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Attorney Grievance Commission of Maryland v. Hekyong Pak Misc. Docket AG No. 83, September Term, 2005 Headno te : The sanction of disbarment is imposed for an attorney's misrepresentations of material facts before a tribunal, false statements to a third party, fraudulent conduct, and conduct prejudicial to th e administra tion of justice . This conduct constituted violations of the Maryland Rules of Professional Conduct ("M RPC") 3.3(a)(1) an d (2), 4.1(a), 5.5(a)(b) and 8.4(c) and (d), and disbarment is warranted. Moreover, the Court of Appeals has original and com plete jurisdiction over all attorney grievance matters in the State of Maryland, and the Attorney G rievance C ommissio n is not und er any obligation to accept the recomm endations o f the Peer R eview P anel.

In the Circuit C ourt for Ba ltimore Co unty Case No. 03-C-06-002149

IN THE COURT OF APPEALS OF MARYLAND Misc. Docket AG No. 83 September Term, 2005 ____________________________________ ATTORNEY GRIEVANCE COMMISSION OF MARYLAND v. HEKYONG PAK __________________________________ Bell, C.J. Raker Cathell Harrell Battaglia Greene Wilne r, Alan M . (retired, specially assigned), JJ. ______________________________________ Opinion by Cathell, J. In which Wilner, J. concurs and dissents. Bell, C.J., Raker, J. and Greene, J. join in the concurrence. ______________________________________

Filed: August 2, 2007

The Attorney Grievance Commission ("the Commission"), acting through Bar Counse l, and pursuant to Maryland Rule 16-751(a)(1)1 filed a petition for disciplinary action in the Court of Appeals against Hekyong Pak, a.k.a. H. Christina Pak, respondent. The petition charged that respondent violated several of the Maryland Rules of Professional Conduct ("the MRP C"). 2 Specifica lly, the petition alleges that respondent, through her actions subseque nt to a default on a loan secured by her parents, violated Rules 3.3 (Candor the Tribunal), 3

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Maryland R ule 16-75 1 provide s, in relevant p art: "(a) Comm encem ent of discip linary or remed ial action. (1) Upon Approval of Co mmiss ion. Upon approval or direction of the Commission, Bar Counsel shall file a Petition for Disciplinary or Remedial Action in the Court o f App eals."

By an Order of February, 8, 2005, we adopted changes to the Maryland Rules of Professional Conduct, effective July 1, 2005. The conduct that led to this case occurred before the effective date of the new Rules Therefore, the Maryland Rules that were in effect at the time of the alleged conduct will be enf orced here in. We no te however, that our conclusions would not be different if conduct similar to that in this case occurred under the presently adopted Maryland Rules. The differences in the Rule sections that w ere allegedly vio lated are no t material and wo uld not lead to different conclusions.
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Rule 3.3(a)(1) and (2) of the 2005 version of the MRPC provide: "(a) A law yer shall not kno wingly: (1) make a false statem ent of ma terial fact or law to a tribunal; (2) fail to disclose a material fact to a tribunal when disclosure is n ecessary to avoid assistin g a crimina l or fraudu lent act by the clien t; The curre nt version o f MR PC 3.3(a )(1) and (2) p rovides: "(a) A law yer shall not kno wingly: (1) make a false statem ent of fac t or law to a tribunal or fail to correct a false statement o f material fa ct or law pre viously made to the tribuna l by the lawyer; (2) fail to disclose a material fact to a tribunal wh en disclosu re is necessa ry to avoid a ssisting a crimina l or frau dulent a ct by the cl ient."

4.1 (Truthfulness in Statem ents to Others), 4 5.5 (Unauthorized P ractice of Law), 5 and 8.4(c) and (d) (Misco nduct) 6 . Pursuant to Maryland Rule 1 6-752(a), 7 we referred the matter to the Honora ble Tim othy J . Ma rtin o f the Circ uit C ourt for B altim ore C ounty to condu ct an

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Rule 4.1(a) 2005 version of the MRPC p rovides: "(a) In the co urse of rep resenting a c lient a lawyer sh all not know ingly: (1) make a false statem ent of material fact or law to a third person; or, (2) fail to disclose a material fa ct to a third person when disclosure is necessary to avoid assisting a crimin al or fra udulen t act by a clie nt." The curre nt version o f the Rule s is identical.

