Filed: March 14, 2002
IN THE SUPREME COURT OF THE STATE OF OREGON
In re: Complaint as to the Conduct of
NIKOLAUS ALBRECHT,
Accused.
On review of the decision of a trial panel of the Disciplinary Board.
Argued and submitted March 8, 2000.
Marc D. Blackman, Ransom Blackman, Portland, argued the cause and filed the brief for the accused.
Mary A. Cooper, Assistant Disciplinary Counsel, Oregon State Bar, Lake Oswego, argued the cause and filed the briefs for the Oregon State Bar.
Before Carson, Chief Justice, and Gillette, Durham, Leeson, and Riggs, Justices.*
PER CURIAM
The accused is disbarred, effective 60 days from the date of the filing of this decision.
Durham, J., dissents and files an opinion.
*Van Hoomissen, J., retired December 31, 2000, and did not participate in the decision of this case; Kulongoski, J., resigned June 14, 2001, and did not participate in the consideration or decision of this case; De Muniz and Balmer, JJ., did not participate in the consideration or decision of this case.
PER CURIAM
In this lawyer disciplinary proceeding, the Oregon State Bar (Bar) charged Nikolaus Albrecht (the accused) with four counts of violating Disciplinary Rule (DR) 1-102(A)(2) (prohibiting criminal act that reflects adversely on honesty, trustworthiness, or fitness to practice law) of the Code of Professional Responsibility, four counts of violating DR 1-102(A)(3) (prohibiting conduct involving dishonesty, fraud, deceit, or misrepresentation), four counts of violating DR 7-102(A)(7) (prohibiting assisting client in conduct that lawyer knows is illegal), four counts of violating DR 7-102(A)(8) (prohibiting knowing engagement in illegal conduct), three counts of violating DR 9-101(A) (requiring deposit of all funds of client in trust account), two counts of violating former DR 9-101(B)(4) (requiring maintenance of complete records of all client funds), (1) two counts of violating ORS 9.460(1) (requiring lawyers to support federal and state law), four counts of violating ORS 9.527(1) (prohibiting lawyers from committing act that, if that lawyer were applying for Bar admission, would cause application to be denied), and four counts of violating ORS 9.527(4) (prohibiting lawyers from engaging in willful deceit or misconduct in legal profession).
After a hearing before a three-member trial panel, Bar Rule of Procedure (BR) 2.4(i)(1), the trial panel ruled that the Bar had obtained most of its evidence in violation of Federal Rule of Criminal Procedure 6(e) (Rule 6(e)), the federal grand jury secrecy rule (set out below). The trial panel decided that the only appropriate remedy for that Rule 6(e) violation was a dismissal of the Bar's complaint. Recognizing, however, that this court might disagree with its decision to dismiss the complaint, the trial panel also made findings on the merits. A two-member majority concluded that the accused had committed single violations of DR 1-102(A)(2), DR 1-102(A)(3), DR 7-102(A)(7), and DR 7-102(A)(8). The majority held that the accused's misconduct would warrant disbarment. One trial panel member dissented, opining that the Bar had failed to prove any allegation by clear and convincing evidence.
The Bar sought review. ORS 9.529. (2) In this court, the Bar argues that we should reject the trial panel's decision to dismiss its complaint as a remedy for violating Rule 6(e). On the merits, the Bar seeks review of only two of its four causes of complaint. Specifically, the Bar urges this court to find that the accused violated DR 1-102(A)(2), DR 1-102(A)(3) (two counts), DR 7-102(A)(7), DR 7-102(A)(8), DR 9-101(A), ORS 9.460(1), and ORS 9.527(4) (two counts), and to disbar the accused. The accused contends that the Bar violated Rule 6(e) and that the only appropriate remedy to redress that violation is to dismiss the complaint. Alternatively, the accused argues that he did not violate the disciplinary rules in question and that, even if he did, the appropriate remedy is, at most, a 30-day suspension.
