Opinion
No. 1164 Disciplinary Docket No. 3 No. 60 DB 2004
01-27-2016
In the Matter of SEBASTIAN M. RAINONE PETITION FOR REINSTATEMENT
ORDER
PER CURIAM
AND NOW, this 17 day of March, 2016, the Petition for Reinstatement is denied.
Petitioner is directed to pay the expenses incurred by the Board in the investigation and processing of the Petition for Reinstatement. See Pa.R.D.E. 218(f). A True Copy Patricia Nicola
As Of 3/17/2016 Attest: /s/_________
Chief Clerk
Supreme Court of Pennsylvania Attorney Registration No. 16046 (Philadelphia)
REPORT AND RECOMMENDATIONS OF THE DISCIPLINARY BOARD OF THE SUPREME COURT OF PENNSYLVANIA
TO THE HONORABLE CHIEF JUSTICE AND JUSTICES OF THE SUPREME COURT OF PENNSYLVANIA:
Pursuant to Rule 218(c)(5) of the Pennsylvania Rules of Disciplinary Enforcement, The Disciplinary Board of the Supreme Court of Pennsylvania submits its findings and recommendations to your Honorable Court with respect to the above captioned Petition for Reinstatement.
I. HISTORY OF PROCEEDINGS
Petitioner, Sebastian M. Rainone was disbarred from the Bar of the Commonwealth of Pennsylvania by Order of the Supreme Court dated December 21, 2006. Petitioner filed a Petition for Reinstatement and Reinstatement Questionnaire on November 20, 2013. Office of Disciplinary Counsel filed a Response to Petition for Reinstatement on November 17, 2014, in opposition to reinstatement.
A reinstatement hearing was held on February 18, 2015 and March 11, 2015, before a District I Hearing Committee comprised of Chair Kevin F. Berry, Esquire, and Members Tara L. Kelly, Esquire and Philip N. Pasquarello, Esquire. Petitioner was represented by Andrew S. Brown, Esquire. Petitioner presented the testimony of four witnesses and testified on his own behalf. He introduced one character exhibit. Office of Disciplinary Counsel presented four witnesses and Exhibits 1- 64.
Following the submission of briefs by the parties, the Hearing Committee filed a Report on August 25, 2015 and recommended that the Petition for Reinstatement be denied.
No Briefs on Exception were filed by the parties.
This matter was adjudicated by the Disciplinary Board at the meeting on October 22, 2015.
II. FINDINGS OF FACT
The Board makes the following findings:
1. Petitioner is Sebastian M. Rainone. He was born in 1947 and was admitted to the bar in Pennsylvania in 1972. He was admitted to the United States District Court for the Eastern District of Pennsylvania in 1976. His attorney registration address is 313 Creek Drive, Apt. 204, Radnor, PA 19087. Petitioner is subject to the jurisdiction of the Disciplinary Board of the Supreme Court of Pennsylvania.
2. Following his admission to the bar, Petitioner practiced law in the Philadelphia region in the areas of criminal defense, employment and business law, and had a consulting business. N.T. 2/18/15, 144-5.
3. From 1993 until his disbarment in December 2006, Petitioner was the sole proprietor of his Philadelphia law firm. Reinstatement Questionnaire No. 2(d). He was also a full-time tenured professor at Villanova University. N.T. 2/18/2015, 145. He holds a Master's Degree in Taxation. Reinstatement Questionnaire No. 2(a).
4. Prior to his disbarment, Petitioner had no history of discipline.
5. By Order of the Supreme Court dated December 21, 2006, Petitioner was disbarred from the practice of law.
6. Petitioner signed a stipulation admitting his misconduct in his first disbarment hearing; however, on the day of the initial hearing, having retained new counsel, he sought to withdraw the signed stipulation alleging portions of it were inaccurate and false. During that hearing, Petitioner was also offered the opportunity to present mitigating evidence which he declined to do. A Special Master was appointed to determine if the signed stipulation was knowing and intentional and the Master concluded it was. The Disciplinary Board reached the same conclusion. N.T. 2/18/15, 152-6; 230-2.
7. The misconduct for which Petitioner was disbarred included two incidents involving dishonesty with client funds, three instances of mishandling funds, and a violation relating to Petitioner's annual attorney registration statements. Report and Recommendation of the Disciplinary Board of the Supreme Court of Pennsylvania, May 11, 2006 at 23.
8. Since 2007, Petitioner has been employed at Strayer University, and he is the Dean of the Willingboro, New Jersey campus, where he teaches business and ethics classes, supervises faculty and student activities, and performs budgetary functions. Reinstatement Questionnaire No. 11(a); N.T. 2/18/15, 33, 118-120.
9. Petitioner completed the requisite Continuing Legal Education requirements necessary for reinstatement. Reinstatement Questionnaire No. 19(a) and Attachment No. 10.
10. Petitioner has paid all costs involved with his disbarment, totaling $6,195.75. Reinstatement Questionnaire, Attachment No. 11.
Failure to File Tax Returns
11. From September 1993 to December 2006, Petitioner was the sole proprietor of his law firm located at 1528 Walnut Street, Philadelphia, PA 19128. Reinstatement Questionnaire No. 2(d).
12. When Petitioner had his law firm in Philadelphia, he knew that he had a legal responsibility to file tax returns with the City of Philadelphia ("City") and pay City taxes. N.T. 3/11/2015, 16.
13. Petitioner failed to file the tax returns with the City, and knew that he had failed to do so. N.T. 3/11/2015, 17-18.
