Discipline of Benson, Matter of, C5-87-1989

• Decision Date: 04 November 1988
• Docket Number: No. C5-87-1989,C5-87-1989
• Citation: 431 N.W.2d 120
• Parties: In the Matter of the Application for the DISCIPLINE OF John T. BENSON, an Attorney at Law of the State of Minnesota.
• Court: Minnesota Supreme Court

Page 120

431 N.W.2d 120

In the Matter of the Application for the DISCIPLINE OF John T. BENSON, an Attorney at Law of the State of Minnesota.

No. C5-87-1989.

Supreme Court of Minnesota.

Nov. 4, 1988.

Candice M. Hojan, Office of the Lawyers Professional Responsibility, St. Paul, for appellant.

Jack S. Nordby, Minneapolis, for respondent.

Considered and decided by the court en banc without oral argument.

OPINION

PER CURIAM.

This petition for the discipline of respondent John T. Benson raises serious charges of misappropriation of an elderly client's funds through the use of invalid documents and subsequent conspiracy with a second attorney to alter the documents and present perjured testimony to make the documents appear valid. We have already dealt with aspects of the case in the disciplinary proceeding of the second attorney. In re Kaine, 424 N.W.2d 64 (Minn.1988). We now address the disciplinary petition brought against the instigating attorney and order his disbarment.

Respondent was admitted to the Minnesota bar in 1978. On November 10, 1987, this court temporarily suspended his license to practice law pending the outcome of the disciplinary proceeding. The petition and two supplementary petitions filed by the Director of the Board of Professional Responsibility on September 24, November 6 and December 4, 1987, allege eleven counts of misconduct which occurred between 1984 and the present time, while respondent was acting as attorney and trustee for an elderly client, Vivian Young.

A four-day hearing was held before a referee. The director called 23 witnesses and submitted numerous documentary exhibits. The respondent did not testify but thoroughly cross-examined witnesses and submitted depositions of two witnesses of his own. On February 22, 1988 the referee issued findings of fact, conclusions of law and a recommendation for discipline. The referee found the respondent had:

1) drafted documents to benefit himself without adequate disclosures, informed consent or independent legal counsel, in violation of DR 1-102(A)(6), DR 5-101(A) and DR 7-101(A)(3) of the Minnesota Code of Professional Responsibility (MCPR);

2) misappropriated client funds in violation of DR 1-102(A)(4) and (6), DR 7-101(A)(3), DR 9-102(A) and (B), MCPR, and Rules 1.15(a) and (b), 1.7(b) and 8.4(c), Minnesota Rules of Professional Conduct (MRPC);

3) made false certification to the Supreme Court regarding trust funds in violation of DR 1-102(A)(4) and DR 9-104(B) MCPR and Rules 1.15(h) and 8.4(c) MRPC;

4) induced a client through undue influence and fraudulent misrepresentation to sign a trust agreement drafted for his own benefit in violation of Rules 1.8(a) and (c) and Rule 8.4(c) MRPC;

5) violated fidiciary duties in forgiving his own debt, in violation of Rules 1.7(b) and 8.4, MRPC;

6) refused to account for assets in violation of Rules 1.15(b), 3.1, 3.4(a) and (d) and 8.4(d) MRPC;

7) altered and fabricated documents in violation of Rule 3.4(a) and Rules 8.4(a), (c) and (d) MRPC;

8) made false statements under oath in violation of Rules 3.3(a), 3.4(b), 8.1(a) and Rules 8.4(b), (c) and (d) MRPC;

9) conspired to alter documents and give false testimony, in violation of Rule 3.4(b) and Rules 8.4(a), (b), (c) and (d) MRPC;

10) failed to timely file income tax returns in violation of DR 1-102(A)(5) and (6) MCPR and Rule 8.4(d) MRPC;

11) failed to provide copies of his tax returns to the Director's office or to execute authorizations, violating Rule 8.1(a)(3) MRPC and Rule 25, Rules on Lawyers Professional Responsibility (RLPR);

12) falsely notarized a power of attorney in violation of DR 1-102(A)(3) and (4) and DR 7-102(A)(8) MCPR;

13) used the falsely notarized document in violation of DR 1-102(A)(4) and (6) MCPR and Rules 4.1 and 8.4(b) and (c) MRPC;

14) presented the falsely notarized document to the Director's office in violation of Rules 3.4(b), 8.1(a)(1) and 8.4(d) MCPR;

15) impeded the Director's investigation by concealing evidence of the alteration of the Young Trust in violation of Rules 3.4(a) and 8.4(b), (c) and (d) MRPC; and

16) failed to comply strictly with the terms of his temporary suspension in violation of Rule 26 RLPR, and Rules 3.4(c) 8.1(a)(3) and 8.4(d) MRPC. The referee found the lack of a previous disciplinary record to be the only mitigating factor. The referee recommended disbarment and assessed costs, disbursements and $2,800 in attorney fees against respondent.

