Appendix — Hook v. Robinson (No. 06-1465)

Supreme Court, U.S.

PILE BOS

061465DEC1 9 2006

(4) OFFICE OF THE CLERK

No. 06-

In the

Supreme Court of the United States

IN THE MATTER OF:

GEORGE CLIVE HOOK,

ATTORNEY-PETITIONER

NO. 1236432

Vo.

MARY ROBINSON,

ADMINISTRATOR,

ILLINOIS ATTORNEY REGISTRATION

AND DISCIPLINARY COMMISSION

On Petition for Writ of Certiorari

To the

SUPREME COURT OF ILLINOIS

M.R. 21025

Having Denied Leave to File Exceptions

To the Report and Recommendation of

Disbarment by the Review Board

98 CH 50

and Disbarment.

APPENDIX

George Clive Hook

Pro Se

Member of the Supreme Court Bar

1201 Deerfield Parkway

Buffalo Grove, Illinois 60089

(847) 947-7975

INDEX TO APPENDIX

DISBARMENT ORDER OF THE

peeueeeerie SUPREME COURT...........ccscceee l

REVIEW BOARD REPORT AND

ES 0) 5

HEARING BOARD REPORT AND

0) 17

CONSTITUTIONAL AND STATUTORY

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United States Constitution:

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i iviscn sdnerdnvuseesecieeresveevevevernesxaces 59

Noa vcavsensunsseconsecosoceserenceeses 59

I a arriicadsvetaxesesevenreeevseyesevvesecevervenrseye 59

EE SLT 59

Neen sccsovusnseneneneevid 60

Ne. vussecsvevseseereverts 60

IE 60

14" ris sskadcenessgussensavetonsones 60

Federal Statutes:

aa cack cuvkevensveveseesevevioeeerens 61

Illinois Supreme Court Rules:

Illinois Supreme Court Rule 19.0.0... ceeeeeeeeeeees 62

Illinois Supreme Court Rule 761(b)...........:seseeseeesees 62

Illinois Supreme Court Rule 761(d).........: icinealusede 62

Illinois Supreme Court Rule 761(f).............c 63

Illinois Supreme Court Rule 770...............c eee 63

STATE OF ILLINOIS

SUPREME COURT

At a Term of the Supreme Court, begun

and held in Springfield, on Monday, the

eleventh day of September, 2006.

Present: Robert R. Thomas, Chief Justice

Justice Charles S. Freeman

Justice Thomas L. Kilbride

Justice Lloyd A. Karmeier

Justice Thomas R. Fitzgerald

Justice Rita B. Garman

Justice Anne M. Burke-

ce

On the twenty-first day of September,

2006, the Supreme Court entered the

following judgment:

In re:

M.R. 21025

George Clive Hook Attorney

Presidential Towers! 802-1 Registration

555 West Madison and

Chicago, IL 60661-2514 Disciplinary

Commission

98CHS0

The petition by respondent George Clive

Hook for leave to file exceptions to the

report and recommendation of the Review

2

Board is denied. Respondent is disbarred,

as recommended by the Review Board.

Order entered by the Court.

As Clerk of the Supreme Court of the

State of Illinois and keeper of the

records, files and Seal thereof, | certify

that the foregoing is a true copy of the

final order entered in this case.

IN WITNESS WHEREOF, I

have herunto subscribed my

name and affixed the Seal of

said Court, this twenty-first

day of September, 2006

SEAL /s/ Julean Hornyak, Clerk

Supreme Court of the

State of Illiois

In re George Clive Hook

Respondent-Appellant

Commission No. 98 CH 50

SYNOPSIS OF REVIEW BOARD REPORT AND

RECOMMENDATION

(May 16, 2006)

Respondent, George Clive Hook, was convicted in

1997 of wire fraud, theft, and money laundering. Following

his conviction, the Administrator filed a complaint against

him pursuant to Supreme Court Rule 761(d), charging him

with committing criminal acts reflecting adversely on his

honesty, trustworthiness, or fitness as a lawyer in other

respects; engaging in conduct involving dishonesty, fraud,

deceit, or misrepresentation; and engaging in conduct that

is prejudicial to the administration of justice and that tends

to defeat the administration of justice or to bring the courts

or the legal profession into disrepute. Hook denied most of

the factual allegations in the complaint and denied all

allegations of misconduct.

The Hearing Board found that the Administrator

proved all of the charged misconduct and recommended

that Hook be disbarred.

The matter came before the Review Board on

Hook's exceptions. He argued that (1) the Hearing Board

failed to consider his actual conduct, (2) his conviction

should not have been given conclusive effect, (3) the

Hearing Board improperly considered his lack of remorse

as an aggravating factor, and (4) disbarment was not

warranted.

Declining to go behind Hook's criminal conviction, the

Review Board determined that the Hearing Board gave

proper consideration to Hook's conviction and his actual

conduct. Tne Review Board recommended that Hook be

disbarred.

THE REVIEW BOARD

OF THE

ILLINOIS ATTORNEY REGISTRATION

AND

DISCIPLINARY COMMISSION

In the Matter of:

GEORGE CLIVE HOOK,

Respondent-Appellant,

Commission No. 98

CH 50

No. 1256432.

REPORT AND RECOMMENDATION OF THE REVIEW

BOARD

In 1997, Respondent-Appellant, George Clive

Hook, was convicted in federal court of wire fraud, theft,

and money laundering. Following his conviction, the

Administrator-Appellee filed a complaint against him

pursuant to Supreme Court Rule 761(d) (134 Ill.2d R.

761(d)), alleging that he (1) committed criminal acts

reflecting adversely on his honesty, trustworthiness or

fitness as a lawyer in other respects; (2) engaged in conduct

involving dishonesty, fraud, deceit, or misrepresentation;

and (3) engaged in conduct prejudicial to the administration

of justice and tending to bring the courts or the legal

profession into disrepute. Respondent denied almost all of

the factual allegations in the complaint and denied all

allegations of misconduct.

Following a hearing, the Hearing Board found that

Respondent committed all of the charged misconduct and

recommended that he be disbarred.

Before the Review Board, Respondent argues that

(1) the Hearing Board's recommendation was not based on

his actual conduct and is therefore invalid, (2) the Hearing

Board should not have afforded his conviction the

conclusive effect prescribed in Rule 761(f); (3) the Hearing

Board improperly considered his lack of remorse to be a

factor in aggravation; and (4) disbarment is not warranted.

The facts pertaining to Respondent's conviction and his

appeal thereof are set forth in detail in United States v.

Hook, 195 F.3d 299 (7th Cir. 1999).

Briefly, Respondent and Carmen Viana, the owner,

chairperson and CEO of Wittek Industries, Inc. (Wittek),

engaged in a scheme to obtain funds from one of Wittek's

employee benefit plans (Plan) for the struggling Wittek to

use as operating capital. They did so after being advised by

attorney Drake Boutwell that the Employee Retirement

Income Security Act of 1974 (ERISA) prohibited the

transfer of Plan funds to Wittek. At all relevant times,

Respondent was a partner at the law firm of McBride,

Baker & Coles (McBride).

Respondent and Viana formed a shell corporation,

Pineville Real Estate Operating Corporation (PREOC),

through which funds flowed from the Plan to Wittek, and

used fraudulent means to induce the Plan administrator,

Manufacturer's Bank, to transfer approximately $989,000

in Plan funds to PREOC's checking account and to

McBride's client trust account. Respondent used most of

the Plan funds to purchase certificates of deposit in

PREOC's name, which he used as collateral for $660,000 in

loans from Harris Bank Glencoe-Northbrook to PREOC.

All of the loan proceeds ended up in Wittek’s accounts.

Respondent prepared a note from PREOC to the Plan in the

amount of $600,000.

Eventually, PREOC defaulted on the Harris Bank

loans and the loan from the Plan. Harris Bank collected the

certificates of deposit, Wittek became insolvent, and Viana

fled the country for Brazil. The Pension Benefit Guarantee

Corporation had to take over as trustee for the Plan so that

the Plan members could recoup the pension funds due to

them.

A jury found Respondent guilty of three counts of

wire fraud, one count of theft from an employee benefit

plan, and three counts of money laundering. He received

concurrent sentences of 84 months in prison on the wire

fraud and money laundering counts, and a 60 month

concurrent sentence on the theft count. The court ordered

him to pay $735,566 in restitution to the Pension Benefit

Guarantee Corporation. The Seventh Circuit upheld the

conviction on appeal. United States v. Hook, 195 F.3d 299

(7th Cir. 1999),

The Administrator submitted proof of Respondent's

conviction and a certified copy of the Seventh Circuit's

opinion. In addition, the Administrator presented the

testimony of attorneys Charles Drake Boutwell and Robert

Schnitz. Boutwell was a former McBride attorney who

specialized in ERISA matters and consulted with

Respondent and Viana regarding the Plan assets. He

testified that he repeatedly told Respondent and Viana that

Plan funds could not go to Wittek.

Schnitz was the managing partner at McBride at the

time of the incidents that gave rise to Respondent's

conviction. He testified that Respondent was _ not

forthcoming with all of the relevant information about the

Plan transactions and the PREOC mortgage transaction. As

a result of Respondent's misconduct, McBride had to pay

the Pension Benefit Guarantee Corporation $200,000,

$125,000 of which was paid by McBride's insurance

company. Harris Bank and its insurer had to pay the

remaining amount that was taken from the Plan, which

totaled $600,000 or $700,000. Schnitz testified that

McBride incurred between $250,000 and $300,000 in

additional expenses, plus a significant amount of attorney

time, due to Respondent's misconduct.

Respondent testified on his own behalf. He believes

that his actions were completely proper. He testified that

Viana wanted to remedy the underfunded Plan by selling

Wittek's Pineville property to the Plan. According to

Respondent, Boutwell assured him that the structure of the

Plan transactions was "appropriate to accomplish the

transfer of working capital to Wittek." In Respondent's

view, the transfer of funds from the Plan to Wittek had tax

consequences, but was not prohibited. He further testified

that he wanted to remove the Plan funds from

Manufacturer's Bank because he and Viana believed that

the Bank had "“annuitized" a portion of the Plan funds

without Viana's authorization.

Respondent presented ten character witnesses. Four

of the witnesses were businessmen and friends of

Respondent's. The remaining witnesses were attorneys, one

of whom was Respondent's ex-wife. All of the witnesses

testified that Respondent had a very good reputation for

honesty, and that his conviction did not change their

opinion of him.

ANALYSIS

Respondent argues that the Hearing Board failed to

consider his "actual conduct" and instead focused solely on

his conviction. As the Hearing Board noted, because an

attorney is disciplined for his conduct, not for his

conviction, it is appropriate for the Hearing Board to

consider evidence pertaining to the acts that led to the

conviction and the surrounding circumstances. See In re

Ciardelli, 118 [Il.2d 233, 239-40, 514 N.E.2d 1006, 113

Ill.Dec. 94 (1987). Respondent concedes that the Hearing

Board "received all of [his] relevant conduct, either through

motion practice or trial testimony.” Resp. Brief at 34. The

Hearing Board specifically states in its Report and

Recommendation that it considered the evidence

Respondent submitted regarding his conduct, but did not

find it persuasive. Hearing Board Report and

Recommendation at 35-36. The Hearing Board found that

Respondent's claim of innocence "strains credulity’ and ?is

preposterous’ in light of the evidence before us." Hearing

Board Report and Recommendation at 35. Thus, while the

Hearing Board did not accept Respondent's version of

events, it certainly considered all of the evidence pertaining

to his actual conduct.

