Case Number(s): 07-O-14468
In the Matter of: David Lowell Nelson, Bar # 170905, A Member of the State Bar of California, (Respondent).
Counsel For The State Bar: Mia R. Ellis, Deputy Trial Counsel
1149 S. Hill Street
Los Angeles, CA 90015
213-765-1380
Bar # 228235,
Counsel for Respondent: Susan Margolis, Margolis & Margolis LLP
2000 Riverside Drive
Los Angeles, CA 90039
Bar # 104629,
Submitted to: Settlement Judge – 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 June 1, 1994.
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 11 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 5.130, Rules of Procedure.
checked. Costs are to be paid in equal amounts prior to February 1 for the following membership years: 2012, 2013. (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.
IN THE MATTER OF: David Lowell Nelson, State Bar No. 170905
STATE BAR COURT CASE NUMBER: 07-O-14468
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.
Facts
1. Beginning September 2004 through the end of March 2005. Respondent’s office manager embezzled approximately $100,000 in funds from Respondent’s Client Trust Account. Respondent learned about the embezzlement toward the end of March 2005.
2. On November 17, 2004, Jennifer Hall ("Mrs. Hall") employed Respondent to represent her and her two minor children ("the minors") in a personal injury, claim. At the time, Mrs. Flail was also going through a divorce, but was represented by separate counsel in that matter.
3. The retainer agreement initially stated that the attorney fees would be thirty-three and one-third percent (33 1/3%) of any and all amounts recovered by way of settlement. However, the parties subsequently modified the retainer agreement and agreed that Respondent would receive 25% as attorney fees.
4. In or about April 2005, Respondent’s office manager re-paid approximately $40,000 of the funds he had embezzled to Respondent.
5. In September 2005, Respondent refinanced his home the approximately $37,000 to repay additional money to his Client Trust Account.
6. From September 2005 through February 2007, Respondent attempted to reconcile the embezzled money with the financial obligations to his clients.
7. On June 19, 2006, Mrs. Hall signed releases to settle her and the minors" personal injury, claim.
8. On June 20, 2006, Infinity Insurance ("Infinity") issued three settlement checks. The first check was payable to Mrs. Hall and Respondent in the sum of $15.000.00. The other two drafts were payable to Respondent. Mrs. Hail, and minors in the sum of 750.00 each. The settlement totaled $16,500.00.
9. On June 27, 2006, Respondent deposited the three checks from Infinity into Respondent’s Wells Fargo Bank client trust account ("CTA").
10. On June 27, 2006. Respondent issued a check to himself for $4,125.00 as his attorney fees.
11. As of June 28, 2006, Respondent was obligated to maintain $12,375 in the Wells Fargo Bank CTA on behalf of Mrs. Hall and the minors.
12. On July 14, 2006, the balance in the CTA dropped to $10,645.73
13. On July 24, 2006, Respondent sent a letter to Mrs. Hall explaining the disbursement of the $16.500.00 in settlement funds, which included:
Attorney’s fees $5,375.00
Dr. Bodzin for Medical Bills $5.404.03
Balance $4,220.97
The actual balance owed to Mrs. Hall and the minors after disbursement was $5,720.97. Respondent stated in the letter that he was inclined to keep a balance of $4.220.97 in his trust account until it could be determined in the pending Hall divorce proceeding who would have a claim to the funds.
14. On July 24, 2006, Respondent disbursed $1,250 to Mrs. Hall from his CTA.
15. Since Respondent did not disburse more money to Dr. Bodzin or Mrs. Hall, as of July 25, 2006. Respondent was required to maintain $11,125 in the CTA.
16. In August 2006, an attorney handling Mrs. Hall’s dissolution matter advised Respondent that Mrs. Hall’s husband would not be making a claim for any portion of the personal injury funds.
17. On September 14, 2006, with no additional disbursements to Mrs. Hall or to Dr. Bodzin, the balance in Respondent’s CTA fell to $4,349.73, $6,775.27 less than he was required to maintain in Hall matter.
18. On February 9, 2007, Respondent sent another letter to Mrs. Hall regarding the disbursement of funds. This time, the total amounts reflected on the disbursement sheet were;
Attorney’s fees $4,125.00
Dr. Bodzin for Medical Bills $5.404.03
Amount already Paid to Hall $1250.00
Balance $5,721.00
Respondent also enclosed with the letter a check made payable to Mrs. Hall in the amount of $5,721.