This court reviews the trial panel's decision de novo. ORS 9.536(3). The Bar has the burden of proving misconduct by clear and convincing evidence. ORS 9.536(2); BR 5.2. For the reasons that follow, we conclude that the complaint should not have been dismissed, that the accused has committed serious violations of the disciplinary rules, and that the accused should be disbarred.
FACTS
We find the following facts by clear and convincing evidence. In 1978, the accused represented Farber in a real estate matter. At that time, Farber was engaged in the business of buying, selling, and managing real estate. Over the next two years, the accused represented Farber on several other real estate matters, and they became social friends.
In 1980, a man named Foss was murdered. Farber was charged with the murder. At his trial, which the accused attended, (3) the state proceeded on the theory that Farber was a drug dealer, that Foss was his supplier, and that Farber had contracted for Foss's murder to avoid paying a drug debt. During his testimony at trial, Farber admitted that he was a drug dealer and testified at length about his illegal drug distribution activities, but denied involvement in the murder. A jury nonetheless convicted Farber of murder, and he was sentenced to life in prison. See State v. Farber, 295 Or 199, 666 P2d 821 (1983) (affirming conviction; remanding for resentencing).
Farber was released from prison in March 1987, and he then obtained work in the sales field. He also began selling cocaine, which he acquired from Sturgis, whom he had met in prison. Sturgis, in turn, acquired the cocaine from Charlesworth, whom Farber also had met in prison.
Several months after his release, Farber approached the accused for legal services in connection with real estate purchases for investors that Farber had recruited. The accused agreed to assist Farber in those transactions. The accused and Farber did not have a fee agreement.
Pursuant to their arrangement, the accused helped Farber consummate four real estate purchases between 1987 and 1989. In the first transaction, Farber found property that was of interest to his investors and signed an earnest money agreement under the name SKAMCO, Inc. (on later documents, the purchaser was identified as "Vernon Baker"). At some point, Farber delivered an amount of money not disclosed in the record to the accused and instructed the accused to deposit that money into his trust account. According to the accused, Farber told him (and he believed) that the money came from legitimate investors. Later, the accused drafted a land sale contract for "Buyer" and wrote a $14,000 check on his trust account as a down payment for the property. The accused never met the buyer.
The second transaction occurred several months later. The accused again assisted Farber in a real estate purchase, this time in the name of an investor named McGuire. The accused received funds from Farber before the purchase and deposited the money into his trust account. The funds that the accused deposited were made up of at least $8,700 in cash and $6,600 in personal checks, payable to and endorsed by the accused. The accused then drafted a land sale contract in McGuire's name and drew a check on his trust account in the amount of $29,000 for the down payment. According to the accused, he was introduced to McGuire on a single occasion at around that time.
The accused performed similar services for Farber in connection with two other real estate purchases in late 1988 and early 1989. Before the third purchase, the accused deposited 13 cashier's checks, payable to the accused, totaling over $45,000 into his trust account. Each of the cashier's checks were in amounts of less than $10,000. (4) The accused took $500 cash back from that deposit. He also wrote himself a check for $1,000 a few days after the deposit. Although the accused does not recall why he made those withdrawals, he maintains that he would not have withdrawn any funds for himself unless Farber had authorized him to do so. Before the fourth purchase, the accused deposited nine cashier's checks totaling about $41,000 in his trust account. Those checks were payable to and endorsed by the accused. All of the checks were in amounts less than $10,000. Both purchases were made in the name "Barbara Woodson," an investor whom the accused never met and from whom he never received money.
On May 1, 1989, the accused opened a new trust account, designating it the "Farber Ltd." trust account. The accused later explained that the growing frequency of Farber's transactions motivated him to keep Farber's funds separate from his other clients' funds. The opening deposit in the Farber Ltd. trust account, totaling $53,738.82, consisted of cash and 12 cashier's checks from Farber. All the cashier's checks were payable to and endorsed by the accused. Three of those cashier's checks had been purchased by "Jim Anderson," four by "Jim Pierson," two by "Jim Robinson," one by "J. Robinson," and one by "Jim Allen." The purchaser of the twelfth check was unidentified. All the cashier's checks were in amounts less than $10,000. Farber then asked the accused to draw a check in Farber's name for another real estate purchase. On May 9, 1989, the accused wrote a check to Farber on the Farber Ltd. trust account in the amount of $58,200, leaving a balance of $85.20. Farber took the check and left the state. The accused did not hear from Farber for more than one year and never had significant contact with Farber again.