In assessing Respondent's conduct, the Hearing

Board justifiably relied on the conclusive evidence of

Respondent's guilt on the wire fraud, theft, and money

laundering

charges. It was required to do so pursuant to Rule 761(f)

and a long line of supreme court cases holding that a

conviction for a crime involving moral turpitude is

conclusive of the attorney's guilt of the crime. See

Ciardelli, 118 Ill.2d at 239; In re Callas, 82 Ill.2d 6, 14, 411

N.E.2d 271, 277 (1980). There is no question that

Respondent's crimes involved moral turpitude, which is

defined as fraudulent conduct or conduct "done knowingly

contrary to justice, honesty, or good morals." In re Vavrik,

10

117 Il.2d 408, 412-13, 512 N.E.2d 1226, 1228 (1987).

Respondent spends much of his argument

contending that his conviction was unjust and improper. He

asserts that "technically" he is not asking this Board to go

behind the record of conviction, but is requesting instead

that we decline to give the conviction the conclusive effect

prescribed by Rule 761(f). He has not presented any

persuasive reason to do so.

We are aware of only one case in which the Review

Board determined that it was not appropriate for the

Administrator to rely on the conclusive presumption in

Rule 761(f). In In re Cueto, No. 97 SH 100 (Review Board,

Aug. 31, 2001) the respondent raised the issue of the

Administrator's involvement in the criminal proceedings

that led to his conviction. The Review Board remanded the

matter to allow the respondent to raise the Administrator's

involvement as a circumstance of his conviction. Following

remand, the Hearing Board and Review’ Board

recommended that Cueto be disbarred and the supreme

court agreed with those recommendations. Cueto, No. SH

100 (Review Board, July 19, 2004), petition for leave to

file exceptions denied, No. M.R. 19679 (Nov. 17, 2004).

Respondent's case is nothing like Cueto. While

Respondent contends that his criminal conviction was

unfair, his remedy for any perceived errors lay with the

federal courts. Respondent may not relitigate his conviction

in this venue.

Next, we address Respondent's novel argument that

the Hearing Board should not have given his conviction

conclusive effect because it did not follow the supreme

court's ruling in American Family Mutual Ins. Co. v.

Savickas, 193 III.2d 378, 739 N.E.2d 445, 250 Ill.Dec. 682

(2000).

1]

In Savickas, the insurance company of a convicted

murderer sought a declaratory judgment that it was not

required to defend Savickas in a lawsuit filed by his

victim's estate. In holding that it was proper to give

estoppel effect to Savickas’s criminal conviction, the

supreme court set forth the following requirements that

must be met before a criminal conviction may be given

estoppel effect in subsequent civil litigation: (1) the issue

decided in the prior litigation must be identical to the issue

in the subsequent litigation; (2) there must have been a final

judgment on the merits in the prior litigation; (3) the party

sought to be estopped must be the same party or in privity

with a party from the prior litigation; (4) the party sought to

be estopped must have litigated the relevant issue in the

prior litigation, (5) the issue must have been necessary to

the judgment in the prior litigation, and (6) it must be clear

that no unfairness will result to the party sought to be

estopped. Savickas, 193 III.2d at 388, 739 N.E. 2d 445, 250

[1].Dec. 682.

The court noted in Savickas that it has long been the

rule in this state that criminal convictions constitute

"conclusive evidence of guilt" in attorney disciplinary

proceedings. Savickas, 193 IIl.2d at 386, 739 N.E. 2d 445,

250 Ill.Dec. 682; citing In re Scott, 98 Ill.2d 9, 16, 74

Ill.Dec. 51, 455 N.E.2d 81 (1983). The court did not hold

that the requirements set forth in Savickas must be applied

in disciplinary proceedings, nor has it amended Rule 761(f)

to so require. For these reasons, we conclude that Savickas

is not controlling in disciplinary proceedings.

Moreover, we agree with the Administrator that the

Savickas requirements are subsumed in the operation of

Rule 761(f), so there is no need to go through them in every

case brought under Rule 761. Rule 761 applies when an

12

attorney has been convicted of a felony or a misdemeanor

(Rule 761(a)). When the crime involves fraud or moral

turpitude, the Hearing Board shall conduct a hearing to

determine whether the crime warrants discipline (Rule

761(d)). Rule 761(f), the section in question, provides that

proof of conviction is conclusive of the attorney's guilt of

the crime. Thus, the issue addressed by Rule 761(f) will be

identical to the issue presented in the criminal case?whether

the attorney was guilty of the charged offenses. Second, the

requirement of a final judgment in the criminal case is

satisfied because Rule 761(d)(2) provides that an attorney's

hearing shall be delayed until the appellate process is

finished, unless the attorney requests otherwise. Third, the

attorney will always be the defendant in the criminal

proceeding. Fourth, the attorney will have either litigated

the issue of his innocence or waived that right in cases

where the attorney pleaded guilty. Fifth, the issue of

whether the attorney committed the charged offenses was

necessary to the judgment.

Finally, Rule 761(f) satisfies the requirement of no

unfairness. The beyond a reasonable doubt burden of proof

in a criminal trial is greater than the clear and convincing

burden of proof in the disciplinary proceeding. Therefore,

ihe attorney received maximum evidentiary safeguards in

the criminal trial. Rule 761(f) does not provide that proof of

conviction is conclusive as to whether discipline is

warranted and, if so, the nature thereof. Those decisions are

ultimately made by the supreme court after considering all

of the relevant circumstances. The fact that attorneys who

are convicted of crimes, especially those whose crimes

involved moral turpitude, regularly receive significant

discipline is both expected and justified, in light of

our disciplinary system's primary purposes of protecting the

13

public and maintaining the integrity of the legal profession.

Accordingly, we cannot agree with Respondent that

the Hearing Board was required to apply the Savickas

factors or that those factors, if applied, would have

precluded the application of Rule 761(f). Consequently, we

conclude that Rule 761(f) as applied is consistent with

Savickas and does not violate his constitutional rights.

Respondent's final argument is that disbarment is

not an appropriate sanction in this matter. The purpose of

the disciplinary process is "to protect the public, to

maintain the integrity of the profession and to protect the

administration of justice from reproach." In re Fox, 122

{1.2d 402, 410, 522 N.E.2d 1229, 119 Ili.Dec. 370 (1988).

The Hearing Board's sanction recommendation is advisory.

In re Hopper 85 [ll.2d 318, 323, 423 N.E.2d 900, 53 Il.

Dec. 231 (1981). When making our - sanction

recommendation, we consider the facts and circumstances

of this particular case, the sanctions imposed in cases

involving sintilar’ misconduct, the purposes of the

disciplinary system, and the sanction's potential deterrent

value. In re Rice, No. 95 CH 210 (Review Board, Dec. 16,

1996) at 11-12, approved and confirmed, No. M.R. 13391

(March 21, 1997).

In his reply brief, Respondent argues that

suspension, rather than disbarment, is the more typical

sanction in cases involving fraudulent schemes. Because

Respondent failed to raise this argument in his initial brief

he has waived it, pursuant to ARDC Rule 302 (f)(5). See In

re Smith, No. 92 CH 296 (Review Board, September 1,

1994) at 13, 168 IIl.2d 269, 659 N.E.2d 896, 213 Ill.Dec.

550 (1995).

Respondent was convicted of crimes involving

moral turpitude. His egregious misconduct involved a

14

series of deliberate acts over a period of several months. He

put the Plan

members’ pension funds in jeopardy and caused significant

financial harm to his former law firm, Harris Bank, and

their insurers. This type of misconduct has warranted

disbarment in other cases, and also warrants disbarment in

this case.

We agree with the Hearing Board that In re Fumo,

52 Ill.2d 307, 288 N.E.2d 9 (1972), and In re Minneman,

No. 98 SH 38 (Review Board, Nov. 29, 2000), petition for

leave to file exceptions denied, No. M.R. 17352 (March 22,

2001) support disbarment. The attorney in Fumo defrauded

insurance companies and his clients and was convicted of

mail fraud. The attorney in Minneman was convicted of

conspiracy to commit tax fraud. Despite favorable character

evidence, the supreme court disbarred both of these

attorneys because they deliberately engaged in a series of

fraudulent acts over a period of time. The same is true of

Respondent.

The Administrator cites In re Hutul, 54 IIl.2d 209,

296 N.E.2d 332 (1973) (attorney convicted of mail fraud

and conspiracy); In re Pappas, 92 III.2d 243, 442 N.E.2d

142 (1982) (attorney convicted of mail fraud, conspiracy to

commit mail fraud, and causing an individual to travel in

interstate commerce with the intent to commit bribery); and

In re Vavrik, 117 IIl.2d 408, 512 N.E.2d 1226 (1987)

(attorney convicted of embezzling). These cases support

our recommended sanction of disbarment as well.

We have considered the evidence Respondent

offered in mitigation and the fact that he has no prior

discipline. Like the Hearing Board, we conclude that the

mitigating evidence does not persuade us that anything less

than disbarment is warranted. The Hearing Board found

15

that Respondent was guilty of the criminal charges against

him, despite his extensive efforts to show that he was

actually acting in the best interests of all the parties

involved. Respondent's character evidence, while

favorable, cannot overcome his refusal to acknowledge and

accept responsibility for his misconduct.

Respondent challenges the Hearing Board's

consideration of his lack of remorse as an aggravating

factor. The supreme court has consistently considered an

attorney's remorse, or lack thereof, when considering

whether he or she is fit to practice law. See In re Rinella,

175 Ul.2d 504, 518, 677 N.E.2d 909 (1997); In re Lewis,

138 Ill.2d 310, 348, 562 N.E.2d 198 (1990). In In re

Wigoda, 77 Ill.2d 154, 160-61, 395 N.E.2d 571 (1979), the

supreme court discussed whether an attorney's continued

assertion of innocence can, by itself, bar his reinstatement.

The court held that it could not. Thus, under Wigoda, a

respondent has the right to maintain that he is innocent.

However, neither the Hearing Board nor this Board is

required to accept Respondent's protestations of innocence,

nor must we ignore his lack of remorse when considering

our sanction recommendation. We find Respondent's lack

of remorse and failure to acknowledge any wrongdoing

particularly disturbing and indicative of an inability to

comprehend his ethical duties. We further note that

Respondent has paid only $200 per month toward the

$735,000 restitution amount ordered by the federal court.

Having considered all of the circumstances of this

case, including the nature of Respondent's misconduct and

the factors in aggravation and mitigation, we conclude that

a recommendation of disbarment is necessary to protect the

public and maintain the integrity of the legal profession.

We further recommend that Respondent be required to

16

continue paying restitution toward the balance of the

amount he owes pursuant to his sentencing order.

Date Entered: May 16, 2006

Respectfully submitted:

Cheryl I. Niro

Terence V. O'Leary

Thomas A. Zimmerman, Jr.

17

Filed July 26, 2005

In re George Clive Hook

Commission No. 98 CH 50

Synopsis of Hearing Board Report and Recommendation

NATURE OF THE CASE: committing criminal acts that

reflect adversely on the lawyer's honesty, trustworthiness or

fitness as a lawyer in other respects; conduct involving

dishonesty, fraud, deceit or misrepresentation; and conduct

that is prejudicial to the administration of justice, or which

tends to defeat the administration of justice or to bring the

courts or the legal profession into disrepute

RULES DISCUSSED: 8.4(a)(3) of the Illinois Rules of

Professional Conduct (1990); 8.4(a)(4); 8.4(a)(5) and

Supreme Court 771

SANCTION: Disbarment

DATE OF OPINION: July 26, 2005

HEARING PANEL: Joseph A. Barthlomew, William E.