14. Petitioner failed to file his City tax returns for the years 2001, 2002 and 2003 which resulted in current open tax liabilities against Petitioner totaling $51,449.70, plus interest and penalties. ODC-35 through ODC-41, ODC-63.
15. In 2000 and 2002, the Commonwealth of Pennsylvania filed tax liens against Petitioner for failing to pay his PA state business taxes to the Department of Revenue. ODC-44 and 45.
16. Pennsylvania's current open tax liens against Petitioner total $1,449.70. N.T. 3/11/2015, 19; ODC-63.
17. Petitioner failed to file timely his Commonwealth of Pennsylvania income tax returns for the years 2006, 2007, 2008, 2010, 2011, 2012 and 2013. ODC-56.
18. Petitioner was assessed penalties and interest for his failure to file timely his state income tax returns and currently owes additional money to the Commonwealth for unpaid taxes, interest and penalties. He does not know the amount due. N.T. 3/11/15, 21.
19. Petitioner also filed his federal income tax returns late for the years 2006, 2007, 2008, 2010, 2011, 2012 and 2013. N.T. 3/11/15, 38; ODC-56.
20. Petitioner testified that his current federal tax liability, including interest and penalties, is at least $65,000. N.T. 3/11/15, 40.
21. At the time of his reinstatement hearing, Petitioner's total tax liability was at least $117,988.00 (City of Philadelphia - $51,449.70; Commonwealth of Pennsylvania - $1,449.70; federal government - $65,000) plus possible additional interest and penalties. N.T. 3/11/15, 40; ODC-63.
22. Since his disbarment, Petitioner has failed to file timely both his federal and state income tax returns in seven out of eight years. N.T. 3/11/15, 42.
23. According to Petitioner, he "avoided [his] taxes," did not "face it [paying his taxes] head on," and it was "annoying paying" taxes. N.T. 3/11/15, 24.
24. By letter dated December 11, 2013, Office of Disciplinary Counsel asked Petitioner to provide his state and federal tax returns from 2006 to the present. N.T. 3/11/15, 30; ODC-3.
25. Petitioner responded by letter dated January 31, 2014, stating that he had requested his state tax returns from the Pennsylvania Department of Revenue. ODC-9.
26. By letters dated May 15, June 2, July 1, July 8, July 24, and September 15, 2014, Office of Disciplinary Counsel forwarded Petitioner repeated requests for copies of his state tax returns from 2006 to 2013, and an explanation for his delay in providing them. N.T. 3/11/15, 30-1; ODC-20, 22, 26, 28, 30, 31, 33.
27. On September 23, 2014, Petitioner provided Office of Disciplinary Counsel with his 2007-2013 tax returns and wrote that the Pennsylvania Department of Revenue had not yet processed his request for his 2006 state tax return. N.T. 3/11/15, 26, 28; ODC-32.
28. By letter dated September 29, 2014, Office of Disciplinary Counsel repeated its request for Petitioner's omitted state tax return. ODC-33.
29. Petitioner did not file his 2006 state tax return until November 19, 2014. N.T. 3/11/15, 28.
30. By letter dated September 23, 2014, Petitioner misrepresented to Office of Disciplinary Counsel that he had already filed his 2006 state tax return. ODC-32.
31. Petitioner did not give Office of Disciplinary Counsel his 2006 state tax return until January 26, 2015, following the January 13, 2015 prehearing conference. N.T. 3/11/15, 34.
32. Petitioner did not file his tax returns for years 2006, 2008 and 2010 until Office of Disciplinary Counsel requested copies of his returns. N.T. 3/11/15, 20-21.
33. Petitioner claimed he did not know that he had failed to file his 2006, 2008 and 2010 state income tax returns until after Office of Disciplinary Counsel requested copies of those tax returns. N.T. 3/11/15, 23.
34. Petitioner failed to cooperate with Disciplinary Counsel's investigation by not promptly advising Office of Disciplinary Counsel of his failure to file his state tax returns. N.T. 3/11/15, 30-1.
35. By letter dated January 31, 2014, Petitioner advised Office of Disciplinary Counsel that he was not assessed interest and penalties for his failure to file timely his federal tax returns for the years 2011 and 2012. ODC-9.
36. Petitioner's statement in his January 31, 2014 letter is false in that Petitioner was assessed interest and penalties for his late filing of his 2011 and 2012 federal tax returns. N.T. 3/11/15, 49-51; ODC-56.
37. Petitioner has an accountant working on his taxes and he testified at the March 11, 2015 hearing that he "should have them filed by the end of this month". Petitioner stated that he was also making monthly payments of approximately $400 to the IRS. N.T. 3/11/15, 24-5.
Failure to Maintain Client Files
38. In 2005 and 2006, prior to Petitioner's disbarment, Petitioner received (a) DB-7 Requests for Statement of Respondent's Position in two matters involving his former clients, Eloise Armstrong and Carolyn McBride Snyder, and (b) Requests for Information in two other matters, Paul McGovern and James R. Pollock. ODC-2; N.T. 3/11/15, 58-59.
39. Petitioner did not provide the records or information to Office of Disciplinary Counsel in response to their requests in these four matters. N.T. 3/11/15, 58-59.
40. By letter dated January 4, 2007, Office of Disciplinary Counsel advised Petitioner that in view of his disbarment it was closing its investigation into these four matters, and requested that Petitioner maintain his files intact during his period of disbarment. Petitioner was further advised that if he petitioned for reinstatement, Office of Disciplinary Counsel would oppose his request if he failed to produce the files at that time. ODC-2.
