Case Number(s): 06-O-14014 and 07-O-10545
In the Matter of: Aron Joshua Laub, Bar # 95478, A Member of the State Bar of California, (Respondent).
Counsel For The State Bar: Dane C. Dauphine,
Assistant Chief Trial Counsel
1149 South Hill St.
Los Angeles, CA 90015-2299
(213) 765-1293
Bar # 121606
Counsel for Respondent: Ellen A. Pansky,
Pansky Markle Ham LLP
1010 Sycamore Ave., #308
South Pasadena, CA 91030
(213) 626-7300
Bar # 77688
Submitted to: Assigned Judge
Filed: November 15, 2011 State Bar Court Clerk’s Office Los Angeles
<<not>> checked. PREVIOUS STIPULATION REJECTED
Note: All information required by this form and any additional information which cannot be provided in the space provided, must be set forth in an attachment to this stipulation under specific headings, e.g., "Facts," "Dismissals," "Conclusions of Law," "Supporting Authority," etc.
1. Respondent is a member of the State Bar of California, admitted December 16, 1980.
2. The parties agree to be bound by the factual stipulations contained herein even if conclusions of law or disposition are rejected or changed by the Supreme Court.
3. All investigations or proceedings listed by case number in the caption of this stipulation are entirely resolved by this stipulation and are deemed consolidated. Dismissed charge(s)/count(s) are listed under "Dismissals." The stipulation consists of 12 pages, not including the order.
4. A statement of acts or omissions acknowledged by Respondent as cause or causes for discipline is included under "Facts."
5. Conclusions of law, drawn from and specifically referring to the facts are also included under "Conclusions of Law".
6. The parties must include supporting authority for the recommended level of discipline under the heading "Supporting Authority."
7. No more than 30 days prior to the filing of this stipulation, Respondent has been advised in writing of any pending investigation/proceeding not resolved by this stipulation, except for criminal investigations.
8. Payment of Disciplinary Costs-Respondent acknowledges the provisions of Bus. & Prof. Code §§6086.10 & 6140.7. (Check one option only):
<<not>> checked. Costs are added to membership fee for calendar year following effective date of discipline (public reproval).
<<not>> checked. Case ineligible for costs (private reproval).
checked. Costs are to be paid in equal amounts prior to February 1 for the following membership years: 2013, 2014 and 2015. (Hardship, special circumstances or other good cause per rule 5.132, Rules of Procedure.) If Respondent fails to pay any installment as described above, or as may be modified by the State Bar Court, the remaining balance is due and payable immediately.
<<not>> checked. Costs are waived in part as set forth in a separate attachment entitled "Partial Waiver of Costs".
<<not>> checked. Costs are entirely waived.
9. The parties understand that:
<<not>> checked. (a) A private reproval imposed on a respondent as a result of a stipulation approved by the Court prior to initiation of a State Bar Court proceeding is part of the respondent’s official State Bar membership records, but is not disclosed in response to public inquiries and is not reported on the State Bar’s web page. The record of the proceeding in which such a private reproval was imposed is not available to the public except as part of the record of any subsequent proceeding in which it is introduced as evidence of a prior record of discipline under the Rules of Procedure of the State Bar.
<<not>> checked. (b) A private reproval imposed on a respondent after initiation of a State Bar Court proceeding is part of the respondent’s official State Bar Membership records, is disclosed in response to public inquiries and is reported as a record of public discipline on the State Bar’s web page.
checked. (c) A public reproval imposed on a respondent is publicly available as part of the respondent’s official State Bar membership records, is disclosed in response to public inquiries and is reported as a record of public discipline on the State Bar’s web page.
Respondent has been in practice since December ! 980 with no prior record of discipline. Respondent was primarily responsible for bdnging the improper activities of Ed Lerner and Crime Attorneys to the attention of the State Bar in 2006. Thereafter, Respondent worked with the Office of the Chief Trial Counsel to see that Crime Attorneys ceased operations and that its remaining clients received a refund of unearned fees that had been deposited in a bank account in Respondent’s name. In November 2006, Respondent executed a declaration detailing his 3 ]/2 month involvement with Crime Attorneys which was used by the State Bar to support its Ex Parte Application for Interim Orders Assuming Jurisdiction Over the Unauthorized Law Practice of Crime Attorneys. Respondent’s candid disclosure to the State Bar demonstrated his spontaneous, overriding concern for the wellbeing of the clients in lieu of any concern for his own self-interest. The events which form the basis of
this proceeding occurred more than five years ago, and there are no other disciplinary charges presented against Respondent before or since.
