Fla. Bar v. Swann

• Decision Date: 20 June 2013
• Docket Number: No. SC11–836.,SC11–836.
• Parties: THE FLORIDA BAR, Complainant, v. Henry T. SWANN, III, Respondent.
• Court: Florida Supreme Court

116 So.3d 1225

THE FLORIDA BAR, Complainant,

v.Henry T. SWANN, III, Respondent.

No. SC11–836.

Supreme Court of Florida.

June 20, 2013.

John F. Harkness, Jr., Executive Director, and Kenneth Lawrence Marvin, The Florida Bar, Tallahasse, FL, and Frances R. Brown–Lewis, Bar Counsel, The Florida Bar, Orlando, FL, for Complainant.

James C. Rinaman, Jacksonville, for Respondent.

PER CURIAM.

We have for review a referee's report recommending that Respondent Henry T. Swann, III, be found guilty of professional misconduct and suspended for ninety-one days. The Florida Bar has filed a petition for review of the report, asking the Court to disapprove the referee's recommended sanction and instead disbar Swann from the practice of law. Respondent Swann has filed a cross-petition for review. We have jurisdiction. Seeart. V, § 15, Fla. Const. As discussed below, we approve the referee's findings of fact and recommendations as to guilt. However, we disapprove the referee's recommended discipline. We conclude that Swann's extensive misconduct, and the often egregious nature of the misconduct, warrant disbarment.

FACTS

In April 2011, The Florida Bar filed a five-count complaint against Respondent Swann, alleging that he engaged in misconduct in violation of several of the Rules Regulating the Florida Bar (Bar Rules). A referee was appointed to consider the matter. Following a hearing, the referee submitted his report for the Court's review, in which he makes the following findings and recommendations.

Count I

Count I involves Swann's conduct as the personal representative for his father's estate, of which Swann's mother was the sole beneficiary. Beginning in 2003, Swann used $463,429 from his father's estate to make several investments, particularly investments in four real estate properties. During the final hearing before the referee in this case, Swann testified that he borrowed this money from his mother as a personal loan. However, despite the large sum of money involved, Swann did not create any written documentation to memorialize the loan or its terms. Moreover, the referee found that at various times before the final hearing, Swann gave a different explanation for his use of the estate's funds. In a letter he sent to the Bar responding to a Bar inquiry, Swann stated that, as the personal representative for his father's estate, he was authorized to invest estate funds for the benefit of the beneficiary. Similarly, during a 2005 deposition that Swann gave during his divorce proceedings, he testified under oath that he invested the $463,429 on his mother's behalf so that there would be sufficient funds for her continued care. Swann claimed that his investments had substantially increased his mother's money. However, the referee found there was no evidence that Swann paid his mother (or his father's estate) any of the profits from these real estate investments.

Swann repaid $400,000 to his father's estate in August 2005. He claimed that the remaining $63,429 was used to pay his mother's bills. However, the referee found that Swann's assertion was not supported in the evidence; the estate's account records do not reflect a deposit of $63,429.

As noted, Swann used the money from his father's estate to purchase four investment properties. Significantly, the referee found that Swann structured these real estate transactions in such a way as to confuse true ownership of the money and assets involved. The first of these real estate investments occurred in April 2003. Swann used estate funds to purchase a property identified as the Coquina Key property. Swann purchased Coquina Key in the name of Beach Street Properties, a limited liability company that he wholly owned and controlled. Immediately after purchasing the property, Swann conveyed Coquina Key to himself individually. Thereafter, he used Coquina Key to obtain a personal loan from Washington Mutual Bank (the Washington Mutual loan).

Subsequently, in 2003 and 2004, Swann used funds from his father's estate to purchase the second and third investment properties, known as Surf Club and Atlantic View, respectively. Swann purchased Surf Club in his own name; he purchased Atlantic View in the name of Beach Street Properties. Swann later sold both properties for a profit. During his deposition in his divorce case, Swann testified under oath that he credited the profits from the sale of the Surf Club property to his father's estate. However, the referee found there was no evidence to substantiate this claim.

In June 2004, Swann sold Coquina Key (his first investment property). Swann acted as the closing agent for the sale. He received $32,055 in cash at the closing and took a wrap-around mortgage from the buyers for $535,000. The referee found that the existing Washington Mutual loan on Coquina Key had a clause providing that the mortgage held by Washington Mutual Bank was assumable only with the bank's prior approval. Nonetheless, Swann did not notify Washington Mutual of the sale.

