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Commonwealth of Massachusetts

NO. BD-2001-020


S.J.C. Order of Term Suspension entered by Justice Sosman on July 10, 2001.1


This matter came before the Court on an information and record of proceedings with the vote and recommendation of the Board of Bar Overseers filed by the Board on June 22, 2001.

The respondent, John G. Vallis, Esq., was admitted to the Bar of the Commonwealth on January 18, 1985. On January 29, 2001, he was administratively suspended from practice of law in Massachusetts pursuant to S.J.C. Rule 4:01, ß 3(2), due to his failure to cooperate with Bar Counselís investigation. On February 13, 2001, he was administratively suspended pursuant to S.J.C. Rules 4:02 and 4:03 for failure to register and to pay his registration fees to the Board of Bar Overseers. On April 13, 2001, he was temporarily suspended from the practice of law pursuant to S.J.C. Rule 4:01, ß 12A, pending final disposition of disciplinary proceedings. On May 8, 2001, the respondent filed his affidavit of compliance with the temporary suspension order.

Since 1985, the respondent has engaged in the private practice of law in Massachusetts, primarily representing lenders in residential real estate closing matters. In his capacity as a conveyancing attorney, the respondent received closing funds and other escrow payments in connection with transfers of interests in real property or the refinancing of mortgages on real property. The respondent deposited these funds in a pooled client funds account.

On November 30, 1999, the respondent acted as the settlement agent and counsel for a residential real estate closing. The lender was to provide funds in the amount of $127,800.00. In addition, the buyer was to provide $16,234.95, which he did at the time of the closing. The lender did not wire the funds for the closing to the respondent prior to the date of the closing. Nonetheless, the respondent, without confirming whether he had received good funds from the lender, closed the transaction on November 30, 1999, and recorded the mortgage on December 1, 1999.

Between December 2, 1999 and January 19, 2000, the respondent disbursed $142,919.89 in funds in connection with this closing from his client funds account still without confirming receipt of the mortgage proceeds. Of this total disbursement amount, the respondent made $126,684.94 in disbursements for the closing negligently using client funds unrelated to the closing. The funds used for this purpose were funds which the respondent had received and not yet disbursed in connection with other closings.

By letter dated January 11, 2000, the lender advised the respondent that it had never funded the loan. Thereafter, between January and April of 2000, the respondent attempted to convince the lender to fund the loan, to no avail. The lender provided the respondent with checks which it had received from the borrower as mortgage payments. The respondent did not attempt to deposit or negotiate these checks. Subsequently the lender gave the respondent an assignment of the mortgage from the borrower, which he did not record. Thereafter the respondent received several additional mortgage payment checks from the borrower, which he also did not attempt to deposit or negotiate. The respondent did not reimburse his trust account for the client funds which he had negligently used for the closing.

In other matters, between 1998 and 2000, the respondent received not less than $117,000 in connection with approximately fifty closings which he deposited to his client funds account but then failed to timely disburse as settlement agent. More than $83,000 of this $117,000 was used to close the transaction described in the previous paragraphs. The respondent does not have sufficient funds in his client trust account to make these disbursements.

In addition, for twenty-four closings in 1999 and 2000, the respondent paid out approximately $6,000 more in disbursements from his client funds account than funds were deposited in the account for those matters, again using other trust funds on deposit in the account. These disbursements included interest, penalties, or other charges incurred by reason of the respondentís late payment of other disbursements in connection with the closings he was handling.

Finally, in approximately fifty cases, the respondent received mortgage discharges and other documents that he failed to record. He does not have sufficient funds to pay the recording fees for the unrecorded documents he is holding and the property owners are unaware that the documents have not been recorded.

By failing to promptly disburse or account for the funds which he received and deposited in his client funds account with respect to numerous real estate closings, the respondent violated Rules 1.3 and 1.15(b) of the Massachusetts Rules of Professional Conduct.

By failing to confirm receipt of the lenderís funds before closing on a transaction, disbursing funds, or recording the mortgage from the buyer to the lender, the respondent handled a legal matter without adequate preparation and neglected a legal matter in violation of Rules 1.1 and 1.3 of the Massachusetts Rules of Professional Conduct.

By negligently and repeatedly using funds being held in escrow for one closing to make disbursements in connection with another closing, with resulting actual deprivation, the respondent failed to safeguard trust funds and engaged in conduct adversely reflecting on his fitness to practice law in violation of Rules 1.15(a) and 8.4(h) of the Massachusetts Rules of Professional Conduct.

By failing to record numerous mortgage discharges or other documents in connection with real estate closings, and by failing to notify the property owners that the documents have not been recorded, the respondent neglected legal matters entrusted to him in violation of Rule 1.3 of the Massachusetts Rules of Professional Conduct.

On May 31, 2001, Bar Counsel commenced disciplinary proceedings before the Board of Bar Overseers by filing a petition for discipline and the respondentís answer and stipulation of the parties. On June 11, 2001, the Board of Bar Overseers voted to accept the stipulation of the parties and their joint recommendation to file an information with the Supreme Judicial Court recommending that the respondent be suspended from the practice of law for three years.

On July 10, 2001, the Court entered an order suspending the respondent from the practice of law for a period of three years, retroactive to April 13, 2001, the effective date of his temporary suspension. On that date the Court also entered an order appointing a commissioner to act pursuant to the provisions of S.J.C. Rule 4:01, ß 17(2). The commissioner was directed to take possession of the respondentís remaining active files, to make an inventory of all remaining active files, and to take appropriate action to protect the interests of clients and of other persons who have interests in the conveyancing matters for which the respondent acted as settlement agent, including but not limited to the actions directed by subsections (1) and (3) of S.J.C. Rule 4:01, ß 17.

1 The complete Order of the Court is available by contacting the Clerk of the Supreme Judicial Court for Suffolk County.

2 Compiled by the Board of Bar Overseers based on the record before the Court.

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