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In Re Frederick W. Salo

July 19, 2012


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

A Suspended Member of the Bar of the District of Columbia Court of Appeals (Bar Registration No. 446236) On Report and Recommendation of the of the Board on Professional Responsibility


(Argued May 10, 2012)

Before BECKWITH and EASTERLY, Associate Judges, and NEBEKER, Senior Judge.

On July 27, 2010, the New York Supreme Court, Appellate Division, First Judicial Department ("the New York court") found respondent Frederick W. Salo guilty of nonvenal misappropriation of funds and related offenses and suspended him from the practice of law in New York for one year, effective August 26, 2010. Matter of Salo, 77 A.D.3d 30, 39 (N.Y. App. Div. 2010). The District of Columbia Office of Bar Counsel now recommends that we impose reciprocal discipline and likewise suspend Mr. Salo for one year with a fitness requirement.*fn1 Mr. Salo argues that the presumption of reciprocal discipline should not apply because the District of Columbia would have imposed a substantially different sanction had this matter originated in our jurisdiction. For the reasons articulated below, we find that Mr. Salo has rebutted the presumption of reciprocal discipline and we impose a six-month suspension with no fitness requirement.


Mr. Salo's misconduct involved the mismanagement of settlement funds following a personal injury action on behalf of a client. The New York court determined that after receiving a $198,000 settlement payment into his Interest on Lawyer Account ("IOLA account") in December 2001, Mr. Salo made payments to the client and himself while retaining $40,000 pending resolution of a worker's compensation lien. Salo, 77 A.D.3d. at 31. That lien was not resolved until June 2005. Id. In the interim, Mr. Salo allowed the balance of his IOLA account to fall as low as $102.88, well below the amount of the lien. Id. The court also concluded that Mr. Salo impermissibly commingled funds when he transferred $32,000 from his IOLA account to his personal account in January 2004 and transferred the same amount back to his IOLA account in April 2005-funds ultimately used to resolve the lien. Id. at 32-33.

Mr. Salo did not dispute the underlying factual allegations. Id. at 32-33. He conceded that he had failed to designate the checks as originating from an IOLA account, that he impermissibly made an IOLA check payable to cash, and that this behavior "adversely reflect[ed] on his fitness as a lawyer." Id. at 33. He further acknowledged that he mishandled his IOLA account due to a mistaken belief that he was authorized to keep a cushion of earned legal fees in the account, a practice he no longer follows. Id. at 32. Mr. Salo contended, however, that post-traumatic stress disorder ("PTSD") and depression, stemming from childhood abuse and from his proximity to the September 11, 2001, attacks on the World Trade Center in New York, precluded him from acting with venal intent as to the misappropriation. Id. at 32-33. At a hearing before a referee in New York on March 28, 2007, Mr. Salo presented substantial medical evidence of his diagnoses and the impact PTSD and depression had had on his ability to practice law. Id.

On review of the referee's findings, the New York court sustained the charges of misappropriation, commingling, improper designation of trust account, improper cash withdrawal, and conduct reflecting adversely on fitness, but held that there was insufficient evidence of venal intent to support a charge for intentional conversion of third-party funds. Salo, 77 A.D.3d at 38. That charge, which alleged that Mr. Salo's invasion of funds subject to the lien involved "dishonesty, fraud, deceit or misrepresentation," could not, in the court's view, "be resolved so simply," as an intentional conversion required a showing of intent to defraud, deceive, or misrepresent, and the court was unable to conclude that Mr. Salo possessed such an intent. Id. at 37-38. The court reasoned that [n]otwithstanding the Referee's careful analysis of the evidence, to which the majority of the Hearing Panel deferred, it cannot be ignored that the mental health experts for both sides were in agreement that respondent invaded the [] lien funds inadvertently, without specifically intending to misappropriate third-party funds, as the direct result of the PTSD from which he suffered at the time. Again, it was the view of both experts that respondent, by reason of his PTSD (which caused him to stop opening mail, including bank statements), lost track of the fact that the balance remaining in his IOLA account was subject to the [] lien on the proceeds of the [] settlement, and believed that he was drawing on the "cushion" of earned legal fees it was his practice to keep in the account.

Id. at 38.

Given this "uncontroverted expert evidence," the court concluded that "it has not been proven by a preponderance of the evidence that respondent had the venal intent required for a finding that he willfully and knowingly converted third-party funds." Id. The court further stated that in reaching that conclusion, it viewed as significant "that respondent had no evident motive to convert third-party funds (since it is uncontroverted that he had sufficient funds of his own to meet his personal expenses); that no other instances of conversion, either before or since, have been alleged; and that neither the client nor the lien-holder was harmed by respondent's conduct." Id.

In imposing sanction, the court recognized that "there are cases in which suspension from the practice of law for a substantial period of time is the appropriate sanction for even nonvenal misappropriation of funds." Id. at 38-39 (citing cases of nonvenal conversion with one- or two-year suspensions). The court rejected the Departmental Disciplinary Committee's recommendation of disbarrment or at least a three-year suspension, however, and determined that a one-year suspension was the appropriate sanction in Mr. Salo's case. Id. at 17, 39. Mr. Salo's suspension took effect on August 26, 2010. He was reinstated to the New York State bar on February 7, 2012, without opposition.

Mr. Salo notified the Bar of the District of Columbia of his New York discipline on September 16, 2011.*fn2 In an order dated December 20, 2011, this court suspended him from the practice of law in the District of Columbia pending final disposition. Mr. Salo filed affidavits pursuant to D.C. Bar Rule XI ...

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