Case Number(s): 07-O-12983
In the Matter of: Richard J. Stinstrom, A Member of the State Bar of California, (Respondent), Bar # 140675
Counsel For The State Bar: Brandon K. Tady, Bar # 83045
Counsel for Respondent: Edward O. Lear, Bar # 132699
Submitted to: Assigned Judge State Bar Court Clerk’s Office Los Angeles
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 June 6, 1989.
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 16 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. until costs are paid in full, Respondent will remain actually suspended from the practice of law unless relief is obtained per rule 284, Rules of Procedure.
checked. costs to be paid in equal amounts prior to February 1 for the following membership years: two billing cycles following the effective date of the Supreme Court Order on this matter. (hardship, special circumstances or other good cause per rule 284, Rules of Procedure.)
<<not>> checked. costs waived in part as set forth in a separate attachment entitled "Partial Waiver of Costs".
<<not>> checked. costs entirely waived.
IN THE MATTER OF: Richard J. Stinstrom
CASE NUMBER(S): ET AL. 07-O-12983
FACTS AND CONCLUSIONS OF LAW
Respondent admits the following facts are true and he is culpable of the violations of the specified statutes.
Case number 07-0-12983
FACTS
1. Respondent is the son of John Duane Stinstrom ("John, Sr.") and Margaret Emma Stinstrom ("Margaret Emma"). On or about October 4, 1983 John, Sr. and Margaret Emma executed their irrevocable Living Trust ("Stinstrom Trust"). Margaret Emma died on December 4, 1983.
2. On or about November 30, 1993, John, Sr. executed an amendment to the Stinstrom Trust. The Amendment provided that, upon John, Sr.’s death, Respondent would act as first successor trustee. In the Amendment, Respondent’s sister, Margaret Elisabeth Stinstrom ("Lisa"), was named as second successor trustee.
3. On or about December 8, 1997, John, Sr. died and Respondent became the successor trustee of the Stinstrom Trust. When Respondent assumed his duties as successor trustee, the total assets of the Stinstrom Trust before payment of any expenses and disbursements to beneficiaries was $987,986.88
4. Four of John, Sr.’s and Margaret Emma’s adult children, including Respondent, are beneficiaries of the Stinstrom Trust. Three of John Sr.’s and Margaret Emma’s grandchildren, including Respondent’s daughter, are beneficiaries of the Stinstrom Trust.
5. Respondent did not represent the Stinstrom Trust as its attorney. Respondent’s admitted misconduct does not relate to his acts within the practice of law.
6. When he assumed his duties as trustee of the Stinstrom Trust, Respondent did not have any legal experience in estate planning, probate law or trust administration.
7. Respondent did not deposit any of the assets of the Stinstrom Trust into an attorney client trust account. Instead, Respondent opened two bank accounts for the benefit of the Stinstrom Trust where he was the signatory. Respondent deposited funds into these two accounts obtained from liquidating assets of the Stinstrom Trust.
8. The most valuable asset of the Stinstrom Trust was John, Sr.’s single family home. Respondent withdrew money from bank accounts opened for- the benefit of the Stinstrom Trust to pay for remodeling John, Sr.’s home. Respondent paid other expenses for the Stinstrom Trust by withdrawing money from Stinstrom Trust bank accounts.
9. Respondent wrote many checks payable to himself and to cash from bank accounts for the Stinstrom Trust. Respondent frequently did not identify what these checks were for. Respondent also did not maintain a detailed accounting or keep records of trust expenses. Although Respondent knew that he was having problems fulfilling his duties as trustee, including failing to maintain proper records of expenses on behalf of the Stinstrom Trust, he did not hire a bookkeeper, accountant, or probate attorney to assist him. Because Respondent did not make an accounting or keep records of trust expenses, he is not able to account for at least $61,269.83 of the Stinstrom Trust’s assets. Respondent claims that the amount of trust assets that are unaccounted for is approximately $28,000. However, Respondent produced an accounting at his deposition on September 16, 2009 that appears to show that the amount of unaccounted for trust assets is $61,269.83.