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Rule 5.5(a)(b) of the 2005 version of the MRPC provides: "A law yer shall not: (a) practice law in a jurisdiction where doing so violates the regulation of the legal profession in that jurisdiction; or (b) assist a person who is not a member of the bar in the performance of activity tha t constitu tes the u nautho rized pr actice o f law." The current version of MRPC 5 .5(a), in relevant part states: "(a) A lawyer shall not practice law in a jurisdiction in violation of the regulation of the legal pro fession in that jurisdiction, or assist another in doing so."
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Rules 8.4(c) and (d) of the 2005 version of the MRPC provide: " It is professional misconduct for a lawyer to: ... (c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation; (d) engage in conduct that is prejudicial to the admin istration o f justice . . ." The curre nt version o f the Rule s is identical.

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Maryland R ule 16-75 2 provide s, in relevant p art: "(a) Order . Upon the filing of a Petition for Disciplinary or Remedial Action, the Court of Appeals may enter an order designating a judge of any circuit court to hear the action and the clerk responsible for maintaining the record. The order of designation shall require the judge, after consultation with Bar Counsel and the attorney, to enter a scheduling order defining the extent of discovery and settin g dates for the com pleti on of discovery, filing of motion s, and h earing." -2-

evidentiary hearing and return to this Court factual findings and recommended conclusions of law. The facts of this case arise out of respondent's conduct during a period of time when her parents had purchase d property in Pennsylvania, defaulted on a personal guarantee loan on that property, and then executed a series of transactions in order to prevent a judgment from attaching to their property. Using her knowledge of the law, respondent aided and

advised her parents in creating shell corporations to transfer title in order to avoid a judgment lien. Due to her actions in these matters, the Commission filed a petition for disciplinary or remedial ac tion with this C ourt. I. Facts Pursuant to Maryland Rule 16-7 52(a), we , as stated earlier, re ferred this m atter to Judge M artin of the C ircuit Court f or Baltim ore Co unty to ho ld an ev identiar y hearing . A preliminary hearing was held on June 5, 2006, to address respondent's jurisdictional objections. At the hearing, respondent claimed that this Court does not h ave jurisdictio n to regulate the conduct of attorneys in the State of Maryland if the Peer Review Panel ("Panel") recommends to the Commission that no action should be taken against an attorney suspected of viola ting the M RPC . The Panel is a group, established by Maryland Rule 16-742, that serves to consider a Statement of Charges against an attorn ey. Its purpose is not an adversarial one, and it does not hold ev identiar y hearing s, decid e facts, o r write f ull opin ions. Md. R ule 16- 743. The

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Panel consists of at least thre e me mbe rs, the ma jority b eing attor neys, but at least one member must be a la y person . At the preliminary hearing, Judge Martin dismissed

respondent's jurisdiction argument, noting that it would be "illogical" to accept respondent's position that the matter should be dismissed based on the Pan el's finding. The hearing c ourt also stated that the P anel is not an entity that creates binding decisions and that, if it were found to do so , such a d ecision would divest th e Cou rt of A ppeals of its juris diction. As previously indicated, this case arose from the actions of respondent in connection with a hotel that was purchased by her parents and her subsequent actions which led to the Commission filing a petition for disciplinary or remedial action. On February 22, 2007, after a three day ev identiary hearing , Judge M artin issued th e followin g findings of fact: "This court, having been persuaded by clear and convincing evidence, finds the following facts: "1. Respondent was admitted to the Bar of the Court of Appeals of Maryland on December 19, 1990. "2. Respondent is the only child of Hosurl and Kyuryon Pak (hereinafter known as the `Paks'). The Paks are immigrants from Korea who have been naturalized United States' citizens since the 1970's. "3. Respondent had her real estate license while in her teens. The Paks have owned and operated several businesses over the past 30 years. Mr. Pak is a real estate broker since the 70's with substantial experience in real estate transactions, the prepara tion and rev iew of rea l estate contracts and the negotiation of same. Mrs. Pak sold real estate with her husband for some 10 years during the Paks' marriage. "4. Between 1990 and 1999, Respondent had substantial professional experience in business transactions, the creation of business entities, the creation and rev iew of busine ss contr acts and in real es tate trans actions . This court finds that she had sub stantial acumen and ex perience in these types of matters. "5. In 1999 on behalf of the Paks, Respondent created MEPA Acquisitions LLC (hereinafter `MEPA') by creating both the Articles of -4-