41. Petitioner received this letter and remembered its contents. N.T. 3/11/15, 60.
42. Upon Petitioner's filing for reinstatement, Office of Disciplinary Counsel by letter dated December 18, 2013 to Petitioner, requested records and information regarding the Pollock, McGovern, Snyder and Armstrong matters. ODC-4.
43. By letter dated January 31, 2014, Petitioner responded that his ex-wife had disposed of all of his law practice-related documents during the course of contentious divorce proceedings in 2007, following his disbarment. ODC-9.
44. Petitioner discovered that his ex-wife had discarded his law-related boxes sometime between January 2007 and June 2007, which was within six months of Petitioner's receipt of Office of Disciplinary Counsel's letter instructing him to maintain the files for reinstatement purposes. N.T. 3/11/15, 63-64.
45. Petitioner made no effort to recreate the legal files, check his computer, or try to locate other copies of the documents following his ex-wife's disposal of the files and, when asked what efforts he had made, Petitioner answered "I didn't even know how I could recreate them. What do you mean 'recreate them'?" N.T. 3/11/15, 64.
46. Petitioner failed to advise Office of Disciplinary Counsel that these four files were destroyed. N.T. 3/11/15, 65.
Failure to Notify Courts and Clients of Disbarment
47. At the time of his disbarment, Petitioner had two open client matters pending in the United States District Court, Eastern District of Pennsylvania. ODC-48, 49.
48. Petitioner failed to comply with Rule 217, Pa.R.D.E. which required notification to the Eastern District Court of his disbarment. ODC-47; N.T. 3/11/15, 68.
49. Petitioner failed to comply with Rule 217, Pa.R.D.E. which required notification to clients in the pending cases in the Eastern District Court of his disbarment. ODC-47; N.T. 3/11/15, 74, 78-79.
50. Petitioner failed to comply with Rule 217(e)(1), Pa.R.D.E, which required filing with the Secretary of the Board a verified statement that he had complied with the mandatory notice provisions of Rule 217.
False and Misleading Statements in Connection with Reinstatement Questionnaire
51. The instructions to the Reinstatement Questionnaire, Form DB-36, completed by Petitioner in connection with his Petition for Reinstatement, stated that Petitioner "must answer all questions fully and precisely" and warned that false statements were subject to criminal penalties. Reinstatement Questionnaire p. 1.
52. In answer to Question 2(d), requesting a list of all employment prior to disbarment, Petitioner failed to list his employment at Villanova University and his corporate consulting business. Reinstatement Questionnaire p. 3.
53. In answer to Question 6(b), relating to notices required to be sent to clients pursuant to Pa.R.D.E. 217(b) and Disciplinary Board Rule § 91.92, Petitioner incorrectly responded that "[b]y the time of my disbarment I did not have any clients". Although Petitioner's notice of disbarment listed the information he was required to give his clients, Petitioner stated that he "was not aware of the requirement". N.T. 3/11/15, 67.
54. In answer to Question 10(a), relating to civil actions that he has been involved with as a party or as one who claimed an interest, although Petitioner correctly answered "Yes," he failed to list nineteen (19) cases to which he was a party, including many tax cases where he was a party defendant with the Commonwealth of Pennsylvania. ODC-34 to ODC-47; ODC-50 to ODC-54.
55. In answer to Question 10(c), relating to whether there were any judgments against him currently on court records as unsatisfied, Petitioner falsely answered "No," although Petitioner had nine unsatisfied judgments of record against him. N.T. 3/11/15, 43; ODC-36 through ODC-41; ODC-44 through ODC-45; ODC-51.
56. In answer to Question 10(d), asking whether Petitioner had any debts which were 90 days past due, Petitioner falsely answered "No," although Petitioner later admitted he had outstanding state and federal tax debts more than 90 days past due. N.T. 3/11/15, 44.
57. In answer to Question 10(e), asking if, since his disbarment, Petitioner had filed timely his state and federal income tax returns, Petitioner falsely answered that he had only failed to file timely his 2011 federal return. In fact, he had also failed to file timely his federal income tax returns for the years 2007, 2008, 2010, 2012 and 2013, and had not filed his state income tax returns for the years 2006, 2007, 2008, 2010, 2011, 2012 and 2013. N.T. 3/11/15, 25-6, 29; ODC-56.
Open Letter in The Villanovan
58. On February 15, 2007, less than two months after his disbarment, Petitioner posted and published in The Villanovan, the official Villanova University newspaper, a letter he had written entitled "An Open Letter to the Villanova Community." ODC-58.
59. In his Open Letter, Petitioner wrote: "I was not found 'guilty' or 'convicted' of violating the Rules of Professional Conduct. In fact, unfortunately, I was never 'adjudged' at all." (ODC-58) Petitioner's writing is false and misleading in that by Order dated December 21, 2006, the Pennsylvania Supreme Court adopted the May 11, 2006 Report and Recommendation of the Disciplinary Board that concluded as a matter of law that Petitioner had violated the Rules of Professional Conduct. Disbarment Order attached as Exhibit No. 2 to Petitioner's Reinstatement Questionnaire.
60. In his Open Letter, Petitioner wrote: "None of my character witnesses were allowed to testify." N.T. 2/18/15, 218; ODC-58. This statement is false and misleading because the hearing committee in the discipline matter specifically invited Petitioner to present evidence in mitigation of discipline. Petitioner repeatedly declined to do so. N.T. 2/18/15, 222-5; ODC-1.
