In re McMillian, No. 25822.

• Court: United States State Supreme Court of South Carolina
• Writing for the Court: PER CURIAM
• Citation: 359 S.C. 52,596 S.E.2d 494
• Parties: In the Matter of William Jefferson McMILLIAN, III, Respondent.
• Decision Date: 17 May 2004
• Docket Number: No. 25822.

359 S.C. 52
596 S.E.2d 494

In the Matter of William Jefferson McMILLIAN, III, Respondent

No. 25822.

Supreme Court of South Carolina.

Submitted April 13, 2004.

Decided May 17, 2004.

Rehearing Denied June 9, 2004.

Henry B. Richardson, Jr., Disciplinary Counsel, of Columbia, for the Office of Disciplinary Counsel.

R. Davis Howser, of Columbia, for respondent.

PER CURIAM:

In this attorney disciplinary matter, respondent and the Office of Disciplinary Counsel (ODC) have entered into an

359 S.C. 53

Agreement for Discipline by Consent pursuant to Rule 21, RLDE, Rule 413, SCACR. In the agreement, respondent admits misconduct and consents to the sanction of disbarment. We accept the agreement and disbar respondent from the practice of law in this state. The facts, as set forth in the agreement, are as follows

FACTS

I.

Respondent was admitted to practice law in November 2000. Around March 2001, respondent entered into a business arrangement with Carolina Title Services, Inc., (CTS) through its principal officer and manager Amy Cook (Cook). The purpose of the arrangement was to close large volumes of real estate loans. Neither Cook nor any other CTS employees were licensed to practice law.

Under respondent and CTS' arrangement, real estate loan transactions would be closed, for the most part, in the following fashion: the handling of the underlying transactions were solicited and obtained by CTS; the lenders sent the loan packages directly to CTS; CTS' non-lawyer staff would conduct or obtain a title search which was completed by a non-lawyer; the non-lawyer staff of CTS would prepare the closing documents; respondent attended closings, reviewed closing documents with parties and signed HUD-1 Settlement Statements as "settlement agent;" thereafter, CTS would see to the recordation of the documents, the disbursement of the proceeds of each transaction, the issuance of title insurance policies, and other actions necessary to consummate the transactions.

For attending the closings, respondent was usually paid a fee of $300 to $350 out of each transaction which was reflected on the Settlement Statements. CTS retained amounts collected for title examination, document preparation, title insurance commitment/binder fees, and commissions on title insurance premiums.

To implement the foregoing arrangement, respondent opened an IOLTA Trust Account at Bank A. This account was styled "The McMillian Law Firm Trust Account." Respondent

359 S.C. 54

gave Cook signatory authority over this trust account. The trust account checkbooks, bank statements, and cancelled checks were maintained by Cook at the offices of CTS. CTS' address was used for mailing monthly bank statements and cancelled checks. Deposits to and disbursements from this account were usually made by Cook and/or employees of CTS without respondent's supervision

Cook was a licensed agent for Chicago Title Insurance Company (Chicago Title) which was the primary provider of title insurance for the transactions closed in furtherance of the foregoing arrangement and, in most cases, Chicago Title issued insured closing letters in connection with these transactions. Usually, loan packages were sent directly from lenders to CTS and almost all negotiations and discussions with lenders related to these transactions were handled by the staff of CTS and not respondent.

Under this arrangement, approximately three hundred transactions were closed by CTS with respondent's assistance and/or using one of respondent's trust accounts between March or April 2001 and April 2002. Respondent estimates that he was present at 80% to 95% of the closings, however, because of the large volume of transactions, it was impossible for him to attend all the closings. When respondent did not attend, closings were conducted by CTS' non-lawyer staff without the presence of a licensed attorney. In those cases, someone at CTS would sign respondent's name to the HUD-1 Settlement Statements and any other documents requiring respondent's signature. While respondent never specifically authorized anyone else to sign his name on documents, on a few occasions, respondent had actual knowledge that Cook and/or one or more employees at CTS were signing his name to closing documents and had constructive knowledge that this was occurring on the other occasions when respondent was unable to be present at closings. Notwithstanding this knowledge, respondent did not prohibit Cook or other CTS employees from signing his name to closing documents and, by not doing so, gave his tacit approval to this practice.

During the entire period of the foregoing arrangement with CTS, respondent maintained no files concerning the real estate transactions (other than a list of closings for which he

359 S.C. 55

expected payment from CTS), failed to reconcile or even review monthly bank statements, and failed to comply with any of the money handling and record keeping requirements of Rule 417, SCACR, notwithstanding establishment of an IOLTA Trust Account styled "Law Offices of William J. McMillian, III, Trust Account." Contrary to Rule 417, SCACR, no one involved in these transactions maintained ledgers or placed identifying data on checks and deposit slips. Any files maintained on these closings were kept by CTS at its offices

Under this arrangement, neither clients nor lenders (for the most part) were advised of respondent's limited role in the closing of these real estate transactions through CTS. Because respondent provided limited services to clients in these closings, the fees charged for his services were excessive. By signing the HUD-1 Settlement Statements as "settlement agent," respondent gave the parties and lenders the incorrect impression that he had or was going to see to the proper disposition of the settlement proceeds when, in fact, he did not do so. Respondent's actions were contrary to the certification requirements imposed by the Federal Truth in Lending Act.

Beginning in September 2001, respondent became aware of non-sufficient fund (NSF) charges for checks written on the Bank A trust account. In November 2001, respondent became aware that there was a negative balance of approximately $119,000 in the Bank A trust account. In this time frame, respondent learned that one or more lenders would no longer accept checks written on this account because of the NSF problems.

As a result of checks on the Bank A trust account not being accepted and because of negative balances in the account, respondent opened a new trust account styled "McMillian Law Firm, P.A., IOLTA Trust Account" at Bank B in December 2001. Notwithstanding the difficulties experienced and the irregularities reported in the Bank A trust account managed by Cook, respondent allowed Cook to be a signatory on the Bank B trust account and continued to allow Cook to make deposits to and write checks from both his Bank A and Bank B trust accounts in furtherance of closing real estate transactions pursuant to his arrangement with CTS.

359 S.C. 56

After opening the Bank B trust account, respondent became aware that Cook was "floating" funds between the Bank A and Bank B trust accounts. Presumably, the "float" was necessary in order for checks to clear in spite of shortages in the accounts.

In December 2001 and January 2002, respondent unsuccessfully attempted to work with Cook to identify the nature and amounts of the bank account shortages and then correct the shortages. On or about February 5, 2002, respondent had his last direct dealings with Cook. After that occasion, respondent appeared at the closing of one or two more loans for CTS. Respondent ceased attending closings for CTS in late March 2002.

After respondent ceased, for the most part,...