A Member of the Bar of the District of Columbia Court of Appeals (Bar Registration No. 405077)
The opinion of the court was delivered by: Oberly, Associate Judge:
On Report and Recommendation of the Board on Professional Responsibility
Before RUIZ and OBERLY, Associate Judges, and FARRELL, Senior Judge.
This disciplinary case is before us on exceptions by respondent Idus J. Daniel, Jr., a member of the District of Columbia Bar, and by Bar Counsel to the Report and Recommendation of the Board on Professional Responsibility. The Board found that Daniel had committed one violation of Rule 1.15 (a) of the District of Columbia Rules of Professional Conduct (commingling client and personal funds) and one violation of Rule 8.4 (c) (engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation by virtue of false statements he made to the Internal Revenue Service), and recommended a one-year suspension. Because we find that Bar Counsel proved an additional Rule 8.4 (c) violation based on Daniel's dishonest and deceitful use of a purported IOLTA account and a client escrow account, and we also have concerns about Daniel's continuing fitness to practice law, we order a three-year suspension, with reinstatement conditioned upon a showing of fitness, in accordance with D.C. Bar R. XI,
I. Facts and Procedural History
The misconduct in this case arose out of Daniel's misuse of an IOLTA account and a client escrow account. An IOLTA account is "a pooled interest-bearing depository account for deposit of client funds that are nominal in amount or expected to be held for a short period of time." D.C. Bar R., App. B, Interest on Lawyers Trust Accounts Program (2007).*fn1 "The interest earned on those funds is then turned over to the District of Columbia Bar Foundation to be used for charitable purposes." In re Pierson, 690 A.2d 941, 942 n.6 (D.C. 1997). On April 11, 1996, Daniel opened an IOLTA account at Riggs Bank, in the name of "IDUS J. DANIEL, ATTORNEY AT LAW -- CLIENTS' TRUST ACCOUNT
(IOLTA)," with an account number ending in 329 ("account 329"). Between January 1, 2000, and at least June 30, 2002, Daniel used account 329 as a personal and/or business account. Daniel withdrew cash or wrote checks payable to "cash" for $1,337, and wrote checks from the account payable to Adrienne Daniel, a non-client ($3,800); rent ($1,600); telephone bills ($984.25); utilities ($178.84); and numerous retailers and organizations, none of which were clients. He also deposited into account 329, on January 7, 2000, a $300 check payable to "Natashira Harris [a client] or Idus Daniels" [sic] and a $350 check from W. Thomas Stovall, II, Esquire for "January ofc. lease." On January 12, 2000, Daniel deposited a $1,000 check payable to "Natashira Harris or Atty Idus Daniels" [sic] and a $975.27 check from Vandy L. Jamison, Jr. The checks from Stovall and Jamison did not constitute "entrusted funds held for a client." On January 8, 2002, Daniel deposited a $3,000 check into the 329 account, payable to client "Rhonda Bennett & Idus J. Daniel, Esq., Her Attorney," which related to an insurance claim. He then wrote a $2,000 check from account 329 payable to Rhonda Bennett and identified as "'client/settlement funds,'" which cleared on January 16, 2002. Between January 8 and January 16, 2002, Daniel withdrew $190 in cash and wrote checks to Margot Kelly ($600, for "rent-feb"), Anthony Hawkins ($100), and South Bowie Boys and Girls Club ($40).
On October 9, 1998, Daniel opened another account at Riggs Bank captioned "IDUS J. DANIEL JR ATTORNEY AT LAW -- ESCROW FOR CLIENTS," with an account number ending in 676 ("account 676").*fn2 Between September 1, 2000, and June 30, 2002, Daniel deposited into account 676 checks totaling $55,717.50 from the Administrative Office of the United States Courts payable to Idus Daniel, which were earned legal fees and not entrusted client funds. In the same time period, he also withdrew approximately $59,472.50 in cash and drew checks from account 676 payable to Idus J. Daniel ($7,500) and Adrienne Daniel ($7,500).
In 2001, Daniel retained the firm American Tax Relief for help in connection with taxes he owed to the IRS. However, by April 2003, Daniel was corresponding directly with the IRS about his tax debt. The IRS posed questions about Daniel's personal and business accounts after Daniel initiated the process of an Offer-in-Compromise, a method of voluntarily settling an outstanding IRS debt for less than the full amount owed. See 26 U.S.C. § 7122 (2006). The IRS had requested bank statements for all open accounts for the period between November 1, 2002, and February 28, 2003, for Daniel and all members of his household. In an April 9, 2003, letter from Daniel to an IRS agent, Daniel responded that he had "no account information to offer" and "no open accounts (personal or business)." Responding to a request for business bank statements from January 1, 2002, to February 28, 2003, Daniel stated "I do not maintain a business account due to previous seizures by IRS." During the time period about which the IRS had inquired, accounts 329 and 676 were open, and showed electronic debits from account 329 to "BALLY FITNESS" ($66, on November 4, 2002) and "BC HARRIS PUB" ($45.64, on November 7, 2002) and from account 676 to "Washington Gas" ($123.56, on February 11, 2003) and "EYE CAREDR SCHW" ($171.97, on December 31, 2002).
The Office of Bar Counsel began investigating Daniel when it received notifications from Riggs Bank that Daniel's client trust accounts were overdrawn. On November 30, 2007, Bar Counsel filed a four-count Specification of Charges against Daniel alleging (1) dishonest identification of the 329 IOLTA account by labeling it as a trust account even though he knew that it was his personal and business account, in violation of Rule 8.4 (c);
(2) similarly dishonest identification of the 676 account, in violation of Rule 8.4 (c); (3) commingling personal and client funds in the 329 account, in violation of Rule 1.15 (a); and (4) dishonest statements to the IRS and concealment of assets, in violation of Rule 8.4 (c), and criminal tax evasion, in violation of Rule 8.4 (b) (commission of a criminal act that reflects adversely on the lawyer's honesty, trustworthiness, or fitness as a lawyer in other respects). Bar Counsel alleged that Rule 8.4 (b) applied because Daniel violated any of three federal tax statutes, 26 U.S.C. § 7201 (2006) (tax evasion), 26 U.S.C. § 7203 (willful failure to supply information), or 26 U.S.C. § 7206 (concealment of property).
Daniel did not personally appear at the Hearing Committee's evidentiary hearing, but submitted an Affidavit in Lieu of Testimony in which he denied any wrongdoing, and argued that Bar Counsel's delay in bringing the charges had caused him "obvious prejudice." In his affidavit, Daniel claimed that after sending the April 9, 2003, letter to the IRS, he orally informed the agency that he had client trust accounts containing unearned attorney fees. The only evidence Daniel provided to supplement Bar Counsel's evidence, other than the affidavit, was a marketing letter from American Tax Relief to Daniel dated April 3, 2001, in which American Tax Relief described the services it could provide for taxpayers who hired the firm to assist in resolving tax disputes with the IRS.
On the basis of the evidence presented, the Committee found that Daniel "knowingly used his trust accounts as his personal and business bank accounts so that the funds would not be seized by the Internal Revenue Service." The Committee found that in his letter to the IRS, Daniel "knowingly, willfully and materially misrepresented . . . facts . . . regarding his assets." The Committee found no evidence supporting Daniel's claim that he had orally informed the IRS about his unearned attorney fees deposited in client trust accounts and, as mentioned, Daniel was not available for cross-examination because he chose not to appear at the hearing. The Committee further found that even if it credited Daniel's ...