Office of Disciplinary Counsel v. Au

• Decision Date: 07 June 2005
• Docket Number: No. 26517.,26517.
• Citation: 107 Haw. 327,113 P.3d 203
• Parties: OFFICE OF DISCIPLINARY COUNSEL, Petitioner, v. Ronald G.S. AU, Respondent.
• Court: Hawaii Supreme Court

113 P.3d 203

107 Haw. 327

OFFICE OF DISCIPLINARY COUNSEL, Petitioner, v. Ronald G.S. AU, Respondent.

No. 26517.

Supreme Court of Hawai'i.

June 7, 2005.

Reconsideration Denied July 1, 2005.

Alvin T. Ito, special assistant disciplinary counsel, for petitioner.

Ronald G.S. Au, respondent, pro se.

MOON, C.J., LEVINSON and NAKAYAMA, JJ., Circuit Judge CRANDALL, In Place of ACOBA, J., Recused, and Circuit Judge WONG, In Place of DUFFY, J., Recused.

PER CURIAM.

The Disciplinary Board (the Board) filed a report and recommendation to suspend Respondent Ronald G.S. Au (Au) from the practice of law for a period of two years. The Board bases its report and recommendation on a hearing committee's findings of fact and conclusions of law.

We accept the hearing committee's findings of fact and conclusions of law. For the reasons set forth below, however, we suspend Au from the practice of law for a period of five years. A separate suspension order is entered with this opinion.

I. BACKGROUND

A. The ODC's Petition for Discipline

On November 14, 2000, Petitioner Office of Disciplinary Counsel (the ODC) petitioned the Board to recommend sanctions against Au based on alleged violations of the Hawai'i Rules of Professional Conduct (HRPC) in three separate disciplinary matters.

1. ODC XX-XXX-XXXX

The ODC alleged that, in the course of representing a client before the Circuit Court of the First Circuit, State of Hawai'i, Au drafted and filed two documents that cited to Sherry v. Ross, 846 F.Supp. 1424 (D.Haw. 1994) (Sherry). Au made the following representations to Circuit Court Judge Daniel G. Heely:

• that Sherry was decided on the "attorney-client crime-fraud provisions [of Rule 503 of the Hawai'i Rules of Evidence (HRE)] and the Fraudulent Conveyance Act ... [under] HRS 651 C-4";

• that, in Sherry, the debtor conveyed real property to his wife with the help of an attorney who prepared the conveyance;

• that the United States Court of Appeals for the Ninth Circuit upheld the "Federal Court"; and

• that the "Court [presumably the Ninth Circuit] found that fraudulent intent was not proven under the fraudulent conveyances provision as under the common law provision."

In fact, Au's description of Sherry was not accurate because

• Sherry addresses neither the attorney-client privilege nor the "crime-fraud" exception to the attorney-client privilege;

• Sherry does not mention a relationship between an attorney and a client, nor does it mention an attorney or an attorney assisting in a conveyance;

• Sherry was decided under neither the "Fraudulent Conveyance Act" nor the "Uniform Fraudulent Transfer Act," but rather, Sherry was decided under the common law;

• in Sherry, a third party (not the debtor) conveyed property to a debtor's wife, and a subsequent creditor challenged the conveyance; and

• Magistrate Judge Francis I. Yamashita of the United States District Court for the District of Hawaii authored Sherry, and there was no Ninth Circuit opinion.

The circuit court judge and opposing counsel complained separately to the ODC about Au's misconduct.

2. ODC XX-XXX-XXXX

The ODC alleged that, with respect to several different clients, Au committed the following misconduct:

• improperly deposited his clients' settlement proceeds into his office account;

• improperly paid costs from his client trust account;

• improperly deposited unearned fees into his office account;

• improperly reimbursed his trust account;

• failed to withdraw funds from his client trust account;

• improperly deposited clients' settlement proceeds into his office account;

• falsely certified in his annual registration statements for the Hawai'i State Bar Association (HSBA) that he was maintaining clients' funds and property in compliance with HRPC Rule 1.15; and

• paid fees to a non-lawyer runner in exchange for the non-lawyer runner's referral of clients for legal services to Au.

3. ODC XX-XXX-XXXX

The ODC alleged that, with respect to a particular client, Au improperly deposited unearned fees into his office account.

B. Au's Answer

On December 18, 2000, Au answered the ODC's petition for discipline. On March 19, 2002, Au filed a first amended answer to the ODC's petition for discipline.

C. The Hearing Committee

On September 28, 2001, the Board appointed three persons to serve as the hearing committee for the ODC's petition against Au: (1) attorney Paul Alston (Chairperson Alston) as the chairperson of the hearing committee; (2) attorney Christobel Kealoha, as a member; and (3) Terri Needles, Ph.D., as a member. During the next year, the parties conducted discovery under the supervision of the hearing committee. The hearing committee held pre-hearing conferences to address disputes and controversies regarding evidence that the parties intended to introduce.

