A tipster (send in your tips here) has just sent in documents which show that the State of Florida has not reinstated attorney Clint Johnson. His licensed remains suspended and Leslie Eiserman, CPA was appointed as receiver on July 14, 2011.
This may have a significant impact for debt settlement clients that were working with Johnson law Group in Florida and some of the debt management companies Clint Johnson had control of funds for. Those groups included Consumer Business Debt Counseling (CBDC) and DebtWave.
The Florida Bar filed this summary of the facts in the case.
On March 31, 2011, The Florida Bar filed a Petition for Emergency Suspension against respondent, which was subsequently assigned Supreme Court Case No. SC11-622. The bar’s petition, supported by the affidavit and attachments of The Florida Bar’s Chief Auditor, Clark V. Pearson, alleged that respondent was causing great public harm by misappropriating trust funds. On April 11, 2011, this Court issued an order suspending respondent from the practice of law and restricting him from depositing or withdrawing fees or other monetary sums received in connection with the practice of law.
On April 15, 2011, respondent filed a Motion for Dissolution or Amendment of Emergency Suspension Order. On April 19, 2011, this Court designated the Chief Judge of the Seventh Judicial Circuit to immediately appoint a referee to “hear, conduct, try and determine” the matters presented and to submit a report and recommendations to the Court. The Honorable Terence R. Perkins was appointed as referee on April 21, 2011. Judge Perkins held a hearing on April 28, 2011 and entered his Report of Referee on May 5, 2011, recommending that respondent’s emergency suspension be modified and that respondent be placed on supervised probation permitting him to make disbursements from his trust accounts.
Thereafter, on May 9, 2011, the bar notified this Court that it would be presenting the Report of Referee to the Board of Governors (during their meeting concluding on May 28, 2011) for a determination of The Florida Bar’s position. On May 9, 2011, respondent filed a motion requesting that he be allowed to continue disbursing or withdrawing monies from his trust and operating accounts under outside supervision. On May 12, 2011, the bar filed its objection to respondent’s motion to continue withdrawing or disbursing monies. On May 13, 2011, respondent filed a response objecting to the bar’s intended action concerning consideration of the Report of Referee by the Board of Governors.
At its meeting that ended on May 28, 2011, the Board of Governors of The Florida Bar considered this case. The Board voted that it was appropriate to seek to maintain the emergency suspension in place. The Board further voted to recommend to this Court that it appoint a receiver to disburse funds from respondent’s debt management trust accounts during the period of his suspension. Thereafter, the bar filed its Petition for Review on or about June 1, 2011. On June 6, 2011, respondent filed an emergency motion requesting interim implementation of the Referee’s Report during the appellate proceedings. The Florida Bar and respondent filed their Stipulation for the Appointment of a Receiver on or about June 13, 2011.
The Florida Bar’s investigation of this matter indicated that respondent misappropriated funds from one of his trust accounts maintained at Bank of America (hereinafter referred to as the “TA-1 account”). The balances in this particular trust account failed to contain sufficient funds to be able to satisfy the obligations to his clients (T-264, l. 15-19; T-274-275; B-Ex. 24). The Florida Bar received an Attorney Trust Account Overdraft Report from Bank of America dated May 4, 2010 regarding trust checks respondent issued to clients representing settlement proceeds from his TA-1 account (B-Ex. 9). The Florida Bar’s Chief Auditor, Clark V. Pearson, determined that respondent made numerous transfers of funds to or from the TA-1 trust account, taking trust funds for his personal use, including cash withdrawals, vehicle payments, various purchases, airline tickets, donations and restaurants (T-279, l. 19-23; T-280, l. 1-8; T- 280, l. 15-17; B-Ex. 24).
Additionally, respondent maintains numerous other trust accounts at Bank of America. These trust accounts have undocumented large transfers of trust funds between respondent’s various trust accounts and respondent’s other operating accounts (B-Ex. 24). Respondent failed to provide the trust records for all his trust accounts as required by Chapter 5 of The Rules Regulating The Florida Bar (B-Ex. 24), and more specifically detailed in the bar’s Petition for Emergency Suspension.
At the hearing on respondent’s motion, respondent denied that he misappropriated client funds (T-212, l. 7-9). Respondent admitted that, after investigation by the bar, he learned that his employee, Deanna Cintron, had misplaced bank statements and other important documents (T-223, l. 5-12, T-224-227). Respondent’s former banker and new employee, Nathan Green, further testified that Ms. Cintron had frequently transferred money from respondent’s operating account to cover trust shortages (T-161-162; T-186-188). In addition to Mr. Green, after the bar began its investigation, respondent hired Certified Public Accountants to assist him with his various trust accounts.