Hornsby, Jr. and Albert C. Baldermann

ADMINISTRATOR'S COUNSEL: Athena T. Taite

RESPONDENT'S COUNSEL: Pro se

BEFORE THE HEARING BOARD

OF THE

ILLINOIS ATTORNEY REGISTRATION

AND

DISCIPLINARY COMMISSION

In the Matter of:

GEORGE CLIVE HOOK,

Attorney-Respondent, .

No. 1256432. Commission No. 98 CH 50

REPORT AND RECOMMENDATION OF THE

HEARING BOARD

18

The hearing in this matter and was held on February 2-3,

March 16 and April 19, 2005 at the offices of the Attorney

Registration and Disciplinary Commission, Chicago,

illinois, before a Panel of the Hearing Board consisting of

Joseph A. Bartholomew, Chair, William E. Hornsby, Jr.

and Albert C. Baldermann. Athena T. Taite appeared on

behalf of the Administrator and Respondent, George Clive

Hook,

appeared pro se.

PLEADINGS AND PRE-HEARING RECORD

In a one-count Complaint filed pursuant to Supreme Court

Rule 761(d) on June 11, 1998, the Administrator alleges

that due to Respondent's May 29, 1997 conviction in the

U.S. District Court, Central Division of Illinois in United

States of America v. George C. Hook, No. 1L95CR10010-

002, Respondent has engaged in the following misconduct:

committing criminal acts that reflect adversely on the

lawyer's honesty, trustworthiness or fitness as a lawyer in

other respects; conduct involving dishonesty, fraud, deceit

Or misrepresentation; and conduct that is prejudicial to the

administration of justice, or which tends to defeat the

administration of justice or to bring the courts or the legal

profession

into disrepute. (See Adm. Compl. at para. 1-7; Adm. Ex. 1)

PAGE 2:

On November 19, 1999 the Illinois Supreme Court,

pursuant to the rule to show cause under Supreme Court

Rule 76! that issued to Respondent on June 17, 1998 and

continued until August 11, 1998, ordered Respondent

suspended from the practice of law effective immediately

and until further order of Court. On September 5, 2000

Respondent filed his Answer to the Administrator's

Complaint.

19

On March 30, 2001 the Administrator's Motion to Strike

Respondent's Answers and Exhibits was granted and

Respondent was allowed to file an Amended Answer to the

Administrator's Complaint in compliance with Commission

Rule 233 on or before April 16, 2001. On April 20, 2001

Respondent filed his Answer and Verified Third Party

Complaints. On April 26, 2001 the Administrator filed a

Motion to Strike Respondent's Third Party Complaints. On

May 15, 2001 Respondent filed a Response to the

Administrator's Motion to Strike his Third Party

Complaints. On June 4, 2001 the Chair granted the

Administrator's Motion to Strike Respondent's Third Party

Complaints and ordered that pages 26-40 of Respondent's

April 20, 2001 Amended Answer be stricken. Respondent's

Answer denies virtually all of the allegations of the

Administrator's Complaint.

On May 17, 2002 Respondent filed a Motion in Limine to

preclude use of his federal conviction. On May 29, 2002

the Administrator filed a response to Respondent's Motion

in Limine. On June 18, 2002 the Administrator filed a

Motion in Limine to preclude argument and evidence

contradicting Court rulings regarding PBGC v. Wittek and

its relationship to U.S. v. Hook, a Motion in Limine to

preclude argument and evidence concerning whether

Respondent received a full and fair hearing, and a Motion

to Strike certain affirmative defenses. On July 31, 2002

Respondent filed his response to both of the

Administrator's Motions in Limine, a response to the

Administrator's Motion to Strike and a reply in support of

his Motion in Limine to preclude use of his federal

conviction. On September 10, 2002 the Chair denied

Respondent's

PAGE 3:

20

Motion in Limine to preclude use of his federal conviction

and granted the Administrator's Motion in Limine to

preclude argument and evidence contracting court rulings

regarding PBGC v. Wittek and its relationship to US. v.

Hook as well as the Administrator's Motion in Limine to

preclude argument and evidence concerning whether

Respondent received a full and fair hearing. The Chair

further deemed the Administrator's Motion to Strike certain

affirmative defenses moot based on the ruling on other

motions.

Based on the reassignment of this matter to another

Hearing Board Chair, on March 20, 2003, Respondent filed

a Motion to Reconsider preclusion of his federal conviction

and a Motion to Reinstate Third Party Complaints. Four

days later, the Administrator filed responses to

Respondent's Motion to Reinstate Third Party Complaints

and the Motion to Reconsider. On March 25, 2003

Respondent filed a Motion to Reconsider Motion to

Compel pursuant to Supreme Court Rule 219. On April 3,

2003 the Administrator filed her response to Respondent's

Motion to Reconsider Motion to Compel and her responses

to Respondent's Motion to Reconsider preclusion of

argument and evidence regarding PBGC v. Wittek and

Motion to Reconsider permitting argument and evidence

that U.S. v. Hook was not a full and fair hearing. On April

15, 2003, Respondent filed a reply in support of the Motion

to Reconsider preclusion of federal conviction.

Additionally, On May 19, 2003 the Chair ordered that a

hearing in this matter was tentatively scheduled for July 29

and 30, 2003. The tentative hearing was to be held, pending

confirmation, at the Metropolitan Correctional Center

where Respondent was incarcerated. On July 16, 2003

Respondent filed an In Chambers Motion to Place Motions

21

Under Seal and a Motion to Postpone Proceedings. On July

22, 2003 the Chair ordered, with no objection by the

PAGE 4:

Administrator, that Respondent's Motion to Postpone

Proceedings be granted and thereby vacated the previously

scheduled July 29 and 30, 2003 hearing dates. On August

17, 2004 the Chair denied Respondent's Motion to

Reinstate Third Party Complaints and his Motion to

Reconsider Preclusion of Federal Conviction. On August

23, 2004 Respondent sent the Chair, a letter requesting

reconsideration

of the August 17, 2004 order which denied his Motion to

Reinstate Third Party Complaints. On September 1, 2004

the Chair denied Respondent's Motion to Reconsider the

Denial of his Motion to Reinstate Third Party Complaints

and the Motion to Reconsider Denial of his Motion to

Reconsider Preclusion of Federal Conviction. On

September 30, 2004 the Chair scheduled the hearing for

_ December 2 and 3, 2004

at the Chicago offices of the ARDC. On November 11,

2004 the Chair ordered that the Administrator and

Respondent file any motions in limine or motions to bar or

exclude testimony on or before November 12, 2004. The

Chair further ordered that the Administrator and

Respondent shall respond to any motions in limine or

motions to bar or exclude testimony on or before

November 23, 2004 and that the hearing remain scheduled

for December 2 and 3, 2004.

On November 12, 2004 the Administrator filed a Motion to

Limit Character Witnesses and Motion in Limine to Bar

Witness Testimony. On November 23, 2004 Respondent

filed responses to the Administrator's Motions. On

November 30, 2004 the Administrator's Motion in Limine

22

to Bar Witness Testimony was granted, but the

Administrator's Motion to Limit Character Witnesses was

denied.

EVIDENCE

The Administrator presented the testimony of Robert

Schnitz, Drake Boutwell and Exhibits 1-3 which are,

respectively, the certified judgment and opinion in United

States of

PAGE 5:

America v. George C. Hook, No. 1L95CR10010-002, and

the July 13, 1992 letter from Drake Boutwell to Carmen

Viana. Respondent presented his own testimony along with

the testimony of Richard Baran, Robert Neil Rudman,

Theodore W. Grippo, Joseph Pankus, Carol Petersen, Glen

Canwitt, Michael C. Osajda, Albert L. Grasso, Nicolas C.

Hindman and Exhibits 4, 17, 21, 22, 24, 24-B, 25, 26-7-A,

26-9-A, 26-B, 27, 28, 28-A, 29, 32, 34, 37, 40, 45, 46, 46-

A, 53, 55, 56-A, 56, 57, 58, 59, 59-A, 59-B, 59-C, 59-D,

60, 61, 61-A, 63, 63-B, 64, 66, and 67. The testimony of

the witnesses and the Exhibits established the following

facts:

On September 13, 1996, a federal grand jury returned a

seven-count indictment alleging that beginning in June of

1992 and continuing to, at least September of 1992,

Respondent conspired with Carmen Viana "Viana") to

commit wire fraud, money laundering and theft. The

indictment alleged that Viana was the sole owner,

Chairman and CEO of Wittek Industries, Inc. ("Wittek").

Wittek was the employer and plan sponsor for an employee

benefit plan ("Plan"). The Plan was an employee benefit

plan subject to the provisions of Title | of the Employee

Retirement Income Security Act of 1974 ("ERISA). Certain

provisions of ERISA

23

prohibited the lending or transfer of Plan funds to or for the

benefit or a party in interest, such as an employer (Wittek).

The assets and funds of the Plan were held and managed by

Manufacturer's Bank in Detroit, Michigan. The indictment

further alleged that Respondent conspired with Viana to

form a "shell" corporation to serve as a conduit for money

to flow from the Plan to Wittek. The purpose of the

conspiracy was to obtain funds to provide additional

operating capital to Wittek. Between July 17, 1992 and

August 7, 1992, Respondent conspired with Viana to

transmit and receive by wire transfer, approximately

$989,000 belonging to the Plan, and that Respondent

placed those funds in a "shell" corporation account and a

client trust account for the purpose of concealing the source

of these funds. The indictment also alleged that between

August 6, 1992,

PAGE 6:

and September 18, 1992, Respondent laundered $660,000

belonging to the Plan with the intent of concealing the

nature, location, source, ownership and control of the

funds. Respondent was also charged with willfully

converting $36,800 of the funds from the Plan. (See Adm.

Compl. para. 1-5; Adm. Ex. 2 at pp. 3-6)). On May 29,

1997 Respondent was found guilty of each charge set forth

in the indictment, (three counts of wire fraud, 18 U.S.C. §

1343, one count of theft from an employee benefit plan, 18

U.S.C. § 664, and three counts of money laundering, 18

U.S.C. § 1956) and on May 27, 1998 Respondent was

sentenced to eighty-four months imprisonment and ordered

to pay restitution in the amount of $735,566.00. (See Adm.

Compl. para. 6-7; Adm. Ex. 1; Adm. Ex. 2 at pp. 7-8).

Testimony of Respondent

24

Respondent testified that Viana described to him a very

simple transaction involving Wittek's Plan which involved

Wittek's three properties and how she wanted to sell one of

those properties to the Plan. Respondent advised Viana that

he did not regard himself as an expert in pension law, but

knew such a transaction required an ERISA lawyer because

it might be a prohibited transaction. Respondent knew

enough about pension law to know an ERISA expert was

required, but that was the extent of his knowledge. In a

meeting between Viana and Boutwell, Viana described the

transaction she wanted Boutwell to complete. Boutwell

informed Viana that such a transaction was prohibited, but

he thought the transaction could be structured in a way to

accomplish Viana's goals which was to cure the under-

funding of the Plan which was approximately $800,000.00.