For example, one controversy involved the ODC's allegations that a non-lawyer, Wayne Yoshimoto (Yoshimoto), had an agreement with Au under which Yoshimoto found legal clients and referred them to Au in exchange for Au's payment of five percent of the gross amount of any settlement that Au recovered for the clients. The ODC intended to prove the allegations by introducing copies of some of Au's checks to Yoshimoto, settlement statements, witness testimony, as well as some audiotapes and corresponding transcripts from some of Yoshimoto's conversations with Au that Yoshimoto surreptitiously recorded on August 16 and 29, 1994. Yoshimoto recorded the conversations with Au because Au was allegedly not paying Yoshimoto some of the client referral fees that Au owed to Yoshimoto, and Yoshimoto wanted to obtain proof that Au acknowledged the existence of their agreement for client referral fees. Au contested the authenticity of Yoshimoto's tape recordings and corresponding transcripts. Au also claimed that someone had deleted exculpatory statements from Yoshimoto's tape recordings. Consequently, on October 24, 2002, the hearing committee issued a pre-hearing order that provided, among other things, that, by November 17, 2002, Au could submit to the hearing committee an annotated copy of the transcripts that would show: (1) the portions of the transcripts that Au accepted as accurate; (2) the portions of the transcripts that Au contended were audible but incompletely or inaccurately transcribed, as well as Au's suggested changes to remedy the incompleteness or inaccuracy; and (3) the portions of the transcripts that Au contended were inaudible and therefore inaccurately transcribed. However, Au did not submit an annotated copy of the transcripts to the hearing committee.

D. Formal Evidentiary Hearings

The hearing committee held formal evidentiary hearings on January 21, January 22, and April 29, 2003. At these hearings, the ODC adduced substantial evidence in support of the ODC's various allegations relating to Au's misrepresenting the holding of a published case, mishandling client funds, misusing a client trust account, and paying a non-lawyer "runner" a fee in exchange for client referrals.

The ODC's evidence included, among other things, Yoshimoto's testimony that he had an agreement with Au under which Yoshimoto found and referred several legal clients to Au in exchange for Au's payment of five percent of the gross amount of any settlement that Au recovered for the clients. The ODC also adduced copies of some of Au's checks to Yoshimoto for his referral fees, Au's settlement statements, as well as the audiotapes and corresponding transcripts from the conversations with Au that Yoshimoto surreptitiously recorded on August 16 and 29, 1994.

One of the clients whom Yoshimoto referred to Au was Cindy Labrador (Labrador). Labrador had two personal injury matters. Au eventually settled Labrador's two personal injury matters for (1) $27,000.00 and (2) $19,000.00, or a total settlement amount of $46,000.00. At about the time when Au settled the second of Labrador's two personal injury matters, Au gave Yoshimoto a check for only $500.00. Yoshimoto learned from Labrador that Au had settled the two personal injury matters for a total amount of $46,000.00. Consequently Yoshimoto met with Au on August 16 and 29, 1994, for the purpose of discussing various unpaid fees that Au owed Yoshimoto, including Yoshimoto's five percent fee for Labrador's two personal injury matters. Following the discussions, Au wrote Yoshimoto two checks, dated August 29, 1994, in the amounts of $850.00 and $950.00. Although writing on the two checks purported that the checks were payments for Yoshimoto's "investigative services" in Labrador's personal injury matters, Au's three payments (i.e., $500.00, $850.00 and $950.00) to Yoshimoto for his services in Labrador's two personal injury matters added up to $2,300.00, which was exactly five percent of the $46,000.00 settlement amount.

In contrast to the ODC's evidence, Au testified, among other things, that Au did not have an agreement with Yoshimoto to pay Yoshimoto a fee in exchange for client referrals. For example, Au claimed that he paid Yoshimoto in Labrador's two personal injury matters because Yoshimoto had performed investigative services.

At the conclusion of the evidentiary hearing on April 29, 2003, Chairperson Alston told the ODC and Au to submit their proposed findings of fact and conclusions of law to the hearing committee. However, on October 28, 2003, Chairperson Alston ordered the parties to appear at a newly scheduled hearing on October 31, 2003. Chairperson Alston informed the parties that the hearing committee would address the following two issues at the October 31, 2003 hearing:

If the Panel determines that the Respondent [Au] has given false testimony and/or made frivolous arguments and/or made groundless accusations against witnesses, to what extent may the Panel consider such matters in deciding (1) the Respondent [Au]'s guilt; and (2) the appropriate discipline, if any[?]

Chairperson Alston began the October 31, 2003 hearing by informing Au that the...