The Coquina Key buyers fully paid the wrap-around mortgage in May 2005. Although Swann should have used these funds to satisfy the Washington Mutual loan, he did not do so. Instead, in August 2005 Swann used proceeds from the sale of a separate property (the Ocean Hammock property) to pay the loan. The referee found that Swann misused the funds intended to satisfy the Washington Mutual loan for his own purposes and violated his fiduciary duties as closing agent.

In October 2004, Swann purchased the fourth investment property, the Ocean Hammock property, using at least some funds associated with his father's estate. Swann purchased the property in his own name. He then used Ocean Hammock to secure a loan from the Bank of St. Augustine (the Bank of St. Augustine loan).

Subsequently, in July 2005, Swann sold Ocean Hammock to Green Ville, LLC, a limited liability corporation owned by Swann's client, Christiane Martinot. Although the company was owned by Martinot, it is clear that during this period Swann actually controlled the company and directed Martinot's actions related to these real estate transactions. Swann did not notify Bank of St. Augustine that he transferred Ocean Hammock to Green Ville, LLC. Shortly after the property was transferred, Martinot, on behalf of Green Ville, executed a mortgage in favor of Swann's father's estate for $400,000, secured by Ocean Hammock. This was the first time that Swann took any action to secure the money he borrowed from the estate.

In August 2005, Swann prepared a subsequent deed transferring Ocean Hammock from Green Ville, LLC to K.R.H. Investments, LLC, a limited liability corporation owned and controlled by Swann; the Articles of Incorporation for the company name Swann's girlfriend, Khadija Rhoualmi, as the registered agent and manager. Swann again failed to notify the Bank of St. Augustine of the transfer.

Immediately after Swann transferred the Ocean Hammock property to K.R.H. Investments, K.R.H. Investments sold the property to E.C.N. Properties, LLC (a company independent from Swann). Swann used some of the proceeds from the sale to pay off the Washington Mutual loan. He also used $400,000 from the proceedsto satisfy the mortgage on Ocean Hammock held by his father's estate.

Based on these facts, the referee found that Swann, as personal representative for his father's estate (and as attorney-in-fact for his mother), utilized estate funds as if they were his own and extensively commingled estate assets with his own in such a manner as to obscure true ownership of the investments and the profits from the investments. Swann's actions had the potential, if not the actual effect, of jeopardizing the money needed for his mother's care. Accordingly, the referee recommends that he be found guilty of violating the following Bar Rules: 3–4.3 (the commission by a lawyer of any act that is unlawful or contrary to honesty and justice, whether the act is committed in the course of the attorney's relations as an attorney or otherwise, may constitute a cause for discipline); 4–1.7(a) ¹ (a lawyer shall not represent a client if there is a substantial risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client or a third person or by a personal interest of the lawyer); 4–3.4(a) (a lawyer shall not unlawfully obstruct another party's access to evidence or otherwise unlawfully alter, destroy, or conceal a document or other material that the lawyer knows or reasonably should know is relevant to a pending proceeding); 4–8.4(a) (a lawyer shall not violate the Rules of Professional Conduct); 4–8.4(c) (a lawyer shall not engage in conduct involving dishonesty, fraud, deceit, or misrepresentation); and 4–8.4(d) (a lawyer shall not engage in conduct in connection with the practice of law that is prejudicial to the administration of justice).

Count II

Count II concerns Swann's relationship with Khadija Rhoualmi, and his involvement in her actions to emotionally and financially exploit one of Swann's clients, William Shelton. Rhoualmi is a Moroccan citizen; during the period of time at issue in this case, she was living in Florida. Swann met Rhoualmi in 2003 and hired her to clean his office. He also assisted Rhoualmi with her application for United States citizenship. The two took several trips together while Swann was married, including visits to the Virgin Islands, Las Vegas, and New Orleans. Swann has stated that he and Rhoualmi had an “adult relationship” during this period; the referee found that they were sexually involved.

In April 2005, Rhoualmi referred Shelton, who was seventy-one years old at the time and in poor physical and mental health, to Swann, purportedly for help with a zoning matter related to a nursery that Shelton owned (the nursery property). Shelton paid Swann $1,000 for his legal services.

About a week after meeting with Swann, Shelton suffered a...