Case Number(s): 09-O-15403-PEM
In the Matter of: David L. Kagel, Bar # 58961, A Member of the State Bar of California, (Respondent).
Counsel For The State Bar: Kevin B. Taylor
Office of the Chief Trial Counsel
State Bar of Califomia
1149 S. Hill St.
Los Angeles, CA 90015
213 765-1630
Bar# 151715
Counsel for Respondent: Arthur Margolis
Margolis & Margolis
2000 Riverside Dr.
Los Angeles, CA 90039
323 953-8996
Bar # 57703
Submitted to: Settlement Judge – State Bar Court Clerk’s Office San Francisco.
<<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 April 30, 1974.
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):
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.
<<not>> checked. Costs are to be paid in equal amounts prior to February 1 for the following membership years:(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.
Case Number(s): 09-O-15403-PEM
In the Matter of: David L. Kagel
a. Restitution
<<not>> 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:
Principal Amount:
Interest Accrues From:
2. Payee:
Principal Amount:
Interest Accrues From:
3. Payee:
Principal Amount:
Interest Accrues From:
4. Payee:
Principal Amount:
Interest Accrues From:
<<not>> checked. Respondent must pay above-referenced restitution and provide satisfactory proof of payment to the Office of Probation not later than .
<<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.
<<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.
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.
IN THE MATTER OF: David L.Kagel, State Bar No. 58961
STATE BAR COURT CASE NUMBER: 09-O-15403-PEM
David L. Kagel, Respondent herein, admits that the following facts are true and that he is culpable of the violation of the specified statutes and/or Rules of Professional Conduct.
FACTS
1. During the time period addressed herein, Respondent maintained his client trust account at Preferred Bank, checking accounting number xxxxx 5601. [Footnote 1: The account number has been partially redacted due to privacy concerns.]
2. On May 20 and 26, 2009, two checks Respondent issued from his client trust account were presented for payment when Respondent did not have sufficient funds in the account to pay the checks. The two checks were paid by Respondent’s bank because his client trust account had overdraft protection. Because of this, the balance in Respondent’s client trust account fell to a negative $1,736.
3. On August 17 and 19, 2009, two additional checks Respondent issued from his client trust account were presented for payment when Respondent did not have sufficient funds in the account to pay the checks. These two checks were also paid by Respondent’s bank because his client trust account had overdraft protection. Because of this, the balance in Respondent’s client trust account fell to a negative $1,556.
4. Respondent explained that his client trust account became overdrawn in May and August 2009 because in each of those months he mistakenly wrote a check issued from his client trust account which should have been issued from his general account. The mistaken check of May 2009 was in the amount of $1,750. The mistaken check of August 2009 was in the amount of $2,000. When each of those checks was presented for payment, Respondent’s client trust account balance dropped, resulting in those two checks and two others to be paid against insufficient funds.
5. Respondent corrected the May 2009 imbalance in his client trust account on May 27, 2009 and the August 2009 imbalance on August 20, 2009.
6. Although, no client lost funds as a result of Respondent’s conduct, he was grossly negligent in managing his client trust account.
7. Additionally, from April 22, 2009 through December 30, 2009, Respondent made 13 deposits of personal funds into his client trust account. One of those deposits, made and withdrawn on June 5, 2009, totaled $100,000. The other personal deposits were amounts in the range of $1,000 to $6,000, with the exception of two deposits which were in the amount of $20,000 and $56,000.
CONCLUSIONS OF LAW
8. By issuing checks from his client trust account when he did not have sufficient funds in the account to pay those checks, Respondent, through gross negligence, engaged in an act of moral turpitude in willful violation of Business and Professions Code, section 6106.
9. By using overdraft protection and depositing personal funds into his client trust account, Respondent commingled personal funds in a client trust account and misused same in willful violation of rule 4-100(A) of the Rules of Professional Conduct.
DISCUSSION RE RECOMMENDED DISCIPLINE
Standard 2.3 of the Standards For Attorney Sanctions For Professional Misconduct provides that culpability of a member for engaging in an act of moral turpitude shall result in actual suspension or disbarment depending upon the extent to which the victim of the misconduct is harmed or misled.
In this matter, no client or member of the public suffered any actual harm as a result of Respondent’s misconduct.
Standard 2.2(b) provides that violations of rule 4-100(A) not involving the misappropriation of client funds shall result in a minimum sanction of three months actual suspension irrespective of mitigation.