10. Respondent also claimed expenses for the Stinstrom Trust that should have been discussed with other Stinstrom Trust beneficiaries. The, se claimed expenses are Respondent’s payments to his wife for supervising the remodeling of John Sr.’s home and the amount of Respondent’s trustee’s fee for serving as trustee of the Stinstrom Trust. Respondent did not discuss these claimed expenses with the other Stinstrom Trust beneficiaries before he incurred them. The other Stinstrom Trust beneficiaries dispute these expenses.
11. From in or about December 1997 through in or about late 2001, Lisa requested that Respondent provide her with an accounting of the Stinstrom Trust’s assets, expenses, and disbursements. On December 28, 1998 Respondent gave Lisa and the other Stinstrom Trust beneficiaries a one page document that included categories listing totals for the approximate assets of the Stinstrom Trust, Respondent’s payments of trust expenses, and disbursements to beneficiaries. The one page document did not include details for many of the categories and it did not include any supporting receipts or other documents.
12. Other than the one page document Respondent gave to Lisa and the other Stinstrom Trust beneficiaries on December 28, 1998, he did not provide a formal written accounting to the Stinstrom Trust beneficiaries. However, Respondent had conversations with the Stinstrom Trust beneficiaries concerning trust expenses. As the trustee of the Stinstrom Trust, Respondent had a fiduciary duty to provide the beneficiaries of the Stinstrom Trust with an accounting of assets, expenses, and disbursements in response to Lisa’s requests.
13. In March, 1999, Respondent, acting as the trustee of the Stinstrom Trust, wrote a check to the Internal Revenue Service ("IRS") in the amount of $112,345.00 for estate taxes owing on John, Sr.’s Estate ("IRS Check"). The IRS check was returned for insufficient funds. Respondent is not able to explain why there were not sufficient assets in the Stinstrom Trust to guarantee payment of the IRS check.
14. In or about 2001, Lisa learned the IRS check was returned for non-sufficient funds. In early January 2002, Lisa filed a Petition to Compel an Accounting from Respondent and to remove him as Trustee of the Amended Trust ("Petition") entitled In the Matter of the John D. Stinstrom and Margaret E. Stinstrom Living Trust UTD 10/4/83, Los Angeles Superior Court Case No. BP071079. Respondent was served with the Petition and he received it. Respondent did not file a response to the Petition.
15. On January 3, 2002, the Probate Court granted Lisa’s Petition to remove Respondent as trustee of the Stinstrom Trust. Respondent did not appear at the hearing and the Probate Court ordered him removed as trustee. Lisa was appointed temporary successor trustee of the Stinstrom Trust. Respondent was served with the Probate Court’s Order removing him as trustee and he received it. Respondent did not object to the Order.
16. On March 6, 2002 and June 12, 2002, the Probate Court ordered Respondent to file an accounting of the Stinstrom Trust’s assets, expenses, and disbursements. Respondent was served with the Probate Court’s Orders and received them. Respondent failed to comply with the Probate Court’s Orders and he did not file an accounting.
17. On August 13, 2002, Lisa filed a First and Final Account of Former Trustee Richard J. Stinstrom prepared by Successor Trustee Margaret E. Stinstrom, Petition for its Settlement and Approval, and Request for Surcharge ("First and Final Account"). The First and Final Account listed the Amended Trust’s assets as of January 3, 2002, as $1,115,701.46. Following proper disbursements, distributions, losses on sales, and assets that remained part of the Amended Trust, the First and Final Account accounted for $593,997.26. The First and Final Account listed unaccounted for assets of $521,704.20 during Respondent’s service as trustee of the Stinstrom Trust. This amount includes, as unaccounted for funds, $90,000 that Respondent was entitled to receive as his first distribution and $30,000 that Respondent’s daughter was entitled to receive as her first distribution.
18. Respondent was served with a copy of the First and Final Account and he received it. Respondent did not file an objection or other response to the First and Final Account.
19. On November 4, 2002, the Probate Court held a hearing on the First and Final Account. Respondent did not attend the hearing.
20. On December 9, 2002, the Probate Court issued its Order approving the First and Final Account and for Surcharge. Respondent was served with, and received, a copy of the Order.
