Disciplinary Counsel v. Bereday (Slip Opinion)

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

Disciplinary Counsel v. Bereday, Slip Opinion No. 2019-Ohio-1895.]

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. 2019-Ohio-1895

DISCIPLINARY COUNSEL v. BEREDAY.

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

may be cited as Disciplinary Counsel v. Bereday, Slip Opinion No.

2019-Ohio-1895.]

Attorneys—Misconduct—Violations of the Rules of Professional Conduct—

Indefinite suspension.

(No. 2018-1763—Submitted January 30, 2019—Decided May 22, 2019.)

ON CERTIFIED REPORT by the Board of Professional Conduct of the Supreme

Court, No. 2018-017.

_______________________

Per Curiam.

{¶ 1} Respondent, Thaddeus Matthew Sigmund Bereday, of Tampa,

Florida, Attorney Registration No. 0061991, was admitted to the practice of law in

Ohio in 1993. On November 27, 2017, we suspended his license on an interim

basis after receiving notice that a federal court had convicted him of a felony for

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making a false statement involving a healthcare-benefit program. See In re

Bereday, 152 Ohio St.3d 1204, 2017-Ohio-8676, 93 N.E.3d 986.

{¶ 2} In March 2018, relator, disciplinary counsel, charged Bereday with

professional misconduct based on the facts that led to his felony conviction.

Bereday stipulated to the charges against him, and the parties jointly recommended

that he serve an indefinite suspension, with credit for the time he has served under

his interim felony suspension. After a hearing, the Board of Professional Conduct

issued a report finding that Bereday had engaged in the stipulated misconduct and

recommending that we adopt the parties’ proposed sanction. The board also

recommended that we condition Bereday’s future reinstatement on his successful

completion of or discharge from a three-year term of supervised release imposed as

part of his criminal sentence. None of the parties objected to the board’s report.

{¶ 3} Upon our review of the record, we adopt the board’s findings of

misconduct and recommended sanction.

Misconduct

{¶ 4} At the time of his misconduct, Bereday was serving as general counsel

and chief compliance officer for Wellcare Health Plans, Inc., which, according to

the parties, was one of Florida’s largest providers of managed healthcare services.

{¶ 5} In March 2011, Bereday and four codefendants—all executives or

officers of Wellcare or its subsidiaries—were named in an 11-count indictment

filed in the United States District Court for the Middle District of Florida. Bereday

was charged with one count of conspiracy, four counts of making false statements

relating to a healthcare benefit program, and four counts of healthcare fraud. In

January 2012, the Securities and Exchange Commission (“SEC”) filed a separate

civil complaint against Bereday and two other Wellcare executives. The SEC

alleged that the defendants had carried out a fraudulent scheme to deceive Florida

healthcare agencies and investors by, among other things, improperly retaining

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millions of dollars in healthcare premiums that should have been reimbursed to the

state.

{¶ 6} The federal court later stayed the SEC action pending the conclusion

of the criminal case. Bereday’s criminal case was severed from his codefendants’

and then delayed for various reasons, including Bereday’s treatment for cancer.

{¶ 7} In June 2017, Bereday entered into a plea agreement in which he

agreed to plead guilty to one count of making a false statement relating to a

healthcare-benefit program in violation of 18 U.S.C. 1035(a)(2). In short, Bereday

admitted that in April 2007, he knowingly and willfully caused one of Wellcare’s

subsidiaries to submit a false worksheet to the Florida agency administering the

state’s Medicaid program. Bereday agreed that as a result of the false financial

information submitted on the worksheet, Florida’s Medicaid program incurred a

loss of $4,489,303. The federal court accepted his guilty plea to the offense, and in

November 2017, it sentenced him to six months of incarceration in federal prison

and to a three-year term of supervised release, including 12 months of home

confinement. The court also imposed a $50,000 fine.

{¶ 8} Bereday thereafter consented to an entry of final judgment in the SEC

action. As part of that judgment, Bereday agreed to an order enjoining him from

acting as an officer or director of an issuer of securities for five years. He also

agreed to pay $3.5 million in disgorgement and prejudgment interest and a $1

million civil penalty for violating securities laws. At the time of his disciplinary

hearing, Bereday had served his six-month prison sentence and had paid the fines

and penalties assessed against him in both the criminal and SEC actions.

{¶ 9} Based on this conduct, the parties stipulated and the board found that

Bereday violated Prof.Cond.R. 8.4(b) (prohibiting a lawyer from committing an

illegal act that reflects adversely on the lawyer’s honesty or trustworthiness) and

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

deceit, or misrepresentation).

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{¶ 10} We agree with the board’s findings of misconduct.

Sanction

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

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

aggravating and mitigating factors listed in Gov.Bar R. V(13), and the sanctions

imposed in similar cases.

{¶ 12} As aggravating factors, the board found that Bereday had a dishonest

and selfish motive and that he had engaged in multiple offenses, as shown by the

separate criminal and civil judgments against him. See Gov.Bar R. V(13)(B)(2)

and (4). The board also noted that his conduct had harmed Florida’s Medicaid

program, despite the fact that it was Bereday’s duty, as Wellcare’s chief compliance

officer, to ensure that this type of fraud did not occur. See Gov.Bar R. V(13)(B)(8).

