Case Number(s): 12-O-10812, 12-O-13363
In the Matter of: Jon James McGrath, Bar # 237893, A Member of the State Bar of California, (Respondent).
Counsel For The State Bar: Timothy G. Byer, Deputy Trial Counsel
1149 S. Hill Street
Los Angeles, CA 90015
(213) 765-1325
Bar # 172472
Counsel for Respondent: David C. Carr, 530 B S~e~,Ste. 1410
San Diego, CA 92101-4410
(619)696-0526
Bar # 124510
Submitted to: Assigned 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 October 27, 2005.
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):
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.
See Attachment, page: “Mitigating Circumstances”
IN THE MATTER OF: JON JAMES MCGRATH
CASE NUMBERS: 12-O-10812, 12-O-13363
FACTS AND CONCLUSIONS OF LAW:
Respondent admits that the following facts are true and that she is culpable of violations of the specified statutes and/or Rules of Professional Conduct.
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 31, 2012 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. The parties further waive the right to the filing of a Notice of Disciplinary Charges and to a formal hearing on any charge not included in the pending Notice of Disciplinary Charges.
CASE NUMBER: 12-O-10812
FACTS:
1. On March 24, 2011, Bud Faulkner employed Respondent to negotiate and obtain for him a home mortgage loan modification. On April 8, 2011, Faulkner paid Respondent an initial advanced fee of $1,200. On that date, Respondent had not completed all the contacted-for services described in the engagement agreement with Faulkner.
2. On May 9, 2011, Faulkner paid Respondent a second installment toward his advanced fee, in the sum of $595. On that date, Respondent had still not completed all the contacted-for services described in the engagement agreement with Faulkner.
CONCLUSIONS OF LAW:
3. By charging and receiving advanced fees after October 11, 2009 in exchange for agreeing to perform loan modification services in violation of California Civil Code section 2944.7(a)(1), Respondent willfully violated Business and Professions Code section 6106.3.
4. On November 19, 2012, Respondent repaid Faulkner in full.
CASE NUMBER: 12-O-13363
FACTS:
5. On August 23, 2011, Charles Johnston employed Respondent to negotiate and obtain for him a home mortgage loan modification, and paid Respondent compensation in the sum of $595. On that date, Respondent had not completed all the contacted-for services described in the engagement agreement with Johnston.
6. Also on August 23, 2011, pursuant to the fee agreement, Respondent charged Johnston for a second and third installment toward his advanced fee, each, respectively, in the sum of $1,450. On that date, Respondent had still not completed all the contacted-for services described in the engagement agreement with Johnston.
7. On November 29, 2011, Respondent sent correspondence to Johnston in which Respondent asserted:
a. That Respondent’s collection of $595.00 in compensation on or about August 23, 2011 was not done in violation of Business and Professions Code section 6106.3;
b. That "the State Bar, including the State Bar expert, has found that [Respondent’s] fee agreement is acceptable[;]"
c. And that "the California State Bar expert for the loan modification industry endorses [Respondent’s firm] as the most professional, effective, and ethical loan modification firm within the state of California."
8. All of the assertions in the preceding paragraph were false and Respondent either knew, or was grossly negligent in not knowing, of their falsity.
9. On November 19, 2012, Respondent repaid Johnson in full.
CONCLUSIONS OF LAW:
10. By charging and receiving advanced fees after October 11, 2009 in exchange for agreeing to perform loan modification services in violation of California Civil Code section 2944.7(a)(1), Respondent willfully violated Business and Professions Code section 6106.3.
11. By making the assertions in his November 29, 2011 correspondence which he either knew, or was grossly negligent in not knowing, were false, Respondent committed an act or acts involving moral turpitude, dishonesty or corruption.
AGGRAVATING CIRCUMSTANCES.
Harm (Standard 1.2(b)(iv)): Both of Respondent’s matters involved representation of individuals seeking modifications of their home mortgage loans due to difficult economic circumstances, who were harmed when Respondent’s receipt from them of illegal fees further exacerbated their difficult economic circumstances.
Multiple/Pattern of Misconduct (Standard 1.2(b)(ii)): Respondent’s three violations of law constitute a multiplicity of misconduct.
MITIGATING CIRCUMSTANCES.
Respondent stipulated to facts, conclusions of law, and disposition in order to resolve his disciplinary proceedings as efficiently as possible. (See Silva-Vador v. State Bar (1989) 49 Cal.3d 1071, 1079, where mitigative credit was accorded to the attorney for admitting facts and culpability in order to simplify the disciplinary proceedings against her.)
AUTHORITIES SUPPORTING DISCIPLINE.
The Standards for Attorney Sanctions for Professional Misconduct provide a "process of fixing discipline" pursuant to a set of written principles to "better discharge the purposes of attorney discipline as announced by the Supreme Court." (Rules Proc. of State Bar, tit. IV, Stds. for Atty. Sanctions for Prof. Misconduct, Introduction (all further references to standards are to this source).) The primary purposes of disciplinary proceedings and of the sanctions imposed are "the protection of the public, the courts and the legal profession; the maintenance of high professional standards by attorneys and the preservation of public confidence in the legal profession." (ln re Morse (1995) 11 Cal.4th 184, 205; std 1.3.)