21. On September 16, 2009, the State Bar took Respondent’s deposition as a part of the present disciplinary proceeding. For the first time, Respondent produced an accounting stating, among other things, that he is not able to account for at least $61,269.83 of the Stinstrom Trust’s assets. Respondent also testified in detail about other expenses he incurred, as trustee, on behalf of the Stinstrom Trust for which he did not have receipts.
22. Shortly after Respondent’s deposition in the present disciplinary proceeding, Respondent produced for the first time approximately 200 receipts that he claims are for remodeling John, Sr.’s home and for other trust expenses. Respondent claims these receipts reduce the amount of trust assets unaccounted for to approximately $28,000. However, Respondent’s accounting produced on September 16, 2009 appears to show that Respondent is not able to account for $61,269.83 of trust assets. The State Bar and Respondent disagree about the amount of trust assets that are unaccounted for.
23. On or about November 1, 2006, the State Bar opened investigation number 07-0-12983 pursuant to a complaint made by Lisa Stinstrom ("Lisa’s Complaint").
24. On or about September 24, 2007, a State Bar investigator wrote to Respondent regarding Lisa’s Complaint. The investigator’s letter requested that Respondent respond in writing to specified allegations of misconduct regarding Respondent’s service as trustee of the Stinstrom Trust that were being investigated by the State Bar concerning Lisa’s Complaint. The investigator’s letter was placed in a sealed envelope correctly addressed to Respondent at his then State Bar of California membership address. The letter was properly mailed by United States Postal Service first class mail. The United States Postal Service did not return the investigator’s letter as undeliverable or for any other reason.
25. Respondent did not respond to the State Bar’s September 24, 2007 letter regarding Lisa’s Complaint, or otherwise communicate with the State Bar investigator.
26. On or about December 20, 2007 and January 15, 2008, a State Bar investigator wrote to Respondent regarding Lisa’s complaint. The investigator’s letters requested that Respondent respond in writing to specified allegations of misconduct regarding Respondent’ s service as trustee of the Stinstrom Trust that were being investigated by the State Bar concerning Lisa’s Complaint. The investigator’s letters were placed in a sealed envelope correctly addressed to Respondent at his then current place of employment. The letters were properly mailed by United States Postal Service first class mail Respondent received the December 20,2007 and January 15, 2008 letters; but, he did not respond to them.
27. Respondent did not respond to the State Bar’s December 20, 2007 and January 15, 2008 letters regarding the Stinstrom complaint, or otherwise communicate with the State Bar investigator.
CONCLUSIONS OF LAW
28. By failing to keep an accounting and maintain proper records of the Stinstrom Trust’s assets, expenses and disbursements and by failing to discuss with the other Stinstrom Trust beneficiaries Respondent’s payments to his wife and the amount of his trustee’s fee, Respondent was grossly negligent in the performance of his duties as trustee. Respondent’s gross negligence caused him to be unable to account for at least $61,269.83 of the Stinstrom’ s Trust’ s assets; although Respondent claims that the amount unaccounted for is approximately $28,000. By his grossly negligent performance of his duties as trustee of the Stinstrom Trust, Respondent violated California Business and Professions Code, section 6106 pursuant to In the Matter of Conner (Review Dept. 2008) 5 Cal. State Bar Ct. Rptr 93. (There is no finding of dishonesty or corruption.)
29. By failing to comply with Lisa’s requests for an accounting of the Stinstrom Trust’s assets, expenses, and disbursements, and by failing to comply with the Probate Court’s Orders requiring him to file an accounting, Respondent breached his fiduciary duties as trustee. By breaching his fiduciary duties as trustee of the Stinstrom Trust, Respondent violated California Business and Professions Code, section 6106 pursuant to In the Matter of Conner (Review Dept. 2008) 5 Cal. State Bar Ct. Rptr 93. (There is no finding of dishonesty or corruption).
30. By failing to file a written response to the State Bar’s letters of September 24, 2007, December 20, 2007, and January 15, 2008 concerning Lisa’s State Bar complaint, Respondent failed to cooperate in a disciplinary investigation in wilful violation of California Business and Professions Code, section 6068 (i).