Organization and an op erating agreement regarding same. Respondent caused the necessary do cuments to be filed with th e State De partment o f Assessm ents and Tax ation to create the e ntity. "6. MEPA w as owned by Mr. Hosurl Pak with other individuals. "7. MEPA acquired interest in a hotel in L ancaster, Pe nnsylvania in 1999. Respondent represented MEPA in the negotiations and transactions to acquire the hotel. "8. MEPA incurred a first mortgage on the hotel property at the time of the purchase. "9. Respondent acted as counsel for MEPA in negotiating and securing a second loan of $1 million from an entity known as Business Loan Center (also kn own a s Busin ess Lo an Ex press, h ereinaf ter `BL E'). She wrote an opinion letter on behalf of MEPA to BLE in order to secure this loan. "10. BLE requ ired the personal guarantees from all the members of MEPA as joint and several obligo rs on the second loan. The Pak s gave their personal guarantees in Febr uary 199 9. Part of the application process required the Paks to provide financial statements reflecting their assets and liabilities. Respondent had actual knowledge of these guarantees. "11. Between 1999 and 2001, Respondent helped the Paks from time to time in the management of the hotel in Pennsylvania. "12. At the time of the BLE loan in 199 9, the Paks owned real estate in Maryland on Oak Ridge Court [Baltimore Cou nty], Summer Fields Co urt [Baltimore Cou nty] and North Ave nue [Baltimore C ity]. "13. In 1999 and there after, the Respondent had actual knowledge of the real properties owned by her parents. "14. Between 2000 and 2003 , in addition to her business, transactional and other professional experience, Respondent was the sole owner and manager of Bayside Title which handled real estate settlemen ts. Respondent's Bayside Title did hundreds of real estate settlements in 2002 alone. "15. In 2001, MEPA sold the hotel to a n entity kn own a s REL EX. Respondent represented her parents in the sales transaction. RELEX assumed the BLE second loan obligation as part of the p urchase. H oweve r, BLE d id not release the personal guarantors on the BLE obligation including the Paks. Respon dent had a ctual know ledge of th e non-relea se of her p arents immediately after the transaction involving RELEX. "16. Between 2001 and early 2003, RELEX defaulted on the BLE loan obligation and the BLE loan came into def ault. On or about February 5, 2003, BLE gave actu al notice of this default to the Paks. Respondent had actual knowledge of the def ault notice received by her parents in early Februa ry -5-

2003. "17. The default by RELEX w as not cured by any of the guarantors. "18. As of February 2003, the Paks had sold the Oak R idge prop erty but continued to own the Sum mer Fie lds and North Aven ue prop erties. Respondent had actual knowledge of these facts. "19. On or about June 9, 2003, BLE filed suit against the Paks in the United States District Court [in the District of Maryland, Northern Division] upon th eir perso nal gua rantees on the lo an. The suit was brought by way of a Comp laint for Co nfessed Ju dgment. "20. At the time of the filing the Paks lived in the residence at Summer Fields. Respondent had, from time to time, lived at Summer Fields Court w ith her parents and had, from time to time, actually paid the mortgage on the property from her own resources. "21. On about June 14, 2003, the Paks were served with BL E's Complaint for Confessed Judgment and supporting documents. Respondent was given these papers immediately following service upon her parents and had actual knowledge of same. "22. On or ab out July 7, 200 3, Respo ndent prep ared a M otion to Dismiss to be filed in th e U.S. D istrict Court on behalf of her parents. At the time it was prepared and filed, Respondent was not a member of the Bar of the United States District Cou rt. Respon dent had h er parents ex ecute the pleading pro se. The Paks relied exclusively on their daughter for preparation and filing this Motion. "23. On or ab out July 11, 20 03, with knowle dge of the impendin g suit, Kyuryon Pak (Re sponden t's Mothe r) solely entered in to a contrac t to sell Summer Fields to the Zirkins. This fact was known by the Respondent. The sales price of Summer Fields was $544,500. "24. On or about July 14, 2003, Kyuryon Pak (the mother of Responden t), with knowledge of the impending suit, entered in to a contract to purchase residential property on Autumn Frost Lane. The purchase price was $205,000. This fact was known by the Responde nt. The Co ntract of Sa le provided that the ultimate name of the buyer would be determined at a later date. "25. On July 15, 2003, but one month and one day after service of the lawsuit and supporting documents upon her parents, Re sponden t, with actual notice of the def ault by REL EX, w ith actual notice of the demand by BLE and the impending lawsuit by BLE against her parents, filed Articles of Organization of the H& K Fam ily Trust, LLC (`H&K '). This was done in an expedited fashion on a one-page document on which the Respondent had interlineated `Family' as part of the name of this entity. No operating -6-