The transaction, if accomplished, would also provide

working capital to Wittek. (Tr. 290-300).

Boutwell testified against Respondent in his criminal trial.

Respondent does not know if Boutwell received immunity

from the prosecution for his testimony. Boutwell's

testimony in the

PAGE 7:

criminal proceeding was that it was untrue that the

Pineville Real Estate Operation Corporation assets were not

Plan assets. (Tr. 301)

Respondent testified that the money (a little less than

$700,000.00) went to Wittek in the form of a loan from

Pineville Real Estate Operation Corporation. Those funds

were used to operate Wittek. Viana was not taking her full

salary during this time period. (Tr. 341). According to

Respondent, Viana did not flee the country after her

indictment; instead she tried to resuscitate the company

until the middle of 1994 when she realized she could not do

25

that. Viana put herself and Wittek into bankruptcy and then

she went to Brazil expecting to come back for the federal

hearings. Viana had periodic medical problems. Viana was

indicted in February of 1995 and was Respondent's co-

defendant. The government attempted to extradite her from

Brazil and trick her to come back, but that did not work.

The government was also planning on indicting Viana for

tax evasion dating back to a period of time long before

Respondent ever knew her. Viana was a New York resident

and citizen of Brazil. (Tr. 341-344).

Respondent testified that he was not counsel for the Plan

although the plan's money went from Manufacturer's Bank

to his firm's trust account even though the Plan was not his

client, since his clients were Pineville and Wittek.

Respondent never expected those funds to go to his firm's

trust account. According to Respondent the firm's trust

account was used an an accommodation account.

Respondent agreed he wired the funds to Wittek which

used the funds for operating expenses. (Tr. 370-371).

Respondent did not wire the funds back to the bank and

wait to get another account in a few days and have the

funds sent to the appropriate bank.

Respondent viewed his responsibility to Viana, not to the

bank which had no further relationship with the Plan, even

though Respondent agreed he did not represent Viana.

Respondent thought he did not have the authority

PAGE 8: |

to direct the funds unless he asked the trustee of the Plan

what to do and Viana told him to send the funds to Wittek's

COBRA account. Respondent initially thought he was

sending the funds to a trust account Wittek's comptroller,

Mr. Lumen, had established. Respondent admitted that

sending of the funds to Wittek's COBRA account without

26

documentation can be interpreted as giving the appearance

of impropriety. Respondent again stated he did not feel

comfortable with doing anything with the funds without

conferring with the trustee, Viana. Respondent believes

what he did was proper, and he does not view it as a

mistake. (Tr. 373-379, 382).

Respondent further testified that Viana was upset that

annuities were purchased with money from the Plan

without her authorization because she was the one who was

ultimately responsible for the pension and profit sharing

plans. (Tr. 485-521).

Respondent stated that the prosecution's theory in his

criminal case was that he assisted Viana to steal money

from Wittek's pension funds. Respondent testified that his

main objective was to secure the Plan from these

unauthorized activities. Respondent thought it was

important to get the funds out of the hands of

Manufacturer's Bank. Respondent wanted to avoid

litigation with Manufacturer's Bank and he was happy

when the attorney, Mr. Buschmann, became

involved because Respondent thought Buschmann would

establish the requirements Manufacturer's Bank needed in

order to transfer funds. Respondent thought Wittek would

be able to satisfy those requirements and therefore the Plan

would not end up in litigation. During this time period there

were already numerous law suits going on involving

Wittek. (Tr. 523, 535-536).

Respondent stated that around June 9 or 10, 1992 Viana

and Boutwell discussed the transaction that Viana wanted

to implement in which Wittek would sell one of three

pieces of property to the Plan. Boutwell indicated that

would be a prohibited transaction and he proposed

PAGE 9:

27

an alternate structure to accomplish Viana’s goal of.curing

the under funding of the Plan which would also provide

working capital for Wittek. The premise of Boutwell's

structure was Department of Labor/IRS Regulation 2510.3-

101. Boutwell stated that as long as the Plan did not have

more than a 51% interest in the underlying company

(Wittek), the assets of that company would not be Plan

assets and the underlying assets would not be subject to

ERISA regulations. Boutwell's structure was the whole

premise of the transaction which would provide working

capital to Wittek. Under the transaction, 51% of Pineville’s

shares would be owned by the Plan and 49% would be

owned by Viana. Respondent prepared the subscription

agreements which were executed by Viana as trustee of the

Plan and by Viana individually; however, the stock was

never issued. Boutwell acceded to Bushmann's concerns

and recommended that the Plan own 100%, which

Respondent thought was contrary to the regulations and

would have meant that Wittek could not have transferred

the property to-Pineville Real Estate Operation Corporation

because it could not transfer it to an entity which was 100%

owned by the Plan. (Resp. Exs. 4, 24; Tr. 539-542, 551-

553).

Respondent believed the structured transaction would cure

the under funding of the Plan and provide working capital

for Wittek. According to Respondent, the whole question

was how could this be done, legally. Respondent did not

know the answer to this question and consulted an ERISA

expert since Respondent could not make that determination.

(Tr. 554, 569-570, 727).

Respondent also testified that he caused the incorporation

of the Pineville Real Estate Operation Corporation in North

Carolina. Respondent prepared the documentation which he

28

had Boutwell review and comment on. Boutwell advised

that a deed in trust to reflect the security interest between

Wittek and Pineville not be filed in order to assure that the

Plan would not be subject to any subordination of a

purchase money mortgage. Boutwell's advice was reflected

in

PAGE 10:

the documents. When Respondent was terminated as

Wittek's counsel in 1994 the documents he had involving

Wittek and Pineville were taken by Viana from him and all

of the documents presented at this hearing are documents

the federal government obtained in its criminal discovery

process. (Tr. 698). :

Respondent further testified that the Plan was not his client,

but Pineville Real Estate Operating Corporation and Wittek

were his clients, and it was appropriate for him to confer

with Viana and receive direction from her. Even if these

entities were not his clients Respondent would have sought

the advice of the person whose funds they were and that is

exactly what he did. (Tr. 701).

Respondent stated that Viana would have benefited from

the Pineville transaction since she would have been a 49%

shareholder in Pineville. If the Pineville property had been

sold Viana would have received 49% of the proceeds and

Wittek would have received the loan from the Plan as well —

as $1.5 million in payments. The transaction was intended

to be a good deal for everyone. (Tr. 732, 738-739).

Respondent also stated that Viana could have cured the

under funding of the Plan with the proceeds from the sale

of the LaGrange property or the Pineville Property.

Respondent testified that, various adjustments had been

made by the actuary, there actually would have been no

29

under-funding of the Plan. (Resp. Ex. 64; Tr. 743-744,

748).

Respondent further testified that the structuring of the

equity in Pineville was done because the pension plan

could not have all of the equity interest and if Viana had

more than a 50% interest under the interested/disqualified

person provision, would be regarded as receiving those

plan assets, and that would adversely affect Boutwell's

structuring therefore, a 51%/49% arrangement was

necessary to comply with the law. According to

Respondent, Boutwell acknowledged in his July 13th letter

that Viana was a fiduciary under the Pineville structuring,

PAGE II:

but was not personally receiving anything from the Plan

that would have made it a prohibited transaction. The only

source of revenue that she would receive from Pineville

was as a shareholder which, according to Respondent, was

not a prohibited transaction since there was no transfer of

Plan Assets from the pension plan to Wittek. (Adm. Ex. 3;

Tr. 786-787, 790-791).

On cross-examination Respondent admitted that in 1992

Wittek was strapped for cash and therefore he tried to

obtain financing for Wittek, but could only obtain financing

from the Pineville Real Estate Operation transaction and

from one of John Darrah's companies. Part of the financing

for Wittek was with respect to the Pineville transactions.

(Tr. 806).

Respendent agreed on cross-examination that Boutwell

consistently gave advice that Wittek could not receive Plan

assets. Respondent agreed that the language in

Respondent's Exhibit 59 specifically discusses the loan

proceeds. Respondent stated that they were to use the Plan's

30

money as working capital which was a very broad term.

(Resp. Ex. 59; Tr. 807-810).

Respondent agreed he was convicted of money laundering

and stated he was also convicted of unlawful conversion of

pension plan assets to the use of another and wire fraud for

misrepresentations occurring in the July 15, 1992 and July

30, 1992 communications to the Bank of Detroit.

Respondent stated he was ordered to pay restitution in the

amount of $735,000. Respondent is unable to pay the full

amount of restitution and is currently paying $200 per

month which is the maximum amount that he can afford to

pay in his present circumstances. (Tr. 811-813).

Testimony of Drake Boutwel!

Drake Boutwell ("Boutwell") is an attorney licensed to

practice in Illinois since approximately 1975 or 1976.

Boutwell graduated from the University of Alabama Law

School

PAGE. 12:

and he received his master's in tax from New York

University. Boutwell also has a background in accounting.

(Tr. 586-587).

Boutwell testified that in 1992 he practiced law and his

concentration was in the ERISA. Boutwell preformed legal

services for Wittek and he knew Respondent and Viana at

that time. Boutwell testified that Administrator's Exhibit 3

is the advisory letter regarding a proposed transaction he

sent to Viana on or about July 13, 1992 which was also

copied to Respondent. Bout:vell agreed that the letter

indicated that Pineville was to use Plan assets to develop

the real estate. Under this letter, it states that only Pineville

could use Plan assets, therefore, Plan assets could not be

used for Wittek's working capital or operating expenses.

Boutwell also testified that the letter was done only with

31

respect to the legality of the transaction and it was not

advice regarding the prudence or advisability of a particular

investment. The advice in the letter was regarding whether

this would, or would not be a prohibited transaction. (Adm.

Ex. 3; Tr. 588-590, 594-595).

Boutwell further testified that around the time of the July

13, 1992 letter, he had conversations with Respondent

indicating that Plan assets could not be used as operating

expenses, working capital, or by Wittek in any fashion.

(Adm. Ex. 3; Tr. 591-592).

On cross-examination Boutwell indicated he regards

himself experienced in ERISA at this time, but it is a very

broad area and as far as the statute in the letter, he hasn't

looked at statutes like that for 10 years. Therefore,

Boutwell does not regard himself as an ERISA expert in the

same way he did in 1992. (Adm. Ex. 3; Tr. 599). Boutwell

recalled that the July 13, 1992 letter had an error in it.

Boutwell could not recall the specific error in the letter,

only that in his own mind he misread a complicated

regulation. Boutwell recalled making an error regarding the

reading of some language in the

PAGE 13:

regulation. Boutwell further testified that he consistently

told Respondent and Viana that the Plan's money could not

go to Wittek. Boutwell testified in Respondent's criminal

case but was not granted immunity. (Adm. Ex. 3; Tr. 633-

635, Tr. 641, Tr. 644). Boutwell stated that he was the only

one out of Respondent, Viana and himself who knew

anything about real estate operating corporations and the

Department of Labor's pension regulations. (Tr. 645).

EVIDENCE OFFERED IN MITIGATION

Testimony of Richard Baran

32

Richard Baran ("Baran") testified that he recently retired

from being a teacher and a coach for the last forty years.

Baran graduated from the Missouri Military Academy ("the

Academy") and he has bachelor's and master’s degrees-in

business from Loyola University, Chicago. Baran also has a

master's of science degree in counseling from Chicago

State and a doctorate in education from Vanderbilt

University. Besides being a-teacher, Baran also worked as a

business consultant in the area of stress management in the

aviation industry. Currently, Baran is working on six

different novels. (Tr. 109-111). Baran has known

Respondent since September of 1952 when they were both

freshmen at the Academy. Baran and Respondent would

socialize a couple of times each year through their

association with the Academy's alumni association and at

homecomings. (Tr. 111-112).