Respondent must pay $48,901.81 to Cindy Talavera within three years of the effective date of discipline. If the Client Security Fund ("CSF") has reimbursed Ms. Talavera for all or any portion of this amount, Respondent must also pay restitution to CSF of the amount paid within three years of the effective date of discipline.
Respondent must pay $15,000 to Russell H. Smith, Sr., within three years of the effective date of discipline. If the Client Security Fund ("CSF") has reimbursed Mr. Smith for all or any portion of this amount, Respondent must also pay restitution to CSF of the amount paid within three years of the effective date of discipline.
FACTS AND CONCLUSIONS OF LAW.
Respondent admits that the following facts are true and that he is culpable of violations of the specified statutes and/or Rules of Professional Conduct.
Background Facts
1. In March 2006, Respondent was contacted by an individual named Edward Lerner ("Lerner") who was operating a criminal law marketing firm known as "Crime Attorneys." Lerner represented that he was not an attorney but had substantial experience in setting up, marketing, and managing private criminal defense law firms. Lerner also represented that Crime Attorneys was in full compliance with all ethical rules and regulations, acknowledging that a law firm must be controlled by a lawyer and that
he was not permitted to engage in the practice of law. Lerner told Respondent that the lawyer who was serving as Crime Attorneys’ current managing attorney was leaving, and he offered the position to Respondent. Lerner represented that Respondent would be able to manage the firm while focusing on representing his clients since Crime Attorneys would provide clerical assistance and office management functions, employee benefits such as medical insurance, computer research access, and professional
errors and omissions insurance. Before agreeing to become the managing attorney for Crime Attorneys, Respondent spoke to the outgoing managing attorney who did not disclose to Respondent any ethical impropriety that he was engaged in by acting as managing attorney for Crime Attorneys and assuring Respondent that Crime Attorneys was being operated in an ethically proper manner.
2. On or about April 3, 2006, Respondent began acting as managing attorney for Crime Attorneys. He was paid a monthly salary that was based on a projection of the amount of fees that Respondent’s cases would generate, with the understanding that the balance of funds was going for the advertising and law office management expenses of the firm. At that time, there was one other attorney working at Crime Attorneys who had a full and active case load. As cases came into the office,
Respondent informed Lerner that additional attorneys were needed to handle the incoming cases, and Lerner represented that he would advertise to hire additional attorneys.
3. On or about May 31, 2006, Respondent and Lemer opened bank accounts at City National Bank, including a checking account and a client trust account. Both accounts were set up in the name of "Aron J. Laub, DBA Crime Attorneys," and both accounts listed Respondent and Lerner as signatories. Lerner kept physical control of the records for the accounts and controlled all the banking for the firm. Lerner did not disclose to Respondent that he still maintained a bank account which had been opened with the former managing attorney. Lerner concealed from Respondent that the continued to deposit some of the advance fees paid by clients into the bank account that had been opened by the prior managing attorney, rather than depositing those funds into the bank account opened by Respondent.
4. In July 2006, Respondent came to the conclusion that Lemer would not follow Respondent’s direction that he was not to accept further clients for the firm, and after contacting the State Bar’s ethics hotline, Respondent realized that the structure of the firm violated several ethical rules. On July 19, 2006, Respondent informed Lemer that he was leaving Crime Attorneys and needed to transition the existing cases to another attorney. The following day, Respondent returned to the office from a court appearance and discovered that Lemer had had entered his office and had removed from Respondent’s office his client files, documents, and work product. Shortly thereafter, Lerner changed the locks on the office, cancelled Respondent’s parking permit, and cancelled Respondent’s access to computer data, making data which Respondent had saved while performing legal research unavailable to Respondent.
5. On July 24, 2006, Respondent instructed City National Bank to "freeze" both of the accounts that he had opened with Lemer and requested that he be provided with bank statements for those accounts. Respondent also hired attorneys to represent him in demanding the return of client files and transfer of fees from Lerner. Lemer hired an outside law firm to resist cooperating with Respondent but eventually returned some of the client files for Respondent’s clients to Respondent in batches during the
period from July through September 2006.
