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Commonwealth of Massachusetts

NO. BD-2008-113

IN RE: SEAN ROBBINS

S.J.C. Order of Term Suspension entered by Justice Cordy on November 24, 2008, with an effective date of December 24, 2008.1
(S.J.C. Judgment of Reinstatement entered by Justice Cordy on October 7, 2009.)

SUMMARY2

This matter came before the Supreme Judicial Court for Suffolk County on a stipulated recommendation for a nine-month suspension based on the respondentís acknowledgement that the following could be proved by a preponderance of the evidence.

The respondent was employed as an associate in a firm handling real estate closings, including closings referred to the firm by a mortgage broker who generated substantial business for the firm. The respondent and his employer also represented the mortgage broker in some of her own real estate investments.

In late November or early December 2006, the mortgage broker hired the respondentís employer to represent her in acquiring a twenty-four unit apartment building and converting the units to condominiums. As the respondent was aware, the mortgage broker planned to transfer title to the building to a new entity and sell the units after the conversion. The mortgage broker and her employees procured buyers for the units and obtained purchase money financing for the unit buyers. The mortgage broker also arranged for the unit lenders to have the respondentís employer or the firm act as lendersí counsel and settlement agent in the unit closings.

At his employerís direction, the respondent formed a new corporation with the mortgage broker as sole officer and director and prepared the condominium conversion documents. In addition, at the mortgage brokerís request, the respondent prepared twenty-four purchase and sale agreements for the unit closings, each listing a purchase price with no down payment or deposit and the entire consideration due on delivery of the deed. The mortgage broker or her employees provided the information needed to complete the purchase and sale agreements and had them signed by or in the names of the unit buyers. The mortgage broker signed the agreements for the new corporation as seller. The respondent knew that copies of the agreements would be furnished to lenders.

On or about December 14, 2006, the respondentís employer represented the mortgage broker in her acquisition of the building. Two days later, the respondent represented the mortgage broker in her conveyance of the building to the new corporation and her execution of the condominium conversion documents on behalf of the corporation.

Various lenders agreed to provide loans to unit buyers secured by first mortgages or, in some cases, by first and second mortgages, ranging from 90% to 100% of the stated purchase price. Before the unit closings, the firm received closing instructions from the lenders. All or virtually all the lenders prohibited secondary financing without the lenderís prior approval and required the settlement agent, among other things, to prepare and have executed a HUD-1 settlement statement for each loan accurately setting forth all receipts and disbursements. The lenders also required the settlement agent to furnish a copy of the settlement statement to the lender before the closing; provide the executed settlement statement and other closing documents to the lender after the closing; comply with the instructions as a condition of closing, funding and disbursing the loan; and report to the lender any inability to comply. The respondent knew that the lenders were or would be funding their loans in reliance on, among other things, the terms of the purchase and sale agreements and settlement statements and compliance with the closing instructions.

The twenty-four unit closings took place in late December 2006 and early January 2007. The respondent handled nineteen of the closings; the remainder were handled by his employer. In all the unit closings he handled, the respondent had the parties execute documents including a settlement statement for each loan. Each settlement statement for a first mortgage listed, among other things, an amount of cash due from and paid by the unit buyer and an amount of cash due and paid or to be paid to the seller. The respondent had the parties sign a certification on each first-mortgage settlement statement that it was a true and accurate statement of all receipts and disbursements made on the buyerís behalf. The respondent also executed certifications on some of the settlement statements that they were true and accurate accounts of the transactions and that he had caused or would cause the funds to be disbursed in accordance with the statements.

In fact, none of the unit buyers brought funds to any of the unit closings or contributed any funds thereafter. As the respondent was aware, his employer had arranged with the mortgage broker to have the proceeds paid to the seller in every unit closing reduced by the amount of the buyerís contribution listed on the corresponding first mortgage settlement statement. By the time of each unit closing he handled, the respondent knew that the unit buyer had not brought any funds to the closing; that the amount shown on the settlement statement as due from the buyer would actually be deducted from the sellerís share of the proceeds; that the first-mortgage settlement statement falsely represented, among other things, the buyerís contribution and the amount of the sellerís proceeds; and that the partiesí certifications on the settlement statements were false.

The respondent failed to correct those first-mortgage settlement statements. The respondent failed to inform the lenders that the statements were inaccurate or that the amounts shown as payments from the buyers were not paid at closing. The respondent recorded the unit deeds in five closings knowing that the first-mortgage settlement statements for those closings were false and that the first-mortgage transactions violated the lendersí requirements.

By intentionally misrepresenting the terms of the unit transactions on the first-mortgage settlement statements for the unit closings he handled; causing or allowing the partiesí false certifications on those settlement statements; certifying falsely the accuracy of some of those settlement statements; causing or allowing the delivery of those false settlement statements to the unit lenders; and causing or allowing the closing, funding, recording and disbursement of those unit loans in violation of the lendersí requirements, the respondent violated Mass. R. Prof. C. 1.2(d) as to fraudulent conduct only and 8.4(c). By failing to notify the unit lenders of the true terms of the unit closings he handled, failing to comply with the unit lendersí requirements, and failing adequately to protect the unit lendersí interests, Robbins violated Mass. R. Prof. C. 1.1, 1.2(a), 1.3 and 1.4(a) and (b)

In addition to representing the lenders in the unit closings, the respondent and his employer also represented the mortgage brokerís interests as broker and principal of the seller in facilitating the unit financing, concluding the unit sales, paying off the mortgage brokerís own mortgages on the building, and obtaining the net sale proceeds for her benefit. The respondentís representation of the unit lenders was materially limited by his responsibilities to the mortgage broker and her business entities and by his and his employerís interests. The respondent never disclosed to any of the unit lenders that he and his employer also represented the interests of the seller and the mortgage broker and that their representation of the lenders was or might be materially limited by their relationship and responsibilities to the mortgage broker and her business entities. The respondent did not obtain the unit lendersí consent to the representation after consultation and could not have obtained consent in the circumstances. The respondent thereby violated Mass. R. Prof. C. 1.7(a) and (b).

In mitigation, the respondent, a salaried employee, acted pursuant to his employerís instructions. The respondent was relatively inexperienced in practice at the time of his misconduct, was not the decision maker, expressed misgivings about the transactions to his employer and was reassured as to their propriety, and realized no financial gain from the transactions in issue except for his salary.

Bar counsel commenced disciplinary proceedings against the respondent by filing and serving a petition for discipline in August 2008. In October 2008, prior to hearing on the petition, the parties submitted a stipulated recommendation for a nine-month suspension on the respondentís acknowledgement that the misconduct described above could be proved by a preponderance of the evidence. The Board of Bar Overseers voted to accept the stipulation and recommendation. On November 24, 2008, the Supreme Judicial Court for Suffolk County entered an order for the respondentís nine-month suspension effective December 24, 2008.


FOOTNOTES:

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 filed with the Supreme Judicial Court.



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