Lack of Recognition of Wrongdoing
61. In responding to the questions posed in his Reinstatement Questionnaire, Petitioner was less than forthcoming in his responses which, at times, indicated a lack of sincere effort to provide accurate answers.
62. At his reinstatement hearing, Petitioner continued to contend that he was not found to have violated the Rules of Professional Conduct, that the Stipulation he signed at his disbarment proceeding was incorrect, and that his prior counsel was partially to blame. N.T. 2/18/15, 184-191.
63. Petitioner testified, without regard to the facts, that the Disciplinary Board initially ruled to exclude the Stipulation but then reversed and admitted the Stipulation after having an ex parte conversation with Petitioner's former lawyer. N.T. 2/18/15, 154.
64. Petitioner also testified regarding the four underlying client complaints that resulted in his disbarment:
a. In the Hunter matter, Petitioner failed to readily admit that he misappropriated Mr. Hunter's refund of attorney fees that Petitioner had received from the Postal Service on Mr. Hunter's behalf. N.T. 2/18/15, 191-200;
b. In the Pachtman matter Petitioner, although acknowledging that he should have put the disputed referral fee funds in escrow and not "ducked" Mr. Pachtman, continued to deny that he had misappropriated funds that he had agreed to pay Mr. Pachtman as the referring attorney, N.T. 2/18/15, 204-208; and
c. In the Starr Furniture and Diamond matters, Petitioner continued to insist that he looked at his conduct more as "bookkeeping errors" than "outright theft," despite findings under the prior disbarment order and stipulation that he misappropriated fiduciary funds. N.T. 2/18/15, 208-216.
65. Petitioner's testimony at his reinstatement hearing displayed limited acceptance of personal responsibility for his conduct and, when taken as a whole, demonstrated that he lacked genuine remorse or a true understanding of the harm he caused by misleading his former clients and a referring attorney, and by his misappropriation of their funds. He believes he "was punished too harshly". N.T. 2/18/15, 187.
Office of Disciplinary Counsel's Witnesses
66. Eloise Armstrong hired Petitioner in 2004-2005 to represent her in an employment discrimination case. Petitioner failed to keep her informed of the status of her case. N.T. 3/11/15, 103-106.
67. Ms. Armstrong was not satisfied with Petitioner's performance at the arbitration hearing in her matter, stating that "[h]e wasn't professional. He looked scruffy. He didn't have a suit on." She felt as if Petitioner was "sitting there not saying anything." N.T. 3/11/15, 106.
68. Ms. Armstrong described Petitioner as "a big liar as far as an attorney is concerned," and "the worst attorney that I've ever witnessed." She believed it would not be in the public interest to reinstate Petitioner. N.T. 3/11/15, 104, 107-8.
69. Carolyn McBride-Francis (a.k.a. McBride-Snyder) hired Petitioner in 2003-2004 to represent her in a personal injury matter and to draft a prenuptial agreement, a will, and a business contract. N.T. 3/11/15, 113-4.
70. Although Ms. McBride-Francis paid Petitioner to prepare the documents, Petitioner failed to prepare the will or the contract. Furthermore, despite providing Petitioner with the information needed for the prenuptial agreement months in advance, she did not receive the agreement until the day of her wedding when it was too late to use it. As she explained, "[i]t was somebody else's" prenuptial agreement, because "the only thing correct on there was my name." N.T. 3/11/15, 114-116.
71. With regard to Ms. McBride-Francis's personal injury case, Petitioner withheld $6,000 of her approximately $28,000 settlement funds to purportedly pay her medical bills. Petitioner never paid those bills. N.T. 3/11/15, 117.
72. Ms. McBride-Francis believed it would "absolutely not" be in the public interest to reinstate Petitioner to the practice of law because "he's not a good lawyer." N.T. 3/11/15, 117.
73. Paul McGovern hired Petitioner in 2003 to represent him in an EEOC matter and a divorce. N.T. 3/11/15, 121.
74. Petitioner failed to respond to the great majority of Mr. McGovern's phone calls and emails. Mr., McGovern estimated that "maybe 1 out of 50" times Petitioner would respond to Mr. McGovern. N.T. 3/11/15, 122.
75. Petitioner failed to inform Mr. McGovern of a scheduled court hearing, resulting in Mr. McGovern's receipt of a contempt of court notice. N.T. 3/11/15, 124.
76. According to Mr. McGovern, there was "no way" it would be in the public's interest to reinstate Petitioner. N.T. 3/11/15, 126.
77. James Pollock hired Petitioner in 2004 to represent him in an age discrimination (EEOC) matter. N.T. 3/11/15, 129.
78. Mr. Pollock explained that once he paid Petitioner "all of the money" Petitioner stopped keeping him informed as to the status of the case and put his case "on the back burner." Mr. Pollock lost his case because Petitioner let the statute of limitations expire. N.T. 3/11/15, 131-133.
79. Mr. Pollock testified that it would "absolutely not" be in the public interest to reinstate Petitioner. N.T. 3/11/15, 134.
80. Office of Disciplinary Counsel's witnesses were all credible.
81. Petitioner did not cross-examine these witnesses or offer any evidence to refute their testimony.
Petitioner's Witnesses
82. Petitioner presented the character testimony of four individuals: Dr. Thomas Papi, Professor Burke Ward, Ms. Barbara Baltimore and Mr. Kingsley Asomaning.
83. Dr. Thomas Papi is the Dean of Students of Strayer University at its Cherry Hill, New Jersey campus and has known Petitioner for approximately four years. N.T. 2/18/15, 27, 39.
