In the Matter of Segal

• Decision Date: 16 November 1999
• Citation: 430 Mass. 359,719 NE 2d 480
• Parties: IN THE MATTER OF ALAN H. SEGAL.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

430 Mass. 359

719 NE 2d 480

IN THE MATTER OF ALAN H. SEGAL.

Supreme Judicial Court of Massachusetts, Suffolk.

September 14, 1999.

November 16, 1999.

Present: MARSHALL, C.J., ABRAMS, LYNCH, & GREANEY, JJ.

Stephen R. Delinsky for the respondent.

Nancy E. Kaufman, Assistant Bar Counsel.

LYNCH, J.

This is an appeal from a decision of a single justice on an information filed in the county court by the Board of Bar Overseers (board) recommending that the respondent be suspended from the practice of law for two years. On February 25, 1994, a judge in the United States District Court for the District of Massachusetts entered an order for a judgment of acquittal terminating the prosecution of Alan H. Segal (respondent) for making false statements to a federally insured bank in violation of 18 U.S.C. § 1014 (1994). On September 30, 1996, bar counsel filed a formal petition before the board alleging ethical violations arising out of conduct which was the subject of the Federal prosecution. The board found ethical violations and recommended a two-year suspension.¹ After a hearing, a single justice of this court imposed a two-year suspension commencing on December 10, 1998.

The respondent asserts that the board's proceeding was barred by preclusion principles, the board's findings were not supported by substantial evidence, and the length of the suspension was disproportionately long. We reject each of the respondent's contentions and conclude that a two-year suspension is appropriate.

1. Facts. We summarize the facts found by a hearing committee of the board. The respondent was admitted to the Massachusetts bar in 1974. Since his admission, the respondent has engaged in a general legal practice with an emphasis on real estate matters. In the spring of 1987, the respondent was hired by the Dime Savings Bank of New York (Dime) as a closing attorney. On behalf of Dime, the respondent conducted all of the closings on the condominium units at Hawthorne Village in North Attleborough.

In order to facilitate the sale of the condominium units, the owner offered incentives to buyers, which included second mortgage financing, a decorating allowance, and cash credits. These incentives obviated the need for a buyer to make a down payment to purchase a condominium unit.

Charles McCormick became the lead condominium unit purchaser. He located and organized a syndicate of investors to buy condominium units. Attorney Thomas Behenna represented McCormick in the condominium unit sales and coordinated financing with the parties including second mortgages.²

The closings on the condominium units began in September, 1987. Dime acted as the mortgage lender to the McCormick group and the respondent conducted the closings on behalf of Dime. Dime had a policy, of which the respondent was aware, against buyers financing their loans through second mortgages. The loan documents which Dime sent to the respondent expressly forbade the use of secondary financing. Furthermore, before becoming Dime's closing attorney, the respondent was told by Dime's executive vice-president to report any irregularities in the loan documents.

The respondent presided over closings on September 16, 1987, October 28, 1987, November 4, 1987, and December 1, 1987, where secondary loan financing was discussed. On September 16, the participants engaged in an argument, in front of the respondent, over who was to pay for preparing the second mortgages.³ On October 28, one of the parties mentioned having "signed seconds a few minutes before" to which the respondent responded, "I can't hear that." On November 4, one of the parties noted that the purchase of the condominium unit was a "no-money-down deal" to which the respondent said, "I am not supposed to know that." Finally, on December 1, one of the parties told Behenna that he did not have a down payment for the condominium unit and was using a second mortgage. In front of the respondent, Behenna explained, "This is nothing to worry about; it's just a formality; this is the way we are doing all of them. It's okay to sign, go ahead and sign." Based on these transactions, the board determined that the respondent recognized that the condominium units were being purchased in conjunction with second mortgages, and by remaining silent, violated his affirmative obligation to inform Dime.

Included among the closing documents were regulatory forms, which the respondent had an obligation to see were complete and accurate, but which failed to disclose the existence of any secondary financing. Thus, the board concluded that, because the respondent knew of the second mortgages, he falsely submitted the documents and did not notify Dime about concerns he had regarding the forms' false information.

