Disciplinary Action Against Larsen, In re

• Decision Date: 27 July 1990
• Docket Number: No. C0-89-1404,C0-89-1404
• Citation: 459 N.W.2d 115
• Parties: In re Petition for DISCIPLINARY ACTION AGAINST Dean D. LARSEN, an Attorney at Law of the State of Minnesota.
• Court: Minnesota Supreme Court

Page 115

459 N.W.2d 115

In re Petition for DISCIPLINARY ACTION AGAINST Dean D. LARSEN, an Attorney at Law of the State of Minnesota.

No. C0-89-1404.

Supreme Court of Minnesota.

July 27, 1990.

Syllabus by the Court

The misconduct warrants disbarment.

William J. Wernz, Director of the Office of Lawyers' Professional Responsibility, Wendy Wilson Legge, Sr. Asst. Director, St. Paul, for appellant.

William C. Pribble, Jr., Minnetonka, for respondent.

Heard, considered and decided by the court en banc.

PER CURIAM.

Following a 4-day hearing, Judge Jack J. Litman, referee, found that respondent Dean D. Larsen had violated certain Rules of Professional Conduct and recommended disbarment. The most serious misconduct grew out of respondent's handling of the financial affairs of his mother's elderly cousin, Mollie Miller.

The Director of the Professional Responsibility Board must prove misconduct by clear and convincing evidence. In re Schmidt, 402 N.W.2d 544, 545 (Minn.1987). This court will not set aside the findings of a referee in a disciplinary action unless they are clearly erroneous. The court has deferred to the referee's findings when they rested on disputed testimony or in part upon respondent's demeanor, credibility or sincerity. In re Ruhland, 442 N.W.2d 783, 786 (Minn.1989); see also In re Daffer, 344 N.W.2d 382, 386 (Minn.1984). Respondent ordered a transcript, hence the referee findings and conclusions of law are not deemed conclusive but are subject to our review. Rule 14(e), Rules on Lawyers Professional Responsibility; In re Peterson, 456 N.W.2d 89, 90 (Minn.1990).

Misappropriation

Respondent was retained by Ms. Miller, his mother's cousin, whom he had known since childhood, in early 1985 to prepare her will and determine the status of some of her assets. At the time, she was 88 years old and in good mental health. Respondent accepted a retainer for his work for which he charged a "family" rate of $75 per hour. In reviewing her assets, respondent discovered that Ms. Miller had approximately $165,000 in cash, savings, and certificates of deposit in addition to some stock and her home. After discovering that Ms. Miller had the ability to pay, respondent raised his fee for his work under the power of attorney to $100 per hour.

In March 1985, at Ms. Miller's request, respondent prepared a power of attorney appointing himself Ms. Miller's attorney in fact which Ms. Miller and respondent executed in April 1985. ¹ Ms. Miller retained signatory power over her checking account, and continued to write checks on this account for small items. She also received her social security checks and a friend assisted her in managing this money.

Ms. Miller moved from her home to Heritage House, an assisted living facility, in March 1985. In April 1988, because of her deteriorating physical condition, she was transferred to Colonial Acres Health Care Center (Colonial Acres), a related nursing home. She was placed in a private room on the special care unit. She was hospitalized on March 25, 1989 and readmitted to the Colonial Acres Medicare unit on April 4, 1989. When her medicare coverage ran out, she was transferred to a semi-private room in a less expensive wing on April 13, 1989. She died May 23, 1989.

During the time respondent had power of attorney, he wrote 134 checks on Ms. Miller's account. Of these checks, 84 were payable to himself, one was used to pay his office telephone bill and the remaining 49 were paid to creditors of Ms. Miller.

From July 1985 through November 1988, respondent wrote checks to himself on Ms. Miller's account for approximately $90,000. He claims $50,000 of this amount was for a loan which Ms. Miller had authorized and the balance of approximately $40,000 was for fees for his services during this period.

The evidence was undisputed that respondent failed to pay Ms. Miller's bills in a timely fashion. Respondent represented to the nursing homes and others that he would pay the nursing home and pharmacy bills, but he did not pay a single monthly Colonial Acres bill. Because the Colonial Acres bill was not paid, Miller was transferred from a wing of the hospital which she preferred to a less expensive room in the facility. Respondent failed to pay Ms. Miller's pharmacy bill for several months. The pharmacy refused to fill prescriptions for Ms. Miller until Colonial Acres' management guaranteed the payment. When respondent did pay the pharmacy bill, an overdraft resulted in Ms. Miller's account of $450 which respondent never rectified. As a result, the bank closed the account. In addition, respondent did not pay property taxes on Ms. Miller's home in 1988 and 1989 even after receiving the real estate tax notices.