6. Respondent voluntarily initiated contact with and informed the State Bar of the situation with Lerner and fully cooperated with the State Bar’s efforts in filing an application on December 1, 2006, to the Los Angeles County Superior Court to assume jurisdiction over the portion of Respondent’s law practice being conducted at the Crime Attorneys office. On that date, the court granted interim orders, and on January 26, 2007, the court granted a permanent order for the assumption of jurisdiction over the
portion of Respondent’s law practice that had been conducted under the name Crime Attorneys.
Case No. 06-0-14014 (Complainant: Cindy Talavera)
FACTS:
7. On March 8, 2006, Cindy Talavera ("Talavera") contacted Respondent to represent her nephew, Anthony Hansen, in preparing and litigating a petition for walt of habeas corpus which had to be filed by September 29, 2006. Talavera gave Respondent a large box of files pertaining to the case and agreed to pay Respondent a fiat fee of $50,000 for the legal services in two installments. The first installment of $25,000 was to be paid by March 29, 2006, and the remaining amount was to be paid by June 29, 2006. On March 19, 2006, Talavera received a fee agreement from Respondent, and she contacted Respondent to inform him that she was in escrow on the sale of a house and would pay the fee in full when the escrow closed. Respondent agreed that when he received the fee agreement and the advance fee, he would commence representation of Hansen.
8. In April 2006, Talavera contacted Respondent by telephone, and Respondent informed Talavera that he had joined a law firm known as Crime Attorneys and that she would have to retain the new firm. Thereafter, Lerner contacted Talavera inquiring about the payment of the fees, but she informed him that the closing of the sale of her house had been delayed. On May 25, 2006, Talavera received a letter from Respondent on the Crime Attorneys letterhead inquiring about whether she intended to retain the firm on behalf of Hansen.
9. In late June 2006, Talavera contacted Respondent by telephone and informed him that she was ready to make the payment and retain the firm. Respondent instructed Talavera to contact Lerner and get wiring instructions to pay the fee. Talavera did as instructed and was provided with instructions to wire the funds to an account at City National Bank, but Lerner gave Talavera the account number for the Crime Attorneys account opened with the prior managing attorney and not one of the accounts opened in
Respondent’s name. On or about June 30, 2006, Talavera paid $50,000 by wiring the funds to the Crime Attorneys account opened by the prior managing attorney.
10. In or about July 2006, Talavera contacted Respondent who informed her that he had left the office of Crime Attorneys but that he would continue to represent Anthony Hansen if Talavera still wanted his services.
11. In or about August 2006, Talavera contacted Respondent and informed him that she was seeking other representation for Anthony Hansen, and she requested a refund of the fees paid and the release of the client file. At that time, Respondent had not provided any legal services to Hansen. Respondent was able to obtain most of the client file from Lerner and return it to Talavera on behalf of Hansen. Respondent did not refund any of the fees paid by Talavera because the funds had been retained by Crime Attorneys after Respondent had left the firm.
12. Talavera contacted Lerner and requested the return of the fees, but Lerner refused, offering that Crime Attorneys would represent Hansen. Talavera declined the offer, requesting the return of the fees.
13. When the superior court assumed jurisdiction over Respondent’s law practice at Crime Attorneys, the court also assumed jurisdiction over the two Crime Attorneys bank accounts opened in Respondent’s name which Respondent had previously frozen. Thereafter, the court approved a disbursement of the frozen funds. Since Talavera’s funds had not been deposited in those accounts, she received only the amount of $1,098.19 from the frozen accounts in July 2008.
CONCLUSIONS OF LAW:
14. By failing to supervise Lerner in the deposit of the funds Talavera paid for legal representation of Hansen during the time that Respondent was managing attorney for Crime Attorneys’ fees and not refunding the amount to Talavera which had been misappropriated by Lerner, Respondent failed to refund promptly any part of a fee paid in advance that has not been earned in willful violation of Rules of Professional Conduct, rule 3-700(D)(2).
Case No. 07-0-10545 (Complainant: Russell H. Smith, Sr.)