agreement was p repared . The sole members of the H&K Family Trust, LLC were the Paks. "26. The Respondent created this entity (H&K) for the sole purpose of hinderin g, delaying, and /or defraud ing BLE in its quest for satisfaction of the obligation g uaranteed by her parents . Respon dent's assertio n in this matter that this entity was created fo r `tax purpo ses' at the advic e of a `Mr. Kim' is, to this court, incredible and completely unpersuasive. Although Petitioner has the burden of persuasion by clear and convincing evidence throughout this proceeding, when Respondent asserts a fact as to the reasons for her actions, she must persuade this court by a preponderance of the evidence that it is so. In this she has completely failed. "27. On July 16, 2003, one day after filing the Articles of Organization of H&K, Respondent prepared and submitted to her parents for execution, quitclaim deeds conveying both Summer Fields and North Avenue to H&K for no consideration. She had her parents execute these deeds and had the deeds recorded in the respective Land Records of B altimore County and B altimore City. "28. Respon dent's action with regard to the above transactions was a continuation of her efforts to hinder, delay and/or defraud BLE in its quest for satisfaction of the obligation guaranteed by her parents. Her explanation as to the reasons for her actions, given the facts, circumstances and the time frame inv olved, we re comple tely incredible an d unpersu asive to this co urt. "29. On August 1, 2003, Confessed Judgment in excess of $1 million was entered in the United States District Court case against the Paks and the other personal guarantors. Notices were sent and Respondent had actual knowledge of these facts in August of 2003. "30. On or about August 14, 2003, Respondent created a Certificate of Partnership for CA CHA Holdings, LLP. This certificate was filed with the State Department of Assessments and Taxation by the Respondent again on an expedited basis. The Resident Agent of this entity was the Respondent and the address of the LL P was R esponde nt's address in Ellicott City, Maryland. "31. On August 15, 2003, but one month after the creation of H&K and having been the titled owner of the Summer Fields property for less than one month, H&K conveyed Summer Fields to the Zirkins for a net to H&K of $243,899.66. "32. The net p roceeds fr om the sale of H& K to the Zirkins were deposited in to Respo ndent's B ayside Title escro w accou nt. "33. On the v ery same day, R esponde nt handled the settlement on behalf of Bayside Title whereby Autumn Frost was purchased by CACHA Holdings, LLP. The funds used to purchase this residence were the net proceeds from the sale of Summer Fields. Th e funds n ot necessar y to -7-

