Disbarrment is the appropriate disciplinary sanction for an attorney who engaged in self-dealing when purchasing a client's property, intentionally evaded state sales tax, made dishonest omissions on two applications for medical assistance, and misappropriated client funds on two occasions.
Heard, considered, and decided by the court en banc.
This attorney discipline case arises out of a petition and a supplementary petition filed by the Director of the Office of Lawyers Professional Responsibility (OLPR) against respondent Brian J. Peterson alleging numerous violations of the Minnesota Rules of Professional Conduct. We granted the director's request for temporary suspension based on the alleged misconduct. After a hearing, the referee concluded that Peterson had violated Minn. R. Prof. Conduct 1.7(b), 14 Minn. Stat. 1391-92 (2004) (amended June 17, 2005, eff. Oct. 1, 2005) (conflict of interest), Minn. R. Prof. Conduct 8.4(b) (commission of a criminal act), and Minn. R. Prof. Conduct 8.4(c) (conduct involving dishonesty, fraud, deceit, or misrepresentation). The referee recommended that Peterson be disbarred. We conclude that disbarrment is the appropriate discipline.
Peterson was admitted to practice law in Minnesota on October 1, 1976. He has a history of professional discipline. Peterson has been admonished for professional misconduct connected with his representation of six separate clients. He was previously suspended by this court on December 21, 2000. In re Peterson, 620 N.W.2d 29, 30 (Minn. 2000). That suspension was based on Peterson's misconduct in fabrication of a homestead waiver and in filing an attorney's lien against the client's homestead without obtaining a validly executed waiver of the homestead exemption. Id. The director filed another petition for disciplinary action alleging that, while suspended, Peterson filed an attorney's lien against a client's homestead using a fabricated waiver of the homestead exemption. The referee appointed by this court in that matter agreed with the director, and we affirmed the referee's conclusion that Peterson committed misconduct and that the misconduct warranted suspension. In re Peterson, 658 N.W.2d 875, 875 (Minn. 2003). Peterson and the director entered into an agreement stipulating the conditions for Peterson's reinstatement, and we then ordered Peterson's reinstatement to the practice of law with supervised probation for a two-year period. In re Peterson, 660 N.W.2d 419, 420 (Minn. 2003).
The majority of the allegations contained in the petition and supplementary petition for disciplinary action currently before us arise from Peterson's actions while acting as attorney in fact for his client, Mildred Johnson, an elderly widow. In 1994, Johnson retained Peterson to prepare her will, and in August 2000 Johnson designated Peterson as her attorney in fact. In December of 2002, Johnson fell in her apartment, fracturing her pelvis. As a result of this injury, Johnson was admitted to the Maranatha Care Center (MCC), where she was diagnosed with moderate dementia. At the hearing, Johnson's physician opined that, from the time of Johnson's admission to MCC, Johnson was unable to make decisions regarding her health care or finances and that Johnson would not be able to return to her assisted-living facility.
Soon after Johnson's admission to MCC, Peterson decided to engage in a "spend down"*fn1 of Johnson's assets in order to make her eligible for government medical assistance. In January of 2003, Peterson estimated that Johnson had roughly $100,000 in assets, an estimate he based on a 1995 inventory of Johnson's property. Because Peterson was suspended from the practice of law at that time, he retained Donald Fraley, an attorney for whom Peterson was currently working as a legal assistant, to "protect [Johnson's] interests."*fn2
In connection with the spend down, Peterson made a variety of purchases with Johnson's assets. On January 20, 2003, Peterson purchased a 1998 Nissan Infiniti I30 for $10,018.38. He and Johnson were both listed on the title to the vehicle. Peterson testified that when he purchased the Infiniti he believed that $4,500 was the maximum vehicle exemption for the purposes of a medical assistance application. Soon after he purchased the Infiniti, Peterson testified that he was informed by a Hennepin County employee that there was no maximum vehicle exemption and that "You can buy a $40,000 car as far as we're concerned. There's no limit as long as you use it to do things for her." Peterson further testified that based on this information he wrote a check to Johnson for the purchase price of the Infiniti, removed Johnson's name from the title, and began looking for a more expensive vehicle for Johnson to purchase as part of the "spend down."
Peterson, acting as Johnson's attorney in fact, next purchased a 2003 Acura 3.5RL for $37,350.00. Peterson and Johnson were again both listed on the title, which Peterson testified was done for insurance purposes because Johnson did not have a valid driver's license. Other purchases made on Johnson's behalf as part of the spend down included the purchase of Thomas Moser furniture, Seasonal Concepts furniture, sculptures, and a sound system with a subwoofer. In addition, Peterson attempted to establish a pooled trust which he testified was intended to shelter Johnson's remaining assets.
Hennepin County received Peterson's first application for medical assistance, made on behalf of Johnson, on January 31, 2003. While Johnson's application was initially approved, medical assistance benefits were eventually denied on the basis of Johnson's ownership of the Acura. Peterson, through Fraley, appealed this denial, but later dropped the appeal and, on May 13, 2003, purchased the Acura from Johnson for $27,300. Peterson's second application for medical assistance was received by Hennepin County on September 19, 2003. Hennepin County Adult Protection subsequently brought a petition for conservatorship, and a guardian/conservator was appointed for Johnson by early 2005. On January 10, 2005, Peterson was convicted of violating Minn. Stat. § 297B.10(a) (2004) (evasion of sales tax on motor vehicles) in connection with his purchase of the Acura from Johnson.
On March 31, 2005, the director filed the present petition for revocation of probation and further disciplinary action. The director alleged that Peterson had violated Rule 1.7(b), Minn. R. Prof. Conduct 1.5(a) (unreasonable fees), Minn. R. Prof. Conduct 1.8(c) (conflict of interest), Minn. R. Prof. Conduct 3.4(c) (disobey obligation under rules of tribunal), Minn. R. Prof. Conduct 5.5 (unauthorized practice of law), rule 8.4(b), rule 8.4(c), and Minn. R. Prof. Conduct 8.4(d) (conduct prejudicial to the administration of justice). In a supplementary petition, the director also alleged a violation of Minn. R. Prof. Conduct 1.15(a) (safekeeping of client funds) and rule 8.4(c).
After a hearing, the referee concluded that Peterson had violated rules 1.7(b) and 8.4(b) in connection with his purchase of the Acura from Johnson. In addition, the referee concluded that Peterson violated rule 8.4(c) through omissions made in Johnson's two applications for medical assistance. The referee found Peterson's history of professional discipline to be an aggravating factor and recommended that Peterson be disbarred. Peterson appeals to this court, disputing the referee's findings, conclusions, and recommendation. The director argues the referee's ...