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In re Bailey9/15/2005
egal counsel regarding the loan, nor did he provide Ms. Haile with the prevailing interest rate. An expert for Bar Counsel testified that if Mr. Bailey had received a loan from a bank, the interest rate would have been higher than what was provided in the promissory note. However, the expert "did not establish that Ms. Haile could have earned more by investing or lending her money elsewhere."
Mr. Bailey never notified Dr. Garmon of the settlement. Instead, Dr. Garmon learned of the settlement when he encountered Ms. Haile months later. Thereafter, Dr. Garmon made several phone calls to Mr. Bailey's office inquiring about his payment. After Mr. Bailey failed to respond, Dr. Garmon wrote him a letter on August 19, 1992, in which he demanded payment and threatened legal action if payment was not received. On September 2, 1992, Dr. Garmon filed a complaint with Bar Counsel. Mr. Bailey eventually paid Dr. Garmon $2,420.30 on October 23, 1992, more than one year after the case had been settled.
During the period between September 1991 and November 1992, Mr. Bailey made several telephone transfers and cash withdrawals from his client Trust Account; however, he lacked the records to explain them. He also deposited several checks into the Trust Account reflecting payments for "legal fee " or "attorney fees," $10,000 borrowed from his mother, fee advances, and entrusted client funds. By August 18, 1992, the Trust Account had a balance of 0.11 cents according to account analysis.
Bar Counsel filed the specification of charges against Mr. Bailey on November 2, 1998. The specification alleged that:
[Mr. Bailey's] conduct violated the following provisions of the Rules of Professional Conduct: (A) Rule 1.15 (a), in that (i) intentionally and/or recklessly misappropriated funds belonging to his client and/or one or more third person; and/or failed to hold property of a client and/or third persons in his possession in connection with a representation separate from his own property (commingling); (B) Rule 1.15 (a), in that failed to maintain complete trust account records; (C) Rule 1.15 (b), in that failed to notify and/or pay promptly one or more third persons having an interest in funds entrusted to in the course of a legal representation; (D) Rule 1.8 (a), in that entered into a business transaction with a client and/or knowingly acquired an ownership, possessory, security, and/or other pecuniary interest adverse to the client without providing the client a writing that fully disclosed the transaction's terms; and (E) Rule 1.8 (b), in that prepared an instrument giving him a substantial gift from the client.
A hearing committee heard two days of testimony in July 1999, during which Bar Counsel presented testimony by Dr. Garmon, Robert H. Tapscott, Jr., a fraud investigator for Crestar Bank which acquired City National Bank, and Lateef Bassi, a certified public accountant. The committee also considered documentary evidence. Mr. Bailey testified on his own behalf, and also called as witnesses Ms. Haile, and David B. Torchinsky, a certified public accountant. On June 7, 2001, the hearing committee issued a report finding that Mr. Bailey violated: Rule 1.15 (a) based on commingling, misappropriation, and failure to maintain complete Trust Account records; Rule 1.15 (b) due to his failure to notify and pay promptly third persons; and Rule 1.8 (a) because of his impermissible business transaction with Ms. Haile. The hearing committee did not find that Mr. Bailey violated Rule 1.8 (b), preparing an instrument giving himself a substantial gift from his client, Ms. Haile. The hearing committee recommended that Mr. Bailey be disbarred.
Bar Counsel did not
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