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Commonwealth of Massachusetts

NO. BD-2010-013

IN RE: VALERIE F. HANSERD

S.J.C. Order of Term Suspension entered by Justice Botsford on February 23, 2010, with an effective date of March 25, 2010.1

SUMMARY2

This matter came before the court on a stipulated recommendation for a suspension of one year and one day based on the respondent’s misconduct in three real estate transactions. In all three transactions, a mortgage broker named Leo H. Desire, Sr. was either the respondent’s client or referred the matter to her. In two transactions, she was the lender’s attorney; in the third she represented Desire as buyer.

(In the following narrative, some actions attributed to “Desire” were taken at his direction by his employees or by employees of entities that he controlled. Similarly, some actions attributed to the respondent were taken by employees at her direction.)

In the first matter, in 2005, Desire arranged a “mortgage rescue” transaction with a husband and wife facing foreclosure. The essentials of the plan were that the homeowners would convey their home to a straw selected by Desire, Desire would obtain a loan to finance the purported sale, and the owners would retain the right to repurchase their home pursuant to a formula set out by Desire. Desire located a straw and obtained a loan commitment. He nominated the respondent to serve as the closing attorney.

On January 9, 2006, the respondent conducted a closing of the purported sale. In the course of this closing, she prepared and signed a HUD-1 disclosure statement that contained false statements concerning the amount of funds received from the buyer and disbursed to the seller. These false statements included an assertion that the buyer brought over $13,000 to the closing when in fact he brought nothing and an assertion that over $65,000 was disbursed to the sellers when the amount actually so disbursed was approximately $43,500. The respondent, following instructions given her by the “sellers,” disbursed more than $36,500 to Desire or his designees. She did not list these disbursements on the HUD-1.

The respondent sent the HUD-1 that she had prepared to the lender without disclosing that she had made disbursements in a different manner. She also sent the lender an affidavit of occupancy executed by purported buyer even though she was aware that he did not intend to occupy the home.

The respondent’s actions constituted misrepresentation in violation of Mass. R. Prof. C. 8.4(c), making false statements to her client and failure to make necessary disclosures in violation of Mass. R. Prof. C. 4.1(a) and (b); failure to keep her client reasonably informed about the status of the matter in violation of Mass. R. Prof. C. 1.4(a);. and conduct that adversely reflects on her fitness to practice law in violation of Mass. R. Prof. C. 8.4(h).

In the second matter, in May, 2006, Desire sent the respondent an order to prepare for a closing on a sale of real property in Revere. The documentation identified the seller and the buyer (“G”), stated the purchase price of $475,000 and recited that G had been approved for a $380,000 first mortgage and a $95,000 second mortgage.

The respondent’s title examination revealed that the seller did not hold title to the property; the Federal Home Loan Mortgage Corporation, commonly referred to as Freddie Mac, had acquired the property by foreclosure in 2005. She informed Desire of her findings and was instructed to keep the file open but to take no further action.

On or about June 13, 2006, Desire instructed the respondent to prepare for a sale from Freddie Mac to G for a price of $475,000. At the same time, she received standard closing instructions from G’s lender.

The respondent contacted Freddie Mac’s attorney and was informed that her understanding of the transaction was incorrect. The agreement was not to sell to G but to Desire and the agreed price was not $475,000 but $305,000. The attorney sent the respondent a HUD-1 showing a sale to Desire at $305,000, together with a signed and notarized deed from Freddie Mac to Desire at that price.

The respondent met with G and conducted a closing on her purchase of the property. During this proceeding, the respondent presented to G the usual documents incidental to a purchase from Freddie Mac at a price of $475,000. She also had G sign two promissory notes and two mortgages in the total sum of $475,000. Loan proceeds of $473,818.28 were wired to the respondent’s IOLTA account. The respondent caused $279,980.45 to be wired from her IOLTA account to Freddie Mac’s attorney’s trust account, that being the amount specified as due to Freddie Mac on the HUD-1 prepared by the attorney. She also returned the HUD-1 that the attorney had sent her, now signed by her and by Desire.