Respondent ordered a transcript on March 1, 1988. Thus the referee's findings are not conclusive under Rule 14(e), RLPR. It is for us to determine whether the evidence supporting those findings of fact meets the clear and convincing standard of proof. In re Schmidt, 402 N.W.2d 544, 545 (Minn.1987). We have described this standard as requiring cogent and compelling evidence. Id.

Respondent filed a brief with this court, admitting the alteration of documents but insisting that the original documents were valid transfers of assets and reflected the wishes of Vivian Young. Less than one month after filing that brief, respondent pled guilty in Ramsey County Court to one felony count of theft by swindle and one felony count of perjury in a seven count felony complaint which arose out of his dealings with Vivian Young's assets. His sentences were stayed on condition that he serve one year in the workhouse with ten years' active probation and pay restitution in the amount of $207,000 to Vivian Young's guardian. Under Rule 19(a), RLPR, these convictions are conclusive evidence that respondent committed the conduct for which he was convicted. In addition, our careful review of the evidence presented at the hearing leads us to affirm the findings of the referee.

This case graphically presents a lawyer's capacity to do injury to vulnerable members of the public who rely on the lawyer in the handling of their assets. Vivian Young and her husband, John, were long-time family friends of the respondent. Just before John Young died of cancer on August 9, 1984, he asked respondent to care for Vivian's needs after his death. Purportedly as part of that arrangement, respondent drafted a September 1, 1984 agreement, signed by himself and Vivian Young. The agreement indicated that respondent was to care for Mrs. Young and would receive the bulk of her estate at the time of her death. Respondent also drafted an addendum to this agreement, dated September 10, 1984, although the date was not filled in until after June 25, 1987. This addendum appeared to give him the right "to use all assets of Vivian Young as they were his own," despite the lack of additional consideration. Vivian Young and respondent both signed this addendum.

Respondent drafted a power of attorney dated September 17, 1984, giving him the power "to sign for Vivian Young in all her financial matters." Vivian Young signed the power of attorney, which was purportedly notarized on September 17, 1984. The notarization stamp, issued in the name of William Bell, had been altered so as to obliterate the year, disguising the fact that the notary's commission had expired on February 27, 1984. William Bell did not notarize the document and the stamp was found in respondent's possession. A handwriting expert testified that the signature of the notary on this document was not the handwriting of William Bell but was consistent with respondent's handwriting. Respondent did not disclose to Vivian Young his adverse interests, nor did he arrange for independent counsel when drafting these three documents in his own interest.

Under the purported authority of these documents, respondent placed over $174,000 of Vivian Young's funds into his trust account between September 17, 1984 and April 27, 1987. Respondent loaned $40,000 of this money on an unsecured basis to a business associate, and loaned himself over $130,000 from Vivian Young's assets, but could not produce the promissory notes.

In 1984, 1985 and 1986, while respondent was appropriating these funds through his trust account, he falsely certified to this court that he did not handle client funds and so was exempt from the trust account rules.

In March 1987, Vivian Young broke her hip and was hospitalized. At that time her attending physician gave her a secondary diagnosis of senile dementia. She was placed in Trevilla nursing home to recuperate on April 13, 1987. During the period she resided at Trevilla, Vivian Young remained confused, sometimes becoming convinced that her husband was still alive, or that she was somewhere else than in the nursing home. During this time, respondent drafted a trust agreement placing all her assets in trust for the benefit of respondent, who was also named trustee. Respondent had Vivian Young sign the agreement on April 28, 1987, while she was incompetent, without benefit of independent counsel. Respondent represented the document as relating to her care, though as drafted, once the assets of Vivian Young were placed in trust they could not be used for her care but only for the benefit of respondent. After Vivian Young had signed the agreement, respondent manufactured two new pages, on June 25, 1987, naming his wife and children as trust beneficiaries and creating a schedule of assets to be included in the trust. Without a schedule, the document signed by Vivian Young was ineffective and could not transfer assets to the trust. Nevertheless, under the purported authority of the trust agreement, respondent transferred into the trust the promissory notes he had signed indicating he had borrowed $130,000 from Vivian Young. Then as trustee, he forgave the debt and destroyed the notes, cancelling his obligation to repay that money.

On April 30, 1987, respondent opened an account at Western State Bank titled "Vivian G. Young Trust," deposited over $32,000 of Vivian Young's funds, and then appropriated those funds to his own use. On June 18, 1987, or shortly thereafter, respondent unsuccessfully attempted...