Discipline of Olkon, Matter of, 85-5140

• Decision Date: 08 July 1986
• Docket Number: No. 85-5140,85-5140
• Citation: 795 F.2d 1379
• Parties: In the Matter of the Application for the DISCIPLINE OF Ellis OLKON, an Attorney at Law of the State of Minnesota, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1379

795 F.2d 1379

In the Matter of the Application for the DISCIPLINE OF Ellis

OLKON, an Attorney at Law of the State of

Minnesota, Appellant.

No. 85-5140.

United States Court of Appeals,

Eighth Circuit.

Submitted Dec. 13, 1985.

Decided July 8, 1986.

Theodore J. Collins, St. Paul, Minn., for appellant.

Jon M. Hopeman, Asst. U.S. Atty., Minneapolis, Minn., for appellee.

Before ROSS, Circuit Judge, BRIGHT, Senior Circuit Judge, and BOWMAN, Circuit Judge.

BRIGHT, Senior Circuit Judge.

Attorney Ellis Olkon appeals a district court ¹ order denying his petition for reinstatement to practice before the federal bench and restricting his right to apply for reinstatement in the future. On appeal, Olkon contends, inter alia, that the district court erred in finding that he failed to prove sufficient rehabilitation to practice. Olkon also contests the district court's reliance on a report by the United States Attorney's Office, recommending denial of the readmission petition, without a full hearing. Olkon asserts that the United States Attorney based the report on unsubstantiated hearsay, including secret grand jury materials unavailable to Olkon, and that the United States Attorney was biased against Olkon. For the reasons set forth below, we affirm with a modification relating to Olkon's privilege to reapply for reinstatement to practice in the federal courts.

I. BACKGROUND.

On September 20, 1979, the Hennepin County District Court convicted attorney Ellis Olkon of two counts of attempted theft, sentenced him to five years of probation, and imposed a $10,000 fine. The court found that Olkon had attempted to defraud two insurance companies by presenting personal injury claims of a client whom Olkon knew was not injured. State v. Olkon, 299 N.W.2d 89 (Minn.1980), cert. denied, 449 U.S. 1132, 101 S.Ct. 954, 67 L.Ed.2d 119 (1981). As a result of his conviction, the Minnesota Supreme Court temporarily suspended Olkon from practice before the state bar on March 30, 1980. In re Petition for Disciplinary Action Against Ellis Olkon, 324 N.W.2d 192 (Minn.1982). The Minnesota Supreme Court allowed Olkon automatic reinstatement to the practice of law, without further investigation, upon completion of his criminal probation. Id. at 196. ²

On May 12, 1980, the United States District Court for the District of Minnesota indefinitely suspended Olkon from practice in federal court pursuant to District of Minnesota Rule of Practice 1.F.1 which provides in pertinent part: "Any member of the bar of this court who has been suspended or disbarred from the bar of the State of Minnesota * * * shall * * * be suspended from practice before this court."

From 1980 until June of 1984, two grand juries investigated the activities of one of Olkon's former clients, Robert Daniel Bahler, who ran an out-call massage service suspected to be a front for a prostitution ring. Because a member of the United States Attorney's Office in the District of Minnesota admitted patronizing the "massage" service, the United States Attorney's Office for the District of Minnesota did not participate in the investigation of this matter. The investigation led to Bahler's arrest and thereafter, he began to actively cooperate with the FBI. At the close of the investigation the government sought no indictments on the basis of the grand juries' findings.

After Olkon served his criminal probation, the Minnesota Supreme Court readmitted him to practice before the state bar without further investigation. In re Petition for Disciplinary Action Against Ellis Olkon, 345 N.W.2d 247 (Minn.1984). On March 8, 1984, Olkon petitioned for readmission to the federal bar. In support of his petition, Olkon submitted affidavits of attorneys Steven Goldfarb and Nancy Olkon (Olkon's wife) attesting to Olkon's legal abilities, good character, and general reputation as a honest, law-abiding citizen.

District of Minnesota Rule of Practice 1.G.1 provides in part: "The United States Attorney shall investigate the facts alleged in the petition for reinstatement and shall present to the court * * * any facts in support of or against the granting of the said petition." Pursuant to this rule, the United States Attorney's Office for the District of Minnesota conducted an investigation of Olkon's character and fitness for readmission to the federal bar. The United States Attorney's Office submitted to the court a report based upon FBI reports, transcripts of wiretap conversations, personal interviews, and material relating to the grand juries' investigation of Olkon's former client, Bahler. The United States Attorney's Office requested and received from the court two continuances of the deadline for this report.

