SJC-07605
IN THE MATTER OF GEORGE W. KENNEDY
Suffolk. June 10, 1998. - August 6, 1998.
Present: Wilkins, C.J., Lynch, Greaney, & Fried, JJ.
Attorney at Law, Disciplinary proceeding, Disbarment.
Information filed in the Supreme Judicial Court for the county of Suffolk
on February 21, 1996.
The case was heard by Marshall, J.
Tracy A. Miner for the respondent.
Nancy E. Kaufman, Assistant Bar Counsel.
WILKINS, C.J. The single issue in this appeal is whether
the respondent, George W. Kennedy, should be disbarred or given the lesser sanction
of indefinite suspension. By a four-to-three vote, with the minority favoring
disbarment, the Board of Bar Overseers (board) voted to recommend Kennedy's
indefinite suspension.1 A single justice of this court
agreed (but acknowledged that the question was a close one). She ordered Kennedy's
indefinite suspension. We give the matter de novo review (cf. Matter of Alter,
389 Mass. 153, 156 [1983]), and conclude that the appropriate sanction is disbarment.
1 Three
board members served on a hearing panel and recommended an indefinite suspension.
Because of recusals and the absence of a member, several board members did not
participate in the board's discussion and vote.
On January 16, 1996, Kennedy pleaded guilty in the United
States District Court for the District of Massachusetts to eleven felony counts:
four counts of making false statements to a lender, five counts of mail fraud,
and two counts of wire fraud. On May 10, 1996, a judge sentenced Kennedy to
twenty-four months' probation, nine months of which were to be served in home
detention, imposed a $4,000 fine, and ordered Kennedy to perform 200 hours of
community service.
Three of the counts to which Kennedy pleaded guilty concerned
his making false statements to a federally insured bank while acting as counsel
to buyers or sellers of real estate. In each of these transactions, in connection
with obtaining a mortgage, Kennedy signed a Federal Housing and Urban Development
(HUD-1) settlement statement and a Federal National Mortgage Association (Fannie
Mae) affidavit that knowingly and falsely represented the purchase price and
the down payment or deposit. In all three cases, the lender was Dime Savings
Bank of New York (Dime). After the completion of one of these transactions,
Kennedy and two other men involved went to a bar where they laughed and joked
that "it was amazing that they could get all this money from Dime." In another
of these transactions, two of Kennedy's clients had purchased property in Harwich
in 1986 for $70,000. Approximately one year later, the wife of one of the clients
applied to Dime for a mortgage on the property of $118,000, stating that she
was purchasing the property for $235,000. In December, 1987, Kennedy, as attorney
for the sellers, knowingly represented falsely in an affidavit and in a settlement
statement that the purchase price was $235,000 and that the deposit was $80,000.
The Federal judge who sentenced Kennedy determined that Dime sustained losses
of approximately $226,000 in these transactions.
The fourth count involving false statements concerned
similar misrepresentations in connection with a transaction in which Kennedy
purchased property for himself. In a HUD-1 settlement statement and a Fannie
Mae affidavit, Kennedy falsely reported that a down payment of $39,000 was paid.
There had been no down payment at all. Dime sustained no losses in this transaction.
The mail fraud and wire fraud counts concerned Kennedy's
knowing submission to a mortgage company, not Dime, of fabricated income tax
returns containing intentionally inflated misrepresentations of his income.
In seeking to refinance some property that he owned, Kennedy intentionally submitted
falsified 1990 and 1991 income tax returns to the prospective lender. For example,
he submitted a 1991 income tax return stating that his income was $90,410, when
his actual 1991 income was $45,930. Kennedy conceded that he had intentionally
provided false income tax figures in this attempted transaction which was never
completed.2
2 The
board concluded that Kennedy had violated S.J.C. Rule 3:07, Canon 1, DR 1-102
(A) (4) and (6), as appearing in 382 Mass. 769 (1981), and Canon 7, DR 7-102
(A) (3), (A) (5), (A) (7), and (B) (1), as appearing in 382 Mass. 785 (1981).
