People v. Jackson

• Decision Date: 18 August 1997
• Docket Number: No. 96SA435,96SA435
• Citation: 943 P.2d 450
• Parties: 97 CJ C.A.R. 1580 The PEOPLE of the State of Colorado, Complainant, v. David L. JACKSON, Attorney-Respondent.
• Court: Colorado Supreme Court

Page 450

943 P.2d 450

97 CJ C.A.R. 1580

The PEOPLE of the State of Colorado, Complainant, v. David L. JACKSON, Attorney-Respondent.

No. 96SA435.

Supreme Court of Colorado En Banc.

Aug. 18, 1997.

Linda Donnelly, Disciplinary Counsel, Kenneth B. Pennywell, Assistant Disciplinary Counsel, Denver, for Complainant.

Scot M. Peterson, Michael H. Berger, Denver, for Attorney-Respondent.

PER CURIAM.

This is a lawyer discipline case. A hearing panel of the supreme court grievance committee approved the findings and recommendation of a hearing board that the respondent be suspended from the practice of law for three years and be required to make certain restitution as a condition for reinstatement. We issued an order to show cause why more severe discipline should not be imposed. After considering the responses of the parties to the order to show cause, we have concluded that the respondent's conduct reflects so seriously and adversely on his fitness to practice law that he should be disbarred.

I.

The respondent was admitted to the practice of law in this state in 1972. The hearing board listened to the testimony of the complainant's and respondent's witnesses, including the respondent himself, and considered the exhibits introduced into evidence. Following the hearing, the board found that the following had been established by clear and convincing evidence.

Two fraudulent real estate transactions took place in 1988, one concerning the respondent's residence, the other the residence of the respondent's brother, William Jackson. The events leading up to the transactions began in 1984 when four individuals, Chris Lopez, John O'Neill, Augie Lopez, and Garry Kispert, became associated with real estate development in Arizona. Chris Lopez was in charge of sales for the development. O'Neill's title was project coordinator and Augie Lopez (no relation to Chris Lopez) was in charge of construction. Kispert handled all of the insurance matters for the development.

The respondent's role with the Arizona development began in early 1988. He formed a corporation, Inter-West Builders of America, which was to be the legal entity responsible for the development. William Jackson was the majority owner of the corporation's stock, and Chris Lopez, Garry Kispert, John O'Neill, and Augie Lopez also owned stock. The respondent did not invest in the Arizona project, although he agreed to perform legal work for the corporation based on the understanding that if the development proved successful, he would receive compensation for his legal work in the form of stock in the corporation.

Early in 1988, the respondent's brother expressed a desire to sell his house in Colorado and move to California. The respondent and his brother lived in separate houses on Upper Bear Creek Road in Evergreen. O'Neill wanted to buy William Jackson's house. The respondent acted as his brother's lawyer in the sale of the house.

The respondent knew that O'Neill had limited financial resources and suspected that O'Neill could not qualify for a loan to buy his brother's house, which was worth about $490,000. In order for the sale to take place, therefore, William Jackson and John O'Neill arranged for a "straw man" to pretend to be the purchaser on paper, while O'Neill would be the purchaser in fact. Kispert, who had a good credit rating, agreed to be the straw man and fill the role of the purported purchaser. His part in the scheme was to submit a loan application based on his credit in order to obtain financing for the purchase of the house. The financing arrangement required the buyer to put a 20% down payment on the purchase. On June 17, 1988, Kispert signed a contract to buy the house from the respondent's brother for a purchase price of $495,000, with a down payment of $123,750. ¹

Garry Kispert had previously submitted a fraudulent loan application to Pacific First Mortgage Corporation on June 13. The application contained an inflated estimate of Kispert's monthly income and was part of the scheme to induce Pacific First to loan a total of $366,272.16 toward the purchase of William Jackson's home. Pacific First was not aware that Kispert had no intention whatsoever of purchasing or living in the house. The hearing board concluded, however, that it had not been proven by clear and convincing evidence that the respondent was involved in the preparation or submission of Kispert's loan application, or that he knew that the application contained false information.

