage, office rent), and he consistently earned between $30,000 and in excess $50,000 annually from his law practice.

Respondent devised the fraudulent scheme during the time of the financial problems with the club. Respondent testified that he was overwhelmed by the club's problems, that he was drinking himself "into oblivion," and he was looking for an "easy way out." Respondent testified that after Lakeland filed its complaint with the Director's office, he consulted Dr. Carleton Anderson, a physician who practices addiction medicine. Respondent stopped drinking soon after his first meeting with Dr. Anderson and began regularly attending Alcoholics Anonymous meetings in addition to his meetings with Dr. Anderson.

Dr. Anderson diagnosed respondent with psychoactive substance use disorder, chronic alcoholism-active, and "probable" chronic anxiety disorder. Dr. Anderson testified that, in his opinion, respondent's alcoholism "triggered an addictive disease process characterized by dishonesty" and that the addictive disease process caused the fraudulent behavior. The doctor based his diagnosis solely on what respondent told him, and he admitted that he did not know some seemingly basic facts about respondent's alcoholism and about the misconduct that prompted the complaint.

The referee concluded that respondent's conduct violated several of the Minnesota Rules of Professional Conduct (MRPC) regarding handling of client funds, honesty, and using client confidences to the lawyer's own advantage. ¹ The referee also concluded that respondent failed to show by clear and convincing evidence that alcoholism should be considered a mitigating factor in determining the appropriate discipline. The referee recommended disbarment, noting that respondent's misconduct was due to his financial worries, not alcoholism.

This court determines appropriate sanctions on a case-by-case basis by examining the specific acts of misconduct together with any aggravating or...