State Bar Court of California

Hearing Department

STIPULATION RE FACTS, CONCLUSIONS OF LAW AND DISPOSITION AND ORDER APPROVING

ACTUAL SUSPENSION

Case Number(s): 09-O-13757

In the Matter of: Fernando Vargas Hernandez, Bar # 40498, A Member of the State Bar of California, (Respondent).

Counsel For The State Bar: Christine Souhrada, Deputy Trial Counsel

180 Howard Street

San Francisco, CA 94105

Phone: (415) 538-2183

Fax: (415) 538-2284

Bar # 228256,

Counsel for Respondent: In Pro Per Respondent

Fernando Vargas Hernandez, Attorney at Law

4 N 2^nd St Ste 590

San Jose, CA 95113

Bar # 40498,

Submitted to: Settlement Judge – State Bar Court Clerk’s Office San Francisco.

Filed: November 29, 2010.

<<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.

A.  Parties' Acknowledgments:

1. Respondent is a member of the State Bar of California, admitted June 13, 1967.

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: two billing cycles following the effective date of the Supreme Court Order.  (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.

B.        Aggravating Circumstances [for definition, see Standards for Attorney Sanctions for Professional Misconduct, standard 1.2(b)]. Facts supporting aggravating circumstances are required.

checked. (1) Prior record of discipline [see standard 1.2(f)]

checked. (a)                  State Bar Court case # of prior case BM4922.

checked. (b)                  Date prior discipline effective June 14,1985.

checked. (c)                  Rules of Professional Conduct/ State Bar Act violations: Business and Professions Code, section 6106; Rules of Professional conduct, former rule 8-101

checked. (d)                  Degree of prior discipline 90 days actual suspension.

<<not>> checked. (e)    If Respondent has two or more incidents of prior discipline, use space provided below. .

<<not>> checked. (2) Dishonesty:  Respondent's misconduct was surrounded by or followed by bad faith, dishonesty, concealment, overreaching or other violations of the State Bar Act or Rules of Professional Conduct.

<<not>> checked. (3) Trust Violation:  Trust funds or property were involved and Respondent refused or was unable to account to the client or person who was the object of the misconduct for improper conduct toward said funds or property.

<<not>> checked. (4) Harm:  Respondent's misconduct harmed significantly a client, the public or the administration of justice.

<<not>> checked. (5) Indifference:  Respondent demonstrated indifference toward rectification of or atonement for the consequences of his or her misconduct.

<<not>> checked. (6) Lack of Cooperation:  Respondent displayed a lack of candor and cooperation to victims of his/her misconduct or to the State Bar during disciplinary investigation or proceedings. 

<<not>> checked. (7) Multiple/Pattern of Misconduct:  Respondent's current misconduct evidences multiple acts of wrongdoing or demonstrates a pattern of misconduct.

<<not>> checked. (8) No aggravating circumstances are involved.
Additional aggravating circumstances: .

C. Mitigating Circumstances [see standard 1.2(e)]. Facts supporting mitigating circumstances are required.

<<not>> checked. (1)    No Prior Discipline:  Respondent has no prior record of discipline over many years of practice coupled with present misconduct which is not deemed serious.

<<not>> checked. (2)    No Harm:  Respondent did not harm the client or person who was the object of the misconduct. 

<<not>> checked. (3)    Candor/Cooperation:  Respondent displayed spontaneous candor and cooperation with the victims of his/her misconduct and to the State Bar during disciplinary investigation and proceedings. 

<<not>> checked. (4)    Remorse:  Respondent promptly took objective steps spontaneously demonstrating remorse and recognition of the wrongdoing, which steps were designed to timely atone for any consequences of his/her misconduct. 

<<not>> checked. (5)    Restitution:  Respondent paid $   on   in restitution to   without the threat or force of disciplinary, civil or criminal proceedings.

<<not>> checked. (6)    Delay:  These disciplinary proceedings were excessively delayed.  The delay is not attributable to Respondent and the delay prejudiced him/her.

<<not>> checked. (7)    Good Faith:  Respondent acted in good faith.

<<not>> checked. (8)    Emotional/Physical Difficulties:  At the time of the stipulated act or acts of professional misconduct Respondent suffered extreme emotional difficulties or physical disabilities which expert testimony would establish was directly responsible for the misconduct.  The difficulties or disabilities were not the product of any illegal conduct by the member, such as illegal drug or substance abuse, and Respondent no longer suffers from such difficulties or disabilities.