In its report, the United States Attorney's Office recommended denial of Olkon's petition for readmission based on evidence of unethical conduct unrelated to Olkon's conviction. The report alleged, inter alia, that Olkon: knowingly advised clients how to avoid arrest for prostitution; knowingly referred women clients, who were unable to pay his fee, to work for a massage/prostitution service; and practiced law after his suspension from the state and federal bars. Olkon submitted a response to the United States Attorney's report, denying the derogatory allegations and explaining his conduct.

At a hearing conducted by the district court on December 12, 1984, Olkon made a motion to strike the United States Attorney's report on grounds that: (1) he had no access to the grand juries' materials on which the United States Attorney relied; (2) the United States Attorney's Office, in bad faith, delayed in filing the report and releasing a copy to Olkon; and (3) the United States Attorney's Office had a conflict of interest and a bias against Olkon due to the public disclosure that a member of the office had patronized Bahler's massage/prostitution services. The district court denied Olkon's motion to strike and offered him the opportunity of a continuance and a full hearing of the matter. The court noted that if Olkon opted for a hearing, discovery would be available but would not necessarily include access to the grand juries' materials. Olkon waived the offer of a continuance and a future hearing, and asked the court to consider the petition on the record before it. Olkon testified that he was of good moral character and guilty of no crimes, and presented no other witnesses.

Concluding that Olkon failed to establish sufficient rehabilitation to practice in federal court, the district court denied Olkon's petition for reinstatement. Petition of Olkon, 605 F.Supp. 784 (D.Minn.1985). In addition, the district court denied Olkon the right to reapply for readmission to the federal bar for four years. Id. at 792. Subsequently, the district court denied Olkon's motion to reconsider. This appeal followed.

II. DISCUSSION.

Olkon contests the district court's disciplinary order on a number of grounds. In considering Olkon's claims, we must first consider the fairness of the disciplinary proceedings. See In re Ruffalo, 390 U.S. 544, 550, 88 S.Ct. 1222, 1225-26, 20 L.Ed.2d 117 (1968); In re Rhodes, 370 F.2d 411, 413 (8th Cir.), cert. denied, 386 U.S. 999, 87 S.Ct. 1321, 18 L.Ed.2d 349 (1967). We then determine whether substantial evidence supports the district court's findings. See Hertz v. United States, 18 F.2d 52, 57 (8th Cir.1927). Finally, we review the terms of the disciplinary order for abuse of discretion. Standing Committee on Discipline of the United States District Court for the Southern District of California v. Ross, 735 F.2d 1168, 1172-73 (9th Cir.1984) (citations omitted).

A. Olkon's Due Process Claim.

Olkon contends that the basic issue before this court is whether the district court afforded him due process in considering his petition for readmission to federal practice. Olkon raises two major allegations as to this issue. First, Olkon argues that the district court erred in not granting his motion to strike the report of the United States Attorney's Office because the report was prepared in bad faith and was the product of bias against Olkon. Essentially, Olkon asserts that the United States Attorney's Office delayed in submitting its report to the district court in order to obtain unfavorable evidence against him from secret grand juries' materials unavailable to Olkon. The investigation of Olkon's former client, Bahler, caused the United States Attorney's Office great embarrassment because a member of the office admitted patronizing Bahler's allegedly illegal operations. Due to a possible conflict of interest stemming from this situation, the United States Attorney's Office recused itself from the investigation of Bahler's activities. Consequently, Olkon asserts, the United States Attorney's Office had a similar conflict of interest in investigating his character and fitness to practice before the federal bench. Olkon further contends that the United States Attorney's Office failed to conduct a complete investigation, and that the delay in preparation as well as the evidence in the report demonstrate the United States Attorney's Office bias against him.

We reject this contention because Olkon failed to demonstrate to this court or the district court the existence of a conflict of interest or bias on the part of the United States Attorney's Office. In preparing the report, the United States Attorney's Office merely performed its duty under Local Rule 1.G.1 to investigate and report any facts in support of or against Olkon's reinstatement to practice. Furthermore, prior to seeing the report, Olkon raised no objection to the United States Attorney's role in preparing it.

After carefully reviewing the report, we conclude that it contains no improper bias against Olkon. The information in the report weighs heavily against Olkon's petition for readmission, but the United States Attorney's Office clearly did not manufacture the evidence. Moreover, had the report reflected...