Attorney Grievance Comm'n of Md. v. Fraidin

ATTORNEY GRIEVANCE COMMISSION OF MARYLAND v. MICHAEL DAVID FRAIDIN

Misc. Docket AG No. 6

COURT OF APPEALS OF MARYLAND

Argued: April 7, 2014

September Term, 2013

Filed: May 16, 2014

Attorney Grievance Commission of Maryland v. Michael David Fraidin, Misc. Docket AG No. 6, September Term, 2013, Opinion by Greene, J.

ATTORNEY DISCIPLINE - Under the circumstances, an attorney's mishandling of client funds in his attorney trust account, combined with concocting and executing a scheme with his wife to commit bankruptcy fraud, constitute violations of Maryland Rules 16-606.1, 16-607, and 16-609; and MLRPC 1.15, 8.1(a), 8.4(a), (b), (c) and (d), and warrant the sanction of disbarment.

Circuit Court for Baltimore City

Case No. 24-C-13-001934

Barbera, C.J.

Harrell

Battaglia

Greene

Adkins

McDonald

Watts,

JJ.

Opinion by Greene, J.

The Attorney Grievance Commission of Maryland ("Petitioner" or "Bar Counsel"), acting pursuant to Maryland Rule 16-751 (a), filed a "Petition For Disciplinary Or Remedial Action" against Michael David Fraidin ("Respondent" or "Fraidin"), on March 25, 2013. Petitioner charged Respondent with violating various Maryland Lawyers' Rules of Professional Conduct ("MLRPC" or "Rule"), specifically Rule 1.15 (Safekeeping Property),¹ Rule 8.1 (Bar Admission and Disciplinary Matters),² and Rule 8.4(a), (b), (c) and (d) (Misconduct).³ In addition, Petitioner charged Respondent with violating Maryland Rules 16-606.1 (Attorney Trust Account Record-Keeping),⁴ 16-607 (Commingling of Funds),⁵ and16-609 (Prohibited Transactions).⁶ The alleged violations stemmed primarily from two courses of conduct: (1) improper use and maintenance of Respondent's attorney trust account, and (2) engaging and assisting Respondent's wife in bankruptcy fraud.

This Court referred the matter to the Honorable Christopher L. Panos of the Circuit Court for Baltimore City for a hearing to issue findings of fact and conclusions of lawpursuant to Md. Rule 16-757. On July 30, 2013 and August 1, 2013, Judge Panos conducted a two day evidentiary hearing, during which Respondent represented himself and elected not to testify as a witness or present any witnesses to testify on his behalf. Thereafter, the hearing judge issued Findings of Fact and Conclusions of Law, in which he found, by clear and convincing evidence, that Respondent violated MLRPC 1.15, 8.1, 8.4(a), (b), (c) and (d), as well as Maryland Rules 16-606.1, 16-607, and 16-609.

FACTS

Respondent was admitted to the practice of law on December 15, 1992, and maintains a solo practice in Baltimore, Maryland. Respondent is married to Mara Fraidin ("Ms. Fraidin"), and they have two children. Since the Fraidins' marriage in 1999, Ms. Fraidin has at no time worked outside the home or had an independent source of income. Respondent has at all relevant times been the sole income provider for the Fraidins. In 2004, Respondent and Ms. Fraidin purchased a home, titled in their names as tenants by the entirety and encumbered by a deed of trust held by Bank of America, N.A. ("Bank of America"). Subsequently, in 2009, the Fraidins began to struggle financially, leading to legal proceedings surrounding: (1) an outstanding debt related to a credit card held in Ms. Fraidin's name; (2) an outstanding debt related to a credit card held in Respondent's name; (3) foreclosure related to the marital home; and (4) Ms. Fraidin's filing for Chapter 13 bankruptcy relief.

Chase Bank Credit Card in Ms. Fraidin's Name

On February 5, 2010, Chase Bank USA, N.A. ("Chase Bank") sued Ms. Fraidin in the District Court of Maryland sitting in Baltimore County to collect on approximately $9,000.00 of outstanding debt on a credit card held by Ms. Fraidin in her name alone. On April 26, 2010, Ms. Fraidin retained Respondent to represent her in the Chase Bank litigation and executed a document titled "Attorney Fee Agreement/Contract of Employment," which stated that Respondent would represent Ms. Fraidin for a reduced hourly rate of $150.00. On April 28, 2010, Respondent entered his appearance as the attorney of record for Ms. Fraidin in the Chase Bank litigation.

