Florida Bar v. Watson

Citation76 So.3d 915
Decision Date08 December 2011
Docket NumberNo. SC09–2022.,SC09–2022.
PartiesTHE FLORIDA BAR, Complainant, v. William Bedford WATSON, III, Respondent.
CourtUnited States State Supreme Court of Florida

OPINION TEXT STARTS HERE

John F. Harkness, Jr., Executive Director, Kenneth Lawrence Marvin, Staff Counsel, and James A.G. Davey, Jr., Bar Counsel, The Florida Bar, Tallahassee, FL, for Complainant.

John A. Weiss, P.A., Tallahassee, FL, for Respondent.

PER CURIAM.

We have for review a referee's report recommending that William Bedford Watson, III, be found guilty of professional misconduct and suspended from the practice of law for ninety days. We have jurisdiction. See art. V, § 15, Fla. Const. We approve the referee's findings of fact. For the reasons discussed herein, we disapprove the referee's recommendation that Watson be found not guilty of violating Rule Regulating the Florida Bar 4–8.4(c). We find that Watson is guilty of three violations of the rule. We approve the referee's recommendations that Watson be found guilty of four violations of rule 5–1.1(b). We disapprove the referee's recommended sanction of a ninety-day suspension and instead impose a three-year suspension, effective, nunc pro tunc, October 1, 2009.1

FACTS

The Florida Bar filed a disciplinary complaint, with four counts, alleging that Respondent Watson engaged in financial transactions that violated the Rules Regulating the Florida Bar. The Bar contended that Respondent engaged in misconduct involving dishonesty, fraud, deceit, or misrepresentation in disbursing third-party funds from his trust account and that he did not apply the funds he held in trust to the specific purpose for which they were intended.

Count I addressed a transaction involving Steven Hooks, asserting violations of rules 4–8.4(c) (a lawyer shall not engage in conduct involving dishonesty, fraud, deceit, or misrepresentation) and 5–1.1(b) (money or other property entrusted to an attorney for a specific purpose is held in trust and must be applied only to that purpose). Count II alleged a violation of rule 5–1.1(b) based on a transaction involving Karl Brown. Count III presented a transaction involving Marian Reid, asserting violations of rules 4–8.4(c) and 5–1.1(b). Count IV alleged a violation of rule 5–1.1(b) based on a transaction involving Brandon Bury. A referee was appointed who held hearings and submitted a report to the Court making the following findings and recommendations.

Phil Walton, Jason Meyer, and Navin Subramaniam–Xavier. Respondent has provided legal services to Phil Walton numerous times since 2002 or 2003. According to testimony, Walton makes his living through commercial transactions that assist individuals in obtaining financing for projects.

Jason Meyer is a developer. In 2007 and 2008, Meyer requested Walton's assistance in obtaining a “financing device” that they referred to as a “standby letter of credit.” The witnesses were not consistent in explaining how this financing device was supposed to function in their situation, but testimony indicates it was sought to assist Meyer in funding a development project. As Meyer was having difficulty obtaining the standby letter of credit, Walton suggested that Meyer contact Respondent, who had experience handling “international transactions, transactional funding, and large real estate projects.” Report of Referee at 2–3. In January 2008, Meyer asked Respondent to represent him in seeking the standby letter of credit. Respondent accepted the responsibilities, although he never personally met Meyer—all of their contact was by telephone or email.

Respondent determined that a standby letter of credit had been issued but had not been funded. In an effort to obtain funding, Meyer asked Walton to seek aid from Navin Subramaniam–Xavier, who was in Florida working as a commodity trader and investor. Based on the testimonies, Meyer needed to raise money to serve as collateral that would convince a bank to issue a standby letter of credit. Thus, Meyer was seeking investors to place their funds into an account, which would serve as the demonstrated collateral. It was determined that the investors' funds would be held in Respondent's trust account. The investors were informed that their monies would be returned to them, with exceptional interest, within a few days.

Meyer introduced Respondent to Subramaniam–Xavier during a telephone conversation. Subsequently, Respondent and Subramaniam–Xavier had numerous telephone conversations throughout January 2008 concerning Subramaniam–Xavier's potential investment in Meyer's project. Respondent told Subramaniam–Xavier that these types of transactions were secure.

Previously, Subramaniam–Xavier had acted as a mortgage broker for Brown. Subramaniam–Xavier asked Brown about Respondent's reputation and credentials. Brown determined that Respondent was an AV rated lawyer with a good reputation.

Thereafter, Subramaniam–Xavier obtained $400,000 from his uncle, who lived in Singapore, to partially fund Meyer's project. On January 14, 2008, Subramaniam–Xavier and Meyer signed a contract that Subramaniam–Xavier had prepared. The agreement specifically provided that Subramaniam–Xavier's funds would be held in Respondent's trust account. In return for their investment, Subramaniam–Xavier and his uncle would be paid the entire principal of $400,000, plus the substantial additional amount of $300,000, within 48 hours. Respondent did not have any role in the negotiations or preparation of the contract.