FACTS:
15. On or about June 5, 2006, family members of Russell H. Smith, Jr., ("Smith") contacted Crime Attorneys to discuss employing the firm to represent Smith in an appeal from the sentencing imposed for a criminal conviction in the State of Virginia, and someone on behalf of the firm quoted a fee of $100,000. On or about June 6, 2006, Respondent spoke to Smith’s father, Russell H. Smith, Sr. about the matter. Thereafter, Smith received a letter from Crime Attorneys signed by Lerner as Chief Executive Officer and listing Respondent as Managing Partner, enclosing a fee agreement to employ Crime Attorneys.
16. On June 9, 2006, Smith employed Crime Attorneys to represent him, and Russell H. Smith, Sr. transferred the sum of $15,000 to Crime Attorneys at Lerner’s direction. Without Respondent’s knowledge or consent, Lemer deposited the funds in the Crime Attorneys account opened with the prior managing attorney rather than depositing the funds into an account opened in Respondent’s name. Respondent did not supervise the receipt of the funds to ensure that they were properly deposited and
did not discover that Lemer had not deposited the funds in one of the accounts in Respondent’s name.
17. In June 2006, Respondent commenced representing Smith.
18. On July 10, 2006, a check payable to Pamela Miller, Smith’s sister, in the sum of $23,800 which she endorsed over to Crime Attorneys was deposited in one of the accounts opened by Respondent as an additional payment towards the fees for legal services.
19. On or about June 28, 2006, a notice of appeal was filed on behalf of Smith by local counsel who had affiliated with Crime Attorneys.
20. On July 20, 2006, and July 25, 2006, without Respondent’s knowledge or consent, Lerner received and deposited in the Crime Attorneys account opened with the prior managing attorney two additional payments received from Smith’s relatives totaling $41,898.85. These payments were deposited after Respondent had notified Lerner that he was terminating his involvement with Crime Attorneys, and Respondent was unaware of the receipt and/or the deposit of these funds.
21. By letter dated August 16, 2006, Crime Attorneys notified Smith that Respondent was no longer the managing partner of Crime Attorneys and that the former staff attorney was now the new managing partner. Respondent also contacted Smith or his father, and Smith chose to continue representation with Respondent. Lerner eventually released Smith’s client file to Respondent, including the record on appeal. Respondent reviewed the record to begin formulating arguments for the appeal.
22. Respondent did not complete the process to obtain permission to appear in the Virginia court as counsel for Smith. For that reason, the Virginia Court of Appeals dismissed Smith’s appeal on October 27, 2006. On January 25, 2007, Respondent mailed a letter to Russell H. Smith, Sr., and to Smith informing them that he was no longer able to continue representing Smith and that the final date for filing a motion for a delayed appeal was April 27, 2007. He acknowledged his responsibility in causing the dismissal of the appeal and offered to provide a declaration in support of a motion for delayed appeal.
23. The Los Angeles County Superior Court approved a disbursement from the Crime Attorneys accounts opened in Respondent’s and Lerner’s names. A total of $25,572.34 was disbursed to Smith or his family members in May and July 2008 from those accounts. Respondent has not refunded the balance of funds in the amount of $15,000 which was received during the time that Respondent was the managing attorney for Crime Attorneys and which were deposited by Lerner in the account opened by the predecessor managing attorney.
CONCLUSIONS OF LAW:
24. By failing to supervise Lerner in the deposit of the $15,000 paid by the Smith family for Smith’s legal representation during the time that Respondent was managing attorney for Crime Attorneys and not refunding that amount, which was misappropriated by Lerner, to Smith or his family, Respondent failed to refund promptly any part of a fee paid in advance that has not been earned in willful violation of Rules of Professional Conduct, rule 3-700(D)(2).
PENDING PROCEEDINGS.
The disclosure date referred to, on page 2, paragraph A(7), was October 26, 2011.
AUTHORITIES SUPPORTING DISCIPLINE.
The Standards for Attorney Sanctions for Professional Misconduct (the "Standards"):
Standard 2.10 provides for a reproval or suspension according to the gravity of the offense or the harm, if any, to the victim for offenses involving other violations not specified in other standard.