<<not>> checked. (9)    Severe Financial Stress:  At the time of the misconduct, Respondent suffered from severe financial stress which resulted from circumstances not reasonably foreseeable or which were beyond his/her control and which were directly responsible for the misconduct.

checked. (10) Family Problems:  At the time of the misconduct, Respondent suffered extreme difficulties in his/her personal life which were other than emotional or physical in nature. At the time of the misconduct, Respondent was dealing with the mental illness and subsequent incarceration of one of his children which caused great stress on Respondent and his family.

<<not>> checked. (11) Good Character:  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/her misconduct.

<<not>> checked. (12) Rehabilitation:  Considerable time has passed since the acts of professional misconduct occurred followed by convincing proof of subsequent rehabilitation.

<<not>> checked. (13) No mitigating circumstances are involved.
Additional mitigating circumstances: 

D. Discipline:

checked. (1)           Stayed Suspension:

checked. (a) Respondent must be suspended from the practice of law for a period of two years.

<<not>> checked. i. and until Respondent shows proof satisfactory to the State Bar Court of rehabilitation and present fitness to practice and present learning and ability in the law pursuant to standard 1.4(c)(ii) Standards for Attorney Sanctions for Professional Misconduct.

<<not>> checked. ii. and until Respondent pays restitution as set forth in the Financial Conditions form attached to this stipulation.

<<not>> checked. iii. and until Respondent does the following: .

checked. (b) The above-referenced suspension is stayed.

checked. (2) Probation:  Respondent must be placed on probation for a period of two years, which will commence upon the effective date of the Supreme Court order in this matter.  (See rule 9.18, California Rules of Court.)

checked. (3) Actual Suspension:

checked. (a) Respondent must be actually suspended from the practice of law in the State of California for a period of six months.

<<not>> checked. i. and until Respondent shows proof satisfactory to the State Bar Court of rehabilitation and present fitness to practice and present learning and ability in the law pursuant to standard 1.4(c)(ii), Standards for Attorney Sanctions for Professional Misconduct

checked. ii. and until Respondent pays restitution as set forth in the Financial Conditions form attached to this stipulation.

<<not>> checked. iii. and until Respondent does the following: .

E. Additional Conditions of Probation:

checked. (1)                  If Respondent is actually suspended for two years or more, he/she must remain actually suspended until  he/she proves to the State Bar Court his/her rehabilitation, fitness to practice, and learning and ability in the general law, pursuant to standard 1.4(c)(ii), Standards for Attorney Sanctions for Professional Misconduct.

checked. (2)                  During the probation period, Respondent must comply with the provisions of the State Bar Act and Rules of Professional Conduct.

checked. (3)                  Within ten (10) days of any change, Respondent must report to the Membership Records Office of the State Bar and to the Office of Probation of the State Bar of California ("Office of Probation"), all changes of information, including current office address and telephone number, or other address for State Bar purposes, as prescribed by section 6002.1 of the Business and Professions Code.

checked. (4)                  Within thirty (30) days from the effective date of discipline, Respondent must contact the Office of Probation and schedule a meeting with Respondent's assigned probation deputy to discuss these terms and conditions of probation. Upon the direction of the Office of Probation, Respondent must meet with the probation deputy either in-person or by telephone. During the period of probation, Respondent must promptly meet with the probation deputy as directed and upon request.

checked. (5)                  Respondent must submit written quarterly reports to the Office of Probation on each January 10, April 10, July 10, and October 10 of the period of probation. Under penalty of perjury, Respondent must state whether Respondent has complied with the State Bar Act, the Rules of Professional Conduct, and all conditions of probation during the preceding calendar quarter. Respondent must also state whether there are any proceedings pending against him or her in the State Bar Court and if so, the case number and current status of that proceeding. If the first report would cover less than 30 days, that report must be submitted on the next quarter date, and cover the extended period.
In addition to all quarterly reports, a final report, containing the same information, is due no earlier than twenty (20) days before the last day of the period of probation and no later than the last day of probation.

<<not>> checked. (6)   Respondent must be assigned a probation monitor. Respondent must promptly review the terms and conditions of probation with the probation monitor to establish a manner and schedule of compliance. During the period of probation, Respondent must furnish to the monitor such reports as may be requested, in addition to the quarterly reports required to be submitted to the Office of Probation. Respondent must cooperate fully with the probation monitor.

checked. (7)                  Subject to assertion of applicable privileges, Respondent must answer fully, promptly and truthfully any inquiries of the Office of Probation and any probation monitor assigned under these conditions which are directed to Respondent personally or in writing relating to whether Respondent is complying or has complied with the probation conditions.

checked. (8)                  Within one (1) year of the effective date of the discipline herein, Respondent must provide to the Office of Probation satisfactory proof of attendance at a session of the Ethics School, and passage of the test given at the end of that session.
No Ethics School recommended.  Reason: .

checked. (9)                  Respondent must comply with all conditions of probation imposed in the underlying criminal matter and must so declare under penalty of perjury in conjunction with any quarterly report to be filed with the Office of Probation.

checked. (10)                The following conditions are attached hereto and incorporated:

<<not>> checked. Substance Abuse Conditions.