When Ms. Miller died, she owed Colonial Acres over $55,000 including late charges accruing at 18 percent per year. In assets, she had her home, some stock, $4,109 from social security checks and $6,613.74 in a time deposit account. Respondent had no access to either the social security money or the time deposit account.

Even though Miller's nursing home bills were not being paid in a timely fashion, respondent continued to write checks to himself on her account. Between April 1988 and March 1989, when her nursing home bills were not paid, respondent transferred $8,000 to himself. Two of these checks were designated "loan" either in Larsen's bank statement or the deposit slip for the check.

On fourteen occasions respondent made early withdrawals at penalty from Miller's certificates of deposits and then used all or part of these funds to write checks to himself. Respondent also paid his office telephone bill of $92.68 with one of Ms. Miller's checks.

The major factual dispute is whether respondent misappropriated all or a portion of the $90,000 which he withdrew from Ms. Miller's account. Respondent maintains that approximately $50,000 represented loans which Ms. Miller approved and for which respondent gave Ms. Miller demand notes. ² Respondent always met in private with Ms. Miller to discuss her business so there were no witnesses to any of these discussions. The respondent claims that pursuant to Ms. Miller's oral authorization, he wrote checks to himself as and when he needed the money between April 15, 1986 and January 21, 1988 which came to a total of $50,025. Respondent testified that he gave Ms. Miller five unsecured demand notes between April 1986 and August 1987 totaling $50,000, plus 10 percent interest. These notes "rolled over" as the amounts of the loans supposedly increased. These original notes were never found among Ms. Miller's personal property following her death.

Respondent provided the Director with two sets of copies of the demand notes. Respondent claims that one set was a file copy of the original set which he gave to Ms. Miller. When this disciplinary proceeding was instituted, he made an additional copy of the file copies. He testified he made the last set on the copier at his new office to which he moved in December 1988. He did not have access to that copier before that date. He provided the Director with both copies during June 1989. Respondent claimed that one set is a photocopy of the other.

The Director produced expert testimony disputing respondent's version of how the copies were made. The expert based her testimony on photocopier marks or "trash marks" found on the copies. ³ Such marks left by dirt on the glass and/or the drum can be unique to each copier. The expert testified that contrary to respondent's testimony, one set of notes was not a copy of the other. Rather, both sets were probably made on the same copier at the same time from a different set of documents. Thus, the two sets in evidence were apparently made on a copier to which respondent had no access until after the dates on the demand notes. The expert also concluded that the original demand notes must have been executed after December 1988, although the dates of the documents were between 1986 and 1987. Thus, respondent must have falsified the documents.

The referee found the respondent's testimony was not credible and that the expert testimony did undercut respondent's credibility concerning the way in which the copies in the Director's custody were produced.

Other evidence supports the referee's finding that respondent misappropriated Ms. Miller's money. Before the first demand note, respondent wrote a check (number 1030) to himself from Ms. Miller's account for $1,000. Respondent testified at the referee hearing that the check represented anticipated fees. However, the "memo" section of the check bears the words "secured loan" which respondent testified he put in because he thought it was "cute." He also wrote another check (number 1040) to himself for $1,000 before the first demand note with "loan" written into the memo section. Respondent was impeached with his own testimony from an earlier panel hearing wherein he stated that the checks were "probably" loans. Respondent also alleged that a later $5,000 check (No. 1139) represented "anticipated fees." However, he wrote the word "loan" on his bank statement next to the deposit entry for this check. Another $500 check (number 1144) was ostensibly for "fees;" however, respondent wrote "MAM Loan" on his copy of the deposit slip for this check. All of these checks were beyond the $50,000 in loans which Ms. Miller allegedly authorized.

On ten occasions, respondent made early withdrawals at penalty from Ms. Miller's time deposit accounts and used all or part of these funds to write checks to himself, which were allegedly loans from Ms. Miller. Ms. Miller never gave written permission for respondent to make any of these early withdrawals. Ms. Miller was a frugal person. The referee found it not credible that Miller authorized respondent to borrow these funds. The referee also found not credible respondent's assertion that Ms. Miller never demanded payment of the purported demand notes. The notes included a 10...