Iowa Supreme Court Attorney Disciplinary Bd. v. Willey, 16-1228
| Decision Date | 27 January 2017 |
| Docket Number | No. 16-1228,16-1228 |
| Parties | IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD, Complainant, v. Bruce A. WILLEY, Respondent. |
| Court | Iowa Supreme Court |
Tara M. van Brederode and Amanda K. Robinson, Des Moines, for complainant.
Leon F. Spies of Mellon & Spies, Iowa City, for respondent.
The Iowa Supreme Court Attorney Disciplinary Board (Board) filed a complaint charging an attorney with violations of four of our ethical rules based on his representation of two clients in a business transaction. The Board and the attorney entered into a joint stipulation of facts and rule violations, and the Grievance Commission of the Supreme Court of Iowa (commission) found the attorney violated three ethical rules. The commission recommended a thirty-day suspension. Upon our de novo review, we conclude the Board proved by a convincing preponderance of the evidence violations of Iowa Rules of Professional Conduct 32:1.7(a)(2) () and 32:1.7(b)(4) (informed consent). We impose a sixty-day suspension for the rule violations.
Attorney Bruce A. Willey practices law at Willey O'Brien, L.C. in Linn County, Iowa. Willey was licensed to practice law in Iowa during the time of the conduct that gave rise to this disciplinary action. Willey is also a Certified Public Accountant (CPA).
David A. Wild (Wild) has been a client and business partner of Willey since at least 2006. In December 2006, Willey incorporated Synergy: Projects, Inc. (Synergy) on Wild's behalf. At the time of incorporation, Wild was the president of Synergy and Willey was the original registered agent. Willey continued to serve in this capacity until April 2015. While the precise legal and business relationships between Wild and Willey are unclear from the record, by February 2007, conflicts of interests were apparent such that Wild and Willey executed a detailed consent and waiver form for the conflicts. The first paragraph of the form provides:
I, David Wild, am President of and otherwise involved with several corporations, including but not limited to, Evergreen Timber Corp., Global Resources, Inc., and Synergy: Projects, Inc. as well as member and manager of other Limited Liability Companies, related entities and subsidiaries (collectively "Wild Group"), do hereby acknowledge that I have been fully informed of the potential conflicts inherent in the representation of me and my company by Bruce A. Willey, Bruce A. Willey, P.C., Willey O'Brien, L.C. and its successors and assigns (collectively "Willey").
Willey began providing legal services to Henry J. Wieniewitz, III (Wieniewitz) in 2008. Willey provided legal advice on corporate business structure and tax structure for companies owned by Wieniewitz. Willey also prepared income tax returns for Wieniewitz and advised him regarding companies he was exploring for purchase.
In June 2010, Willey and Wieniewitz met to discuss a business that Wieniewitz was considering purchasing. During this meeting, Willey learned that Wieniewitz was interested in possible investment opportunities. After discussing the original business purchase, Willey told Wieniewitz that he knew of another investment opportunity that might be available and he would let him know if there was space for an additional investor.
In July, Willey contacted Wieniewitz and told him that he could participate in the investment opportunity if he acted quickly. Willey told Wieniewitz that other clients of his had been involved with the same or similar investment opportunities and that it was a safe and common investment. Specifically, Willey emailed Wieniewitz, "[There] isn't really risk related to that...." Willey informed Wieniewitz that the minimum investment was $100,000. Wieniewitz decided to invest $100,000. Prior to forwarding the check to Willey, Wieniewitz told Willey, "I can afford to be out the liquidity 30–60 days, but could never afford to put the money in a place to potentially lose it." Wieniewitz denies that Willey ever advised him prior to his investment that he was investing money with another client.
The investment opportunity was structured as a loan between Wieniewitz and Synergy. Wieniewitz wrote a check for $100,000 payable to Willey's law firm. Willey prepared a promissory note on behalf of Synergy that reflected the agreement between Synergy and Henry and Amber Wieniewitz. Pursuant to the terms of the promissory note, this original investment would be repaid within forty-five days. Thereafter, Wieniewitz would receive $100,000 every forty-five days until the total amount paid to him equaled $400,000.
The promissory note did not provide any security or collateral to Wieniewitz in exchange for the loan.
Willey deposited the check into his trust account and immediately disbursed the money to Synergy. Willey did not bill any party for drafting the promissory note. However, Wild considered Willey to be acting on behalf of Synergy. In his personal statement to the Board, Willey stated that he believed he was acting only as an intermediary who was facilitating a business relationship between two sophisticated business people.
Willey did not disclose his relationship with Wild or Synergy to Wieniewitz until much later. Willey never obtained informed consent from Wieniewitz, nor confirmed in writing any potential conflict of interest with Wild and Synergy. Willey did not recommend Wieniewitz consult with independent counsel regarding the concurrent conflict of interest.
At the outset of the transaction, Willey offered Wieniewitz the opportunity to meet with Wild to discuss the loan; however, Wieniewitz declined the offer. All communication regarding the loan and efforts to collect on the loan was made through Willey. Although Willey facilitated the loan and all of the communication between the parties, he had no independent information about the transaction other than what Wild told him. At the time Willey prepared the promissory note between Synergy and Wieniewitz, he had no knowledge of how Synergy would utilize the funds from Wieniewitz or the identities of the other parties or entities with whom Synergy was working. Willey had no direct financial interest in Synergy.
After the initial $100,000 investment, no payments were received as promised. Wieniewitz contacted Willey on multiple occasions to request information about the status of the loan repayment. Wieniewitz began emailing Willey in September 2010 expressing concern about the transaction. On September 20, Willey emailed Wieniewitz to update him that Wild had informed him of a "short delay" in disbursements. In an email on September 27, Wieniewitz wrote that he had expected to have his principal returned by then, as per the promissory note. He told Willey that his wife believed the entire transaction was a scam. Willey responded that he did not believe it was a scam, but Wild had been tied up with a family emergency and that may explain the delay. Later, Willey responded that he had spoken with Wild and Wild told him there was no problem with the transaction, but that the parties were "negotiating a few items behind the scenes and that [was] the reason for the delays."
In October 2010, Wieniewitz again emailed Willey to ask about the status of the disbursements. Willey emailed him an update from Wild: On November 18, Willey emailed Wieniewitz to tell him that Wild expected to have the funds that week, but was "[j]ust clearing up last of [the] paperwork necessary to allow release."
In February 2011, Wieniewitz emailed Willey asking about the payments because he wanted to use the loaned funds to purchase some apartments. Willey responded that "some things have been going on behind the scenes and neither [Wild] nor [he] wanted to give out information before its time." Willey again included a response from Wild that said the "funds are sold, just behind schedule."
Wieniewitz emailed Willey again in March asking about the payments and was again forwarded a response from Wild:
When no payments were received, Wieniewitz sent another email to Willey on September 18 asking for a realistic timeline on the return of his money. Wieniewitz also expressed frustration at repeatedly being told things were "close" but never receiving a disbursement. Willey responded and again told Wieniewitz the funds would be disbursed "in the next couple of weeks."
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