<<not>> checked. Law Office Management Conditions.

<<not>> checked. Medical Conditions.

checked. Financial Conditions.

F.  Other Conditions Negotiated by the Parties:

checked. (1)                  Multistate Professional Responsibility Examination:  Respondent must provide proof of passage of the Multistate Professional Responsibility Examination ("MPRE"), administered by the National Conference of Bar Examiners, to the Office of Probation during the period of actual suspension or within one year, whichever period is longer.  Failure to pass the MPRE results in actual suspension without further hearing until passage. But see rule 9.10(b), California Rules of Court, and rule 5.162(A) & (E), Rules of Procedure.
<<not>> checked. No MPRE recommended.  Reason: .

checked. (2)                  Rule 9.20, California Rules of Court:  Respondent must comply with the requirements of rule 9.20, California Rules of Court, and perform the acts specified in subdivisions (a) and (c) of that rule within 30 and 40 calendar days, respectively, after the effective date of the Supreme Court's Order in this matter.

<<not>> checked. (3)   Conditional Rule 9.20, California Rules of Court:  If Respondent remains actually suspended for 90 days or more, he/she must comply with the requirements of rule 9.20, California Rules of Court, and perform the acts specified in subdivisions (a) and (c) of that rule within 120 and 130 calendar days, respectively, after the effective date of the Supreme Court's Order in this matter.

<<not>> checked. (4)   Credit for Interim Suspension [conviction referral cases only]:  Respondent will be credited for the period of his/her interim suspension toward the stipulated period of actual suspension. Date of commencement of interim suspension:

<<not>> checked. (5)   Other Conditions:

Attachment language (if any):

FINANCIAL CONDITIONS

Case Number(s): 09-O-13757

In the Matter of: Fernando Vargas Hernandez

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: Bernardo and Maria Elena Lopez

   Principal Amount: $2,027.50

   Interest Accrues From: May 29, 2009

2. Payee:

   Principal Amount:

   Interest Accrues From:

3. Payee:

   Principal Amount:

   Interest Accrues From:

4. Payee:

   Principal Amount:

   Interest Accrues From:

checked. Respondent must pay above-referenced restitution and provide satisfactory proof of payment to the Office of Probation not later than .

b. Installment Restitution Payments

<<not>> 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)

   Minimum Payment Amount

   Payment Frequency

2. Payee/CSF (as applicable)

   Minimum Payment Amount

   Payment Frequency

3. Payee/CSF (as applicable)

   Minimum Payment Amount

   Payment Frequency

4. Payee/CSF (as applicable)

   Minimum Payment Amount

   Payment Frequency

<<not>> checked. 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.

c. Client Funds Certificate

<<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.

d. Client Trust Accounting School

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.

ATTACHMENT TO

STIPULATION RE FACTS, CONCLUSIONS OF LAW AND DISPOSITION

IN THE MATTER OF: Fernando Vargas Hernandez, State Bar No. 40498

STATE BAR COURT CASE NUMBER: 09-O-13757

I. FACTS AND CONCLUSIONS OF LAW

FACTS

1. On November 11, 2008, Maria Elena Lopez (hereinafter, “Lopez”), and her husband, Bernardo Lopez, hired respondent to represent then in a dispute involving a construction contract, and paid respondent an advanced fee of $3,000 towards his services.

2. On November 12, 2008, and again on December 3, 2008, respondent wrote to the construction contractor, Hahn Ha, on Lopez’s behalf.

3. On December 16, 2008, Lopez met with respondent and gave him two additional payments totaling $3,320. One payment was the sum of $3,000 for advanced legal fees. The second payment, in the amount of $320, was an advanced cost for the filing fee for filing suit.

4. Respondent did not file suit on behalf of Lopez.

5. Respondent failed to deposit Lopez’s check in the sum of $320 for filing fees in his CTA account. Respondent also failed to maintain these funds in his CTA account. This money was not spent on behalf of Lopez as respondent did not file suit on her behalf.

6. On January 6, 2008, respondent sent another letter to the contractor on behalf of Lopez.

7. In February of 2009, respondent called Lopez and asked for an additional $1,500. Thereafter, Lopez terminated respondent’s services.