Although not binding, the standards are entitled to "great weight" and should be followed "whenever possible in determining level of discipline. (In re Silverton (2005) 36 Cal.4th 81 92, quoting In re Brown (1995) 12 Cal. 4th 205, 220 and In re Young (1989) 49 Cal.3d 257, 267, fn. 11.) Adherence to the standards in the great majority of cases serves the valuable purpose of eliminating disparity and assuring consistency, that is, the imposition of similar attorney discipline for instances of similar attorney misconduct. (ln re Naney (1990) 51 Cal.3d 186, 190.) Any discipline recommendation different from that set forth in the applicable standards should clearly explain the reasons for the deviation. (Blair v. State Bar (1989) 49 Cal.3d 762, 776, fn. 5.)
Standard 1.6(a) provides, in relevant part, that "if two or more acts of professional misconduct are found or acknowledged in a single disciplinary proceeding, and different sanctions are prescribed by these standards for said acts, the sanction imposed shall be the more or most severe of the different applicable standards."
Respondent’s violations of Business and Professions Code section 6106.3 are not addressed in a particular standard, and therefore fall within the ambit of Standard 2.10, which calls for a range of discipline from reproval to suspension. As such Standard 2.3, applicable to Respondent’s misrepresentations, is the more severe of the sanctions applicable here. That standard provides that "culpability of a member of 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 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." In the Johnston matter, the client was not harmed or misled by Respondent’s misrepresentations, and the magnitude of the misrepresentations in the letter was not great despite being made to a client and within his practice of law. Application of standard 2.3 indicates actual suspension is appropriate.
Consideration should also be given to the aggravating and mitigating factors. In aggravation, Respondent harmed his clients by taking an illegal fee from them, which he has now paid back, and his three violations are multiple acts of misconduct. In mitigation he has entered into this stipulation admitting all violations and that his actual suspension and conditions of probation are warranted, eliminating the need for further inconveniencing his clients to appear as witnesses or the necessity of trial.
In Drociak v. State Bar, 52 Cal.3d. 1085 (1991), the Supreme Court upheld a disciplinary Review Department recommendation of one year stayed suspension and two years probation, with probation conditions including thirty days actual suspension where it was shown an attorney who had obtained his client’s presigned verifications to discovery responses had committed an act of moral turpitude. His misconduct was aggravated by a finding of a pattern of misconduct (based on his admission to employing the presigned verification practice with other clients), a threat to the administration of justice, and a lack of remorse. Significantly, his misconduct was mitigated by the lack of harm to his clients, his cooperation with the State Bar, and his 25 prior years of discipline-free practice.
Here, Respondent’s misconduct is lacking both the extensive aggravation and mitigation presented by the facts in Drociak. Drociak was in practice for 25 years without discipline, mitigation not present here where Respondent had been in practice less than 6 prior to the commencement of his misconduct. Drociak’s misconduct constituted a pattern, a threat to the administration of justice, and lacked remorse, none of which are aggravating factors here. Respondent’s misrepresentations did not harm his client: although that client had been harmed by the payment of an illegal fee at the outset of the representation, Respondent’s misrepresentation as to the permissibility of his advanced fee did not induce reliance by that client to his detriment. What adds to Respondent’s misconduct here are his violations of the loan modification laws prohibiting his taking of a fee in advance of performing those services. This raises Respondent’s misconduct here to the level of that in Drociak.
A period of thirty days actual suspension is within the range of discipline prescribed by Standard 2.3 and caselaw; and will serve the purposes of discipline under the circumstances of this case.
EXCLUSION FROM MCLE CREDIT.
Pursuant to rule 3201, Respondent may not receive MCLE credit for completion of State Bar Ethics School and State Bar Client Trust Accounting School, which have been ordered as a condition of reproval or suspension. (Rules Proc. of State Bar, rule 3201.)
PENDING PROCEEDINGS.
The disclosure date referred to, on page 2, paragraph A(7), was November 20, 2012.
COSTS OF DISCIPLINARY PROCEEDINGS.
Respondent acknowledges that the Office of the Chief Trial Counsel has informed Respondent that as of November 20, 2012, the prosecution costs in this matter are approximately $7,671. 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.
Case Number(s): 12-O-10812, 12-O-13363
In the Matter of: Jon James McGrath
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: Jon J. McGrath
Date: November 20, 2012
Respondent’s Counsel: David C. Carr
Date: November 20, 2012
Deputy Trial Counsel: Timothy G. Byer
Date: November 20, 2012
Case Number(s): 12-O-10812, 12-O-13363
In the Matter of: Jon James McGrath
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:
<<not>> checked. The stipulated facts and disposition are APPROVED and the DISCIPLINE RECOMMENDED to the Supreme Court.
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.
Page 8 – Paragraph 11 – Insert at end of sentence – “In violation of Business and Professional Code Section 6106.”
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: 12-05-2012
[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 December 10, 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:
DAVID C. CARR
LAW OFFICE OF DAVID C. CARR
530 B STREET STE. 1410
SAN DIEGO, CA 92101
checked. by interoffice mail through a facility regularly maintained by the State Bar of California addressed as follows:
TIMOTHY BYER, Enforcement, Los Angeles
I hereby certify that the foregoing is true and correct. Executed in Los Angeles, California on December 10, 2012.
Signed by:
Angela Carpenter
Case Administrator
State Bar Court