84. Dr. Papi stated that Petitioner's Willingboro campus has won awards and is ranked in the top ten percent of Strayer University's campuses. N.T. 2/18/15, 30-1.
85. Petitioner's reputation in the Strayer community is that he is "a great teacher and a great Dean." N.T. 2/18/15, 31-2.
86. According to Dr. Papi, Petitioner is "probably the most well-respected Dean . . . in our region." N.T. 2/18/15, 55.
87. Dr. Papi has never discussed Petitioner's reputation with other people that know Petitioner. N.T. 2/18/15, 39-40.
88. Dr. Papi discovered that Petitioner had been disbarred after doing a Google search two or three years ago. N.T. 2/18/15, 40.
89. Dr. Papi never discussed Petitioner's disbarment with Petitioner even after discovering it on the Internet. N.T. 2/18/15, 42.
90. Dr. Papi did not know the underlying charges that led to Petitioner's disbarment, including the misappropriation of client funds. N.T. 2/18/15, 42.
91. Dr. Papi did not know that Petitioner had failed to file and pay income taxes on a timely basis both prior to and subsequent to his disbarment. N.T. 2/18/15, 45-51.
92. Dr. Papi agreed that someone who teaches business law in a Master's program would know about filing tax returns. N.T. 2/18/15, 52.
93. Dr. Papi did not think that a person necessarily needed to be law-abiding to be a professor. N.T. 2/18/15, 36-7.
94. Burke Ward is a professor at Villanova University School of Business, Business Law and Taxation. He met Petitioner in 1977, when he interviewed for a faculty position at Villanova where Petitioner was already a professor. N.T. 2/18/15, 58-9.
95. Professor Ward and Petitioner are "real good friends" and were so at the time of Petitioner's disbarment. N.T. 2/18/15, 63-4.
96. Professor Ward recently testified on Petitioner's behalf in separate proceedings in July 2014, regarding Petitioner's obligation to pay his daughter's tuition at Fordham University. N.T. 2/18/15, 71.
97. Professor Ward indicated that at the time of the disbarment, Petitioner was primarily stressed by his divorce. N.T. 2/18/15, 65-6.
98. Professor Ward testified that Petitioner is "more focused and more serious" than at the time of his disbarment. N.T. 2/18/15, 66-7.
99. Professor Ward and Petitioner never discussed the Disciplinary Board Report or Petitioner's misappropriation and mishandling of funds. N.T. 2/18/15, 88-9, 92.
100. Professor Ward did not know that since the time of disbarment, Petitioner had failed to file timely most of his state and federal tax returns. Although Petitioner "should have filed," this did not change his good opinion of Petitioner's character for truthfulness, honesty or law-abidingness. N.T. 2/18/15, 98-100.
101. Professor Ward stated that based on what the Disciplinary Board and Court found, Petitioner's statement in his letter to The Villanovan regarding his not being adjudged guilty of violating the Rules of Professional Conduct appeared to be a false statement. N.T. 2/18/15, 106-9.
102. Professor Ward "would expect that whatever was asked [of Petitioner on the Reinstatement Questionnaire] would have been answered" correctly. N.T. 2/18/15, 113.
103. Professor Ward agreed that Petitioner's failure to answer the Reinstatement Questionnaire correctly would reflect negatively on his morals and competency. N.T. 2/18/15, 113.
104. Barbara Baltimore is Petitioner's academic assistant at Strayer University and has known Petitioner since both began working at Strayer in 2007. N.T. 2/18/15, 135-6.
105. Ms. Baltimore reports directly to Petitioner and personally assists him with the office paperwork. N.T. 3/11/15, 145.
106. According to Ms. Baltimore, Petitioner is responsible for maintaining a budget. N.T. 3/11/5, 137. There is an internal audit of the budget at least twice a year and they have always received "commendable" and "very successful audits." N.T. 3/11/15, 138.
107. Petitioner told Ms. Baltimore of his disbarment "a couple months" before the reinstatement hearing. N.T. 3/11/15, 148.
108. Petitioner told Ms. Baltimore that he had tax problems, and "some funds" were misappropriated, but did not give her any details about the misappropriation or other reasons for his disbarment, such as his failure to communicate, failure to handle client matters with reasonable diligence, and his commingling of fiduciary funds with personal funds. N.T. 3/11/15, 148-150.
109. Ms. Baltimore did not think that anyone else on campus knew of Petitioner's disbarment and she had not told anyone. N.T. 3/11/15, 150.
110. Petitioner told Ms. Baltimore that "his taxes were kind of put on hold because he had to come up with his daughter's tuition." N.T. 3/11/15, 153.
111. Mr. Kingsley Asomaning is a former student of Petitioner's at Strayer University. N.T. 3/11/15, 156.
112. Mr. Asomaning has been friends with Petitioner for six or seven years and they currently go to lunch about once per month. N.T. 3/11/15, 162-3.
113. Mr. Asomaning founded the Denkyem Charitable Foundation, which deals with youth delinquency, youth obesity and sports development with the goal of getting children into college. N.T. 3/11/15, 157.
114. Petitioner is on the Board of Directors for Denkyem and Mr. Asomaning credits Petitioner with assisting at least thirty children in going to college, through Petitioner's counseling and advice. N.T. 3/11/15, 158-9.
115. Mr. Asomaning described Petitioner as an "excellent human being," a "wonderful man," and someone who has been "very good to me." N.T. 3/11/15, 160-1.