Baran testified that he aware of Respondent's reputation

regarding his character and when he heard what happened

he was, "to put it bluntly—totally floored by all of this"

since he has known Respondent so long. Baran stated that

Respondent is upright and "honest as the day is long”.

Baran also testified that he could not ever see Respondent

doing the things that he was accused of doing. Baran stated

he was aware of the charges that were brought against

PAGE 14:

Respondent and that he was found guilty of those charges

by a jury and that Respondent was sentenced to seven years

in prison. (Tr. 112-117).

Testimony of Robert Neil Rudman

Robert Neil Rudman ("Rudman") testified that he

graduated from the Academy in 1956 and four years later

graduated from Westminster College in Fulton, Missouri.

After graduating from Westminster College Rudman went

33

into his family businesses which consisted of several

enterprises. Rudman met Respondent when they were

freshmen at the Academy and he has known Respondent

since that time.

Rudman and Respondent were roommates during their

junior and senior years at the Academy. After graduating

from the Academy, Rudman and Respondent kept in touch.

Rudman also testified that Respondent was a trustee of the

Academy. Respondent attended Rudman's daughter's

wedding and his 60th birthday party. Rudman and

Respondent got together whenever they could. (Tr. 119-

124).

Rudman further testified that the consensus about

Respondent's character amongst his peers is that it would

be inconceivable that Respondent would be guilty of

whatever he was sentenced for because that is not

Respondent's nature. Rudman stated he "had no reason not

to say you were guilty or innocent to me because it made

no difference, really in our friendship. And it's my belief

that you aren't guilty." Rudman also stated he has the

highest regard for Respondent and that hasn't changed

because of his misfortunes. If Rudman had to characterize

Respondent in one word it would be "integrity". (Tr. 125-

127).

Rudman was aware of the federal charges against -

Respondent, that he was found guilty of those charges and

that he was sentenced to seven years in prison. Rudman's

opinion of Respondent has not changed because of

_ Respondent's indictment, conviction or incarceration.

PAGE 15:

Rudman testified that he wrote letters to President Bush

and to Attorney General Ashcroft on behalf of Respondent.

(Tr. 124-125). (Tr. 127-128).

34

Testimony of Theodore W. Grippo

Theodore W. Grippo ("Grippo") testified that he is a

partner with the law firm Grippo & Elden located in

Chicago. Grippo received a bachelor in science from

Georgetown University and his law degree from

Northwestern University. Grippo also received an LLM

degree in taxation from DePaul University. Grippo was the

Securities Commissioner for the State of Illinois in 1959

and he practiced law with the law firm Keck, Mahin &

Kate, Rubin & Proctor which merged into the law firm

Isham, Lincoln & Beale. This firm eventually dissolved.

Grippo then formed the law firm of Grippo & Elden.

Grippo has known Respondent since approximately 1975

when they both lived at 2650 Lakeview in Chicago. (Tr.

131-135, 141). Grippo testified that in 1992 he was

involved with Wittek. Grippo's involvement with Wittek

began because Sidley & Austin was representing Wittek

and they had experienced some sort of conflict which

caused that firm to withdraw from its representation of

Wittek. Upon Sidley & Austin's withdrawal, Wittek

retained Grippo & Elden as legal counsel. Grippo handled

the Wittek matter since it was more of a corporate matter

than a litigation matter even though it involved litigation. It

appeared that there was an attempt to take over Wittek by a

group of internal officers. The president of the company,

Viana, had acquired this company while Sidley & Austin

was representing Wittek. Viana moved Wittek from the

Chicago area to Galesburg, IIlinois. Grippo went to court to

seek a temporary restraining order ("TRO") so that the

internal employees of Wittek could not take over the

company. The Circuit Court issued the TRO. The

opponents filed a motion for sanctions against Grippo &

Elden alleging that the complaint was not justified.

35

Eventually, over a two year period, the opponent's motion

for sanctions was

PAGE 16:

dismissed. Because of the motion of sanctions being filed

against Grippo & Elden, Grippo & Elden could no longer

represent Wittek and Respondent became Wittek's counsel.

(Tr. 136-140).

Grippo testified that due to his association with Respondent

he has formed an opinion as to Respondent's character.

Grippo stated at the time of the Wittek matter, he felt

Respondent had the highest quality of character. He

thought Respondent was a fine lawyer and fine man.

Grippo testified he is generally aware of the federal charges

against Respondent, that Respondent was found guilty of

those charges and that he was sentenced to seven years in

prison. :

Grippo wrote Respondent letters while he was in prison.

Grippo also wrote a letter to President Clinton asking for

Respondent's pardon and he visited Respondent while he

was in prison. Grippo also stated that Respondent would be

fit to practice law today since he believes Respondent

would never make that mistake again. (Tr. 142-145).

Testimony of Joseph Pankus

Josey Pankus ("Pankus") testified that he graduated with

Respondent from Knox College located in Galesburg,

Illinois. Pankus was in the advertising business and

eventually started his own company called Holiday

Publishing. Pankus sold this company and went on to a

variety of other jobs and most recently retired as President

of Wurlitzer where he spent the last 12 years. Pankus then

joined a company called Morris Anderson. (Tr. 153-154).

36

Pankus has known Respondent for almost fifty years and

has periodically kept in touch with Respondent since their

graduation from Knox College. Respondent

contacted Pankus in 1992 to help revise a poorly structured

marketing and sales program at Wittek. Pankus thought

Respondent was the attorney for the company at that time.

Pankus left Wittek after about four

PAGE 17:

months since it was evident to him that, without major

changes, Wittek was not going to make it. (Tr. 154-156).

Pankus stated Respondent asked him to deal with Wittek's

marketing and sales strategies which Pankus agreed to do.

Pankus discovered that prior to his involvement some

Wittek employees tried to sabotage the company with an

attempted takeover, and in reviewing the growth of the

company, Pankus noticed that the labor cost ratios kept

getting higher and higher than the previous labor cost ratios

had been at Wittek. According to Pankus, there were too

many

variables at Wittek that kept increasing from the cost

standpoint. Pankus informed Viana and Jim Baughman

("Baughman"), the head of Wittek's quality control, that if

they continued selling the products at the same prices they

would run out of money within 12 to 18 months. Pankus

also showed Viana and Baughman informal data that he

collected indicating that at that time Wittek's labor costs

were going right through the roof. Viana and Baughman

did not

respond to Pankus' information. Pankus also testified that

he informed Viana and Baughman that they either had to

get new equipment or make the company unique, but

Wittek could not continue the same way without raising

prices. (Resp. Ex. 63; Tr. 158-167).

37

_ Pankus testified that he is aware of Respondent's character

and that he has never had anybody question Respondent's

integrity, honesty or moral fiber. Pankus is aware of the

federal charges against Respondent, that Respondent was

convicted of those charges and that he was sentenced to

seven years in prison. Pankus stated Respondent's criminal

conviction has not changed his opinion about Respondent.

(Tr. 172-175).

Testimony of Carol Petersen

Carol Petersen ("Petersen") testified that she graduated

from the University of Illinois, she received her master's

and juris doctor degrees from Stanford and she received a

master's in

PAGE 18:

tax from IIT Kent. In 1966 Petersen joined the law firm

Schiff, Hardin Waite, Dorshell & Britton as an associate

and became a partner in 1973. Petersen left

that firm in 1979 and went to Hubachek, Kelly, Brown &

Kirby. In 1990 Petersen went to the First National Bank of

Chicago as a trust advisor for their client

services area. (Tr. 177-178).

Petersen first met Respondent when he interviewed for an

associate position with Schiff, Hardin, Waite, Dorshell &

Britton. In October of 1966, Respondent became an

associate at this firm upon his return from the service.

Petersen and Respondent started dating each other when

they were both associates at Schiff, Hardin, Waite, Dorshell

& Britton and were married in 1968. Petersen and

Respondent have two children together and they were

divorced in 1992. Respondent is currently staying at

Petersen's home since he was released from prison in the

spring of 2004. (Tr. 178-179).

38

Petersen testified that as a result of their association she is

aware of Respondent's character. According to Petersen

Respondent is, "scrupulously honest.and that you try to do

the very best under the circumstances."

Petersen is aware of the federal charges for which

Respondent was found guilty and that he was sentenced to

seven years in prison. She visited Respondent while he was

incarcerated. Her knowledge of Respondent's conviction

has not altered her opinion of Respondent. (Tr. 180-181).

Petersen stated that during the time frame when

Respondent was trying to get Harris Bank to be the Plan's

trustee, Respondent did not seek Petersen's counsel about

how he should handle the trustee issue. Petersen further

testified Respondent did not speak with her about any of

the Wittek matters. Petersen testified that the Wittek

situation really not did have anything to do with her divorce

from Respondent. (Tr. 213-215).

PAGE 19:

Petersen further testified that Respondent was involved in a

_ very, very difficult situation when he was representing

_ Wittek and she was shocked and surprised that Respondent

was criminally prosecuted. Petersen further testified that

she did not believe Respondent lacked objectivity regarding

his client in this matter, but that Respondent tends to

zealously represent his clients and, "that can get people's -

hackles up on the other side." Petersen thinks Respondent

got caught up in becoming very close to the client and felt

that he zealously had to do things to straighten out the

situation at the company. Petersen thinks Respondent

became close to the situation in trying to resolve all of the

problems of the client in a relatively short period of time

while Respondent received his own client's version of

things which sometimes can affect

39

objectivity. (Tr. 216-227).

Testimony of Glen Canwitt

Glen Canwitt ("Canwitt") testified that he is an attorney

who graduated from Swarthmore College in 1965 and from

Columbia Law School in 1968. Upon graduation from law

school he joined the law firm of Hopkins & Sutter where he

was an associate for six years before becoming partner.

Canwitt was a partner with Hopkins & Sutter until it

merged with Foley & Lardner in 2001 where Canwitt

remains a partner. Canwitt has known Respondent for

almost thirty years. Canwit met Respondent through his

wife who was friends with Respondent's wife. Canwitt and

Respondent also had a case they worked on together in the

1970s. (Tr. 237-239).

Respondent asked Canwitt, who had some experience in

tax litigation, advice about what Wittek should do in

relation to a seizure controversy involving the Internal

Revenue Service and Wittek. Canwitt was basically an

expert consultant relating to Wittek's issue with the IRS and

he functioned as co-counsel with Respondent in the Wittek

takeover case. According to Canwitt, Respondent's

representation of Wittek's Board of Directors was effective

and honest and he

PAGE 20:

thought Respondent displayed a high amount of integrity.

Canwitt thought Respondent gave the Board of Directors a

very high degree of professional, independent

representation. (Tr. 240-241).

Canwitt testified that as a result of his association with

Respondent he is aware of Respondent's character

reputation. According to Canwitt, Respondent is a

reputable person with a high reputation. Canwitt further

stated that this does not mean that Respondent has not

40

made a mistake, but nobody is perfect. Canwitt stated if

people's mistakes are an isolated instance that, to him,

doesn't affect their integrity. Canwitt is familiar with the

federal charges that were brought against Respondent, that

Respondent was found guilty of those charges and was

aware that Respondent was sentenced to time in prison.