complete the transaction, i.e. some $37,000, were disbursed from Bayside Title to the Paks. "34. The deed to Autumn Frost, purchased by CACHA on August 15, 2003, was not r ecorded in August 2003 after the settlement. There is no record of this transaction until April 22, 2004. "35. Respondent, on behalf of her parents, purposely failed to record the CACHA de ed, with the intent to hind er, delay and/or d efraud B LE in its quest to satisfy the personal obligation of her parents. "36. Respondent knew that the procee ds of Sum mer Fields , originally the property of her parents, were n ow in the A utumn F rost property an d still at risk of being discovered and ultimately attached by BLE in its quest for satisfaction of the Paks' obligation. "37. Again R esponde nt's assertion th at the deed a nd/or settlem ent file were lost or misplace d is not accepted by this court. Respondent's obligation to produc e sufficien t proof of th is fact was , in no way, m et. "38. On September 9, 2003, a Motion to Vacate the Confessed Judgment was filed b y the Pak s in the U nited S tates D istrict Co urt case . A Mr. Levine and Mr. Driscoll represented the Paks. "39. On December 10, 2003, the United States District Court granted a summary judgment motion on behalf of BLE against the Paks and entered judgment against the Paks in the amount of approximately $1.1 million. "40. On or about January 2004, BLE, as judgment creditor, began post-judgment proceedings and attempted to schedule the depositions of the Paks. "41. From A ugust 15, 2003 until January 2004 CAC HA ha d title to Autum n Frost. "42. The Paks were living in Autumn Frost during this entire time. "43. On January 15, 2004, the Paks sent a check for $30,000 (part of the $37,000 received by the Paks as excess funds after the purchase of Autumn Frost) to a relative in Seattle. This, according to the Paks, was a part payment of an antecedent debt to Mrs. Kyuryon Pak's o ther brother. Respondent had actual knowledge of these circumstances. "44. The action on the part of the Paks and with notice and approval and/or advice of the Respondent were yet further attempts to keep the Paks' property out of the risk of attachment in satisfaction of BLE's judgment against the Paks. This court does not believe the testimony of either the Paks or the Respondent as to the reasons for this transaction and the conveyance of these funds. "45. On or about February 20, 2004, with the actual knowledge and cooperation of the Respondent, Yong Sung Kim, Respondent's husband, purchased Autumn Frost from CACHA in his name alone. Mr. Kim never -8-

testified in these proceedings. The settlement o n this transaction was handled by American Home Title. "46. The purchase price for the Autumn Frost transaction came from three (3) sources: $5,000 from Respondent's business o perating ac count, $1626.13 from a joint account of the Respondent and Mr. Kim and a loan of $164,000 by Mr. Kim alone. "47. Respondent's name was never placed on the title to Autumn Frost. "48. The Respondent, her husband and the Paks h ave lived in Autumn Frost since August of 2003. "49. Both the deed from the Sellers of Autumn Frost to CA CHA in August of 2003 and the deed from C ACH A to M r. Kim on February of 2004 were recorded after the second transaction with the full knowledge and actual involvement of the Responden t (emphasis added). "50. The actions of Yong Sung Kim with the Paks and with the knowledge, approval and active involvement of the Respondent were yet further attempts to hinder, delay, thwart and/or defraud BLE's quest to obtain satisfaction of its judgment against the Paks "51. Respondent's assertion that CACHA was created on behalf of or in trust for her mother's brother in satisfaction of an antecedent debt is not believed by this court and is unaccep ted. Respo ndent has failed to pro ve this fact by a preponderance of the evidence. "52. On or about February 20, 2004, American Home Title, acting on the instructions from Hosurl Pak and with the advice and approval of the Responden t, wired $196,000 to relatives of the Paks in South Korea. No relatives of the Paks ever testified in these matters. "53. On or about February 24, 2004, American Home Title, acting on instructions from H osurl Pak and with the advice and approval of the Respon dent, disbursed $4 ,126 from the Autumn Frost settlement to the Respon dent. "54. The Court finds no existence of an antecedent debt to any relatives of the Paks in Korea. This Court finds these assertions by the Respondent and her parents w ere yet further attempts to justify their prior actions and were created after the fact to justify these actions in hindering, delaying, thwarting, and/or defrauding BLE in its quest for satisfaction of the guarantees and the ultimate judgment against the Paks. "55. The transfers of both the Summer Fields and North Avenue properties to H &K wer e discovered by BLE on or about February 24, 2004 during the deposition of the Paks. "56. The deposition of the Paks took place four (4) days after M r. Yong S ung Kim took title alone to Autum n Frost. -9-