19. In March 2007, Mrs. Hall discovered that Respondent had not paid Dr. Bodzin as Respondent claimed on the disbursement sheets. Mrs. Hall began making monthly payments to Dr. Bodzin to satisfy the bill.
20. On October 26, 2007, Respondent sent an email to Mrs. Hall’s new attorney. In the email. Respondent acknowledged Mrs. Hall’s attempts to collect the funds held by Respondent and to pay the medical bills. In addition, Respondent stated he had confirmed that Mrs. Hall had paid Dr. Bodzin $4,597.98 and that $500.00 remained unpaid. In addition, Respondent stated that he would make Mrs. Hall whole.
21. On October 31, 2007, Respondent sent a cashier’s check in the amount of $5,800.00 to Mrs. Hall’s new attorney to reimburse Mrs. Hall and to satisfy Dr. Bodzin’s bill. Respondent ultimately disbursed $12,771 to Mrs. Hall.
Conclusions of Law
Through grossly negligent conduct of not maintaining the required funds in his CTA on behalf of Mrs. Hall and minors, Respondent wilfully failed to maintain client funds in a trust account in violation Rules of Professional Conduct, rule 4-100(A).
By misappropriating at least $6,775.27 of his client’s funds for his own use and benefit. Respondent was grossly negligent in violating Business and Professions Code, section 6106.
PENDING PROCEEDINGS.
The disclosure date referred to. on page 2, paragraph A(7), was November 23, 2010.
COSTS OF DISCIPLINARY PROCEEDINGS.
Respondent acknowledges that the Office of the Chief Trial Counsel has informed respondent that as of November 23, 2010, the prosecution costs in this matter are $2,057.30. 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 2.2(a) culpability of a member of wilful misappropriation of entrusted funds or property shall result in disbarment. Only if the amount of funds or property misappropriated is insignificantly small or if the most compelling mitigating circumstances clearly predominate, shall disbarment not be imposed. In those latter cases, the discipline shall not be less than a one-year actual suspension, irrespective of mitigating circumstances.
Standard 2.3 -culpability of a member of an act of moral turpitude, fraud, or intentional dishonesty toward a court, client or another person or of concealment of a material fact to a court, client or another person shall result in actual suspension or disbarment depending upon the extent to which the victim of the misconduct is harmed or misled and depending upon the magnitude of the act of misconduct and the degree to which it relates to the member’s acts within the practice of law.
AGGRAVATING CIRCUMSTANCES.
FACTS SUPPORTING AGGRAVATING CIRCUMSTANCES.
Respondent’s conduct harmed his client as she found it necessary to hire new counsel to assist in resolving the outstanding liens in this case.
MITIGATING CIRCUMSTANCES.
FACTS SUPPORTING MITIGATING CIRCUMSTANCES.
Although the misconduct is serious, Respondent has no prior record of discipline in his twelve years of practice.
Respondent’s office manager embezzled $100,000 from his Client Trust Account which money was never fully repaid. During that time, Respondent suffered difficulties in his personal life when his son was born with serious medical complications that required prolonged and repeated hospitalizations over a period of months. Also, during this time, Respondent was caring for his
mother, who suffered serious health problems.
Respondent has been cooperative to the extent that he stipulated to facts, conclusions of law and level of discipline.
Respondent’s good character is attested to by a wide range of references in the legal and general communities who are aware of the full extent of his misconduct. The character letters remain in the State Bar file.
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.
SIGNATURE OF THE PARTIES
Case Number(s): 07-O-14468
In the Matter of: David Lowell Nelson
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: David Lowell Nelson
Date: December 19, 2010
Respondent’s Counsel: Susan Margolis
Date: December 22, 2010
Deputy Trial Counsel: Mia R. Ellis
Date: December 28, 2010
Case Number(s): 07-O-14468
In the Matter of: David Lowell Nelson
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 5.58 (E) & (F), 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. Platel
Date: January 18, 2011
[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 20, 2011, 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:
SUSAN LYNN MARGOLIS
MARGOLIS & MARGOLIS, LLP
2000 RIVERSIDE DRIVE
LOS ANGELES, CA 90039
checked. by interoffice mail through a facility regularly maintained by the State Bar of California addressed as follows:
Mia R. Ellis, Enforcement, Los Angeles
I hereby certify that the foregoing is true and correct. Executed in Los Angeles, California, on January 20, 2011.
Signed by:
Johnnie Lee Smith
Case Administrator
State Bar Court