Disciplinary Counsel v. Pappas

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as

Disciplinary Counsel v. Pappas, Slip Opinion No. 2014-Ohio-3676.]

NOTICE

This slip opinion is subject to formal revision before it is published in

an advance sheet of the Ohio Official Reports. Readers are requested

to promptly notify the Reporter of Decisions, Supreme Court of Ohio,

65 South Front Street, Columbus, Ohio 43215, of any typographical or

other formal errors in the opinion, in order that corrections may be

made before the opinion is published.

SLIP OPINION NO. 2014-OHIO-3676

DISCIPLINARY COUNSEL v. PAPPAS.

[Until this opinion appears in the Ohio Official Reports advance sheets,

it may be cited as Disciplinary Counsel v. Pappas,

Slip Opinion No. 2014-Ohio-3676.]

Attorneys—Misconduct—Felony conviction for making false statement to federal

authorities—Affidavit known to be false filed in court of law—False

statement to disciplinary authority—Violation of multiple Rules of

Professional Conduct—Two-year suspension with no credit for time

served under interim felony suspension.

(No. 2013-1625—Submitted December 11, 2013—Decided September 4, 2014.)

ON CERTIFIED REPORT by the Board of Commissioners on Grievances and

Discipline of the Supreme Court, No. 2012-089.

____________________

Per Curiam.

{¶ 1} Respondent, George Zane Pappas of Urbana, Ohio, Attorney

Registration No. 0033674, was admitted to the practice of law in Ohio in 1986. In

December 2007, we suspended Pappas’s license for failing to register but

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reinstated him the following day. In re Attorney Registration Suspension of

Pappas, 116 Ohio St.3d 1420, 2007-Ohio-6463, 877 N.E.2d 305; In re Pappas,

116 Ohio St.3d 1498, 2008-Ohio-290, 880 N.E.2d 97. In November 2011, we

suspended him again for failing to register. In re Attorney Registration

Suspension of Pappas, 130 Ohio St.3d 1420, 2011-Ohio-5627, 956 N.E.2d 310.

We sanctioned him in December 2011 for failure to comply with the continuing-

legal-education requirements of Gov.Bar R. X. In re Pappas, 130 Ohio St.3d

1505, 2011-Ohio-6770, 959 N.E.2d 2.

{¶ 2} On August 22, 2012, we imposed an interim felony suspension on

him pursuant to Gov.Bar R. V(5)(A)(4) after receiving notice that he had been

convicted of making a false statement to federal authorities. In re Pappas, 132

Ohio St.3d 1497, 2012-Ohio-3775, 973 N.E.2d 266. The 2011 and 2012

suspensions remain in effect.

{¶ 3} In December 2012, relator, disciplinary counsel, charged Pappas

with violations of the Disciplinary Rules of the Code of Professional

Responsibility based on his criminal conviction and for allegedly making the

same false statement to a court and to relator.1 Relator and Pappas entered into a

comprehensive list of stipulations of fact and misconduct, but they could not

agree on the appropriate sanction. After a hearing, a three-member panel of the

Board of Commissioners on Grievances and Discipline determined that the

parties’ stipulations were supported by clear and convincing evidence and

recommended that Pappas serve a two-year suspension from the practice of law

with credit for time served under his interim felony suspension. The board

adopted the panel’s report in its entirety, and no party has filed objections to the

board’s recommendation.

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Relator charged Pappas with misconduct under the applicable Disciplinary Rules for acts

occurring before February 1, 2007, the effective date of the Rules of Professional Conduct, which

superseded the Disciplinary Rules of the Code of Professional Responsibility.

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{¶ 4} Upon our review of the record, we accept the board’s findings of

fact and misconduct and agree that a two-year suspension is the appropriate

sanction in this case. However, we do not credit Pappas with the time he has

served under this interim felony suspension.