Case Law
Failure to refund an unearned fee has resulted in discipline of a public reproval for a single violation or actual suspension up to 6 months where there are repeated violations or other misconduct. (Matthew v. State Bar (1989) 49 Cal.3d 784 [60-days actual suspension for failing to account for and/or refund unearned fees in three matters and failing to and failing to perform services diligently in two of the matters; no prior record of discipline]; In the Matter of Lindmark (Review Dept. 2004) 4 Cal. State Bar Ct. Rptr. 668 [public reproval for failure to refund $5,000 which was eventually reduced to a judgment against the attorney and collected by a bank account levy 21 months after termination of employment; no prior discipline]; In the Matter of Nees (Review Dept. 1996) 3 Cal. State Bar Ct. Rptr. 459 [6-month suspension in a default case for failing to communicate with the client in a habeas corpus case, failing to perform services, failing to release the client file, and failing to refund unearned fees on $7,000, all in one client matter, no prior discipline]; In the Matter of Hanson (Review Dept. 1994) 2 Cal. State Bar Ct. Rprt. 703 [public reproval for failure to refund $1,000 in unearned fees for 15 months until after State Bar involvement; prior private reproval considered remote in time]; In the Matter of Kennon (Review Dept. 1990) 1 Cal. State Bar Ct. Rptr. 267 [30-days actual suspension for failing to perform and communicate in two client matters and failing to refund unearned fees of $2,000 in one of the cases; no prior discipline].)
Due to the mitigating circumstances, a public reproval is an appropriate disposition.
Case Number(s): 06-O-14014, 07-O-10545
In the Matter of: Aron Joshua Laub Number 95478
By their signatures below, the parties and their counsel, as applicable, signify their agreement with each of the recitation and each of the terms and conditions of this Stipulation Re Facts, Conclusions of Law and Disposition.
Signed by:
Respondent: Aron J. Laub
Date: 11-3-11
Respondent’s Counsel: Ellen A. Pansky
Date: 11-7-11
Deputy Trial Counsel: Dane C. Dauphine
Date: 11/9/11
Case Number(s): 06-O-14014 and 07-O-10545
In the Matter of: Aron Joshua Laub, Number 95478
Finding the stipulation to be fair to the parties and that it adequately protects the public, IT IS ORDERED that the requested dismissal of counts/charges, if any, is GRANTED without prejudice, and:
checked. The stipulated facts and disposition are APPROVED AND THE REPROVAL IMPOSED.
<<not>> checked. The stipulated facts and disposition are APPROVED AS MODIFIED as set forth below, and the REPROVAL IMPOSED.
checked. All court dates in the Hearing Department are vacated.
The parties are bound by the stipulation as approved unless: 1) a motion to withdraw or modify the stipulation, filed within 15 days after service of this order, is granted; or 2) this court modifies or further modifies the approved stipulation. (See rule 5.58 (E) & (F), Rules of Procedure.) Otherwise the stipulation shall be effective 15 days after service of this order.
Failure to comply with any conditions attached to this reproval man constitute cause for a separate proceeding for willful breach of rule 1-110, Rules of Professional Conduct.
Signed by:
Judge of the State Bar Court: Richard A. Honn
Date: 11-15-11
[Rules Proc. of State Bar; Rule 5.27(B); Code Civ. Proc., § 1013a(4)]
I am a Case Administrator of the State Bar Court of California. I am over the age of eighteen and not a party to the within proceeding. Pursuant to standard court practice, in the City and County of Los Angeles, on January 24, 2012, I deposited a true copy of the following document(s):
STIPULATION RE FACTS, CONCLUSIONS OF LAW AND DISPOSITION AND
ORDER APPROVING
in a sealed envelope for collection and mailing on that date as follows:
checked by first-class mail, with postage thereon fully prepaid, through the United States Postal Service at Los Angeles, California, addressed as follows;
ELLEN A PANSKY ATTORNEY AT LAW
PANSKY MARKLE HAM LLP
1010 SYCAMORE AVENUE UNIT 308
SOUTH PASADENA, CALIFORNIA 91030
checked by interoffice mail through a facility regularly maintained by the State Bar of California addressed as follows:
Dane C. Dauphine, Enforcement, Los Angeles
I hereby certify that the foregoing is true and correct. Executed in Los Angeles, California, on November 15, 2011.
Signed by:
Julieta E. Gonzales
Case Administrator
State Bar Court