116. Although they have known each other for years, Petitioner told Mr. Asomaning about his disbarment only three weeks prior to the reinstatement hearing. N.T. 3/11/15, 159-160.
117. Petitioner told Mr. Asomaning that the circumstances of his disbarment included taking money from some clients, taking a referral fee due an attorney, and failing to communicate with clients and handle their matters in a diligent and prompt manner. N.T. 3/11/15, 166-8.
118. Petitioner told Mr. Asomaning that Petitioner "has some tax delinquencies, whereby he didn't file his taxes on time." N.T. 3/11/15, 170.
119. Mr. Asomaning was not too concerned with Petitioner's tax problems, testifying that "at least a majority of us have tax problems." He would not hold anyone responsible for financial problems. N.T. 3/11/15, 170.
120. Mr. Asomaning stated that Petitioner has a reputation in the Willingboro Township business community for being truthful, honest and law-abiding. N.T. 3/11/15, 164-5.
121. Petitioner submitted an exhibit titled Affidavit of Clayton Sills. Mr. Sills is a Commissioner of Willingboro Township, New Jersey. P-1.
122. According to Mr. Sills, Petitioner joined Mr. Sills' "green team" support group and has proven to be a valuable member of the team. P-1.
123. Petitioner recently informed Mr. Sills of his disbarment for misappropriation of client funds and other ethical violations, and Mr. Sills is aware of Petitioner's financial and tax problems. P-1.
124. Mr. Sills was not interested in Petitioner's "misconduct of ten years ago nor did I need to know the details about any current tax problems. I judge people on what I see them do around me and not the past." P-1.
Petitioner's Testimony
125. At the time of Petitioner's disbarment in 2006, his marriage was "a disaster" and it affected everything in his life, including his professional career and his relationship with his daughter. N.T. 2/18/15, 148, 151.
126. As part of his Divorce Agreement, Petitioner was responsible for his daughter's college tuition, for which his ex-wife sued, resulting in his owing her $57,000 for tuition. N.T. 2/18/15, 162-3,165-166.
127. Petitioner was summoned to court in 2014, for failure to make tuition payments, and he had to take an advance from his inheritance from his mother to pay $11,000 towards tuition. N.T. 2/18/15, 167.
128. Petitioner's mother died in December 2014, and Petitioner will be receiving "maybe $90,000 to $100,000" as inheritance. It is Petitioner's intention to use that money to "gather up all my creditors and cut a deal and satisfy everyone" and "with some luck and negotiation . . . be debt free by the end of [2015]." N.T. 2/18/15, 168-9.
129. Petitioner's current yearly salary at Strayer University is $80,000. Reinstatement Questionnaire No. 11(a).
130. Petitioner testified that if the purpose of disbarment was "rehabilitation, I can tell you from the bottom of my heart that it's given me many years to be very introspective, to really see where I was wrong, to really see where my responsibilities were, to fully understand how I could never let my life get into a spot like that again." N.T. 2/18/15, 173.
131. Petitioner's disbarment has been "humbling" and "sobering," and he acknowledged that "the people that I tried to help - I basically wronged." N.T. 2/18/15, 174-5.
132. Petitioner testified that "other than the financial difficulties I'm having" he has done a "real good job" the last seven or eight years helping students, and performing community and charitable work. N.T. 2/18/15, 173-4.
133. Petitioner continues to maintain a business checking account at TD Bank and the monthly bank statements remain titled "Sebastian M. Rainone Attorney At Law, Attorney Professional Account." ODC-54; N.T. 3/11/15, 81-84.
134. Petitioner explained that his checks only have his name on them and he has asked the bank to remove the attorney header from their computer bank statements, but gave up trying a couple years ago. N.T. 3/11/15, 82-3.
135. Petitioner bounced two checks that were reported on his June 30, 2013 bank statement. N.T. 3/11/15, 83-4.
136. Petitioner admitted he continues to experience "financial challenges" because he has debts. N.T. 3/11/15, 84.
III. CONCLUSIONS OF LAW
1. The conduct for which Petitioner was disbarred is not so egregious as to preclude consideration of his Petition for Reinstatement. Office of Disciplinary Counsel v. Keller, 506 A.2d 872, 879 (Pa. 1986).
2. Petitioner has met his burden of demonstrating by clear and convincing evidence that he has the learning in the law required for admission to practice law in this Commonwealth. Rule 218(c)(3), Pa.R.D.E.
3. Petitioner has failed to meet his burden of demonstrating by clear and convincing evidence that he has the competency and moral qualifications required for admission to practice law in this Commonwealth. Rule 218(c)(3), Pa.R.D.E.
4. Petitioner has failed to meet his burden of demonstrating by clear and convincing evidence that his resumption of the practice of law within the Commonwealth will be neither detrimental to the integrity and standing of the bar or the administration of justice nor subversive of the public interest. Rule 218(c)(3), Pa.R.D.E.; Office of Disciplinary Counsel v. Verlin, 731 A.2d 600, 602 (Pa. 1999).
IV. DISCUSSION
Petitioner seeks reinstatement to the bar of the Supreme Court of Pennsylvania following his disbarment by Order dated December 21, 2006.
The threshold issue is whether the misconduct that resulted in Petitioner's disbarment was of such magnitude that his reinstatement would have a detrimental effect upon the integrity and standing of the bar or would be subversive of the public interest. Office of Disciplinary Counsel v. Keller, 506 A.2d 872, 875 (Pa. 1986).
