In re Santos

616 B.R. 332

IN RE: Cynthia SANTOS, Purported Debtor.

CASE NO. 19-33256-SGJ13

United States Bankruptcy Court, N.D. Texas, Dallas Division.

Signed March 17, 2020

Steve Le, Law Office of Steve Le, Grand Prairie, TX, for Purported Debtor.

MEMORANDUM OPINION AND ORDER ON SHOW CAUSE ORDER REQUIRING STEVE LE AND GABRIEL SANTOS TO APPEAR AND SHOW CAUSE WHY THEY SHOULD NOT BE SANCTIONED FOR CONDUCT DESCRIBED HEREIN WITH RESPECT TO THE FILING OF AN UNAUTHORIZED CHAPTER 13 PETITION AND RELATED SCHEDULES AND STATEMENTS

Stacey G. C. Jernigan, United State Bankruptcy Judge

TABLE OF CONTENTS

I. Introduction...338

II. Procedural History...338

III. Jurisdiction...340

IV. Findings of Fact...340

A. The Parties and Counsel...340

B. Mr. Le's Testimony, Public Disciplinary Record and Experience Before this Court as a Debtor's Attorney...341

C. Mr. Santos's Testimony...346

D. Mrs. Ramos's Testimony...347

V. Conclusions of Law...348

A. The Bankruptcy Code Provisions and Rules that Mr. Le Violated...348

1. Mr. Le Violated 11 U.S.C. § 526...348

2. Mr. Le Violated 11 U.S.C. § 527...349

3. Mr. Le Violated 11 U.S.C. § 528...350

4. Mr. Le Violated Federal Rule of Bankruptcy Procedure 1008...350

5. Mr. Le Violated Federal Rule of Bankruptcy Procedure 5005...351

6. Mr. Le Violated Federal Rule of Bankruptcy Procedure 9011...351

7. Mr. Le Violated the Texas Disciplinary Rules of Professional Conduct (the "TDRPC")...353

8. Local Bankruptcy Rule 2090-2(b) Authorizes this Court to Discipline Mr. Le for Unethical Behavior and Failure to Comply with Other Rules...355

B. Sanctions to be Imposed on Mr. Le: Indefinite Suspension, Disgorgement of Fees, and Additional Ethics CLE...––––

1. A Note on the Case Law this Court Considered...354

2. Indefinite Suspension, Disgorgement of Fees, and Ethics CLE are Appropriate ...356

C. Sanctions to be Imposed on Mr. Santos: Ten-Year Bar on Filing Bankruptcy; Criminal Referral to the United States Attorney...357

I. INTRODUCTION

This is the story of Gabriel Santos's wrongheaded scheme to manipulate the bankruptcy system, of attorney Steve Le's failure to uphold the integrity of his profession, and of the stress they both caused to Cynthia Ramos—Gabriel Santos's ex-wife, an innocent victim, and the Purported Debtor in this case.¹

In a nutshell, Gabriel Santos, who had filed bankruptcy three times, was barred from filing bankruptcy for 180 days after having his most recent Chapter 13 case dismissed with prejudice. To work around this bar, Mr. Santos sought to file bankruptcy in his ex-wife's name , without a power of attorney or any other form of authorization, to prevent imminent foreclosure on his house.² He falsified emails purportedly from his ex-wife authorizing the bankruptcy and sent them to Mr. Le, an attorney, the day before the scheduled foreclosure. Mr. Santos also brought Mr. Le $3,500 cash. Mr. Le, perhaps well-intentioned, nevertheless ignored his ten years of experience as a debtor's attorney (and his many hours of ethics training) and filed a Voluntary Chapter 13 Petition, Bankruptcy Schedules, a Statement of Financial Affairs ("SOFA") and other items, using Mrs. Ramos's name and social security number. Mr. Le never spoke to Mrs. Ramos or obtained a single wet signature. Mr. Santos said his ex-wife was out-of-town and unavailable to talk to Mr. Le on the telephone—yet, somehow, she was supposedly able to take credit counseling from a remote location and email Mr. Le purported profit and loss statements for a business. Instead of taking reasonable steps to protect himself and the Purported Debtor in light of the strange circumstances he faced, Mr. Le decided to forge Mrs. Ramos's electronic signature at least six times on documents filed with the court—allegedly assuming, in good faith, that he had her permission—via her ex-husband—to do so.

The results of these men's actions were unquestionably harmful for Mrs. Ramos, whose credit has been adversely affected and whose name is now permanently etched in the bankruptcy database to be searched by banks, employers, and the public at large. Now, Mrs. Ramos, the court, Mr. Le, and all attorneys involved in this matter must commit untold hours and resources to try to unwind a grievous mistake that was easily preventable had Mr. Le, the attorney at the center of this mess, simply remembered his ethics training.

II. PROCEDURAL HISTORY

On September 30, 2019, attorney Steve Le filed a Chapter 13 Bankruptcy Petition on behalf of the Purported Debtor using the CM/ECF system.³ The electronic file containing the Petition also contained the Purported Debtor's (a) Schedules; (b) Declaration; (c) SOFA; (d) Statement of Current Monthly Income; (e) Verification of Mailing List for the Creditor Matrix; and several other documents. In all, the first docket entry filed in this case contains six electronic signatures that read, "/s/ Cynthia Santos."