WAIVER OF VARIANCE BETWEEN NOTICE OF DISCIPLINARY CHARGES AND STIPULATED FACTS AND CULPABILITY
The parties waive any variance in the Notice of Disciplinary Charges filed on June 26, 2008 and the facts contained in the Stipulation. Additionally, the parties waive the issuance of an amended Notice of Disciplinary Charges. The parties further waive the right to a formal hearing on any charge not included in the Notice of Disciplinary Charges. The parties also acknowledge the Court granted the State Bar’s Motion to Amend the Notice of Disciplinary Charges; but, this matter was resolved before the Amended Notice of Disciplinary Charges was filed.
PENDING PROCEEDINGS.
The disclosure date referred to, on page 2, paragraph A(6), was October 21, 2009.
COSTS OF DISCIPLINARY PROCEEDINGS.
Respondent acknowledges that the Office of the Chief Trial Counsel has informed Respondent that as of October 29, 2009, the prosecution costs in this matter are $5387.55. Respondent further acknowledges that should this stipulation be rejected or should relief from the stipulation be granted, the costs in this matter may increase due to the cost of further proceedings.
AUTHORITIES SUPPORTING DISCIPLINE.
Standard 2.3 provides that culpability of a member of an act of moral turpitude, fraud, or intentional dishonesty toward a court, client, or another person shall result in actual suspension or disbarment depending on the extent to which the victim of the misconduct is harmed or misled and depending on the magnitude of the act of misconduct and the degree to which it relates to the member’s acts within the practice of law.
In the present disciplinary proceeding, Respondent admits that he was grossly negligent in the performance of his duties as trustee of the Stinstrom Trust and he breached his fiduciary duties to provide an accounting to Lisa and to the Probate Court. Respondent also admits he failed to cooperate with the State Bar in its investigation of Lisa’s State Bar complaint. The stipulated discipline of two (2) years actual suspension with the requirement of a Standard 1.4 (c) (ii) hearing, four (4) years stayed suspension, and five (5) years probation is consistent with Standard 2.3.
STATE BAR ETHICS SCHOOL.
Because Respondent has agreed to attend State Bar Ethics School as part of this stipulation, respondent may receive Minimum Continuing Legal Education credit upon the satisfactory completion of State Bar Ethics School.
OTHER CONDITIONS NEGOTIATED BY THE PARTIES.
Respondent agrees not to oppose a claim by the Stinstrom Trust with the State Bar’s Client Security Fund (“CSF") for reimbursement.
FINANCIAL CONDITIONS, RESTITUTION.
See attached Financial Conditions Form.
Case Number(s): 07-O-12983
In the Matter of: Richard J. Stinstrom A Member of the State Bar
a. Restitution
checked. Respondent must pay restitution (including the principal amount, plus interest of 10% per annum) to the payee(s) listed below. If the Client Security Fund (“CSF”) has reimbursed one or more of the payee(s) for all or any portion of the principal amount(s) listed below, Respondent must also pay restitution to CSF in the amount(s) paid, plus applicable interest and costs.
1. Payee: The John D. Stinstrom and Margaret E. Stinstrom Living Trust UTD 10/4/83
Principal Amount: $61,269.83
Interest Accrues From: Respondent is required to begin making minimum monthly payments of $250 beginning the first month immediately following Respondent’s completion of his two (2) years actual suspension. If Respondent timely makes each $250 monthly payment and he pays the principal amount of $61,269.83 not later than 30 days prior to the expiration of the period of probation, then Respondent is not required to pay interest on the principal amount of $61,269.83. If Respondent fails to make any of his minimum monthly payments of $250 or he is late making any of his minimum monthly payments of $250, then interest at the legal rate of 10% per annum on the entire principal amount of $61,269.83 shall accrue from January 3, 2002.
<<not checked>>Respondent must pay above-referenced restitution and provide satisfactory proof of payment to the Office of Probation not later than
checked. Respondent must pay the above-referenced restitution on the payment schedule set forth below. Respondent must provide satisfactory proof of payment to the Office of Probation with each quarterly probation report, or as otherwise directed by the Office of Probation. No later than 30 days prior to the expiration of the period of probation (or period of reproval), Respondent must make any necessary final payment(s) in order to complete the payment of restitution, including interest, in full.