Petitioner was disbarred because he converted settlement funds and misled the client about Petitioner's receipt of the funds; converted settlement funds for which an attorney was owed a referral fee and misled the referring attorney about Petitioner's receipt of the settlement funds; commingled a client's settlement funds in his attorney operating account and converted the funds to his personal use; failed to maintain sufficient funds in his escrow account to support his fiduciary obligation to a client; failed to communicate; failed to act with reasonable diligence and promptly refund his fee to a client; and, made certain omissions on his annual attorney registration form.
There is no doubt that Petitioner's misconduct was serious and that his disbarment was the appropriate sanction. When misuse of fiduciary funds forms the basis for disbarment, "a most cautious eye scrutinizes the reinstatement proceedings." In Re Anonymous, No. 6 DB 83, 26 Pa. D. & C. 4 61, 68 (1994). Nevertheless, Petitioner's misconduct was not so egregious that it should prohibit his reinstatement. Petitioner's misconduct is similar to that of other attorneys who have been disbarred and who have sought and gained reinstatement. See In re Greenberg, 749 A.2d 434, 436 (Pa. 2000) (misappropriation of two million dollars and commission of perjury in a bankruptcy not so egregious as to prevent consideration of his reinstatement); In re Costigan, 664 A.2d 518, 520 (Pa. 1995) (theft and conspiracy convictions are not a breach of trust so extreme as to bar readmission). Accordingly, Petitioner has met the Keller threshold.
Petitioner next bears the burden of proving by clear and convincing evidence that he possesses the moral qualifications, competency and learning in the law required for admission to practice law in the Commonwealth, and that his readmission will not have a detrimental impact on the integrity and standing of the bar, the administration of justice or be subversive of the public interest. Rule 218(c)(3), Pa.R.D.E. To that end, Petitioner must prove that his post-disbarment conduct and efforts at qualitative rehabilitation were sufficient to dissipate the detrimental impact of his conduct on the public trust. Verlin, 731 A.2d at 602. Following a careful examination of the record, and after due consideration of the parties' recommendations and the Hearing Committee's Report and Recommendation, we conclude that Petitioner has not met his reinstatement burden.
To begin, Petitioner has failed to meet his burden regarding his moral qualifications and competency to practice law. His failure to maintain client files, and his failure to give timely notice to his clients and the courts of his disbarment, showed he had little concern for the Rules of Disciplinary Enforcement immediately following his disbarment. Unfortunately, the carelessness and deception he displayed when preparing his answers to the Reinstatement Questionnaire, and his persistent lack of cooperation and deception in response to inquiries from Office of Disciplinary Counsel during his reinstatement process, showed that his ability to follow the rules has not improved over time.
Petitioner was on notice from the beginning of the reinstatement process that he had to answer all questions fully and precisely, in accordance with the instructions on the Reinstatement Questionnaire. A review of Petitioner's Questionnaire responses raises serious doubts that he diligently answered, or made a credible attempt to provide thorough, accurate details. Under cross-examination at the reinstatement hearing held on March 11, 2015, Petitioner admitted that he had failed to list all lawsuits against him, failed to list all the times when he filed taxes late, failed to list all debts 90 days past due, failed to list all open judgments, failed to list his disbarment by the Eastern District, and failed to list all complaints against him. Although not every omission or oversight disqualifies a petition for reinstatement, the multitude of false and misleading answers and discrepancies contained in Petitioner's Questionnaire discloses a pattern of incompetence and deception that cannot be ignored. While Petitioner has characterized his responses as merely "incomplete," or the result of his misunderstanding, N.T. 3/11/15, 43-5, 89, the quantity and quality of the errors and misstatements disprove his explanation. Instead, they show Petitioner's pervasive lack of attention to detail, his lack of fitness to resume the practice law, and his tendency to deceive.
Petitioner's pattern of deception is particularly evident in his reinstatement correspondence with Office of Disciplinary Counsel, where he gave false statements about his taxes. Petitioner advised Disciplinary Counsel that he was not assessed interest and penalties for his failure to file timely his federal tax returns, when he was assessed interest and penalties. In a separate letter, Petitioner claimed he had requested his state tax returns from the Department of Revenue, but Revenue had not processed his 2006 state tax return. In fact, Petitioner did not file his 2006 state tax return until a date several months after he sent the letter to Disciplinary Counsel. Petitioner's explanations for these false and misleading statements were neither convincing nor satisfactory.
Petitioner's testimony indicated in other ways that he was not yet competent to resume the practice of law. Prior to Petitioner's disbarment, Office of Disciplinary Counsel notified him that he had to preserve certain files of clients who had filed complaints against him. Petitioner failed to do so, excusing his conduct by claiming that his ex-wife discarded the files during their contentious divorce. Petitioner never attempted to recreate these files or notify Disciplinary Counsel that the files had been destroyed. At the reinstatement hearing, Petitioner's testimony revealed that he failed to appreciate the significance of preserving these files, and he appeared bewildered by Disciplinary Counsel's questions about whether he had tried to recreate the files.
Petitioner's lack of competence extended to other client matters. Petitioner was obligated post-disbarment to take specific actions to notify clients in pending cases. This he failed to do, claiming at the reinstatement hearing that he was unaware of the requirements, even though he had been fully informed by the Disciplinary Board of his duties as a disbarred attorney.