On January 15, 2008, Subramaniam–Xavier transferred the $400,000 into Respondent's trust account. That same day, Respondent wrote a letter to Subramaniam–Xavier that acknowledged the agreement, and he had a telephone conversation with Subramaniam–Xavier regarding the funds. During this conversation, Subramaniam–Xavier told Respondent that the funds could be released from the trust account and disbursed according to Meyer's instructions. This oral agreement was confirmed by email messages between Respondent and Subramaniam–Xavier.

Following instructions from Meyer, Respondent disbursed the funds from his trust account. Even though Subramaniam–Xavier did not receive the payments as agreed in the contract, neither he nor his uncle complained about the transaction.2

Steven Hooks. Hooks is an investor and financial consultant in Texas. He understood that Meyer was in the process of securing funds for a development project in Arizona. They had numerous telephone conversations, some of which included Respondent. The terms of the eventual agreement, however, were negotiated by Hooks and Meyer. Respondent was not involved with the negotiations.

Hooks understood from Meyer that for his investment of $300,000, Hooks would receive a return of $600,000 within 48 hours. Hooks thought his funds would remain in Respondent's trust account and not be disbursed without his permission. He concluded that Respondent was an independent escrow agent and not Meyer's lawyer.

On January 16, 2008, Respondent wrote and emailed Hooks a letter with copies sent to Meyer and Walton, which Respondent calls a “disbursement letter.” Respondent testified that he prepared this letter based on his understanding of the transaction. Hooks received the email and believed that it accurately reflected the transaction, especially the point that his funds would remain in Respondent's trust account. However, a few hours after receiving the email, Meyer made handwritten changes to it and transmitted the revised copy by email to Hooks and Respondent. Hooks denies receiving this changed version of the email. Respondent confirms that he received the changed version, but admits that he did not communicate with Hooks regarding the changes.

On January 22, 2008, Hooks transferred $300,000 into Respondent's trust account. The next day, Respondent, acting upon Meyer's instructions, disbursed those funds. When Hooks learned that the money was gone, he made an effort to recover his funds, both through Meyer and Respondent. Meyer repaid Hooks only about $72,000 of the $300,000.

Karl Brown, Marian Reid, and Brandon Bury. Subramaniam–Xavier was contacting other individuals to convince them to invest with Meyer. As part of this recruitment effort, Meyer asked Walton to prepare written material that he could show to prospective investors. On January 28, 2008, Walton prepared material that mentioned Respondent's law firm, stating in part: “This is an excellent opportunity for an investor no risk and Watson & Watson will provide a letter of undertaking to the lender that payment will be effected from the first disbursement from the transaction that is being funded.”

Subramaniam–Xavier again approached Brown, this time asking him to invest in Meyer's project. Subramaniam–Xavier told Brown that there was little risk because the funds would remain in Respondent's trust account. Brown spoke with Respondent by telephone prior to investing his money, explaining that he was concerned whether the financial transactions were part of an illegal scheme and that he did not want the money being released to Walton. Respondent assured Brown that he had handled many of these types of transactions before and that Brown's funds would remain in Respondent's trust account. Brown understood that he would receive a 25% profit on his investment in a very short time with little risk. On January 31, 2008, Brown deposited $46,000 into Respondent's trust account. Also, Brown spoke with his friends, Richard Lawson and Brandon Bury, regarding the promised financial transaction.

During this time, Respondent was asked by Subramaniam–Xavier or Walton to prepare letters to five possible investors. Respondent prepared the letters, which were on his letterhead, signed by him, dated February 1, 2008, and addressed to Brown, Lawson, Bury, Azim Ramlize, and Lashon Toyer. 3 The letters suggested that the five investors had already provided their funds for the project. Respondent sent the letters by email to Subramaniam–Xavier. Although Respondent...

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7 cases
  • Fla. Bar v. Rousso
    • United States
    • Florida Supreme Court
    • July 1, 2013
    ...noted, the ultimate responsibility for the trust account monies rests with Respondents. They are the lawyers. See Fla. Bar v. Watson, 76 So.3d 915, 923 (Fla.2011) (attorneys are responsible for managing the trust accounts). In Florida Bar v. Ward, 599 So.2d 650 (Fla.1992), the Court stated ......
  • In re Hawk
    • United States
    • U.S. District Court — Southern District of Georgia
    • December 6, 2016
    ...funds or property into the hands of his attorney.'" Florida Bar v. Rousso, 117 So. 3d 756, 767 (Fla. 2013) (quoting Florida Bar v. Watson, 76 So. 3d 915, 823 (Fla. 2011)). In finding that the attorneys in Rousso had failed to effectively monitor their employee or their trust account, the Su......
  • Fla. Bar v. Rousso
    • United States
    • Florida Supreme Court
    • March 28, 2013
    ...noted, the ultimate responsibility for the trust account monies rests with Respondents. They are the lawyers. See Fla. Bar v. Watson, 76 So. 3d 915, 923 (Fla. 2011) (attorneys are responsible for managing the trust accounts). In Florida Bar v. Ward, 599 So. 2d 650 (Fla.1992), the Court stat......
  • Fla. Bar v. Marrero
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    • Florida Supreme Court
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    ...rely upon, and the documents falsely represented that the borrowers could offer the property at issue as collateral. See Fla. Bar v. Watson, 76 So.3d 915 (Fla.2011) (attorney's drafting and signing of letters on his firm letterhead addressed to investors indicating that the investors had in......
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