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In re Pelkey

December 23, 2008; as amended January 5, 2009


The opinion of the court was delivered by: Reid, Associate Judge

On Report and Recommendation of the Board on Professional Responsibility (BDN 67-03)

Argued January 23, 2008

Before REID, Associate Judge, FARRELL, Associate Judge, Retired,*fn1 and PRYOR, Senior Judge.

The Board on Professional Responsibility ("the Board") has recommended that respondent Bruce A. Pelkey be disbarred; that he be ordered to pay restitution to the Client's Security Fund with interest at a six percent rate; and that he be required to satisfy all outstanding judgments and orders against him in favor of complainant Linda Cavalli. The Board recommended disbarment based on its conclusion that Mr. Pelkey violated multiple provisions of the District of Columbia Rules of Professional Conduct. Mr. Pelkey challenges the Board's report and recommendation.

We conclude that Bar Counsel presented clear and convincing evidence that Mr. Pelkey violated the Rules of Professional Conduct, including Rules 8.4 (b) (concerning criminal conduct "that reflects adversely on the lawyer's honesty, [or] trustworthiness . . . ."), 8.4 (c) (relating to dishonest, fraudulent and deceitful conduct); 8.4 (d) (pertaining to "conduct that seriously interferes with the administration of justice"); and 3.1, 3.2 (a), 3.3 (a)(1), and 4.4 (a) (relating to frivolous legal proceedings, proceedings that "would serve solely to harass" another, "false statement[s] of fact or law [made] to a tribunal," and use of "means that have no substantial purpose other than to . . . delay, or burden a third person"). We also hold, in agreement with the Board, that, on this record, disbarment is the appropriate sanction for Mr. Pelkey's misconduct, and that his reinstatement should be conditioned upon his making full restitution to the Clients' Security Fund with interest, and his satisfaction of all judgments against him and in favor of Ms. Cavalli or related business entities.


The record before us, which includes factual findings made by the Hearing Committee and affirmed by the Board, shows that Mr. Pelkey, an attorney admitted to the District of Columbia Bar on April 3, 1995, practiced law in Arizona after being admitted in that jurisdiction in 1982.*fn2 Eventually, he moved to Virginia and accepted a post as a professor of law at Regent University. He also gave lectures in the Soviet Union, and he established an international consulting group. Ms. Cavalli specialized in international economic development*fn3 and worked as an investment banker in California before moving to Virginia. For a short period of time, she joined an entity in which a former United States Congressman, Mark Siljander, was involved and which was designed to encourage investment in the United States by foreign investors.

Mr. Siljander introduced Ms. Cavalli to Mr. Pelkey in June 1996. That was the beginning of a personal relationship and a mutual interest and collaboration in international business ventures, particularly through a program operated by the United States Immigration and Naturalization Service ("INS"). Mr. Pelkey's role emerged as that of attorney and legal counsel for the ventures (his duties involved drafting incorporation documents and contracts), and Ms. Cavalli used her expertise and experience to generate proposals for immigrant investors, as well as to prepare business plans and marketing documents. She also developed investment opportunities for funds resulting from work with overseas investors. Consulting or investment entities established by Mr. Pelkey and by Ms. Cavalli played a role in the Pelkey/Cavalli business ventures. These included Consulting Group International ("CGI") and Trading Partners International ("TPI"), both owned by Mr. Pelkey; and Signet Services Group ("Signet") and Tourism Support Services ("TSS"), both belonging to Ms. Cavalli. Two other entities, one of which became a subject of dispute between Ms. Cavalli and Mr. Pelkey, were Trading Partners International of California ("TPIC") and American Opportunity International Services ("AOIS").

Between 1996 and 1998, Mr. Pelkey and Ms. Cavalli not only planned certain business ventures, but also established them and realized income from those ventures, particularly through a proposal (prepared by Ms. Cavalli) for an export trading Regional Center under INS's Immigrant Investor Pilot Program (also known as the U.S. Investor Visa Program). Business plans were developed, primarily by Ms. Cavalli, for an African project under the Investor Pilot Program, with M. Tshiamala Kadala Mianda of the Democratic Republic of the Congo; and for an investment project with the Russian Fund Vostock for which both Mr. Pelkey and Ms. Cavalli served as the contacts. Ms. Cavalli advanced approximately $32,000 of her own personal funds to help cover the costs of the ventures. The Hearing Committee and the Board determined that Mr. Pelkey had provided legal services to the Pelkey/Cavalli business entities. As the Board stated: "Although the Committee does not specify the business entities, the record supports a finding that [Mr. Pelkey] provided legal advice, at a minimum, for Trading Partners International of California (made up of entities owned by Respondent and Cavalli) and [AOIS] (jointly created by Respondent and Cavalli)."