Petitioner's lapses are inexplicable, considering his testimony and that of his witnesses about his impressive background in business law and taxation and his superior performance as a campus Dean at Strayer University, a position requiring strong communication skills, attention to detail, financial planning, and successful audit compliance. Petitioner alluded to his inability to transfer these skills to the practice of law when he testified "I don't want to run a solo practice . . . I'm not even sure that I want to participate in a firm . . . maybe an in-house counsel to a university . . . and be of value and contribute and not have to worry about the details of things." N.T. 2/18/15, 159-160. Based upon Petitioner's assessment of his strengths, he is not yet ready to resume the detail-oriented practice of law, and he is uncertain how he will address the demands of the legal profession.
Petitioner has also failed to meet his burden of proving that he is morally qualified to resume the practice of law. In its Report and Recommendation, the Hearing Committee aptly noted that proving one's morality to practice law involves demonstrating he is trustworthy. Costigan, 664 A.2d at 522. While Petitioner has had multiple tax problems with the City, state and federal governments that have existed for many years, by the time of his reinstatement hearing, he had not resolved them. His chronic late filing of his state and federal income tax returns during his disbarment suggests that he is unable or unwilling to comply with this unavoidable legal obligation. Petitioner further exemplified his lack of trustworthiness by failing to provide honest answers to questions regarding his debts and liens on the Reinstatement Questionnaire, failing to cooperate with Office of Disciplinary Counsel by ignoring its concerns about these issues, failing to reveal his delinquent 2006 Pennsylvania tax return, and then failing to take meaningful efforts to settle his financial problems.
Once again, Petitioner's testimony did not help him prove his trustworthiness. Although Petitioner, who has a Master's Degree in Taxation, knew that he had to file tax returns and pay taxes, he admitted he avoided his taxes, didn't want to face them, and found it "annoying" to pay taxes. N.T. 3/11/15, 24. He created significant doubt that he would make any effort to model his conduct to what the law required, and while he testified that he planned to resolve his outstanding debts by using his inheritance, his plans remained incomplete. Petitioner, therefore, did not demonstrate an understanding of his past lapses or "any greater understanding of his responsibilities" than at the time of his disbarment. Costigan at 522.
Finally, Petitioner demonstrated little genuine remorse for his misconduct. While his reinstatement testimony contained some references to his acceptance of personal responsibility and occasional admissions of wrongdoing, his statements highlighted his conviction that the conduct for which he was disbarred was not as egregious as portrayed. He still believed that disbarment was too harsh a penalty for what he preferred to describe as his bookkeeping errors. By contrast, Petitioner's four former clients' descriptions of his failure to communicate, neglect of their assignments, and harmful delays and mistakes, coupled with their unanimous opinion that he should not be reinstated, carried more weight than his reluctant admissions. The impact of their message intensified when Petitioner failed to cross-examine them or respond to their testimony.
In 2007, not long after his disbarment, Petitioner wrote a letter to the Villanova University student newspaper stating that he was "not found 'guilty' or 'convicted' of violating the Rules of Professional Conduct" and he never "intentionally did anything wrong." ODC-58. In his Reinstatement Questionnaire filed on November 26, 2013, more than six years after he wrote the letter, Petitioner was still minimizing his behavior and unable to readily acknowledge his professional misconduct. At the reinstatement hearing in 2015, eight years after he wrote the Villanova letter, Petitioner refused to concede that the letter was misleading, and he initially denied that he had violated the Rules of Professional Conduct. N.T. 2/18/15, 185-7, 227-8, 230-1, 235.
Although Petitioner's character witnesses offered credible testimony as to his positive performance at Strayer University and his contribution to community activities, they were unable to help him prove he was remorseful or committed to "the highest degree of integrity". Verlin, 731 A.2d at 602. Several of the witnesses had no knowledge of the details of Petitioner's prior misconduct and the extent of his tax problems. The sketchy information they knew came from their online searches and Petitioner's brief references to his financial troubles. Professor Burke Ward, for example, upon learning of Petitioner's failure to file most of his state and federal tax returns until Office of Disciplinary Counsel contacted him, conceded that such behavior did not reflect positively on Petitioner, N.T. 2/18/15, 102-103, and Petitioner's failure to answer the Reinstatement Questionnaire correctly also reflected negatively on him. N.T. 2/18/15, 113. Professor Ward agreed that he would have expected Petitioner to answer "whatever was asked". Id.
In summary, based upon the evidence presented, Petitioner's reinstatement at this time would be detrimental to the integrity and standing of the bar and the administration of justice, and would be subversive of the public interest. Petitioner has failed to meet his burden of proof as to his competency and moral qualifications to resume the practice of law; additionally, he has failed to show that he has made significant rehabilitative efforts since the time of his disbarment. Philadelphia News. Inc. v. Disciplinary Board of the Supreme Court, 363 A.2d 779, 780-1 (1976). Consistent with the Board's responsibility to protect the public, the profession, and the courts from unfit attorneys, the Board recommends that the Petition for Reinstatement be denied. Office of Disciplinary Counsel v. Lucarini, 472 A.2d 186, 190 (Pa. 1983).
V. RECOMMENDATION
The Disciplinary Board of the Supreme Court of Pennsylvania unanimously recommends that reinstatement of Petitioner, Sebastian M. Rainone, be denied.
The Board further recommends that, pursuant to Rule 218(f), Pa.R.D.E., Petitioner be directed to pay the necessary expenses incurred in the investigation and processing of the Petition for Reinstatement.
Respectfully submitted,
THE DISCIPLINARY BOARD OF THE
SUPREME COURT OF PENNSYLVANIA
By: /s/_________
Jane G. Penny, Vice-Chair Date: January 27, 2016 Board Members Porges and Cordisco did not participate in the adjudication.