Several weeks after Farber left the state, Farber's client McGuire (who was, in fact, Charlesworth) contacted the accused. McGuire asked the accused to render the same legal services for him that the accused had rendered for Farber. The accused agreed to assist McGuire. As was true respecting his relationship with Farber, the accused and McGuire had no written fee agreement.
Just as he had done for Farber, the accused deposited cash and cashier's checks that McGuire gave him into the Farber Ltd. trust account and drew checks on that account to cover McGuire's down payments on real estate transactions. All of the cashier's checks were in amounts less than $10,000 and all were payable to and endorsed by the accused. The accused performed those services for McGuire in connection with a total of four real estate transactions. On six occasions, the accused took cash back from the deposits, usually a few hundred dollars. On 18 occasions, the accused wrote checks to himself or to "cash" from the account; the amounts varied from $150 to $1,600. The accused maintains that he would not have taken funds from the account unless McGuire had instructed him to do so.
There was a major difference, however, between the accused's handling of funds that he received from McGuire and his handling of funds that he had received from Farber. With Farber, the accused immediately had deposited all the funds received, no matter the total amount of the deposit. With McGuire, the accused ensured that the total of virtually every deposit made into the Farber Ltd. trust account was less than $10,000. (5)
For example, the record contains a handwritten receipt, signed by the accused, showing that, on July 18, 1989, the accused received $76,000 from McGuire. The accused's trust account records, however, do not show a $76,000 deposit on July 18 or any day thereafter. Rather, the trust account records show that, over the course of two months, the accused made nine different deposits, each in an amount less than $10,000. The nine deposits included seventeen cashier's checks, each dated July 17, 1989. Almost all the cashier's checks denoted McGuire as the purchaser. One deposit during that two-month period consisted of $8,750 in cash. By the end of September 1989, the accused had deposited $59,625.53 of the $76,000 into the Farber Ltd. trust account. The record does not indicate what happened to the remaining $16,374.87. (6)
In May 1991, state law enforcement authorities arrested Sturgis, Farber's former drug supplier, in a drug "sting" operation. The record is not entirely clear on the exact chain of events that followed; however, investigation of Sturgis led both to his drug supplier, Charlesworth, and to Farber. Further investigation revealed that one of Charlesworth's aliases was McGuire. More investigation led to the accused. At some point, federal authorities became involved. Eventually, the matter was presented to a federal grand jury.
On a date not revealed in the record, an Assistant United States Attorney served on the accused's bank a grand jury subpoena for the accused's trust-account records. The bank complied with the subpoena. (7)
In May 1993, the Assistant United States Attorney who was prosecuting the case moved the federal district court for an order under Rule 6(e) permitting him to disclose grand jury material to a Multnomah County Deputy District Attorney, an Assistant Attorney General, and their clerical staff. (8) The district court granted the motion. (9) The accused's trust-account records were among the documents of which the district court permitted disclosure.
In the spring of 1995, the Deputy District Attorney (DDA) who had received the grand jury materials under the May 1993 court order, and who subsequently had investigated the case, filed a complaint with the Bar regarding the accused's conduct. In his Bar complaint, the DDA outlined the scheme described above, suggested that the evidence showed that the accused had been engaged in a money-laundering scheme and, in so doing, had violated several disciplinary rules. To support his Bar complaint, the DDA attached a copy of the accused's trust-account records. (10) This proceeding ensued.