1. Payee/CSF (as applicable) John D. Stinstrom and Margaret E. Stinstrom Living Trust UTD 10/4/83
Minimum Payment Amount $250 per month.
Payment Frequency Respondent is required to make a Living Trust UTD 10/4/83 minimum payment each month of $250. Respondent’s first minimum monthly payment of $250 is due by the end of the first month immediately following Respondent’s completion of his two years actual suspension. Respondent is not precluded from making minimum monthly payments during the period of his two (2) years actual suspension. Respondent is required to pay the full amount of $61,269.83 not later than 30 days prior to the expiration of the period of probation.
<<not>> checked.
1. If Respondent possesses client funds at any time during the period covered by a required quarterly report, Respondent must file with each required report a certificate from Respondent and/or a certified public accountant or other financial professional approved by the Office of Probation, certifying that:
a. Respondent has maintained a bank account in a bank authorized to do business in the State of California, at a branch located within the State of California, and that such account is designated as a “Trust Account” or “Clients’ Funds Account”;
b. Respondent has kept and maintained the following:
i. A written ledger for each client on whose behalf funds are held that sets forth:
1. the name of such client;
2. the date, amount and source of all funds received on behalf of such client;
3. the date, amount, payee and purpose of each disbursement made on behalf of such client; and,
4. the current balance for such client.
ii. a written journal for each client trust fund account that sets forth:
1. the name of such account;
2. the date, amount and client affected by each debit and credit; and,
3. the current balance in such account.
iii. all bank statements and cancelled checks for each client trust account; and,
iv. each monthly reconciliation (balancing) of (i), (ii), and (iii), above, and if there are any differences between the monthly total balances reflected in (i), (ii), and (iii), above, the reasons for the differences.
c. Respondent has maintained a written journal of securities or other properties held for clients that specifies:
i. each item of security and property held;
ii. the person on whose behalf the security or property is held;
iii. the date of receipt of the security or property;
iv. the date of distribution of the security or property; and,
v. the person to whom the security or property was distributed.
2. If Respondent does not possess any client funds, property or securities during the entire period covered by a report, Respondent must so state under penalty of perjury in the report filed with the Office of Probation for that reporting period. In this circumstance, Respondent need not file the accountant’s certificate described above.
3.
The requirements
of this condition are in addition to those set forth in rule 4-100, Rules of
Professional Conduct.
<<not>> checked. Within one (1) year of the effective date of the discipline herein, Respondent must supply to the Office of Probation satisfactory proof of attendance at a session of the Ethics School Client Trust Accounting School, within the same period of time, and passage of the test given at the end of that session.
SIGNATURE OF THE PARTIES
Case Number(s): 07-O-12983
In the Matter of: Richard J. Stinstrom
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: Richard J. Stinstrom
Date: 12-23-2009
Respondent’s Counsel: Edward O. Lear
Date: 12/23/09
Deputy Trial Counsel: Brandon K. Tady
Date: 12/23/09
Case Number(s): 07-O-12983
In the Matter of: Richard J. Stinstrom
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 DISCIPLINE RECOMMENDED to the Supreme Court.
<<not>> checked. The stipulated facts and disposition are APPROVED AS MODIFIED as set forth below, and the DISCIPLINE IS RECOMMENDED to the Supreme Court.
<<not>> checked. All Hearing dates 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 135(b), Rules of Procedure.) The effective date of this disposition is the effective date of the Supreme Court order herein, normally 30 days after the file date. (See rule 9.18(a), California Rules of Court.)
Signed by:
Judge of the State Bar Court: Richard A. Honn
Date: 1-20-10
[Rule 62(b), Rules Proc.; 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 20, 2010, 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:
EDWARD O. LEAR
CENTURY LAW GROUP LLP
5200 W CENTURY BLVD #345
LOS ANGELES, CA 90045
checked. by interoffice mail through a facility regularly maintained by the State Bar of California addressed as follows:
Brandon Keith Tady, Enforcement, Los Angeles
I hereby certify that the foregoing is true and correct. Executed in Los Angeles, California, on January 20, 2010.
Signed by:
Cristina Potter
Case Administrator
State Bar Court