This information has not changed Canwitt's opinion of

Respondent. (Tr. 242-244).

Testimony of Michael C. Osajda

Michael C. Osajda ("Osajda") testified that he is a

commercial attorney and business ethics champion at

Motorola. Osajda received a degree in foreign service and a

master's of law in taxation from Georgetown University

and he received his law degree from Northwestern

University. Osajda spent eleven years in active duty in the

United States Marine Corp. and remained in the Reserves

for thirty years and retired as a Colonel of the United States

Marine Corp.

Reserves. Osajda spent four years at Much, Shelist, Freed,

Denenberg, Ament & Eiger, P.C. ("Much Shelist") and

subsequently he became the Deputy General Counsel of

Midway Airlines. Osajda spent a period of time in private

practice and in 1979 went to Motorola where he is still

employed. (Tr. 246-247).

In 1981 Osajda met Respondent after he was hired as an

associate at Much Shelist where Respondent was then a

partner. According to Osajda he worked under

Respondent's tutelage

PAGE 21:

and assisted Respondent on a number of projects in the

securities area where Respondent had an expertise and on

projects involving the redomestication of insurance

companies. (Tr. 247-249).

4]

Osajda stated Respondent is of extreme high moral

character and he conducts himself, both professionally and

personally, with extreme rectitude. Osajda is aware of the

federal charges brought against Respondent, that he was

found guilty of those charges and that Respondent was

sentenced to seven years in prison. It was Osajda's

understanding that there was no personal benefit in the

transactions which led to the charges against Respondent.

Osajda's stated Respondent's conviction has not changed

his opinon of Respondent. (Tr. 250-253).

Testimony of Albert L. Grasso

Albert L. Grasso ("Grasso") testified that he is an attorney

who has a master's degree in tax law and primarily

concentrates his practice in tax and employee benefits law.

Grasso began practicing law in Washington D.C. where he

was employed by a small law firm. He obtained both his

law degree and master's in tax law from Georgetown

University. Grasso then went to work for the law firm

Baker & McKenzie. Grasso then joined Much Shelist and

became a partner at that law firm. While at Much Shelist

Grasso became well acquainted with Respondent Grasso

then went to form his own law firm in 1987 which is

Chuhak & Tecson. Grasso has served in various capacities

with the American Institute of Certified Public

Accountants, although he is not a CPA himself. He has also

taught taxation, estate planning and deferred compensation.

(Tr. 257-258, 260-261).

In 1997 Respondent went to Grasso, in conjunction with his

indictment, regarding questions Respondent had with

respect to certain pension law matters and testified as an

expert in Respondent's criminal case. (Tr. 259-260, 264-

266).

PAGE 22:

42

Grasso testified that it was not unreasonable for

Respondent to rely on Drake Boutwell's advice since

Boutwell was an acknowledged ERISA practitioner. It also

would have been reasonable not to have followed

Boutwell's advise, subsequent to extensive conferences

with Boutwell, regarding real estate operating corporation

matters that the pension plan should have a 100% interest

in the Pineville Real Estate Operation Corporation since

under the Department of Labor regulations, with respect to

dealing with the definition of plan assets, it is clear that if

you own 100% of an entity you are treated as owning the

underlying assets of the entity. As soon as Boutwell's

proposed structured is understood you know that you could

not follow that advice because it would end up that you

would be dealing directly with plan assets because of the

100% real estate holding entity. Grasso further testified that

when he looked at the transaction he thought to himself that

only someone who is familiar with the ERISA requirements

would lay out the structure in this fashion and that person is

not Respondent.

Grasso also knew that Boutwell was the partner who did

ERISA work at the firm Respondent was with at that time

and he thought that Respondent had to have consulted with

Boutwell. Grasso also thought that there would have been a

much simpler way of effecting that transaction. Grasso

testified that besides Respondent's conviction, he believes

Respondent could well serve the bar. (Tr. 274-275, 279-

280, 282). (Tr. 282).

Testimony of Nicholas C. Hindman

Nicholas C. Hindman ("Hindman") is the Senior

VicePresident and Chief Financial Officer of Westel

Technologies. Hindman received an accounting degree

from the University of lowa and is a CPA. Hindman began

43

his career with Arthur Andersen which he left in 1977 to

begin a career as a tax and insurance manager which he did

until 1980. Since 1980 Hindman has

PAGE 23:

had his own CPA firm. In 1980 he helped start Westel and

became its CFO in 1999. Hindman has assisted in turning

around troubled companies. (Tr. 395-396).

Hindman has known Respondent since the early 1980s

when he met Respondent through a mutual client. Hindman

stated Respondent contacted him to finish an audit that was

delinquent with respect to Wittek's Plan. Hindman prepared

an audit for the 6141 pension plan as of December 30, 1990

and he believed he prepared audits for other years,

including 1991. (Tr. 396-403, 410, 419-425).

Hindman stated that due to his association with Respondent

he is aware of Respondent's character which is very high.

Hindman is aware of the federal charges which were

brought against Respondent and of Respondent's conviction

and sentencing and that has not changed his opinion of

Respondent. (Tr. 439-440).

Testimony of Delores Marie Veninga

Delores Marie Veninga ("Veninga") testified that she

graduated from Souther: Methodist University School of

Law in 1971 and then was.a research student at

Cambridge University for two years. Subsequently,

Veninga headed up her tamily's real estate business in

Dallas. In 1981 she was an associate at the law firm Katten,

Muchin Pierce & Galler ("Katten"). After that, Veninga

went back to Dallas and was associated with the firm Jones,

Day Reavis & Pogue. In 1984 she joined the law firm

McBride Baker & Coles ("McBride"). Respondent was a

partner at McBride Baker & Coles when Veninga joined

the firm. According to Veninga she worked with

44

Respondent the entire time she was with McBride Baker &

Coles until she was terminated by that firm in 1991. (Tr.

452-453).

PAGE 24:

According to Veninga, Mr. Schnitz, was instrumental in her

termination from the McBride law firm. Veninga also

testified that she is aware of the bias Schnitz has against

Respondent to cause Schnitz to misrepresent things about

Respondent. (Tr. 453-469).

Veninga further testified that while she was at McBride she

was aware of Respondent's character amongst the partners

and associates of that law firm. Respondent was held in the

highest regard both as a person of integrity and as an

excellent securities and corporate lawyer by the partners

and associates. Also, when Veninga first joined the firm

she understood that Respondent was the most financially

successful attorney.at McBride. Although Veninga left the

firm prior to Respondent acquiring Wittek as a client,

Respondent did ask Veninga to do work on behalf of

Wittek. (Tr. 469-470, 471-475).

Veninga stated that from the time she worked with

Respondent she was able to observe that Respondent would

call in partners that were experts in particular areas that

Respondent was not an expert in and he would follow their

advice. Respondent would also question these experts about

particular matters so that he would have a better

understanding of the expert's proposals. (Tr. 476-477).

Veninga further testified that after she joined McBride she

had conversations with former partners at Katten who knew

Respondent. These partners held Respondent in great

respect and were pleased that Veninga was working with

Respondent. Veninga thinks Respondent is a very

honorable man and that his background as a soldier has

45

given him a level of integrity which is somewhat unique.

Veninga was co-counsel with Respondent on his criminal

trial and is

aware that he was convicted, has served time and is

currently on supervised release, but that has not changed

her opinion of Respondent's reputation.

Veninga stated Respondent's conviction has affected his

public reputation, but thinks that many in the legal and

business community,

PAGE 25:

including herself, still have great faith in Respondent and

would allow Respondent to represent them if he is able to

continue to practice law. (Tr.

477-480).

EVIDENCE OFFERED IN AGGRAVATION

Testirnony of Robert Schnitz

Robert Schnitz ("Schnitz") testified the he is currently

employed as one of two section's operations managers with

the law firm of Holland & Knight. Schnitz currently does

not practice law, but has been licensed to practice law for

thirty years. (Tr. 30-31).

Schnitz testified that he knows Respondent since they were

both partners at the law firm McBride Baker & Coles.

Schnitz was a partner at thet law firm from 1975 until it

merged with Holland & Knight in 2002. Schnitz was also

the managing partner at McBride Baker & Coles from 1998

until 2002. As managing partner, Schnitz was responsible

for everything that went on at the law firm including

management of the partners and the administrative staff.

Schnitz was also responsible for keeping track of each

partner's income. (Tr. 31-32).

Schnitz had a conversation with Respondent about his

partnership income sometime in late 1991 or early 1992

46

because, although he had a couple of good years with

respect to income, most of Respondent's years were not

good. Schnitz discussed with Respondent his prospects for

improving his financial performance. (Tr. 32-33).

Schnitz also testified that in the fall of 1992 he received

notice from Respondent about a legal malpractice issue

involved Pineville Real Estate Operating Company and

Wittek. Respondent left Schnitz a couple of voice mail

messages concerning his reported failure to record a deed

with respect to property and the consequent intervention of

other creditors that would result in a large malpractice

claim. Based on Respondent's notice of the malpractice

issue, the law firm reported this malpractice issue to their

insurer. At about the same time they

PAGE 26:

engaged an ERISA attorney, Peter Kelly, because it was

apparent that there was a Plan involved in the malpractice

issue and their firm did not currently have a lawyer within

their firm with the expertise to advise the firm on what

course of conduct should be followed. The firm also

delegated three partners from their firm's management

committee, including Schnitz, to investigate Respondent's

malpractice issue. According to Schnitz, Respondent told

the investigation committee some of the things they needed

to know, but not everything. For example, initially the

investigation committee thought that the transactions had

been completed so the firm spent a couple of weeks

creating rescission documents that would undo the

transactions only to find out after furthur investigation that

the transactions had not been completed. Also, based upon

information from Respondent, the firm believed Viana was

the trustee of the Plan when later, after Respondent left the

47

firm, it was discovered that Harris Bank was the trustee of

the Plan. (Tr. 33-34).

Based upon Respondent's conduct Schnitz stated that the

firm incurred several expenses. The firm was required to

pay a penalty to Pension Benefit Guarantee Corp. after it

sought to recover the amounts that had been taken from the

Plan from the firm and from Harris Bank. Harris Bank and

their insurer were responsible for the balance, which would

have been approximately $600,000-$700,000 and the firm

was responsible for $200,000 of which the firm paid

$75,000 and the firm's insurer paid the remaining amount.

The firm also spent $200,000 to employ Peter Kelly

throughout this period for his advice regarding ERISA law.

The firm also incurred a number of out-of-pocket expenses

relating to production of documents, meetings with

government agencies and the payment for a bond. These

out-of-pocket expenses totaled between $50,000-$100,000.

Additionally, the firm also had to dedicate a significant

amount of attorney time to determine what happened with

respect to Respondent's malpractice issue. Schnitz could

PAGE 27:

not put a figure on the amount of attorney time his law firm

spent in this matter. (Tr. 36-38, 51-52).

On cross examination, Schnitz recalled that Respondent

resigned from the firm. The firm had given Respondent the

choice of either terminating his representation of Wittek

and making a recommendation to that client, or leaving the

firm. Schnitz also recalled that if the firm was going to

continue

representing Wittek, the firm would require Wittek to pay a

large monthly retainer to the firm. Schnitz could not recall

what the monthly retainer fee for Wittek was going to be if

Wittek was to remain a client of the firm. (Tr. 39).