"We start with the premise that disbarment or indefinite
suspension is the usual sanction imposed for a felony conviction." Matter
of Concemi, 422 Mass. 326, 329 (1996). In the Concemi case, we concluded
that the lawyer had "shown no special mitigating circumstance that would justify
deviation from the usual and presumptive sanction of disbarment following conviction
of a serious crime." Id. at 330. Matter of Labovitz, 425 Mass.
1008, 1009 (1997). See Matter of Knox, 412 Mass. 569, 570-571 (1992)
(more than two-thirds of all felony convictions have resulted in disbarment
or resignation in lieu of disbarment). We have rejected a lawyer's reputation
in the community as a special mitigating factor. See Matter of Concemi,
supra at 330; Matter of Saab, 406 Mass. 315, 327 (1989). We have
also determined that remorse and cooperation with the Federal government are
not sufficient justification for the imposition of a sanction less than disbarment
where a lawyer is guilty of making a false statement to a federally insured
institution. Matter of Ogan, 424 Mass. 1015, 1015-1016 (1997).
The appropriate discipline depends on the facts of each
case, but we are guided by the sanctions imposed in similar situations. See
Matter of Concemi, supra at 329; Matter of Hurley, 418
Mass. 649, 655 (1994), cert. denied, 514 U.S. 1036 (1995). In selecting a sanction,
we should consider its effect on, and the perception by, the public and its
deterrent effect on other lawyers contemplating similar conduct. See Matter
of Concemi, supra at 329; Matter of Alter, 389 Mass. 153,
156 (1983).
In the Concemi case, we concluded that disbarment
was "the appropriate sanction for an attorney convicted of thirty-five felony
counts for conspiracy to defraud a bank, bank fraud, and making false statements
to a federally insured bank while acting in his capacity as a member of the
bar." Matter of Concemi, supra at 331-332. In Matter of Ogan,
supra, the lawyer participated in thirty-three sales in which inflated
sales prices were reported to lenders to obtain loans that were excessive in
relation to (but less than) the true sales prices. Id. at 1015. The lawyer
feared that he might lose his client's business if he did not agree to prepare
the false documents. Id. at 1016. We ordered this lawyer disbarred as
well. Id.
In Matter of Nickerson, 422 Mass. 333 (1996),
on which Kennedy relies, we indefinitely suspended the lawyer from the practice
of law. Nickerson was a salaried employee at a law firm. She was not involved
in shaping policy at the firm and did not directly profit from her wrongdoing.
Id. at 337. She was not convicted of bank fraud but pleaded guilty to
fourteen counts of making false statements. Id. at 336. She cooperated
in the prosecution of others and accepted responsibility for her wrongdoing.
Id.
Kennedy's conduct was more seriously improper than the
conduct of Nickerson. The typical Dime false statements cases involve deposits
and forbidden second mortgages, but, unlike here, those cases did not involve
inflated purchase prices and bank loans exceeding the value of the mortgaged
property. Moreover, the preparation of false income tax returns and their submission
to a prospective lender is a particularly egregious act and is not found in
the Nickerson case, or even in the Concemi or Ogan cases.
This deliberate misrepresentation in order to gain financial advantage is most
troubling conduct by a lawyer.
We see no special circumstances justifying departure
from the presumptive sanction of disbarment. The fact that real estate transactions
were not a major part of Kennedy's practice is not a mitigating factor or an
excuse. The wrongdoing here did not involve complicated conveyancing procedures.
Kennedy knew that he was engaged in improper conduct. Community service, pro
bono representation of clients, and a favorable reputation in the community
are commendable, but they cannot alone offset the consequences of serious unethical
conduct which otherwise calls for disbarment. Although Kennedy apparently received
only $110 in legal fees for his services to clients in the transactions involved
here, he benefited by retaining his clients. Furthermore, Dime sustained substantial
losses.
Kennedy was the decision maker. No employer dictated
his conduct. Moreover, he purchased property for himself, obtaining a mortgage
equal to the purchase price, by lying to the lender. It is true that Concemi
and Ogan engaged in certain egregious conduct that did not occur in the present
case. Kennedy, however, committed other, unique improprieties.
The judgment of indefinite suspension is vacated, and
a judgment of disbarment shall be entered retroactive to February 26, 1996,
the date of Kennedy's temporary suspension from the practice of law.
So ordered.
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