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Commonwealth of Massachusetts

NO. BD-2004-092

IN RE: DAVID HARLOW

S.J.C. Order of Term Suspension (6 months and one day) entered by Justice Spina on December 14, 2004, with an effective date of January 13, 2005. 1

MEMORANDUM AND JUDGEMENT

The Board of Bar Overseers (board) has filed an Information with the county court, having voted to adopt the report of a hearing committee and its recommendation that the respondent be suspended from the practice of law for six months and one day. Bar counsel and the respondent join in recommending that I accept the board’s recommendation of a six-month and one day suspension.

Bar counsel filed a petition for discipline on October 23, 2003, alleging the respondent violated several provisions of the Massachusetts Rules of Professional Responsibility with respect to his representation of NewCare Health Corporation and its subsidiary, NewCare Mass. Nursing, Inc. (collectively, NewCare), in connection with its application to the Department of Public Health (DPH) for licenses to operate four nursing homes. After a two-day evidentiary hearing, a hearing committee found that the respondent represented to the DPH that an escrow fund had been established conformably with the conditions required by the DPH when in fact the account had been funded only temporarily with the proceeds of a loan that was so severely restricted by the lender that the funding of the escrow account did not comply with the DPH’s conditions. The hearing committee concluded that:

(1) “By stating to the DPH [on January 29, 1999,] that the escrow fund was in compliance with the terms of the escrow agreement and the DPH’s probationary terms, without disclosing to the DPH the terms of the loan agreement [used to fund the escrow account], the [r]espondent knowingly failed to disclose material facts to the DPH when disclosure was necessary to avoid assisting a fraudulent act by a client, in violation of Mass. R. Prof. C. 4.1(b) (in representing a client, lawyer shall not knowingly fail to disclose a material fact to a third person when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client, unless disclosure is prohibited by Rule 1.6, 8.4(c) (dishonesty, fraud, deceit, or misrepresentation), and 8.4(h) (conduct adversely reflecting on fitness to practice).

(2) “By failing to disclose to the DPH that he wired the funds back to [the lender] and that the escrow account was unfunded by February 1, 1999[,] and remained depleted thereafter, and by failing to withdrawn from representation of NewCare and to cause his firm to withdraw from acting as escrow agent, the [r]espondent violated Mass. R. Prof. C. 1.6(b)(3) (lawyer may reveal, and to the extent required by Rule 3.3, Rule 4.1(b), or Rule 8.3 must reveal, such information to the extent the lawyer reasonably believes necessary to rectify client fraud in which the lawyer’s services have been used, subject to Rule 3.3(e)), 1.16(a)(1) (except as stated in paragraph (c), a lawyer shall not represent a client or, where representation has commenced, shall withdraw from the representation of a client if the representation will result in violation of the rules of professional conduct or other law), 4.1(b) (in representing a client, lawyer shall not knowingly fail to disclose a material fact to a third person when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client, unless disclosure is prohibited by Rule 1.6), and 8.4(h) (conduct adversely reflecting on fitness to pratice).

(3) “By signing [the loan agreement] letter as escrow agent; by stating to the DPH that the escrow funds would be held in accordance with the escrow agreement and that the escrow was in compliance with the probationary conditions without disclosing to the DPH the terms of the [loan] agreement; by wiring the funds back to [the lender]; and by not informing the DPH or advising his client to notify the DPH that the escrow had been depleted to repay [the lender] and not replenished, the [r]espondent assisted NewCare in conduct that he knew was a fraud on the DPH in violation of Mass. R. Prof. C. 1.2(d) (lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent, but a lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law), 8.4(c) (dishonesty, fraud, deceit or misrepresentation), and 8.4(h) (conduct adversely reflecting on fitness to practice).”

The hearing committee viewed the respondent’s status as an income partner in his firm, which was the escrow agent, and at least constructive knowledge of the circumstances by one of the firm’s equity partners (who has not been charged with any ethical violations), as a mitigating factor.

The hearing committee also considered as a mitigating factor the absence of evidence of harm flowing from the unfunded escrow account. There was no indication that any bill to the four nursing homes had gone unpaid due to a lack of funds in the escrow account. However, the hearing committee also found that “the respondent’s conduct caused the DPH to issue licenses to a company about which it had both financial and quality concerns and thus potentially jeopardized the health and safety of the vulnerable population served by the nursing homes.”

The hearing committee considered the respondent’s assertion that he had done nothing unethical, but committed only an error in judgment, as an aggravating factor. See Matter of Clooney, 403 Mass. 654, 657 (1988).

The hearing committee recommended a suspension of six months and one day. Both bar counsel and the respondent waived their rights to appeal to the board from the hearing committee report, and they jointly recommended adoption of the hearing committee’s report in its entirety. The board voted to adopt the report of the hearing committee and its recommendation to file an Information with the Supreme Judicial Court recommending that the respondent be suspended from the practice of law for six months and one day. (One member voted for a more severe sanction. Three members recused themselves.)

After reviewing the record, I am satisfied that the findings of the hearing committee, adopted by the board, are supported by substantial evidence, see Matter of Segal, 430 Mass. 359, 364 (1999), and that there is no error in the conclusions that the respondent committed the ethical violations in question. I also am satisfied that a suspension of six months and one day is not markedly disparate from judgments in comparable cases. In the Matter of Alter, 389 Mass. 153, 156 (1983). The board’s recommendation is entitled to substantial deference. Id. at 157-158. The respondent, who was admitted to practice on December 21, 1987, had an otherwise unblemished career and this was an isolated incident involving a difficult corporate client.

The respondent is hereby suspended from the practice of law for a period of six months and one day. He is responsible for the board’s costs of $1,693.51.

By the Court,

Francis X. Spina
Associate Justice

ENTERED: December 14, 2004

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



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