The same day, Mr. Le also filed a Certificate of Credit Counseling,⁴ which indicates that the Purported Debtor completed online credit counseling, and a Form 121 Social Security Number Verification,⁵ which contains Mrs. Ramos's social security number and an electronic signature that reads, "/s/ Cynthia Santos."

Eight days later, on October 8, 2019, the standing Chapter 13 Trustee, Mr. Tom Powers, filed a Motion for a Show Cause Order, alleging that "Cynthia Ramos f/k/a Cynthia Santos contacted the Trustee's office and stated that she did not file the Voluntary Petition and did not give anyone permission to do so on her behalf."⁶ The Chapter 13 Trustee also filed a Motion to Dismiss,⁷ and Mr. Le, in an attempt to undo his mistake, filed a Motion to Expunge the case on behalf of Mrs. Ramos.⁸

The court held a hearing on the Trustee's Motion for a Show Cause Order and Motion to Dismiss on November 18, 2019.⁹ Mr. Powers and an attorney for the U.S. Trustee, Erin Schmidt, both appeared. Mr. Le, represented by Corbet Bryant, testified. Finally, Mrs. Ramos testified and Mr. Santos, her ex-husband, also testified.¹⁰

After hearing from all parties-in-interest, the court found that this bankruptcy case was improperly filed without Mrs. Ramos's authorization. Reticent to eliminate evidence of potential bankruptcy fraud and preempt any potential criminal referral against Mr. Santos, the court declined to expunge the case.¹¹ Instead, the court requested that the Chapter 13 Trustee submit an order of dismissal. The court further requested that the order contain strong language indicating in the clearest possible terms that what happened to Mrs. Ramos was tantamount to identity theft, so that she may use the order to clear her name with regard to the credit reporting agencies, banks, and anyone else who may become aware of the purported bankruptcy filing. On November 26, 2019, the court entered its Memorandum Opinion and Order Dismissing Unauthorized Bankruptcy to that effect.¹²

At the November 18 hearing, the court also granted the Chapter 13 Trustee's Motion for a Show Cause Order and requested that he submit a form of show cause order that directed Mr. Le and Mr. Santos to appear at a future hearing.¹³ After advising everyone in the room that this unauthorized filing triggered Title 18 implications and after explaining to Mr. Santos and Mrs. Ramos that those implications meant the court would consider referring the case to the U.S. Attorney's office for criminal prosecution, the court exhorted Mr. Santos to hire a lawyer to represent him at the next hearing. Accordingly, on November 26, 2019, the court entered its Show Cause Order Directing Steven Le and Gabriel Santos to Appear for another hearing on February 3, 2020.¹⁴

On February 3, 2020, the same parties-in-interest returned to court pursuant to the Show Cause Order. This time, Mr. Santos appeared represented by attorney Willie Cantu. Before the evidentiary hearing began, Mr. Cantu made an oral motion to continue the hearing on grounds that he was unprepared to provide effective assistance of counsel to Mr. Santos. Mr. Cantu represented to the court that he was not aware of the nature of this show cause hearing before arriving at court that day because the ECF transcript of the last hearing was still unavailable to the public at that time. Mr. Cantu also stated that he was only hired by Mr. Santos on Friday, January 30 (just three days prior) and that Mr. Santos had given him a different idea of what would happen at the February 3 hearing. The Chapter 13 Trustee, counsel for Mr. Le, and counsel for Mrs. Ramos, Julianne Parker, each opposed the oral motion to continue. The court denied the oral motion to continue on grounds that Mr. Santos had been afforded two-and-a-half months' notice of the February 3 hearing (and the nature of it), and that the court had strongly urged Mr. Santos to hire counsel.¹⁵ Accordingly, the parties proceeded to put on evidence and make arguments on the record.

III. JURISDICTION

Bankruptcy subject matter jurisdiction exists in this proceeding pursuant to 28 U.S.C. § 1334 and 28 U.S.C. § 157(b). The bankruptcy court has authority to adjudicate this matter pursuant to Miscellaneous Rule No. 33 for the Northern District of Texas.

IV. FINDINGS OF FACT

A. The Parties and Counsel.

There are, essentially, four individuals involved in various capacities in this bankruptcy matter, one of whom is known by a different name than the name used on all the documents filed with this court. Each party was represented by counsel at one or both of the hearings before this court. The following table is intended to make clear who participated in the proceedings.

Person	Relation to Case	Counsel	Representation
Cynthia Ramos f/k/a Cynthia Santos	Victim of identity theft and forged bankruptcy filing. Former spouse of Gabriel Santos (divorced 2009).	Julianne Parker	At the February 3 hearing only.
Gabriel Santos	Perpetrator of identity theft and forged bankruptcy filing. Hired Mr. Le to file bankruptcy in his ex-wife's former name.	Willie Cantu	At the February 3 hearing only.
Steve Le	Attorney hired by Gabriel Santos to file

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