Misconduct

{¶ 5} Between 1995 and 2010, Pappas was a sole practitioner in Urbana,

focusing primarily on criminal-defense work. In February 2004, Pappas’s law-

school classmate and long-time best friend, Aristotle Matsa, was in the midst of a

divorce. According to Pappas, Matsa told him that his ex-wife was attempting to

“take everything and destroy him.” Matsa therefore requested that Pappas falsely

claim ownership of Matsa’s Columbus law firm in order to prevent Matsa’s ex-

wife from obtaining firm records. Pappas agreed and executed an affidavit, which

was filed in Matsa’s divorce case in an effort to quash a subpoena. In the

affidavit, Pappas averred:

2. I am the sole shareholder and principal in charge of the

Law Offices of Aristotle R. Matsa, A Legal Professional

Association, which [is] referred to by some as the Law Offices of

Aristotle R. Matsa, and have been such from the date of the

creation of this entity through the present.

3. It has recently come to my attention that someone has

attempted to subpoena banking records relating to the entity

referred to in item 2 above. I believe that any such attempt is in

clear violation of my rights, and the attorney client privilege, as

well as other statutory and common law rights.

4. The attempt to delve into my/my entity’s banking

records is intended to intimidate and harass me and my clients.

Any release of such records would cause my clients, me, and my

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entity irreparable harm. It would obviously be a violation of

privacy as well given that I have no interest in the above captioned

case.

5. As Mr. Golden and his firm well know, I do represent

the Plaintiff [Matsa] in another civil case and it is my belief that

this action by Mr. Golden is intended to damage, harass, and

intimidate me and my practice; and to attempt to gain privileged

information that his firm might use in an unrelated lawsuit wherein

I represent the Plaintiff and others.

Despite these averments, Pappas had in fact never had any ownership interest in

Matsa’s law firm.

{¶ 6} Two months later, in April 2004, relator sent Pappas a letter of

inquiry requesting information regarding his alleged acquisition of Matsa’s law

practice. Pappas responded in writing and falsely stated that he had been the sole

and/or primary shareholder of Matsa’s law firm since 1987. Pappas further stated

that in “an abundance of caution,” he was changing the name to the “Law Offices

of George Z. Pappas, L.P.A.” Based upon Pappas’s false representations, relator

terminated its investigation.

{¶ 7} Apparently unbeknownst to Pappas, Matsa had been carrying out a

tax-fraud scheme for nearly three decades. According to the parties’ stipulations,

Matsa had set up a complex web of shell C-corporations, trusts, limited-liability

companies, churches, and other nominee entities purportedly owned or associated

with others. Matsa’s criminal scheme led to a federal investigation by the Internal

Revenue Service (“IRS”) and the United States Justice Department for alleged tax

fraud, money laundering, and conspiracy to obstruct justice.

{¶ 8} As part of that investigation, IRS agents interviewed Pappas in

August 2006. During that interview, Pappas again falsely stated that he was the

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owner of Matsa’s law firm. The IRS then served Pappas with two subpoenas—

one for his personal appearance before the federal grand jury in September 2006

and the other as the custodian of records for a long list of entities, including

Matsa’s law firm. On September 19, 2006, Pappas appeared before the grand jury

and falsely stated, under oath, that he was the owner of Matsa’s Columbus law

firm. Immediately following that testimony, Pappas sent a letter to the

Department of Justice stating, again, that he was the owner of Matsa’s law

practice, that he had always been the sole shareholder of the firm, and that many

of the entities listed on the subpoena were not associated with Matsa but were

clients of Pappas’s law practice.

{¶ 9} Within months after sending the September 2006 letter, Pappas

agreed to take responsibility for his lies and began cooperating with federal

authorities. The federal prosecutor later stated that Pappas’s cooperation proved

significant in obtaining a search warrant of Matsa’s law office in 2007 and in the

government’s investigation of Matsa. On December 10, 2009, Pappas signed a

confidential plea agreement with the federal government, and in February 2010,

he waived his right to indictment and pled guilty to a charge of making a false

statement under 18 U.S.C. 1001, based on the false statements he had made in the

September 2006 letter to the Department of Justice. Pappas reported his

misconduct to relator and closed his Urbana law office. At some point thereafter,

he began working as a part-time line cook at a restaurant chain, where he

continued to work at the time of his disciplinary hearing.

