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Commonwealth of Massachusetts

NO. BD-2006-0066

IN RE: ERIC R. JAROSZ

S.J.C. Order of Term Suspension entered by Justice Cordy on July 25, 2006, with an effective date of August 24, 2006.1

SUMMARY2

On March 16, 2004, a buyer and seller entered into a purchase and sale agreement (the “P&S”) for a two-family house located in Worcester, Massachusetts. The purchase price was $300,000. According to the P&S, the buyer had paid a $15,000 deposit. In fact, the parties agreed that the buyer would not put down a deposit.

After signing the P&S, the buyer went to Landmark Funding LLC (“Landmark”), a mortgage brokerage company, for assistance in obtaining financing. In early April 2004, Landmark arranged a $255,000 loan for the buyer from a lender. The loan was to be secured by a first mortgage on the property. The buyer required additional funds to complete the purchase of the property, and Landmark arranged for the sellers to lend the buyer those funds. The parties agreed that the loan would be secured by a second mortgage on the property.

The respondent began representing lenders as the settlement agent for residential loans generated by Landmark in early 2004. Sometime prior to April 23, 2004, the date set for the closing, the respondent was informed that the buyer had not put down a deposit for the purchase of the property, and that, in order to complete the purchase, the buyer would have to borrow funds from the sellers. At the request of a principal at Landmark, the respondent drafted the note and mortgage deed.

As part of his preparation for the closing, the respondent drafted a HUD-1 settlement statement showing that the buyer had paid a $15,000 deposit and another $35,878.38 at the closing and that the sellers received a total of $101,507.02 at the closing. The respondent knew that these amounts on the HUD-1 were false, deceptive, and misleading. The respondent also did not disclose on the HUD-1 that the sellers were financing a portion of the purchase price secured by a second mortgage.

At the closing on April 23rd, the respondent directed the buyer and the sellers to execute under the penalties of perjury the HUD-1 settlement statement containing the false representations that the respondent had prepared. After the parties had signed the settlement statement, the respondent certified that the “HUD-1 Settlement Statement which I have prepared is a true and accurate account of this transaction.” When the respondent signed the HUD-1, he knew that the settlement statement contained information that was false and misleading.

During the closing, the respondent had the buyer sign a Uniform Residential Loan Application containing the false representation that that there was no secondary financing involved in the purchase of the property. The respondent also had the buyer sign the note and the second mortgage that he had drafted. The respondent never advised the lender of the secondary financing and that the loan application and the HUD-1 contained false representations.

By permitting the sellers and buyer to sign the HUD-1 settlement statement and the loan application that he knew contained false and misleading information and by certifying that information as true, the respondent violated Mass. R. Prof. C. 8.4(c) and (h) (conduct involving dishonesty, fraud, deceit or misrepresentation and conduct that adversely reflects on the fitness to practice law). The respondent’s representation of the lender when his business, personal, and financial interests materially limited that representation and when his representation of the lender was adversely affected violated Mass. R. Prof. C. 1.7(b) (lawyer shall not represent a client if the representation may be materially limited by the lawyer’s responsibilities to another client or to a third person).

On June 26, 2006, the parties submitted a stipulation to the Board of Bar Overseers recommending that the respondent be suspended from the practice of law for nine months. On July 10, 2006, the Board of Bar Overseers voted to accept the stipulation of the parties and recommend that the respondent be suspended from the practice of law for nine months.

On July 25, 2006, the Supreme Judicial Court for Suffolk County ordered that the respondent be suspended from the practice of law for nine months effective August 25, 2006.

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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