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Commonwealth of Massachusetts

NO. BD-2004-089

IN RE: RAYMOND C. LANTZ, JR.

S.J.C. Judgment of Resignation entered by Justice Ireland on November 29, 2004, with an effective date of December 28, 2004.1

SUMMARY2

Bar Counsel filed a two-count Petition For Discipline against the respondent on January 7, 2004. On October 29, 2004, the respondent submitted to the Board of Bar Overseers an affidavit of resignation from the practice of law pursuant to Supreme Judicial Court Rule 4:01, ß15. In his affidavit, the respondent admitted that the following material facts and disciplinary rule violations set forth in the petition can be established by sufficient evidence.

Count One: A client, a widow in her late 70ís, approached the respondent in March of 1998 for legal advice about a $100,000 annuity and alternative investments. The respondent was in the process of purchasing the building that housed his law office and asked the client if she would be willing to loan him the $100,000 to assist in buying the building. The client agreed to do so and was told by the respondent that she would be one of four lenders, that she would receive 15% interest and that she would receive a secured promissory note that would be repaid by the end of 1998. The respondent did not at that time fully disclose the transaction and its terms to the client in writing, did not advise her to seek the advice of independent counsel, and did not obtain her consent to the transaction in writing.

In mid-June of 1998, the client liquidated her annuity and endorsed the $100,000 check to the respondent, who deposited it in a clientsí fund account. The respondent did not at that time give the client a promissory note, any security for the funds or any written agreement or statement itemizing her rights or his obligations concerning the funds pending his purchase of the property, nor did he fully disclose the terms of the transaction to the client in writing, advise her to seek the advice of independent counsel, or obtain her consent to the transaction in writing.

On June 29, 1998, the day before the respondentís purchase of the building, the respondent met with the client and had her sign a Participation Agreement. In this agreement, also signed by the other three lenders, the lenders agreed to loan their respective funds to the respondentís spouse, as trustee of a nominee trust created to hold title to the building. In exchange, the respondentís spouse, as trustee, provided a promissory note to each lender and a mortgage on the building to the respondent as trustee of a participation trust created to hold the mortgage. The respondent as trustee agreed to hold the mortgage for the benefit of the lenders.

The respondentís borrowing of $100,000 from the client and its terms were not fair and reasonable to the client. The client had no independent right on her own to foreclose the mortgage securing her promissory note or to cause it to be foreclosed by the respondent as trustee. She did not have a priority interest in the mortgage over the interests of the other lenders. Further, the respondent as trustee of the participation trust had a personal interest in not foreclosing the mortgage because the mortgaged property was held by his spouse in trust for his family.

At his meeting with the client on June 29, 1998, the respondent also had her co-sign a copy of a letter to her that described and summarized the transaction. The respondent did not fully disclose the terms of the transaction to the client in writing in terms that could reasonably be understood by her. He did not inform the client that that she had no independent right to foreclose the mortgage or cause it to be foreclosed, that she had no priority interest over the other lenders in the mortgage, and that the respondent as trustee of the participation trust had a personal interest in not foreclosing the mortgage.

The respondentís letter to the client co-signed by her on June 29, 1998, the day before the purchase, included statements that the respondent could not provide the client with legal advice on the transaction and that she had the right to have the transaction reviewed by another attorney. This advice did not give the client a reasonable opportunity to consult with independent counsel concerning the transaction. The respondent did not obtain the clientís consent to the transaction in writing.

In September of 1998, the client approached the respondent for legal advice about investing another $75,000 that she had available. The respondent borrowed these funds from the client and gave her a promissory note payable by January 31, 1999, secured by a second mortgage on the office building.

The respondentís borrowing of $75,000 from the client and its terms were not fair and reasonable to the client. There were risks to the client in making a loan secured by a second mortgage on the property. If the first mortgage were to be foreclosed, the security provided by the second mortgage would be wiped out. Unless a foreclosure sale would produce sufficient funds to pay off both the first and second mortgages, the client would be forced to buy out the first mortgage and pay off all the lenders in order to protect her interest in the property. The respondent did not inform the client of these risks and did not advise her to obtain an appraisal of the property.

In connection with the second borrowing, the respondent had the client co-sign a letter that described the terms of the transaction and that advised her that she had the right to have the transaction reviewed by another attorney. The respondent did not fully disclose the terms of the transaction to the client in writing in terms that could reasonably be understood by her, did not give the client a reasonable opportunity to consult with independent counsel and did not obtain the clientís consent to the transaction in writing.

The respondent did not pay off either the $100,000 promissory note or the $75,000 promissory note to the client when due. Action to foreclose the clientís second mortgage on the property was begun on her behalf by new counsel in late 1999. In March of 2000, the respondent refinanced the property and paid off the clientís promissory notes in full, including interest and attorneyís fees.

The respondentís conduct in borrowing $100,000 from the client in June of 1998, and $75,000 in September of 1998, where the terms of the transactions were not fair and reasonable to the client and were not fully disclosed and transmitted in writing in a manner that she could reasonably understand, where she was not given a reasonable opportunity to seek the advice of independent counsel, and where she did not consent to the transaction in writing, was in violation of Mass. R. Prof. C. 1.8(a).

Count Two: In December of 2001, the respondent was holding in his IOLTA account $99,706.61 of a client. With the clientís authority, the respondent borrowed the funds and used them for unrelated purposes. This transaction and its terms were not fair and reasonable to the client. The respondent did not provide a promissory note to the client and did not provide any security for his repayment of the funds. The respondent did not fully disclose the transaction and its terms to the client in writing, did not advise the client to seek the advice of independent counsel for the transaction, and did not obtain the consent of the client to the transaction in writing.

In connection with Bar Counselís investigation of the circumstances of Count Two, the respondent knowingly misrepresented to Bar Counsel that no checks were written against the clientís funds and that all transactions were by wire transfer. The respondent also knowingly misrepresented to Bar Counsel under oath the purpose for which the clientís funds were used.

The respondentís conduct in borrowing $99,706.61 from the client in December of 2001, where the terms of the transaction were not fair and reasonable to the client and were not fully disclosed and transmitted in writing to the client in a manner that he could reasonably understand, where the client was not given a reasonable opportunity to seek the advice of independent counsel, and where the client did not consent in writing to the transaction, was in violation of Mass. R. Prof. C. 1.8(a).

The respondentís knowing misrepresentations and knowing misrepresentations under oath to Bar Counsel were in violation of Mass. R. Prof. C. 8.1(a), 8.4(c), 8.4(d) and 8.4(h).

On November 8, 2004, the Board voted to recommend that the Supreme Judicial Court accept the respondentís affidavit of resignation as a disciplinary sanction. On November 24, 2004, the Supreme Judicial Court for Suffolk County entered a Judgment accepting the respondentís resignation as a disciplinary sanction and striking the respondentís name from the Roll of Attorneys.

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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