{¶ 10} Matsa’s criminal trial did not occur until April 2012. Pappas met

with government agents and investigators numerous times before trial, and he

testified against his former friend in pretrial hearings and at trial. Pappas’s

cooperation was described as instrumental in assisting the prosecution, and Matsa

was ultimately convicted of multiple felonies and sentenced to 85 months in

prison.

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{¶ 11} In June 2012, a federal judge convicted Pappas of making a false

statement based on his 2010 guilty plea and sentenced him to probation for one

year, including four months of home confinement, along with a $100 fine and a

$100 assessment. The parties here stipulated, and the board found, that Pappas

did not financially benefit from his false representations regarding his ownership

of Matsa’s law firm, and no evidence established that Pappas was even aware of

Matsa’s illegal activity. Indeed, in its sentencing memorandum in Pappas’s

federal case, the government stated the following:

Matsa’s aim was to obstruct the fact that he (Matsa)

controlled all the entities and was the mastermind behind the

fraudulent tax filings, not only of the corporate law firm, but of the

other corporate and trust entities which he controlled. Pappas’ aim

was to conceal his prior lie to the divorce court and to the Ohio

Supreme Court and to again help his best friend out of a jam he

perceived to have been created by Matsa’s ex-wife. Pappas did not

financially benefit from his conduct. In fact, there is no evidence

that Pappas knew of Matsa’s illegal conduct involving the clients,

the corporations or the trusts.

The district court judge agreed, stating at Pappas’s sentencing hearing that Pappas

was essentially “taken advantage of by a friend who was involved in a much more

aggravated and criminal scheme than what [Pappas] involved himself with.”

{¶ 12} Based on these facts, we agree with the board’s findings of

misconduct in this case. In count one, Pappas’s false statements to federal

authorities, which led to his criminal conviction, violated DR 1-102(A)(4)

(prohibiting a lawyer from engaging in conduct involving dishonesty, fraud,

deceit, or misrepresentation), 1-102(A)(5) (prohibiting a lawyer from engaging in

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conduct that is prejudicial to the administration of justice), and 1-102(A)(6)

(prohibiting a lawyer from engaging in conduct that adversely reflects on the

lawyer’s fitness to practice law). In count two, Pappas’s false statements in

response to relator’s 2004 letter of inquiry violated DR 1-102(A)(4), 1-102(A)(5),

and 1-102(A)(6). And in count three, Pappas’s execution of the false affidavit in

Matsa’s 2004 divorce proceeding violated DR 1-102(A)(4), 1-102(A)(5), 1-

102(A)(6), 7-102(A)(4) (prohibiting a lawyer from knowingly using perjured

testimony or false evidence in his or her representation of a client), and 7-

102(A)(5) (prohibiting a lawyer from knowingly making a false statement of fact

in his or her representation of a client).

Sanction

{¶ 13} When imposing sanctions for attorney misconduct, we consider

several relevant factors, including the ethical duties that the lawyer violated and

the sanctions imposed in similar cases. Stark Cty. Bar Assn. v. Buttacavoli, 96

Ohio St.3d 424, 2002-Ohio-4743, 775 N.E.2d 818, ¶ 16. In making a final

determination, we also weigh evidence of the aggravating and mitigating factors

listed in BCGD Proc.Reg. 10(B). Disciplinary Counsel v. Broeren, 115 Ohio

St.3d 473, 2007-Ohio-5251, 875 N.E.2d 935, ¶ 21. However, because each

disciplinary case is unique, we are not limited to the factors specified in BCGD

Proc.Reg. 10(B) and may take into account all relevant factors in determining

which sanction to impose.

Aggravating and mitigating factors

{¶ 14} In aggravation, the board found that Pappas acted with a dishonest

or selfish motive—not for financial gain, but to protect his friend—and that he

engaged in a pattern of misconduct. See BCGD Proc.Reg. 10(B)(1)(b) and(c).

We concur, and also note that Pappas has prior discipline for failing to register as

an attorney. See BCGD Proc.Reg. 10(B)(1)(a).