At the hearing, the referee also heard testimony from respondent’s experts, none of whom performed a compliance audit of the TA-1 account or the remaining nine trust accounts. Pedro Pizarro, a CPA and former auditor for The Florida Bar testified that he was only involved with the TA-1 account to assist with respondent’s accounting procedures (T-84, l. 8-12). He testified that after numerous transfers by respondent from his operating account to this trust account, the account was finally in balance, but only for the period of December 2010 through March 2011 (T-61, l. 19-23). Steven A. Koenig, CPA, testified that he was retained in September 2009 to perform a financial audit, not a compliance audit of respondent’s three debt management trust accounts involving the funds for respondent’s 13,200 clients (T-131, l. 4). Mr. Koenig’s financial audit was only for the period of 2009, in which he found no evidence of fraud or misappropriation for that limited period of time (T-123, l. 17-18). Mr. Koenig did not conduct a compliance audit involving a full review of the trust records as required by Chapter 5 of The Rules Regulating The Florida Bar. Further, Mr. Koenig did not review the trust records for 2010 involving these debt management trust accounts (T-132, l. 9-15). Mr. Koenig further testified that he would be willing to monitor respondent’s debt management trust accounts to assure compliance if respondent’s suspension was upheld by this Court (T-126).
At the conclusion of the hearing, the referee heard testimony from The Florida Bar’s expert witness, Clark V. Pearson, Chief Auditor for The Florida Bar. Mr. Pearson testified that in his opinion, respondent still presented great public harm, despite any corrective measures that had been taken (T-318, l. 20-24). Mr. Pearson testified in detail regarding the ongoing shortages in respondent’s TA-1 account and respondent’s numerous transfers to balance this trust account (T-302-315). Mr. Pearson also testified that respondent failed to provide full and complete trust records for his remaining nine other trust accounts, including respondent’s debt management trust accounts (T-258, l. 20-25; T-260-261; T-267, l. 12-22).
The referee found that the evidence was clear that respondent was negligent in the management of his trust accounts and that respondent was non-compliant with the requirements in Chapter 5 regarding Trust Accounts (ROR-5). The referee also found that the bar had met its burden of proof as required by R. Regulating Fla. Bar 3-5.2. In opposition to the bar’s analysis regarding respondent’s trust accounts, the referee found no evidence of the potential for public harm or misappropriation (ROR-11). After considering all the evidence at the hearing, the referee recommended modification of the emergency suspension order and that respondent be permitted to make supervised disbursements from his trust accounts (ROR-14).
SUMMARY OF THE ARGUMENT
The referee herein found that The Florida Bar met its burden to prevail on allegations of respondent’s trust account non-compliance as required by R. Regulating Fla. Bar 3-5.2. In his report, the referee specifically stated that “TFB is likely, if not certain, to prevail on allegations of trust account non-compliance by Respondent” (ROR-5). The Supreme Court of Florida’s decisions in similar cases further illustrate that an emergency suspension adequately supporting misuse of trust funds will not be modified, even when an attorney has reimbursed the trust money or if no clients were harmed. It is undisputed that respondent had significant shortages in his TA-1 account, and the bar has clearly met its burden to prevail on trust account non-compliance by respondent.
After considering all of the evidence in this matter, Clark V. Pearson, Chief Auditor for The Florida Bar, opined that respondent presented and continued to present great public harm based in part on respondent’s misappropriation from the TA-1 account (T-318, l. 14-24). The misuse of client funds is a serious violation, and the public must be protected. In addition, respondent’s own admissions, his inconsistent testimony, and his failure to take prompt steps to notify his clients of the suspension, further support that respondent’s emergency suspension should remain in place without modification.
To further support the continuation of the emergency suspension in this matter, it is important to note that the evidence and testimony presented at the hearing are in direct conflict with the referee’s findings that there was “un-rebutted” evidence to establish that no money was misappropriated (ROR-11). Clark V. Pearson, Chief Auditor for The Florida Bar, was received as an expert and testified regarding his completion of a compliance audit of respondent’s TA-1 account. Mr. Pearson, as the only expert to have completed a compliance audit, testified that there were numerous and ongoing shortages in the TA-1 account (T-264, l. 18-19).