The respondent was charged in the Federal District Court with making false statements to a federally insured bank under 18 U.S.C. § 1014. At the close of the evidence, the judge allowed the respondent's motion for an acquittal because the government failed to prove that the respondent made the statements for the purpose of influencing a federally insured bank.⁴

2. Preclusion. The respondent first contends on appeal that, because he was acquitted in United States District Court, the board is prohibited from bringing a subsequent disciplinary action against him arising from the same conduct. He relies on S.J.C. Rule 4:01, § 11, as appearing in 425 Mass. 1313 (1997), to support his position. The rule provides in part:

"The acquittal of the respondent lawyer on criminal charges, or a verdict, judgment, or ruling in the lawyer's favor in civil, administrative, or bar disciplinary proceedings shall not require abatement of a disciplinary investigation predicated upon the same or substantially similar material allegations."

The respondent asserts that the interpretation of rule 4:01 is governed by the maxim, the expression of one thing is an implied exclusion of things omitted. See Harborview Residents' Comm., Inc. v. Quincy Hous. Auth., 368 Mass. 425, 432 (1975), and cases cited. The respondent argues that, by expressly permitting the board to conduct further investigations after an acquittal, the rule impliedly denies the board the power to proceed with a bar disciplinary proceeding after an acquittal. The maxim on which the respondent relies "is not to be followed where to do so would frustrate the general beneficial purposes of the legislation." Brady v. Brady, 380 Mass. 480, 484 (1980), quoting Harborview Residents' Comm., Inc. v. Quincy Hous. Auth., supra.

Furthermore, each portion of a rule must be read in relation to the entire scheme to understand the relation of one part of a rule to the rule as a whole. Cf. Saccone v. State Ethics Comm'n, 395 Mass. 326, 334 (1985) ("We look ... to the entire statutory scheme to determine the sense of the amendment in relation to the statute as a whole").

We conclude that S.J.C. Rule 4:01, § 11, does not prevent the board from conducting a bar disciplinary proceeding after an attorney has been acquitted in a substantially similar criminal matter.⁵ The thrust of the rule is to permit the board to go forward with its business without regard to other criminal and civil proceedings.

In the absence of any specific provisions in the rule, general rules of collateral estoppel govern. It is well established that an acquittal in a criminal trial does not prevent civil proceedings addressing the same facts because civil sanctions require a different standard of proof than a criminal conviction. See Krochta v. Commonwealth, 429 Mass. 711, 718 (1999); Doherty v. Retirement Bd. of Medford, 425 Mass. 130, 140 (1997); Commissioners of Civil Serv. v. Municipal Court of the Brighton Dist., 369 Mass. 166, 173-174 (1975), cert. denied sub nom. Patuto v. Commissioners of Civil Serv., 429 U.S. 845 (1976); Chief of the Fire Dep't of Boston v. Sutherland Apartments, Inc., 346 Mass. 685, 690 (1964); Matter of Dolan, 10 Mass. Att'y Discipline Rep. 59, 62 (1994). The omission of the term "prosecution" from the last sentence of the rule is not an implied deviation from this long-standing principle. Cf. Cousineau v. Laramee, 388 Mass. 859, 862 (1983), quoting Dexter v. Commissioner of Corps. & Taxation, 316 Mass. 31, 38 (1944) ("A statute should not be interpreted to `require a radical change... in the existing law [if] the act does not manifest any intent that such a change should be effected'").

Our decision in Matter of Concemi, 422 Mass. 326 (1996), is not to the contrary. There we held that "the certificate of conviction is conclusive as to the conduct alleged therein," id. at 329, and noted that "the issue of guilt or innocence is not to be relitigated in a bar discipline proceeding." Id. The respondent contends that the Concemi case prevents the initiation of any bar discipline proceeding once the attorney has been acquitted of a related criminal charge. Rather, it stands for the limited proposition that respect for the criminal justice system precludes relitigation during a bar disciplinary prosecution of facts conclusively decided in a criminal trial.

The judge in the United States District Court did not conclusively find facts that would require that the bar discipline proceedings be decided in the respondent's favor. In the Federal court he was charged with making false statements to a federally insured bank. He was acquitted because there was no proof that the respondent made the statements to a federally insured bank. Thus, the fraudulent nature of the respondent's statements was not conclusively determined by the judgment of acquittal. Therefore, bar counsel could properly litigate the respondent's knowledge and intent before the board.

3. Substantial evidence. We review the determination of the board only to determine whether it is supported by substantial evidence in the record. See G. L. c. 30A, § 14 (7) (e). "`Substantial evidence' means such evidence as a reasonable mind might accept as...