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Commonwealth of Massachusetts

NO. BD-99-045

IN RE: IRWIN I. WEITZ

S.J.C. Order of Term Suspension entered by Justice Lynch on August 9, 1999, with an effective date of September 8, 1999.1

SUMMARY2

In 1997, after administrative hearings and appellate procedures, the Federal Deposit Insurance Corporation issued an order pursuant to 12 U. S. C. § 1818(e) which prohibited the respondent from participating in any manner in the affairs of any insured depository institution. By this order, the respondent was prohibited from serving as attorney to any depository institution subject to the jurisdiction of the FDIC. The respondent did not appeal from the FDIC order.

The respondent was precluded from contesting any of the findings which were necessary to the Commission's decision. Bar Counsel v. Board of Bar Overseers, 420 Mass. 6 (1995).

The respondent represented, and acted as closing agent for, a bank which agreed to lend $1,000,000 to the buyers of a 28 unit apartment building, subject to the requirement that the loan be secured by a first mortgage on the building. The respondent simultaneously represented the borrowers, who had signed an agreement to purchase the building for $1,250,000. He did not inform the bank of the dual representation.

At various times after the bank had issued its commitment letter, the buyer and the seller entered into written and oral agreements which had the effect of lowering the purchase price. Some of these agreements were made prior to the closing; others during the closing itself. These agreements

(1) reduced the amount that the buyer was to pay the seller from $250,000 to $62,500 and then to nothing.

(2) Eliminated the seller's obligation to make repairs, in exchange for a "repair credit" which was first set at $50,000 and then raised to $200,000.

The respondent was aware of these agreements but did not inform his client or the bank of their existence. At the closing, without informing the bank, he paid approximately $160,000 from the proceeds of the loan made to his clients to the buyers instead of to the seller. Without informing the bank, he also utilized $2,787 from the proceeds of the loan to pay himself an amount due from the buyers for legal services unconnected with the apartment building transaction.

The respondent was aware that the seller had failed to remove encumbrances to the property and that the encumbrances acted to cloud title to the property. He did not inform the bank of these encumbrances and permitted the closing to go forward without their removal. He executed a title certificate and a title insurance policy which falsely asserted that the bank was in a first priority position.

After the closing, the respondent prepared a Memo of Sale which falsely asserted that the closing had been conducted in conformity with the bank's commitment letter (with one change of which the bank was aware), omitting the changes made by the other written and oral agreements.

Shortly after the closing, the buyers defaulted on the note and declared bankruptcy. After a lengthy foreclosure process, the property was sold for a loss of $798,000.

The respondent stipulated, and the Board found, that his actions as found by the FDIC violated DR 1 102(A)(4) and (6); DR 5 105(A) and (B); DR 5 107(B); and DR 7 101 (A)(1), (2), and (3). Bar Counsel and the respondent stipulated that the appropriate sanction for this misconduct was a one year suspension, but the Board rejected the agreed disposition and recommended a two year suspension.

The single justice suspended the respondent for one year.

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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