It was Mr. Pearson’s opinion that respondent misappropriated trust funds because of the transfers he made from his TA-1 trust account to his operations account (T-275, l. 6-7). Mr. Pearson’s opinion regarding misappropriation by respondent was also supported by the fact that there were shortages in the TA-1 account for nearly every month of the audit period (T-274, l. 24-25). Moreover, Mr. Pearson clearly identified numerous instances in which respondent used trust funds for his personal use, subsequent to taking the funds from trust and placing them in his operations account (T-278, l. 17-20; T-279, l. 19-23; T-280, l. 5-8 and l. 15-17). Mr. Pearson also testified that respondent made improper disbursements to clients from his TA-1 trust account prior to the related deposit. This meant that respondent was improperly using one client’s trust funds for a different client (T-274, l. 2-16).
Mr. Pearson testified that he was not aware of any of respondent’s clients that had come forward to state that respondent had stolen their funds (T-300, l. 4-7). However, Mr. Pearson in his testimony specifically identified respondent’s trust shortages regarding certain clients. For example, Mr. Pearson identified a $2,000 shortage for respondent’s client, Tequila Golden (T-314, l. 16-18; B-Ex. 18, 20). In response to the referee’s inquiry about misappropriation, Mr. Pearson initially responded in the negative (T-312, l. 10), which likely created some confusion with the referee as to respondent’s conduct with his TA-1 trust account (T-312, l. 11). Thereafter, Mr. Pearson clarified in detail for the referee the impact of the ongoing shortages in respondent’s TA-1 trust account (T-312, l. 12-25). Mr. Pearson clearly testified that after an adjustment was made to respondent’s trust account, the remaining difference represented theft from respondent’s trust account (T-312, l. 24-25). The referee acknowledged, and Mr. Pearson confirmed, that respondent took money before he was entitled to it or that he was not entitled to remove from the trust account (T-313, l. 5-15). The evidence indicates that respondent repeatedly removed funds from the TA-1 account when respondent was not entitled to those funds (T-307, l. 17-25; B-Ex. 18, 20).
During the audit period, over $400,000 came out of the TA-1 account and was transferred to several of respondent’s other accounts (T-302, l. 12-24; B-Ex. 20). While the referee found that respondent was negligent in the management of his trust accounts and respondent conceded continuous non-compliance, the referee found no evidence of theft or misappropriation (ROR-5, 11). Nevertheless, the Court has held that “[k]nowingly or negligently engaging in sloppy bookkeeping amounts to intent under rule 4-8.4(c).” Riggs, 944 So.2d at 171. Ultimately, Mr. Pearson further opined that respondent presented, and continued to present, great public harm based in part on respondent’s misappropriation from the TA-1 account (T-318, l. 14-24). In addition, Mr. Pearson testified that respondent failed to provide full and complete trust records for his remaining nine other trust accounts, including respondent’s debt management trust accounts (T-258, l. 20-25; T-260-261; T-267, l. 12-22). This was despite repeated requests for full and complete trust records, required by rule to be maintained, as well as respondent’s representations to the bar that he had provided everything regarding all his trust accounts. Thus, at the time of the hearing, due to respondent’s own conduct with his numerous trust accounts, a compliance audit for all respondent’s trust accounts could not be completed. Accordingly, it was difficult to make a determination regarding the trust funds which were to be maintained for all respondent’s clients.
In fact, the referee’s most vital reason to modify the emergency suspension order was due to the potential danger to respondent’s debt management clients should respondent’s trust accounts remain frozen (ROR-12). Since respondent alleged that his law firm has over 13,000 debt management clients, this case does warrant special attention in order to sufficiently protect respondent’s clients. Due to the unique circumstances of this matter, the parties requested that this Court use its authority to appoint a neutral party to act as a receiver for the respondent’s debt management trust accounts. On or about June 13, 2011, the bar and respondent stipulated to the appointment of a receiver to complete an accounting and disburse funds from respondent’s debt management trust accounts during the period of his suspension. The bar submits that the stipulation to the appointment of a receiver, which is currently under consideration by this Court, would adequately protect respondent’s clients as the referee proposed, without modifying the emergency suspension.
In this matter, the referee has already determined that The Florida Bar met its burden to prevail on allegations of trust account non-compliance. The bar and respondent have further agreed to the appointment of a neutral receiver to help protect respondent’s clients. Therefore, The Florida Bar requests that this Court order that the emergency suspension remain in full force and effect without modification. – Source
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