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{¶ 15} In mitigation, the board determined that Pappas (1) eventually

made a good-faith effort to rectify the consequences of his misconduct, (2)

cooperated in the disciplinary investigation, after making the initial

misrepresentation in 2004, (3) has a “reputation for good character” and a history

as a “sensitive criminal attorney serving a constituency who benefits from his

services,” and (4) has been subject to other penalties, including successful

completion of a term of home confinement and probation and payment of a fine

and assessment. See BCGD Proc.Reg. 10(B)(2)(c), (d), (e), and (f). The board

also determined that Pappas had displayed “immense remorse,” acknowledged the

wrongful nature of his misconduct, and had not benefited financially in any way

from his misconduct.

{¶ 16} We agree that these mitigating factors are present here, and we

defer to the panel’s credibility determinations regarding Pappas’s level of remorse

and his reputation. See Cuyahoga Cty. Bar Assn. v. Wise, 108 Ohio St.3d 164,

2006-Ohio-550, 842 N.E.2d 35, ¶ 24 (“Unless the record weighs heavily against a

hearing panel’s findings, we defer to the panel’s credibility determinations,

inasmuch as the panel members saw and heard the witnesses firsthand”).

Applicable precedent

{¶ 17} The parties submitted a number of cases to the board involving

attorneys whose misconduct resulted in felony convictions, with sanctions ranging

from a two-year suspension, with credit for time served under the interim felony

suspension, to an indefinite suspension without credit for time served. See, e.g.,

Disciplinary Counsel v. Blaszak, 104 Ohio St.3d 330, 2004-Ohio-6593, 819

N.E.2d 689 (two-year suspension, with credit for time served, for an attorney

convicted of offering to sell testimony in exchange for $500,000); Disciplinary

Counsel v. Margolis, 114 Ohio St.3d 165, 2007-Ohio-3607, 870 N.E.2d 1158

(two-year suspension, without credit for time served, for an attorney convicted of

federal antitrust violations that affected between $37.5 million and $100 million

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in bid rigging); Disciplinary Counsel v. Bennett, 124 Ohio St.3d 314, 2010-Ohio-

313, 921 N.E.2d 1064 (indefinite suspension, with credit for time served, for an

attorney convicted of illegally structuring financial transactions in an amount of

$124,300 to evade federal currency-transaction reporting requirements);

Disciplinary Counsel v. Smith, 128 Ohio St.3d 390, 2011-Ohio-957, 944 N.E.2d

1166 (indefinite suspension, with credit for time served, for an attorney convicted

of making false tax returns, conspiring to defraud the IRS, and corruptly

endeavoring to obstruct and impede an IRS investigation); Disciplinary Counsel

v. Camera, 68 Ohio St.3d 478, 628 N.E.2d 1353 (1994) (indefinite suspension,

without credit for time served, for an attorney convicted of perjury for signing a

false affidavit at a sheriff’s sale; the affidavit stated that the attorney was not

acting on behalf of the client whose forfeited property was being sold due to her

conviction in a criminal matter, but the attorney was in fact acting on that client’s

behalf).

{¶ 18} The board found several distinctions between Pappas’s conduct

and the conduct of the attorneys in these cases. For example, the board

determined that Pappas’s misconduct—“telling the same lie on three separate

occasions”—was less severe than the misconduct in Blaszak and Margolis and not

as frequent or as complex as the misconduct in Bennett and Smith. Similarly, the

board noted that unlike the attorneys in Blaszak, Bennett, and Smith, Pappas was

not motivated by any personal financial gain, and in contrast to the attorney in

Margolis, Pappas showed “immense remorse” and took responsibility for his

actions. As to Camera, the board concluded that because this court’s opinion did

not discuss aggravating and mitigating factors, the board could not determine

whether the facts in Pappas’s case warranted the same sanction as that imposed in

Camera.

{¶ 19} The board found that its recommended sanction of a two-year

suspension was supported by Disciplinary Counsel v. Derryberry, 54 Ohio St.3d

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107, 561 N.E.2d 926 (1990). In that case, the attorney was convicted of perjury

after testifying that, while serving as a bankruptcy trustee, he had not received

certain creditor contributions given to a third party. But in fact, the third party

had given the trustee-attorney at least one creditor’s check, apparently as part of a

$27,500 personal loan. Id. at 108. In mitigation, the board had stressed the

attorney’s character evidence, his 17 years’ experience as a trustee in bankruptcy

actions, his active civic participation, and his near-completion of his criminal

sentence of three years’ probation. Id. at 108. This court accepted the board’s

recommended sanction of a two-year suspension with credit for time served under

the interim felony suspension. Id. at 109.