On June 17, 1998, the trial panel conducted a hearing on the Bar's complaint. At that hearing, the Bar called Haworth, an IRS special agent, to testify about his investigation of the accused's trust accounts. In aid of an objection, the accused's lawyer asked Haworth if it was his understanding that the records of the accused's trust accounts had been obtained through a federal grand jury subpoena. Haworth responded that that was his understanding. The lawyer then asked Haworth if he had an order under Rule 6(e) authorizing disclosure of the records to the Bar. Haworth indicated that he did not, but that it was his understanding that the United States Attorney's office had one, because "otherwise I wouldn't be here testifying." The accused's lawyer then stated that, until such an order was produced, he would object to the introduction of the trust-account records and to evidence derived from those records on the ground that they were subject to the grand jury secrecy rule, Rule 6(e), and could not be disclosed without a federal court order. (11)
The Bar's lawyer replied:
"I've never heard of this objection, I'm totally unprepared to respond to it. I can say that the bar got these records from the district attorney's office, Norman Frink. The bar didn't get these in response to a grand jury subpoena. So how this -- how Mr. Haworth originally obtained his records, I don't know. And what is required there, I don't know. All I can say is, we've got these, we've gone through these with [the accused], they have been exchanged, he's been deposed on it, this is the first I've heard of any objection."
The members of the trial panel indicated that they were unfamiliar with Rule 6(e) and did not know how to proceed. The accused's lawyer briefly explained the rule to them and also noted that he had a "vague memory" that there had been a motion to unseal the grand jury records in 1994 or 1995, and that the motion had been denied. Haworth interjected that the accused's lawyer probably was thinking of a motion to unseal that occurred later in the process, but that there must have been a Rule 6(e) order early on because the case had been "transferred" from the United States Attorney's office to the Multnomah County District Attorney's office and would not have been "transferred" without a Rule 6(e) order. The trial panel then asked the Bar's lawyers:
"Mr. Stroup: Was there any discussion about the source of the documents?
"Mr. Heiling: Not that I remember.
"Ms. Hicks: I can speak to that. The documents were received from the complainant in this case, who happened to be Norm Frink, and they were sent to [the accused] with the initial letter that the [B]ar received. So all of the documents that we received * * * have come from the Multnomah County District Attorney's office.
"Mr. Stroup: Did they have anything on them identifying where they came from, that they came through this U.S. investigation?
"Ms. Hicks: Are they stamped with grand jury stamp or something? No.
"* * * * *
"Mr. Stroup: I was trying to find out if there was any indication on there the source of the documents so that this issue could have been raised earlier in some fashion.
"Ms. Hicks: No."
The trial panel then asked the Bar's lawyers to make a telephone call to the Multnomah County District Attorney's Office regarding the matter. After a recess, the Bar's lawyer reported:
"Ms. Hicks: I called Norm Frink at the Multnomah County DA's office, I asked him about whether or not he had a 6-e order. He said that he did not have a copy of it but he is absolutely certain that the records would not have been released to him by the U.S. Attorney's office absent such an order." (12)
The trial panel ultimately concluded that it was more likely than not that the United States Attorney's office and the Multnomah County District Attorney's office had operated in the matter in accordance with the law (i.e., that the federal district court had permitted disclosure), and decided to proceed with the hearing on the basis of that assumption. However, the trial panel placed the Bar under an obligation to try to find the order and suggested that, if no order were found, then the records might have to be excluded. (13) The hearing continued, and the trust account records, Haworth's testimony about the records, and other derivative evidence were received. The hearing concluded on June 24, 1998.
Ten weeks passed, and, after considerable effort, the Bar failed to produce the court order. During that time, the United States Attorney's office retrieved the file that was supposed to the contain the disclosure order, but the order was not in the file. When the trial panel learned that the Bar could not find the order, it issued its decision in the proceeding, in which it inferred from the Bar's inability to produce a copy of the Rule 6(e) order that the federal district court had not permitted disclosure and, thus, that the Bar had received the trust account records in violation of Rule 6(e). The trial panel further concluded that it was required to exclude the trust account records and all evidence thereby derived. Because the excluded evidence was the bulk of the Bar's case against the accused, the trial panel dismissed the complaint for failure of proof. (14) However, the trial panel acknowledged that this court might disagree with its decision to dismiss and made findings on the merits in light of that possibility. In those findings, a majority of the trial panel found that the accused had violated the federal money-laundering statute, 18 USC