"57. Following the depositions of the Paks, on March 2, 2004, BLE filed a compla int in U.S. District Court, District of Baltimore, to set aside fraudulent transfer and conspiracy against the Respondent and H&K as Defendants. "58. On or about March 25, 2004, Defendant filed an Answer to the Comp laint on beh alf of herself and H&K. She was not a member of the bar of the United States District Court at the time the Answer was filed. "59. In Defendant's communications with the U.S. District Court and counsel for BLE, Defendant did not correct BLE's representation that the proceeds of the sale o f Summ er Fields ha d been w ired to Korea. Defendant failed to correct these representations in her continued efforts to deceive BLE and protec t herself in the fraudulen t transfer/con spiracy suit. "60. Defendant did not disclose that the proceeds from the sale of Summ er Fields ha d actually been used to pu rchase A utumn F rost. "61. Defendant falsely admitted, in her response to B LE's Request for Admissions of Fact, that the funds from the sale of Summer Fields had been wired to Korea. "62. Defend ant did not d isclose in the U.S. District Court proceedings the existence of CACHA Holdings, LLP, the purchase by CACHA of Autumn Frost with the funds from Summer Fields, nor the purchase of Autumn Frost from CACHA by her husband alone. "63. On July 9, 2004, Judge Frederick Motz held that the conveyances of Summer Fields and North Avenue properties were fraudulent. He set aside the transactions and entered summary judgment against the Respondent of $200,000 in favor of BLE. "64. In Defendan t's Motion to Alter or Amend the Judgment by Judge Motz, the Defe ndant aga in failed to disclose the creation of CACHA, the funding of CACHA's purchase of Autumn Fields, the transfer of Autumn Fields to her husband by CACHA and the facts of that transaction. The Motion was denied by Judge Motz. "65. The ruling and judgment of Judge Motz were appealed by Defendant to the Fourth Circuit Court of Appeals. The decision of Judge Motz was affirm ed by the Fou rth Circuit on February 3, 2 005. The Fourth Circuit also denied Defendant's Petition for Rehearing and Rehearing En Banc. "66. At a meeting w ith Mr. Aronson between March of 2004 and May of 2004, Respondent showed him a document in Korean to which was attached an English translation. This document was a purported promissory note from Kyuryon Pak to her brother allegedly recognizing an antecedent debt from the Paks to her brother. Respondent stated that she first saw the document some time after Augus t 2004 [2 003]. He r statements a re again co ntradictory to her -10-

action and previous statements. "67. Responden t told Mr. Aronson that the money did not go to Korea as of the sale of Summer Fields. Respondent contradicted herself in her own responses to request for a dmission (question 21 , Petitioner's exhibit 8). "68. The Court does not accept Respondent's assertions (or for that matter her mother's) that a promissory note was prepared by her mothe r in 1995 and executed by her in Korea in consideration of an antecedent debt by her mothe r and fa ther to h er mate rnal un cle. The timing of the disclosure of this note in these proceedings (after she was sued in 2004), the very language of the note and the allegations that her mother never showed her or her father the note after returning from Korea are unb elievab le to this c ourt. Add ition ally, the failure of credible corroborative evidence of the existence of this antecedent debt and obligatio n is fatal to R esponde nt's assertion o f this fact. "69. On July 29, 2004, the Petitioner made inquiry to the Respondent as to the facts and circumstances of the transactions involving her parents' prop erty. In her response on August 25, 2004, Respondent makes ab solutely no mentio n of he r creatio n of C ACH A, the transfer of Autum n Frost to CACHA, the subsequent transfer of Autumn Frost to her husband alone or the sources of the fundin g of the purcha se. This cour t finds that she intentionally failed to disclose these transactions in yet further, if vain , attempts to protect her actions with respect to the BLE suit and BLE's efforts to satisfy the obligation of her parents and, as a m atter of fact, to p rotect herself as to Petitioner's i nquiry. "70. Finally, after a subsequent letter from Petitioner to Respondent on December 21, 2004, she first provided information regarding CACHA and the ultimate tra nsactions re garding the purchase of Autu mn Fros t. "71. Melvin Sykes, Esquire, a noted and well-respected expert on these matters, gave expert opinions on behalf of the Respondent. He clearly assumed a valid legal business purpose for the creation of the H&K Family Trust under these particular circumstances and had no opinion on whether there were valid tax/capital gains or other legitimate reasons for the creation of this b usiness entity. "Mr. Sykes clearly assumed the existence of an antecedent debt of the Paks to a third party in Korea in giving his opinion that the transfer of these funds were m erely an al lowab le prefe rence to one cre ditor ov er anoth er. "The court has found, as a fact, that there were no proven business purposes or valid reason for the creation of H&K Family Trust nor was the re an antecedent debt to the Paks' relatives proven as the Respondent has claime d. As su ch, this c ourt do es not a ccept th e opinio ns of M r. Sykes." -11-

Judge Martin also provided the following conclusions of law, based on the facts of the case: "

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