48

Schnitz also testified that prior to September of 1992 the

firm had an ERISA attorney, Drake Boutwell, and as far as

Schnitz knew Respondent consulted with Boutwell about

ERISA issues although the firm encouraged consultation

with Peter Kelly about such issues. (Tr. 40-42).

Schnitz further testified that he had conversations about

Respondent's financial prospects because Respondent was

not bringing in enough money to cover the draws and costs

that he was receiving from the firm. In that type of

situation, the usual remedy was for the partner to bring in

more business or leave the firm. Schnitz recalled that

Respondent incurred substantial obligations to the firm as a

result of having people work on the Wittek matter. (Tr. 42-

43, 46). Schnitz could not recall the specific details of the

transaction relating to the property located in Pineville,

North Carolina except that there were a series of

transactions to get money to Harris Bank and then to

Wittek. (Tr. 47).

Schnitz stated that Respondent led him to believe that

Viana was the trustee while failing to inform him that

Harris Bank was the trustee. Schnitz was told by the

prosecutor in Respondent's criminal trial that Harris Bank

"did not have authority to be trustee." Schnitz

PAGE 28:

became aware that Viana was not the trustee when an

associate, Bob Hirshhorn, of his firm went through the files

in order to respond to the Department of Labor's subpoena

and discovered documents that showed Manufacturer's

Bank had been told that Harris Bank was the trustee and

Viana was not so that Manufactuer’s Bank would move

funds from the Plan. Schnitz also testified that during this

time

Harris Bank was the firm's primary bank. (Tr. 47-51).

49

FINDINGS OF FACT AND CONCLUSIONS OF LAW

Proceedings, such as this one, under Supreme Court Rule

761 (134 Ill. 2d R. 761), are not designed to re-litigate

Respondent's guilt or innocence of the underlying criminal

charges. In re Ciardelli, 118 Ill. 2d 233, 239, 514 N.E.2d

1006, 113 Ill. Dec. 94 (1987); In re Scott, 98 Ill. 2d 9, 16-

18, 455 N.E.2d 81, 74 Ill. Dec. 51 (1983); See Supreme

Court Rule 761(f) (134 Ill. 2d R. 761(f)). A proceeding

under Rule 761 is designed to determine whether or not

Respondent's criminal conduct warrants discipline and, if

so, the discipline to be imposed. See Supreme Court Rule

761(d) (134 Ill. 2d R. 761(d)); In re Minneman, No. 98 SH

38 (Review Board Nov. 29, 2000), petition for leave to file

exceptions denied,

No. M.R. 17352 (March 22, 2001).

Because an attorney is disciplined for his or her conduct,

not for the conviction, consideration of the attorney's

conduct is not only proper, but necessary, to an informed

determination in the disciplinary case. See In re Crane, 23

Ill. 2d 398, 400-01, 178 N.E.2d 349 (1961). The Hearing

Board, therefore, may consider evidence concerning the

acts that led to the conviction, and the surrounding

circumstances, in order to evaluate Respondent's actual

conduct and determine the proper quantum of discipline.

See Ciardelli, 118 Il. 2d at 239-40; Scott, 98 Ill. 2d at 16;

Crane, 23 Ill. 2d at 400.

PAGE 29:

In this matter, the Administrator has charged Respondent

with: committing criminal acts that reflect adversely on the

lawyer's honesty, trustworthiness or fitness as a lawyer in

other respects, in violation of Rule 8.4(a)(3) of the Illinois

Rules of Professional Conduct; conduct involving

dishonesty, fraud, deceit or misrepresentation in violation

50

of Rule 8.4(a)(4) of the Illinois Rules of Professional

Conduct; and conduct that is prejudicial to the

administration of justice, or which tends to defeat the.

administration of justice or to bring the courts or the legal

profession into disrepute, in violation of Rule 8.4(a)(5) of

the Illinois Rules of Professional Conduct; and Supreme

Court Rule 771 (now known as Supreme Court Rule 770)

states: Conduct of attorneys which violate the Rules of

Professional Conduct contained in Article VIII of these

rules or wl.ich tends to defeat the administration of justice

or to bring the courts or the legal profession into disrepute

shall be grounds for discipline by the court. Discipline may

be: disbarment; disbarment on consent; suspension for a

specified period and until further order of court; suspension

for a specified period of time; suspension until further order

of court; suspension for a specified period of time or until

further order of the court with probation; or reprimand by

the court, the Review Board or a hearing panel. (Amended,

effective Oct. 13, 1989; amended and renumbered March

23, 2004, effective April 1, 2004.)

The charges of misconduct against the Respondent are

based upon his conviction stemming from a seven-count

indictment in which Respondent was charged with

conspiracy to commit wire fraud, money laundering and

theft. Respondent was found guilty of each charge set forth

in the indictment, and in May of 1998 was sentenced to

eighty-four months imprisonment and ordered to pay

restitution in the amount of $735,566. On December 21,

1999, Respondent's conviction was affirmed by the U. S.

Court of Appeals for the 7th Circuit on direct appeal. (See

U.S. v. Hook, No. 98-2420 (7th Cir. 1999); Adm. Exs. 1-2).

It is a well-established and long-standing principle that a

criminal conviction of an attorney for a crime involving

51

moral turpitude is conclusive evidence of the attorney's

guilt and grounds for discipline. See Ciardelli, 118 Ill. 2d at

239; In re Callas, 82 Ill. 2d 6, 14, 411 N.E.2d 271, 277

(1980); In re Steinbrecher, 53 Ill. 2d 413, 420, 292 N.E.2d

422, 425 (1973). In

PAGE 30:

Ciardelli, for example, the Court stated that it "has held in

many cases that the conviction of a crime involving moral

turpitude is conclusive evidence of the respondent's guilt

and that grounds for the imposition of discipline exist."

Ciardell, 118 Ill. 2d at 239. Moral turpitude includes

conduct "done knowingly contrary to justice, honesty, or

good morals” or that involves "fraud or fraudulent

conduct.” In re Needham, 364 III. 65, 70, 4 N.E.2d 19, 21

(1936); In re Vavrik, 117 Ill. 2d 408, 412-13, 512 N.E.2d

1226, 1228 (1987). See also In re Teitelbaum, 13 III. 2d

586, 589, 150 N.E.2d 873, 875 (1958)..

There is no doubt that the crimes for which Respondent

was convicted involved moral turpitude and reflected

adversely on his honesty, truthfulness, and fitness as an

attorney. Thus, based upon the foregoing principles, the

evidence clearly and convincingly established the

misconduct charged in the complaint warrants the

recommendation of Respondent's disbarment. In making

this recommendation, we find several decisions particularly

instructive. The court in In re Fumo, 52 Ill. 2d 307, 288

N.E.2d 9 (1972) and In re Hutul, 54 Ill. 2d 209, 296 N.E.2d

332 (1973), stated the well-established rule of law that a

conviction of a crime involving moral turpitude is

conclusive evidence of an attorney's guilt and a ground for

disbarment. In those cases, the attorneys were convicted on

multiple counts of mail fraud. In In re Vavrik, 117 Ill. 2d

408, 512 N.E.2d 1226 (1987), where the attorney was

52

disbarred based on his misconduct in embezzling funds, the

court stated that moral turpitude is shown when the crime

involved fraud or fraudulent conduct, and that any act that

demonstrates a lack of personal honesty or integrity may be

sufficient to warrant disbarment.

In this case, a seven-count indictment against Respondent

charged him with conspiring with Carmen Viana to commit

wire fraud, money laundering and theft.

Following the holdings in Fumo, Hutul and Vavrik, we find

that Respondent's conviction of the charges involving

PAGE 31:

fraudulent conduct involving money laundering, the

unlawful conversion of pension plan assets and wire fraud

for misrepresentations occurring in the July

15, 1992 and July 30, 1992 communications to the Bank of

Detroit (Tr. 811-813), there is conclusive evidence of

Respondent's guilt of crimes involving moral turpitude

which is the basis for a recommendation of disbarment.

RECOMMENDATION

The Supreme Court of Illinois has stated that, "[o}ur

attorney disciplinary proceedings are designed to safeguard

the public and maintain the integrity of the legal

profession.” In re Levin, 77 Ill.2d 205, 211, 395 N.E.2d

1374 (1979).

"The Rules of Professional! Conduct recognize that the

practice of law is a public trust and lawyers are the trustees

of the judicial system." In re Smith, 168 III. 2d at 269, 287,

659 N.E.2d 896 (1995). The purpose of the disciplinary

system is not to punish an attorney, but to safeguard the

public and protect the integrity of the legal profession. In re

Goldstein, 103 Ill.2d 123, 468 N.E.2d 959 (1984).

Additiona’s:, the final determination of appropriate

sanctigas 'n attomey disciplinary proceedings necessarily

53

involves analysis of the unique facts and circumstances of

the particular case. See In re Crisel, 101 I1].2d 332, 461

N.E.2d 994 (1984).

In this case, the Administrator has requested the sanction of

disbarment and, in support thereof, cited the following

cases: In re Powell, 126 III. 2d 15, 533 N.E.2d 831

(1988);In re Fumo, 52 Ill. 2d 307, 288 N.E.2d 9 (1972); In

re Minneman, 98 SH 38, M.R. 17352, March 22, 2001

(Review Board Report, pp. 6-7).

The Administrator also discussed how In re Cueto, 97 SH

100, M.R. 19679 (Nov. 17, 2004), although being

procedurally different from this matter, resulted in

Cueto's disbarment. The Respondent has requested that the

suspension issued in

PAGE 32:

1998 against him should serve as his punishment in this

matter. After reviewing the cases cited by the

Administrator, we recommend that Respondent be

disbarred.

In Fumo, the disciplinary charges were based on the

attorney's guilty plea to a multi-count indictment in federal

court arising out of a scheme with a physician "to defraud

and obtain money under false pretenses from certain

insurance companies and from his own clients." He was

sentenced to a 3-year term of probation, with the conditions

that he serve the first 60 days in jail, pay a fine of $5,000,

and pay restitution. Fumo, 52 Ill. 2d at 308. In mitigation,

the attorney presented evidence that he served the 60-day

jail term, paid the fine, and made full restitution as ordered

by the court. He also presented witnesses who testified that

he had a good reputation for honesty and integrity and that

he was an upstanding member of the community.

Additionally, there was evidence that the attorney's son had

54

a serious illness and the "efforts to cure the affliction had

created an extraordinary financial burden upon him." Id. at

309. The Court pointed out that the attorney's misconduct

was "not an isolated

aberration,” but rather was "a deliberate, calculated series

of individual acts, over an extended period of time, all

designed to extract funds from insurance companies, as

well as from his own clients." Id. at 310. The Court

concluded that the misconduct demonstrates "a lack of

fidelity to private trust, tends to defeat the administration of

justice and to bring the legal profession into disrepute.” Id.

at 310-11. The attorney was disbarred.

In Powell, the attorney arranged for his client to post a

certificate of deposit as collateral for a $10,000 bank loan

to a judge. The judge was presiding in a civil case

involving the client. A few days after the judge received the

loan, he ruled in favor of the attorney's client. Powell, 126

Il]. 2d at 20-21. In mitigation, the attorney presented eight

witnesses who testified that he had a good reputation for

honesty and integrity. Id. at 31. The Court described the

attorney's

PAGE 33:

misconduct as "shocking" and with the motive of trying to

"curry favor with the judge." Id. at 24, 26, 30. The Court

also pointed out that the attorney's actions in making

"arrangements for the loan extended over a period of

several days” and, thus, his misconduct "was not a quick

and unreasoned failure of judgment, but rather a deliberate

course of conduct." Id. at 31-32. Finally, the Court stated

that "where an ethical violation is of sufficiently serious

character, such as that considered here, a single act of

misconduct may warrant disbarment." Id. at 31. Powell was

disbarred.