The respondent did not record the deed sent to her by Freddie Mac’s attorney; relying on Desire’s statement that the deal would be revised, she delivered it to Desire. A few days later, Desire presented her with a purported deed showing a sale from Freddie Mac to G at a purchase price of $475,000. This document was fraudulent and was created by altering the real deed. The respondent caused it to be recorded without consulting with Freddie Mac’s attorney.

When the respondent recorded the altered deed from Freddie Mac, she simultaneously recorded the two mortgages from G in the total amount of $475,000. She transmitted to G’s lender a HUD-1 that showed a sale from Freddie Mac to G for a price of $475,000, and payments to Freddie Mac totaling $440,152.45.

The amounts shown on the HUD-1 sent to G’s lender were inaccurate. In fact, the respondent distributed to Desire all funds in excess of the $279,980.45 paid to Freddie Mac (except for a fee paid to herself and incidental expenses).

The respondent’s actions constituted misrepresentation in violation of Mass. R. Prof. C. 4.1 and 8.4(c), assistance in a fraud in violation of Mass. R. Prof. C. 1.2(d); failure to keep her client reasonably informed about the status of the matter in violation of Mass. R. Prof. C. 1.4(a);. lack of competence in violation of Mass. R. Prof. C. 1.1 and conduct that adversely reflects on her fitness to practice law in violation of Mass. R. Prof. C. 8.4(h).

In the third matter, at the end of October, 2006, Desire retained the respondent in connection with an offer that he proposed to make to purchase an 18-lot real-estate development in Brockton from two brothers. Over the next few days, the respondent entered into negotiations with the brothers on behalf of Desire and reviewed drafts of various documents connected to the proposed transaction. The brothers insisted that Desire make a deposit of $75,000 to be held in escrow by the respondent.

On November 16, 2006, the respondent sent a facsimile transmission to the brothers consisting of a fax cover sheet, a photocopy of a $75,000 Bank of America cashier’s check made payable to Valerie Hanserd, and a draft Purchase and Sale agreement that recited that $75,000 had “been paid as a deposit this day” and designated the respondent as the person to hold the deposit in escrow. There was no message on the fax beyond the photocopies.

On November 16, the respondent did not have in her possession an actual check. The photocopy sent to the brothers had been transmitted to her in a fax from Desire. Before forwarding the photocopy to the brothers, the respondent whited out the letters and numbers that identified it as a fax transmission.

Further negotiations took place, culminating in the signing of the P&S on December 11. The version of the P&S that was ultimately signed was drafted by the respondent and recited that the respondent was holding a $75,000 deposit. At no time did she tell the brothers that she did not actually have the funds.

The transaction did not close. In March, 2007, a lawyer for the brothers brought suit against Desire, naming the respondent as the escrow agent. Only after the court ordered her to deposit the funds in court did she give notice that she had never received the funds.

The respondent’s actions in sending a message that falsely implied that she was holding $75,000 in escrow and her failure to disclose that she was not holding the deposit constituted deceit and misrepresentation in violation of Mass. R. Prof. C. 8.4(c); a false statement of material fact and failure to disclose a necessary material fact, in violation of Mass. R. Prof. C. 4.1(a) and (b); assisting a client in fraudulent conduct in violation of Mass. R. Prof. C. 1.2(d); and lack of competence in violation of Mass. R. Prof. C. 1.1.

In mitigation, the respondent was relatively inexperienced in practice at the time of her misconduct. She realized no financial gain from the transactions in issue except for her normal legal fees. In addition, the respondent was dealing with three very serious family illnesses during the relevant time, which involved hospitalizations and frequent travel out of town to care for family members, as a result of which she paid less attention than she should have to the consequences of her acts.

The parties stipulated that a suspension of one year and one day was appropriate to the misconduct. The Board approved the stipulation, and the Court imposed a suspension of one year and one day.


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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