Pacific First assumed that Kispert was the actual purchaser, that he intended to live in the house, and that he would fund the down payment. Kispert actually provided nothing for the down payment. Before the closing, the respondent prepared and had Kispert sign a promissory note and deed of trust in the amount of $125,000 payable to William R. Jackson. Kispert received nothing in consideration of signing the promissory note. The property that was pledged as collateral in the deed of trust was the respondent's brother's residence. Since the note and deed of trust were executed before closing, Kispert had no legal interest in the property pledged.

The respondent took the note and deed of trust to a business associate who exchanged it for a check in the amount of $125,000 drawn on the associate's company, Western National Mortgage Company. The check was made payable to "David L. Jackson Law Trust Account." The respondent used these funds for the down payment at the closing.

The closing took place on June 29, 1988. Pacific First provided a check for $366,272.16 at the closing representing the loan it was making to Kispert. The down payment of $120,627.16 was provided by the respondent in the form of a check drawn on his trust account. After paying off the existing mortgage, William Jackson received net proceeds of $326,475.07 as a check payable to him. The respondent deposited this check in his trust account immediately after closing. The respondent then wrote a check on his trust account in the amount of $125,000 to Western National to repay the loan for the down payment. He also paid Western National a fee of $1,500 for the short term use of the money.

Although the respondent claims that he was told that Pacific First did not care where the money for the down payment came from, the hearing board did not find his testimony credible. Rather, the board found that the respondent participated in a scheme to conceal the source of the down payment from the lender; and that if Pacific First had known the true source of the down payment, it would not have made the loan.

In the pursuit of the loan proceeds for the purchase of his brother's house, the respondent wrote a false and misleading letter to Pacific First's loan officer on June 17, 1988:

This letter is to and does acknowledge that concerning the above-referenced agreement for sale of real property, the undersigned holds in escrow the deposit for the difference between the selling price and the amount to be financed, which difference is not to exceed $125,000.00. I will bring the same to closing for the endorsement of Garry Kispert to William R. Jackson.

When he wrote the letter, the respondent had no funds for the down payment, only the promissory note signed by Kispert. Pacific First relied on this misleading letter in proceeding to close on the loan.

The respondent's brother signed a statement at the closing certifying that "no fees, charges or discounts have been received, paid or collected, nor will be in the future, directly or indirectly, to any party to this transaction, including the buyer, that have not been disclosed to" Pacific First. The board found that, as his brother's lawyer, the respondent should have reviewed this statement and advised his brother not to sign it because it was not correct. The statement concealed the means by which the down payment was obtained and the fees paid to Western Mortgage for the short term use of the down payment funds. In addition, William Jackson and Garry Kispert signed an affidavit at the closing stating that Kispert would occupy the property as his principal residence. The respondent should have advised his brother not to sign this affidavit. Pacific First would not have made the loan if it had known that Kispert did not intend to live in the house.

After the closing, John O'Neill moved into the house. Neither Garry Kispert, the fictitious purchaser, nor John O'Neill, the intended purchaser, ever made any payments to Pacific First. Instead, the respondent made the first five monthly payments out of his trust account from the proceeds his brother received from Pacific First at the closing. When the respondent stopped making these payments, the loan went into default, and Pacific First foreclosed on the property. The hearing board determined that the total loss sustained by Pacific First on the loans it made for the purchase of the respondent's brother's home and the respondent's home (see below) was about $500,000.

The sale of the respondent's home took place several months after the sale of his brother's home, and in much the same way. A fictitious purchaser was chosen solely for her good credit record and consequent ability to attract financing for the purchase of the home by the real buyer, who was in no position to qualify for the loan. This time, the real purchaser was Chris Lopez who was making about $1,500 a month, had no savings, and lived with his parents. The purported purchaser was Ellen Pence. Pence's husband, Ernie Swinden, was acquainted with those participating in the Arizona development and played a small role as a real estate agent for the development.

Swinden pressured his wife to act as the apparent purchaser of the respondent's home. She received a fee of $3,000 from the respondent to allow her name and good credit history to be used. The hearing board found that Pence was unsophisticated in business matters, was unaware of the fraudulent aspects of the transaction,...