8. On May 29, 2009, Lopez wrote a letter to respondent, requesting that a portion of their fees be returned to her. Respondent failed to refund any fees to Lopez.

9. On August 24, 2009, in response to the State Bar investigation of this matter, respondent provided a Statement for Legal Services on the Lopez matter. Respondent’s Statement of Account indicated that he had earned $4,292.50. This would leave $2,027.50 due and payable to Lopez according to Respondent’s own accounting.

10. To date, respondent had failed to make any payment to Lopez.

Conclusions of Law:

11. By failing to deposit and maintain Lopez’s advanced cost, the $320 filing fee, in his CTA, respondent failed to deposit funds received for the benefit of a client in a bank account labeled “Trust Account”, “Client’s Funds Account” or words of similar import, in willful violation of Rules of Professional Conduct, rule 4-100(A).

12. By failing to refund a sum at minimum $2,027.50 (representing respondent’s accounting of what was due in refund) to Lopez, respondent failed , upon termination of his services, to refund any unearned fees and costs to Lopez, in willful violation of Rules of Professional Conduct, rule 3-700(D)(2).

II. SUPPORTING AUTHORITY

“An attorney has a ‘personal obligation of reasonable care to comply with the critically important rules for the safekeeping and disposition of client funds.’ [citation omitted] This duty is nondelegable. [citation omitted]…” In the Matter of Malek-Yonan (Rev. Dept. 2003) 4 Cal. State Bar Ct. Rptr. 627, 635.

The Standards for Attorney Sanctions for Professional Misconduct, standard 1.7 dictates the effect of prior discipline. Specifically, standard 1.7(a) states that where a respondent has no prior imposition of discipline the discipline in the current matter “shall be greater than that imposed in the prior proceeding.” Under standard 1.7(a) discipline in the present case must be above the 90 days actual suspension Respondent received in 1985.

III. PENDING PROCEEDINGS

The disclosure date referred to in paragraph A(7) of this stipulation, was November 12, 2010.

IV. WAIVER OF VARIANCE BETWEEN NOTICE OF DISCIPLINARY CHARGES AND STIPULATED FACTS AND CULPABILITY

The parties waive any variance between the Notice of Disciplinary Charges filed on July 22, 2010 and the facts and/or conclusions of law in this stipulation. Additionally, the parties waive the issuance of an amended Notice of Disciplinary Charges and to a formal hearing on any charge not included in the pending Notice of Disciplinary Charges.

V. DISMISSALS

The parties respectfully request that the Court dismiss count 2 (Rules of Professional Conduct, rule 4-100(B)(3) and count 4 (Business and Professions Code, section 6106) with prejudice in the interest of justice.

VI. ESTIMATE OF COSTS OF DISCIPLINARY PROCEEDINGS

Respondent acknowledges that the Office of the Chief Trial Counsel has informed Respondent that as of November 12, 2010, the estimated prosecution costs in this matter are approximately $2,669.18. Respondent acknowledges that this figure is an estimate only. Respondent further acknowledges that should this stipulation be rejected or should relief from this stipulation be granted, the costs in this matter may increase due to the cost of further proceedings.

SIGNATURE OF THE PARTIES

Case Number(s): 09-O-13757

In the Matter of: Fernando Vargas Hernandez

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: Fernando Vargas Hernandez

Date: November 12, 2010

Respondent’s Counsel:

Date:

Deputy Trial Counsel: Christine Souhrada

Date: November 15, 2010

ACTUAL SUSPENSION ORDER

Case Number(s): 09-O-13757

In the Matter of: Fernando Vargas Hernandez

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.

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: Lucy Armendariz

Date: November 29, 2010

CERTIFICATE OF SERVICE

[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 San Francisco, on November 29, 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 San Francisco, California, addressed as follows:

FERNANDO VARGAS HERNANDEZ

ATTORNEY AT LAW

4 N 2^ND ST STE 590

SAN JOSE, CA 95113

<<not>> checked. by certified mail, No. , with return receipt requested, through the United States Postal Service at , California, addressed as follows:

<<not>> checked. by overnight mail at , California, addressed as follows:

<<not>> checked. by fax transmission, at fax number . No error was reported by the fax machine that I used.

<<not>> checked. By personal service by leaving the documents in a sealed envelope or package clearly labeled to identify the attorney being served with a receptionist or a person having charge of the attorney’s office, addressed as follows:

checked. by interoffice mail through a facility regularly maintained by the State Bar of California addressed as follows:

Christine Souhrada, Enforcement, San Francisco

I hereby certify that the foregoing is true and correct. Executed in San Francisco, California, on November 29, 2010.

Signed by:

George Hue

Case Administrator

State Bar Court