On February 25, 2011, Respondent, on behalf of Ms. Fraidin, and Chase Bank negotiated a settlement for full satisfaction of Ms. Fraidin's outstanding debt. The settlement terms required that Ms. Fraidin pay $4,150.00 through three separate installments: $1,400.00 by March 31, 2011; $1,400.00 by April 30, 2011; and $1,350.00 by May 31, 2011. Despite the terms of the "Attorney Fee Agreement/Contract of Employment," Respondent never charged Ms. Fraidin for his representation of her in that matter. Nevertheless, Respondent made payments on behalf of Ms. Fraidin using funds from his Interest on Lawyer Trust Account ("IOLTA"). As found by the hearing judge:

Specifically, Respondent purchased, on March 31, 2011, three money orders [made out to the law firm representing Chase Bank in its action against Ms. Fraidin] from 7-Eleven totaling $1,400.00 On May 2, 2011, Respondent purchased a Bank of America cashier's check in the amount of $1,400.00. On June 2, 2011, Respondent purchased a final Bank of America cashier's check in the amount of $1,350.00 after executing a $1,350.00 "Cash Withdrawal"from his IOLTA account also on the same day. Funds in Respondent's IOLTA account, held in trust for Ms. Fraidin, were insufficient to support the payments made by Respondent. In order to purchase the foregoing money orders and cashier's checks, Respondent withdrew monies in his IOLTA account held on behalf of other clients.

Respondent maintained no client ledger detailing the deposits, disbursements, or other exchanges associated with the legal services provided to Ms. Fraidin relating to this matter.

Bank of America Credit Card in Respondent's Name

In December 2010, Respondent settled a $25,000.00 outstanding credit card debt with Bank of America arising out of a credit card account held for personal use in his name alone. The settlement included a payment plan requiring an initial payment of $7,000.00 by March 28, 2011, followed by twelve consecutive monthly payments of $1,500.00. On March 28, 2011, Respondent made a "Cash Withdrawal" of $7,000.00 from his IOLTA account, which Respondent then used to purchase a Bank of America cashier's check to make the initial payment to Bank of America. With regard to Respondent's explanation of this action, the hearing judge found:

Respondent asserted in his defense that he was representing Ms. Fraidin in the legal settlement with Bank of America and the money he withdrew and used from his IOLTA account was money held in trust on Ms. Fraidin's behalf. Respondent thus contends that the money he withdrew from his IOLTA account was properly accountable and attributable to his legal representation of Ms. Fraidin. However, this defense is factually implausible in light of the fact that the Bank of America settlement stemmed from debt he incurred personally with a credit card issued in his name alone, which resulted in a legal settlement between him and Bank of America. As a result, this [c]ourt finds Respondent's defense to be wholly without merit. [Moreover, t]he explanation Respondent made to Bar Counsel in a July 6, 2012 letter, [stating that the cash deposits "on 2/11/11 ($1,300), 2/14/11 ($1,000) and 3/28/11 ($5,000) weremonies being held on behalf of Mara Fraidin with a disbursement on 3/28/11 ($7,000),"] and similar arguments made in filings and statements before this [c]ourt regarding his purported representation of Ms. Fraidin's legal interests in the matter concerning the Bank of America credit card debt in his name alone, were knowingly and intentionally falsely made.

Liquidation of Respondent's IRA/Retirement Assets

On June 14, 2011, Respondent liquidated his personal IRA account in the amount of $ 15,000.00, and wire-transferred the $ 15,000.00 into his IOLTA account. The hearing judge found that "Respondent's claim that this money . . . was being held for the benefit of and in the course of his representation of Ms. Fraidin, to pay the debt owed on Respondent's personal credit card, is implausible." Rather, the $15,000.00 wire transfer from Respondent's personal IRA constituted personal funds, which Respondent deposited into his IOLTA account.

Foreclosure Action and Bankruptcy Proceedings

On June 1, 2010, Bank of America initiated a foreclosure action against Respondent and Ms. Fraidin relating to their marital home. A public auction of the home was scheduled for September 16, 2011. On September 14, 2011, two days prior to the scheduled public auction, Ms. Fraidin filed a Chapter 13 Voluntary Petition for Bankruptcy, naming Bank of America, as mortgage holder of the marital residence, as sole creditor. On September 16, 2011, Ms. Ellen W. Crosby ("Ms. Crosby") was appointed the Bankruptcy Trustee in relation to Ms. Fraidin's Petition. At that time, Ms. Crosby sent Ms. Fraidin a letter providing information about the Chapter 13 Bankruptcy process and requested copies of paychecks tosubstantiate Ms. Fraidin's asserted income. In response to this request, Ms. Fraidin produced copies of several checks each in the amount of $3,000.00 and drawn on Respondent's IOLTA account, which purported to be paychecks from Ms. Fraidin's employment with Respondent's solo law practice. With regard to Respondent's participation in this process, the hearing judge found:

In her bankruptcy proceedings, Ms. Fraidin asserted that she was self-represented. Additionally, Respondent denied having served as Ms. Fraidin's attorney during the bankruptcy proceedings. In the course of Ms. Fraidin's purported self-representation in the bankruptcy proceeding, Respondent "participated" in the collection of information, provided legal templates to Ms. Fraidin, and communicated with Christina M. Williamson, Esquire, counsel for Bank of America, toward the end of requesting a postponement for Ms. Fraidin, thus conveying to Ms. Williamson the perception that Respondent was acting as Ms. Fraidin's "agen

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