55

In Minneman, the Court disbarred an attorney who was

convicted of conspiracy to commit tax fraud based upon

use of his client's trust account to conceal the nature of his

client's income which totaled over $700,000. In the Review

Board's reliance on the Hearing Board's recommendation to

disbar the attorney, it stated that the attorney acted in a

knowing, willful and deceitful manner to hide a large

portion of his client's income, for the purpose of evading

payment of income taxes over a three-year period. The

Review Board also agreed with the Hearing Board's

findings of fact that this attorney's misconduct was not

isolated, nor a quick and unreasoned failure of judgment.

Rather, his misconduct consisted of deliberate, calculated

series of individual acts over an extended time. The

attorney engaged in criminal conspiracy with a client and

used his special skills as a lawyer to facilitate the crime.

The attorney also benefited financially from the scheme;

however the attorney lacked an understanding of his ethical

obligations and the seriousness of his misconduct. The

Review Board noted that despite the presentation of some

favorable character evidence and the absence of prior

discipline, the Hearing-Board regarded disbarment as

necessary to protect the public, given the level of

dishonesty involved. Minneman, 98 SH 38 (Review Board

Report at pp. 6-7).

PAGE 34:

We find the language in the decisions discussed above very

instructive. In particular, in disbarring Minneman, the

Review Board emphasized that despite that presentation of

some favorable character evidence and absence of prior

discipline, it was necessary to disbar Minneman to protect

the public due to the level of dishonesty involved.

Respondent, Irke Minneman, was convicted of a crimes

56

involving moral turpitude which is conclusive evidence of

an attorney's guilty and a ground for disbarment.

Additionally, in this Hearing Board Panel's opinion,

Respondent's conduct was even more egregious than

Minneman's since Respondent was convicted of conspiracy

to commit wire fraud, money laundering and theft.

Respondent has made no effort to apologize or explain his

actions to members of his former law firm, Harris Bank or

the Pension Benefit Guarantee Fund. Also, Respondent has

not made a significant dent in restoring a significant portion

of the $735,566 court ordered restitution.

We find that Respondent exhibited no signs of remorse;

instead he remains steadfast in his proclamation of

innocence although two courts have already ruled

otherwise. The evidence, including Respondent's lengthy

testimony during this hearing, clearly demonstrates

Respondent's lack of remorse and that he still fails to

comprehend the wrongfulness or serious nature of his

misconduct despite serving a significant amount of time in

prison. These matters are properly considered as

aggravating factors. See In re Lewis, 138 Ill. 2d 310, 348,

562 N.E.2d 198, 214 (1990); In re Rinella, 175 Tl. 2d at —-

518, 677 N.E.2d at 916) and In re Samuels, 126 Ill. 2d 509,

531, 535 N.E.2d 808, 817 (1989). In Samuels, the Court

stated: "Respondent still believes he acted properly, which

does not inspire confidence that respondent is ready to

recognize his duty as an attorney and to conform his

conduct to that required by the profession."

Although we do not consider the Respondent's continued

assertion of innocence as an aggravating factor, (See In re

Wigoda, 77 II]. 2d 154, 160-61, 395 N.E.2d 571, 574

(1979)) we

PAGE 35:

57

do find that his claim of innocence "strains credulity" and

"is preposterous" in light of the evidence before us. See In

re Hutul, 54 Ill. 2d at 216, 296 N.E.2d at 336; Minneman,

98 SH 38, Review Board Report, p. 7.

During this hearing, Respondent was allowed to present

substantial mitigating evidence regarding the events which

he believed lead to his federal conviction.

The basis of the Hearing Board Chair allowing such a

significant amount of mitigating evidence regarding the

events relating to the underlying conviction was the Review

Board's rationale found in In re Cueto, 97 SH 100, M.R.

19679 (Nov. 17, 2004). In that case the Review Board

recommended that the matter be remanded for a new

hearing in order to allow the Respondent to raise as a

circumstance regarding his conviction the underlying

involvement of the

representatives of the ARDC in the Respondent's criminal

prosecution. Ultimately the Review Board agreed with the

Hearing Board's initial recommendation of the

Respondent's disbarment. Id. In this matter Respondent

expressed the view that such evidence was not presented in

an effort to go behind the federal conviction, but was

relevant in determining what the crimes were and what the

appropriate punishment is, if any. Respondent also stated

that the basis of his federal conviction was not conduct that

would be regarded as a crime under Illinois law and that it

did not involve moral turpitude. Respondent's presentation

of substantial evidence, including numerous exhibits was

done, in his opinion, to demonstrate the extraordinary

efforts Respondent went to protect the interests of all

parties. We have considered whether the evidence offered

in mitigation showed that Respondent acted in such a

manner to warrant a lesser sanction than disbarment in this

58

matter and if Respondent is currently aware of how his

conduct violated the Illinois Rules of Professional Conduct

as charged in the Administrator's Complaint; however since

we have heard and weighed all of the mitigating evidence

presented with respect to the

PAGE 36:

events relating to Respondent's underlying conviction we

still come to the conclusion that Respondent is guilty of the

charges presented in the seven-count indictment and thus

we consequently find that the Administrator proved by

clear and convincing evidence that the Respondent

committed the above-referenced misconduct as charged in

the complaint. Therefore, based upon our findings we

cannot conclude that the mitigating evidence presented

(however extensive it

was) warrants this Hearing Panel to issue a

recommendation of a sanction less than disbarment in this

matter. Based upon the totality of the mitigating and

aggravating evidence presented during this hearing, we

strongly recommend disbarment as the appropriate sanction

for the Respondent.

CONCLUSION

Due to the nature of Respondent's misconduct, we

recommend that Respondent be disbarred.

Date Entered: July 26, 2005

Joseph A. Barthlomew, William E. Hornsby, Jr.

and Albert C. Baldermann concurring

59

CONSTITUTIONAL AND STATUTORY

PROVISIONS

The following Constitutional and Statutory

provisions are involved herein:

Article ], § 10, Cl. 1:

No State shall...pass any Bill of Attainder.

Article III, § 1:

The judicial Power of the United States, shall be vested in

one supreme Court...

Article Ill, § 2, Cl. 1:

The judicial Power shall extend to all Cases in Law and

Equity, arising under this Constitution, the Laws of the

United States...or which shall be made under their

Authority...

Article III, § 2, Cl. 2:

...In all other Cases before mentioned, the supreme Court

shall have appellate Jurisdiction, both as to Law and Fact,

with such Exceptions, and under such Regulations as the

Congress shall make.

Article IV, § 2:

60

The Citizens of each State shall be entitled to all Privileges

and Immunities of Citizens of the several States.

5" Amendment:

No person shall be...deprived of life, liberty or property,

without due process of law.

6" Amendment:

In all criminal prosecutions, the accused shall enjoy the

right... to be confronted with the witnesses against him;

gs" Amendment:

...nor cruel and unusual punishments inflicted.

14" Amendment, § 1:

...No State shall make or enforce any law which shall

abridge the privileges or immunities of citizens of the

United States; nor shall any State deprive any person of

life, liberty, or property, without due process of law; nor

deny to any person within its jurisdiction the equal

protection of the laws.

28 USC 1257(a):

Final judgments or decrees rendered by the highest court of

a State in which a decision could be had, may be reviewed

by the Supreme Court by writ of certiorari where the

validity of a treaty or statute of the United States is drawn

61

in question or where the validity of a statute of any State

is drawn in question on the ground of its being repugnant

to the Constitution, treaties, or laws of the United States, or

where any title, right, privilege, or immunity is specially set

up or claimed under the Constitution or the treaties or

statutes of, or any commission held or authority exercised

under, the United States.

%*

Illinois Supreme Court Rule 19: Notice of Claim of

Unconstitutionality.

(a) Notice Required. In any cause or proceeding in which

the constitutionality of a statute, ordinance, or

administrative regulation affecting the public interest is

raised, and to which action or proceeding the State or the

political subdivision, agency, or officer affected is not

already a party, the litigant raising the constitutional issue

shall serve an appropriate notice thereof on the Attorney

General, State’s Attorney, municipal counsel or agency

attorney, as the case may be. (b) Contents and Time for

Filing Notice. The notice shall identify the particular

statute, ordinance, regulation, and shall briefly describe the

nature of the constitutional challenge. The notice shall be

served at the time of suit, answer or counterclaim, if

constitutionality is raised at that level, or promptly after the

constitutional question arises as a result of a circuit or

reviewing court ruling or judgment. (c) Purpose of Notice.

The purpose of such notice shall be to afford the State,

political subdivision, agency or officer, as the case may be,

the opportunity, but not the obligation, to intervene in the -

cause or proceeding for the purpose of defending the

constitutionality of law or regulation challenged. The

election to intervene shall be subject to applicable

62

provisions of law governing intervention or impleading of

interested parties. (As in effect at the relevant time.)

Illinois Supreme Court Rule 761(b):Conviction of Crime

Involving Moral Turpitude.

If an attorney is convicted of a crime involving fraud or

moral turpitude, the Administrator shall file a petition with

the court alleging the fact of such conviction and praying

that the attorney be suspended from the practice of law

until further order of the court. A certified copy of the

judgment of conviction shall be attached to the petition and

shall be prima facie evidence of the fact that the attorney

was convicted of the crime charged. Upon receipt of the

petition the court shall issue a rule to show cause why the

attorney should not be suspended from the practice of law

until the further order of the court. After consideration of

the petition and the answer to the rule to show cause, the

court may enter an order, effective immediately,

suspending the attorney from the practice of law until the

further order of the court.

Hlinois Supreme Court Rule 761(d): Hearing.

Where an attomey has been convicted of a crime involving

fraud or moral turpitude, a hearing shall be conducted

before the Hearing Board to determine whether the crime

warrants discipline, and, if so, the extent thereof. (1) If the

attorney has not appealed from the conviction, the

Administrator shall file a complaint with the Hearing Board

alleging the fact of the conviction. (2) If the attorney has

appealed from the conviction, the hearing shall be delayed

until completion of the appellate process unless the attorney

63

requests otherwise. If after the completion of the appellate

process the conviction has not been reversed, the attorney

shall notify the Administrator within 30 days of the

mandate being filed in the trial court that the conviction

was affirmed. Upon becoming aware that the conviction

has been affirmed, the Administrator shall file a complaint

with the Hearing Board as described in (1) above.

Illinois Supreme Court Rule 761(f): Proof of Conviction.

In any hearing conducted pursuant to this rule, proof of

conviction is conclusive of the attorney's guilt of the crime.

lilinois Supreme Court Rule 770: Types of Discipline.

Conduct of attorneys which violates the Rules of

Professional Conduct contained in article VIII of these

rules or which tends to defeat the administration of justice

or to bring the courts or the legal profession into disrepute

shall be grounds for discipline by the court. Discipline may

be: (a) disbarment; (b) disbarment on consent; (c)

suspension for a specified period and until further order of

court; (d) suspension for a specified period of time; (e)

suspension until further order of the court; (f) suspension

for a specified period of time or until further order of the

court with probation; (g) censure; or (h) reprimand by the

court, the Review Board or a hearing panel.