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Commonwealth of Massachusetts

NO. BD-2001-072

IN RE: MICHAEL J. HARRINGTON

S.J.C. Order of Term Suspension entered by Justice Sosman on July 19, 2002, with an effective date of August 18, 2002.1

SUMMARY2

The respondent was the trustee of Three Corner Realty Trust (3CRT), a realty trust that owned the Hawthorne Hotel in Salem, Massachusetts. The respondent as trustee of 3CRT borrowed $6.25 million from the Bank of New England (BNE) to renovate the hotel, securing the loan with his personal guaranty and a mortgage on the hotel property.

In October 1990, the 3CRT loan was in default. To prevent foreclosure, the respondent entered into an agreement with BNE in which he agreed to pay all of the receipts of the hotel into a lockbox account under control of BNE and to request back only such funds as were necessary to pay the expenses of the hotel in the ordinary course of business.

BNE failed in January 1991. The Federal Deposit Insurance Corporation (FDIC) was appointed receiver and retained Recoll Management Corporation (Recoll) to liquidate, collect, and manage the non-performing loans of BNE. The 3CRT loan was among these.

Beginning on or about January 11, 1991, in knowing violation of his agreement with BNE and its successor, the respondent directed hotel employees to provide to him each week a check in the approximate amount of $1500 drawn on the hotel’s operating account. The checks were made out to 3CRT. The respondent endorsed these checks as trustee, deposited them to his personal checking accounts, and expended the funds on his personal obligations. Between January 11, 1991, and December 2, 1993, the respondent received 151 such checks, totaling $226,771. The respondent concealed these withdrawals from Recoll.

In March 1995, the respondent was notified that he was the subject of a criminal investigation into the 3CRT loan. On June 1, 1995, the respondent made an offer to Recoll to settle the 3CRT loan and repaid $200,000 into the lockbox account.

On September 20, 2001, the respondent was convicted in the United States District Court for the District of Massachusetts of knowing conversion of government property in violation of 18 U.S.C. § 641. The respondent was fined $100,000.

Knowing conversion of government property is a misdemeanor that has misappropriation as an element of the offense. The respondent was convicted of a “serious crime” as defined by S. J. C. Rule 4:01, § 12(3). The respondent’s conduct violated Canon One, Disciplinary Rules 1-102(A)(4) and (6).

On December 31, 2001, bar counsel filed a petition for discipline. On May 3, 2002, bar counsel and the respondent filed a stipulation in which the respondent admitted to the allegations of the petition for discipline and joined with bar counsel in recommending a three-year suspension from the practice of law. The parties stipulated that the respondent’s conduct occurred outside the practice of law and that he had satisfied his civil and criminal obligations to the government.

On July 8, 2002, the Board of Bar Overseers voted to accept the parties’ stipulation and their recommendation for discipline. On July 19, 2002, the Supreme Judicial Court for Suffolk County entered an order suspending the respondent from the practice of law for three years.

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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