{¶ 13} In mitigation, the board determined that Bereday has a clean

disciplinary record, he had paid $3.5 million in restitution for disgorgement of ill-

gotten gains, he had provided full and free disclosures to the board and had a

cooperative attitude toward the disciplinary proceedings, and he has been subject

to other criminal and civil sanctions for the same misconduct. See Gov.Bar R.

V(13)(C)(1), (3), (4), and (6). The board also noted that Bereday had presented

witness testimony and 16 letters of reference attesting to his character and

reputation. See Gov.Bar R. V(13)(C)(5).

{¶ 14} To support its recommended sanction, the board cited a number of

cases in which we indefinitely suspended attorneys convicted of similar fraudulent

financial crimes. For example, in Mahoning Cty. Bar Assn. v. Wagner, 137 Ohio

St.3d 545, 2013-Ohio-5087, 1 N.E.3d 398, and Mahoning Cty. Bar Assn. v. Helbley,

141 Ohio St.3d 156, 2014-Ohio-5064, 22 N.E.3d 1078, we indefinitely suspended

attorneys convicted of conspiracy to commit wire fraud in a mortgage-fraud

scheme. We also granted those attorneys credit for the time they had served under

their interim felony suspensions imposed for the same misconduct. In Disciplinary

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Counsel v. Schuler, 138 Ohio St.3d 346, 2014-Ohio-1127, 6 N.E.3d 1173, we

indefinitely suspended an attorney, with credit for the time he had served under an

interim felony suspension, who had been convicted of filing a false tax return. And

in Disciplinary Counsel v. Bennett, 124 Ohio St.3d 314, 2010-Ohio-313, 921

N.E.2d 1064, we indefinitely suspended an attorney, with credit for the time he had

served under an interim felony suspension, who had been convicted of illegally

structuring financial transactions to evade federal currency-transaction reporting

requirements.

{¶ 15} The board also noted that in two cases that are more recent, we

declined to grant credit for the time served under interim felony suspensions. For

example, in Disciplinary Counsel v. Marshall, 155 Ohio St.3d 208, 2018-Ohio-

4174, 120 N.E.3d 772, we indefinitely suspended an attorney who had participated

in a scheme in which a group of related businesses submitted false information to

federal agencies to obtain funding that the businesses were not qualified to receive.

The attorney was later convicted of attempt and conspiracy to commit wire fraud.

We noted that although the nature of Marshall’s underlying criminal offense was

comparable to the misconduct in Wagner, Helbley, and Bennett, Marshall’s actions

were distinguishable, in part because he had engaged in a criminal conspiracy that

spanned more than 11 years and arguably diverted more than $140 million in

federal contracts away from other businesses that actually qualified for the money.

In contrast, the misconduct in Wagner, Helbley, and Bennett occurred over

relatively shorter periods of time—7 months in Wagner, 13 months in Helbley, and

5 months in Bennett. On that record, we declined to grant Marshall credit for the

time he had served under his interim felony suspension. Marshall at ¶ 23.

{¶ 16} Here, the board found that although Bereday’s criminal conduct

involved a significant amount of money, it was centered on the submission of one

false financial worksheet. Therefore, the board concluded that the span of

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Bereday’s misconduct was not as egregious as the 11-year course of fraudulent

conduct in Marshall.

{¶ 17} We agree that an indefinite suspension is the appropriate sanction

for Bereday’s misconduct, and based on the facts of his case, we accept the board’s

recommendation to grant credit for the time he has served under his interim felony

suspension. See Disciplinary Counsel v. Doumbas, 149 Ohio St.3d 628, 2017-

Ohio-550, 76 N.E.3d 1185 (accepting the board’s recommendation to indefinitely

suspend an attorney convicted of bribery and to grant credit for the time he had

served under his interim felony suspension because, among other reasons, his

misconduct was a one-time violation and he had presented significant mitigating

evidence). We also agree with the board’s recommendation that Bereday be

required to complete or be released from his three-year term of supervised release

before petitioning for reinstatement. See Bennett at ¶ 28 (conditioning the

attorney’s reinstatement on his completion of his term of supervised release);

Cincinnati Bar Assn. v. Kellogg, 126 Ohio St.3d 360, 2010-Ohio-3285, 933 N.E.2d

1085 (indefinitely suspending an attorney convicted of money laundering and other

offenses and conditioning his reinstatement upon his completion of his term of

supervised release).

Conclusion

{¶ 18} For the reasons explained above, Thaddeus Matthew Sigmund

Bereday is indefinitely suspended from the practice of law in Ohio, with credit for

the time he has served under the November 27, 2017 interim suspension.

Notwithstanding Gov.Bar R. V(25)(D)(2), Bereday shall not petition for

reinstatement until he has successfully completed or has been released from the

term of supervised release imposed as part of his criminal sentence. Costs are taxed

to Bereday.

Judgment accordingly.

FRENCH, DEWINE, DONNELLY, and STEWART, JJ., concur.

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O’CONNOR, C.J., and KENNEDY and FISCHER, JJ., concur in part and dissent

in part and would not give credit for time served.

_________________

Scott J. Drexel, Disciplinary Counsel, for relator.

Coughlan Law Firm, L.L.C., and Jonathan Coughlan, for respondent.

_________________

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