In April 1997, Ms. Cavalli submitted a proposal to INS for the establishment of TPIC as a Regional Center under the Immigrant Investor Pilot Program; the proposal stated that "TPIC is wholly owned by its two members, [TPI], a subsidiary of [CGI], and [Signet]." INS sent Ms. Cavalli a letter in August 1997, approving the proposal and designating TPIC as a Regional Center under the Immigrant Investor Pilot Program. A related contract with Mr. Tshiamala and his California export trading company, Somico LLC, was executed in February 1998, resulting in $177,500 in fees for the Cavalli/Pelkey African investor business venture. In addition, Mr. Pelkey and Ms. Cavalli traveled to Russia in 1997 to solicit business from Fund Vostock, and a contract with that Fund was executed in October 1997. Fund Vostock made a $50,000 investment with TPIC in November 1997, and another $50,000 investment in 1998.

The factual bases for many of Bar Counsel's charges against Mr. Pelkey took place after the relationship between Ms. Cavalli and Mr. Pelkey crumbled.*fn4 Ms. Cavalli returned to California in August 1998, and she learned, around 1999, that neither her name nor Signet's name appeared in the TPIC legal documents that Mr. Pelkey drafted and filed, that he in fact had listed only his name and those of his entities, CGI and TPI, as the owners and managers of TPIC. By around April 2000, the Cavalli/Pelkey business relationship had deteriorated substantially and Ms. Cavalli and Mr. Pelkey were locked in bitter litigation in the District of Columbia Superior Court, filed by Ms. Cavalli in May 2000, and in California Superior Court, lodged by Mr. Pelkey in August 2000. A heated, fractious, and bitter dispute erupted concerning an Arbitration Agreement signed by both which was designed to resolve the litigation in the District of Columbia and the California courts.

Mr. Pelkey and Ms. Cavalli disagreed over whether Ms. Cavalli was a business partner (Ms. Cavalli's position) or a consultant (Mr. Pelkey's position). Ms. Cavalli insisted that Mr. Pelkey had agreed to take responsibility for forming TPIC as an entity wholly owned by TPI (Mr. Pelkey's entity) and Signet (Ms. Cavalli's entity), with Mr. Pelkey as a "Managing Partner" and Ms. Cavalli also as a "Managing Partner." The Hearing Committee credited the testimony of Ms. Cavalli, and found that documents created in 1996 and 1997, including a February 26, 1997 document prepared by Ms. Cavalli and personally edited by Mr. Pelkey in his own handwriting, confirmed not only that Ms. Cavalli was intended to be a business partner for the ventures, but also that Mr. Pelkey was not "the prime mover in the establishment and success of th[e] immigration investor program," as he claimed.*fn5 In addition, the Board asserted: "Respondent argues that [Ms.] Cavalli was never an equity partner in any of his companies, but the record is replete with evidence to support the [Hearing] Committee's findings to the contrary."

In addition to disagreeing about whether Ms. Cavalli was a business partner or a consultant, Mr. Pelkey and Ms. Cavalli quarreled about the funds generated from their business ventures. These funds were deposited in Mr. Pelkey's bank accounts as they were received, and he was the sole signatory on the accounts. In April and June 1998, respectively, Ms. Cavalli and Mr. Pelkey placed $30,000 from the Fund Vostock project and $50,000 from the African project into Ms. Cavalli's investment account in Costa Rica, TSS. Mr. Pelkey claimed that these funds belonged to him, and his efforts to retrieve the funds invested in TSS, as well as resulting dividends, sparked the litigation filed by Ms. Cavalli and by him. In late 1999, Mr. Pelkey began to demand the return of funds from the TSS investment which he then calculated to be $125,000 (the original $80,000 investment plus dividends). After receiving letters from Mr. Pelkey's attorney, Ms. Cavalli authorized the release of two payments to Mr. Pelkey, $15,000 in late October and $19,000 in late November. The Hearing Committee determined that, in December 1999, a law firm representing Mr. Pelkey accused Ms. Cavalli of "fraudulent actions" and demanded $110,000 within fifteen days; an earlier October 1999 letter stated that Ms. Cavalli would be in "violation of the California Penal Code" if she failed to remit the demanded sums of money.

Mr. Pelkey's actions regarding an arbitration agreement, designed to mediate the complaints filed in the District of Columbia and California courts, not only served as the factual basis of some of Bar Counsel's charges and the Hearing Committee's findings, but also formed the basis for the Court of Appeal of the State of California's decision to impose a monetary sanction against him. After Mr. Pelkey and Ms. Cavalli executed their Arbitration Agreement on July 19, 2001, Mr. Pelkey balked at arbitrating. The Hearing Committee determined that he "signed [the agreement to arbitrate] . . . in part, to avoid going to trial in the civil action pending in the [District], but with the hidden intent to later challenge the arbitration agreement if things didn't work out." He began to draft a declaration in support of a motion to rescind the agreement on July 20, 2001, and he personally filed the motion and declaration on March 23, 2002 in California, after Ms. Cavalli had filed a formal ...

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