{¶ 20} Based on this precedent, and its belief that the “significant number

of mitigating factors” in Pappas’s case were of “overriding importance,” the board

determined that “[b]eyond any term suspension there is no valid reason to believe

that the public needs to be protected from [Pappas’s] practicing law.”

Accordingly, it recommended that Pappas serve a two-year suspension, with

credit for time served during the interim felony suspension.

{¶ 21} We agree with the board that the relevant precedent—especially

Derryberry—supports a two-year suspension from the practice of law. Pappas’s

misconduct was not as egregious as the attorneys in Smith or Bennett, who both

engaged in complex schemes to defraud the IRS for personal gain and, as a result,

received indefinite suspensions. Given the facts and significant mitigating factors

here, a lesser sanction than in Smith or Bennett is warranted. However, Pappas

was not only convicted of making a false statement to federal authorities, he also

made the same false statement to a court and to relator. “Such conduct strikes at

the very core of a lawyer’s relationship with the court * * *. Respect for our

profession is diminished with every deceitful act of a lawyer.” Disciplinary

Counsel v. Fowerbaugh, 74 Ohio St.3d 187, 190, 658 N.E.2d 237 (1995).

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Accordingly, we decline to credit Pappas for the time served under his interim

felony suspension.

Conclusion

{¶ 22} For the reasons explained above, George Zane Pappas is suspended

from the practice of law in Ohio for two years, with no credit for time served

under his interim felony suspension. Costs are taxed to Pappas.

Judgment accordingly.

O’CONNOR, C.J., and PFEIFER, LANZINGER, KENNEDY, FRENCH, and

O’NEILL, JJ., concur.

O’DONNELL, J., dissents.

____________________

O’DONNELL, J., dissenting.

{¶ 23} Respectfully, I dissent.

{¶ 24} The egregious conduct Pappas engaged in, particularly with

respect to IRS agents, and his testimony before a grand jury and representations to

the Department of Justice adversely affect the administration of justice.

{¶ 25} In this case, Pappas executed an affidavit, knowing that it would be

filed in the Domestic Relations Division of the Franklin County Common Pleas

Court, falsely claiming ownership in Aristotle Matsa’s law practice in an effort to

quash a subpoena. He made false representations to relator, he falsely told IRS

agents that he was the owner of Matsa’s law firm, he appeared before a federal

grand jury and falsely testified under oath that he was the owner of Matsa’s law

firm, and after that testimony, he sent a letter to the Department of Justice,

representing again that he was the owner of Matsa’s law practice, that he had

always been the sole shareholder of the firm, and that many of the entities listed

on the subpoena were not associated with Matsa but were clients of his law

practice. After signing a confidential plea agreement with federal authorities,

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Pappas reported his misconduct to relator. A federal district court convicted him

of making a false statement to federal authorities.

{¶ 26} In Disciplinary Counsel v. Fowerbaugh, 74 Ohio St.3d 187, 190,

658 N.E.2d 237 (1995), we stated that a

lawyer who engages in a material misrepresentation to a court

* * * violates, at a minimum, the lawyer’s oath of office that he or

she will not “knowingly * * * employ or countenance any * * *

deception, falsehood, or fraud.” Gov.Bar R. I(8)(A). Such

conduct strikes at the very core of a lawyer’s relationship with the

court * * *. Respect for our profession is diminished with every

deceitful act of a lawyer.

In this case, Pappas made repeated material misrepresentations.

{¶ 27} The board determined that he acted with a dishonest or selfish

motive and that he engaged in a pattern of misconduct.

{¶ 28} In my view, a two-year suspension with no credit for time served

under the interim felony suspension is not an appropriate sanction.

{¶ 29} I would disbar him from the practice of law.

____________________

Donald M. Scheetz, Senior Assistant Disciplinary Counsel, for relator.

Kegler Brown Hill & Ritter, Geoffrey Stern and Rasheeda Khan, for

respondent.

_________________________

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