Additionally, Respondent has a record of prior discipline.
In April 1997, Respondent suffered a six month actual suspension in State Bar Court case number 94-J-18858. That matter involved 1988 misconduct including the making of materially false statements in a registration statement filed with the Securities and Exchange Commission (SEC) and subsequently attempting to conceal same by way of further misrepresentations to the SEC in response to their investigative inquiries. Respondent stipulated to violating Business and Professions Code, section 6106, in that matter.
The parties recognize that more than 20 years have passed since the occurrence of the misconduct underlying Respondent’s prior discipline. However, that misconduct, along with that addressed herein, is not minimal in severity. Therefore, Standard 1.7(a), directing that subsequent discipline be greater than any past imposition of discipline, applies here.
In light of these Standards and the facts of this matter, the parties submit that an eight month actual suspension, along with the rehabilitative probation conditions attached thereto, is consistent with the Standards for Attorney Sanctions for Professional Misconduct and sufficient to address Respondent’s misconduct and protect the public.
DISMISSAL OF CHARGES
The parties respectfully request that the Court, in the interest of justice, dismiss Counts One, Two, Three, Five and Six of the Notice of Disciplinary Charges filed in this matter.
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 in this matter on November 28, 2011 and the facts and/or conclusions of law contained in this stipulation. Additionally, the parties waive the issuance of an amended Notice of Disciplinary Charges. Finally, the parties waive the right to a formal hearing on any charge not included in the pending Notice of Disciplinary Charges.
PENDING PROCEEDINGS
The disclosure date referred to, on page 2, paragraph A(7), was February 14, 2012.
COSTS OF DISCIPLINARY PROCEEDINGS
Respondent acknowledges that the Office of the Chief Trial Counsel has informed respondent that as of, February 14, 2012, the prosecution costs in this matter are approximately $3,269. 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.
SIGNATURE OF THE PARTIES
Case Number(s): 09-O-15403-PEM
In the Matter of: David L. Kagel
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 L. Kagel
Date: March 1, 2012
Respondent’s Counsel: Arthur Margolis
Date: March 3, 2012
Deputy Trial Counsel: Kevin B. Taylor
Date: March 5, 2012
Case Number(s): 09-O-15403-PEM
In the Matter of: David L. Kagel
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: March 8, 2012
CASE NUMBER(s): 09-O-15409-PEM
l, the undersigned, am over the age of eighteen (18) years and not a party to the within action, whose business address and place of employment is the State Bar of
California, 1149 South Hill Street, Los Angeles, California 90015, declare that: I am not a party to the within action; that I am readily familiar with the State Bar of California’s practice for collection and processing of correspondence for mailings with the United States Postal Service; that in the ordinary course of the State Bar of California’s practice, correspondence collected and processed by the State Bar of California would be deposited with the United States Postal Service that same day; that I am aware that on motion of party served, service is presumed invalid if postal cancellation date or postage meter date on the envelope or package is more than one day after date of deposit for mailing contained in the affidavit; and that in accordance with the practice of the State Bar of California for collection and processing of mail, I deposited or placed for collection and mailing in the City and County of Los Angeles, on the date shown below, a true copy of the within.
· STIPULATION RE FACTS, CONCLUSIONS OF LAW AND DISPOSITION AND ORDER APPROVING
in a sealed envelope placed for collection and mailing at Los Angeles, on the date shown below, addressed to:
Arthur Margolis, Esq.
Margolis & Margolis LLP
2000 Riverside Dr
Los Angeles, CA 90039
In an inter-office mail regularly maintained by the State Bar of California addressed to:
N/A
I declare under penalty of perjury, under the laws of the State of California, that the foregoing is true and correct. Executed at Los Angeles, California, on the date shown below.
DATED: March 5, 2012
SIGNED BY: Charles C. Bagai
Declarant
[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 March 12, 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 San Francisco, California, addressed as follows:
ARTHUR LEWIS MARGOLIS
MARGOLIS & MARGOLIS LLP
2000 RIVERSIDE DR
LOS ANGELES, CA 90039
checked. by interoffice mail through a facility regularly maintained by the State Bar of California addressed as follows:
Kevin B. Taylor. Enforcement, Los Angeles
I hereby certify that the foregoing is true and correct. Executed in San Francisco, California, on March 12, 2012.
Signed by:
Lauretta Cramer
Case Administrator
State Bar Court