Opinion
No. CV03-0478961S
November 14, 2008
MEMORANDUM OF DECISION RE APPLICATION FOR REINSTATEMENT TO THE CONNECTICUT BAR
On November 13, 2007, the applicant Frank Toro, Jr. (Toro) applied for reinstatement to the Connecticut Bar. On December 3, 2007, pursuant to Practice Book § 2-53, the application was referred by the court, Lager, J., to the New Haven County Standing Committee on Recommendations for Admission to the Bar (committee) which held a hearing on May 29, 2008. On June 4, 2008, the committee issued a report unanimously recommending that Toro be reinstated to the practice of law. On June 16, 2008, pursuant to Practice Book § 2-53, Chief Justice Chase Rogers appointed the undersigned to serve as three-judge panel to consider the Toro's application for reinstatement (the application).
The panel held a hearing on July 23, 2008 during which it heard testimony from Toro and several attorneys. Also before the panel were the application and its appendices, a transcript of the committee's May 29, 2008 hearing and the committee's June 4, 2008 report. After the close of the hearing, the panel determined that it wished to review the sentencing transcript in the underlying criminal case which had been the basis for Toro's presentment. The applicant submitted the transcript without objection. Additional testimony was taken and arguments heard with regard to the same on September 10, 2008.
I.
Toro was convicted after pleading guilty to one count of making a false statement in violation of 18 U.S.C. 1001, a felony, in the case of U.S. v. Frank Toro, Jr., Docket No. 3:02 CR 00362 (PCD) United States District Court, District of Connecticut. On June 5, 2003, he was sentenced to a 24 month term of incarceration and other conditions were imposed. On June 12, 2003, the Statewide Grievance Committee filed a presentment to this court pursuant to Practice Book § 2-41 seeking an interim suspension of Toro's license to practice law and such other discipline as the court would deem appropriate. In a letter dated June 24, 2003, to the Office of the Chief Clerk of the Superior Court for the Judicial District of New Haven, Toro tendered his resignation from the Connecticut Bar effective immediately. On August 7, 2003 the court, Silbert, J., placed Toro on interim suspension.
18 U.S.C. § 1001. Statements or Entries Generally.
(a) Except as otherwise provided in this section, whoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully —
(1) falsifies, conceals, or covers up by any trick, scheme, or device a material fact;
(2) makes any materially false, fictitious, or fraudulent statement or representation; or
(3) makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry;
shall be fined under this title, imprisoned not more than 5 years or, if the offense involves international or domestic terrorism (as defined in section 2331), imprisoned not more than 8 years, or both. If the matter relates to an offense under chapter 109A, 109B, 110, or 117, or section 1591, then the term of imprisonment imposed under this section shall he not more than 8 years.
There is no indication in the court file that the court accepted respondent's June 24, 2003 letter of resignation. Section 2-52 of the Practice Book states at: "Such resignation shall not become effective until accepted by the court after a hearing following a report by the statewide grievance committee, whether or not the attorney seeking to resign shall, in the resignation, waive the privilege of applying for admission to the bar at any future time."
In his application, Toro represented that he had complied with all the conditions of the sentence imposed in the U.S. District Court, including a period of incarceration, a period of supervised release, performance of community service and payments of restitution to the victim of his crime. The application stated that Toro was discharged from supervised release on July 6, 2007 and that he took and passed, with a scaled score of 82, the National Conference of Bar Examiners' multi-state professional responsibility examination in August 2007. The application was supported by several letters from current members of the Connecticut Bar.
After a hearing in which it heard only from Tore and received the application, with its appendices, as the only exhibit, the committee found Tore's testimony to be credible and believed he had "accepted responsibility for his error." Citing Toro's 35 years of practice without incident and the many letters from Bar members, the committee recommended "that Mr. Toro be reinstated to the practice of law with the suggestion that the court order a mentor for a period of one year (at Mr. Toro's expense) to monitor his practice."
II.
The standing committee's recommendation that Toro be reinstated is not binding on the court "which takes the final and decisive action." (Citations omitted; quotation marks omitted) Scott v. State Bar Examining Committee, 220 Conn. 812, 817, 601 A.2d 1021 (1992). The panel is required to determine whether the reasons advanced to support the recommendation have merit and "are reasonable and proper in view of the subordinate facts found and the applicable principles of law." In re Application of Koenig, 152 Conn. 125, 133, 204 A.2d 33 (1964). In addition, since Toro introduced evidence before the panel in support of his application, that evidence must also bear on our determination because under Practice Book § 2-53(b) the "three judges, or a majority of them, shall determine whether the application should be granted."
In considering an application for reinstatement, the focus is "on the issue of present fitness to practice." (Emphasis in original.) In re Application of Pagano, 207 Conn. 336, 345, 541 A.2d 104 (1988). "The question for determination on an application like this one is . . . the present fitness of the applicant for reinstatement to again exercise the privileges and functions of an attorney as an officer of the court and confidential manager of the affairs and business of others entrusted to his care and keeping, in view of his previous misconduct, his discipline therefor, and any reformation of character wrought thereby or otherwise as shown by his mere recent life and conduct." In re Kone, 90 Conn. 440, 442, 97 A. 307 (1916).
"[M]isconduct, indicative of moral unfitness for the profession, whether it be professional or nonprofessional, justifies . . . exclusion from the bar." In re Peck, 88 Conn. 447, 451, 91 A. 274 (1914). "An applicant for readmission to the bar must be possessed of such standards of honor and honesty and have such an appreciation of the distinctions between right and wrong in the conduct of men toward each other as will make him a fit and safe person to engage in the practice of law. In re Kone, 90 Conn. 440, 442, 97 A. 307 (1916). Good moral character is a necessary and proper qualification for admission to the bar. Fairfield County Bar v. Taylor, 60 Conn. 11, 17, 22 A. 441; Grievance Committee v. Broder, 112 Conn. 263, 277, 152 A. 292; note, 64 A.L.R. 2d 301. In this state, the ultimate burden of proving good character rests upon the applicant. In re Application of Warren, 149 Conn. 266, 274, 178 A.2d 528." In re Application of Koenig, supra, 152 Conn. at 132; see Scott v. State Bar Examining Committee, supra, 220 Conn, at 821.
Analogously, applicants for admission to the bar initially undergo scrutiny as to their moral character, their honesty, integrity and candor to receive a license to practice law. This is appropriate because an attorney has ethical obligations not only to his clients, but also to the public, the courts and the legal system. The panel uses the term "legal system" advisedly because much of an attorney's work occurs outside the presence of the court. An attorney makes representations and administers oaths upon which others, including clients, opponents and the public, rely. In reviewing applications for admission to the bar, if an applicant has a history of criminal conduct, any doubts about the character should be resolved in favor of protecting the public by denying bar admission to the applicant. See Strigler v. Board of Bar Examiners, 448 Mass.1027, 864 N.E.2d 8 (2007).
III.
A proper assessment of Toro's present fitness requires us to review his misconduct, which arose in the course of his practice of law. There is a complicated factual predicate for his felony conviction. Toro participated in a scheme of real estate fraud wherein residential properties were purchased or sold at inflated values, sometimes through a dummy or straw purchaser, and mortgages in excess of the fair market value of the underlying property were secured. In Toro's own words, "These were residential closings where typically the buyer was a first time home buyer with lousy credit or no credit and these were what I called B and C loans, sub prime loans that were risky to begin with . . ." (Transcript of May 29, 2008 committee hearing, p. 7.)
As a result of this fraudulent scheme, Toro's client, a mortgage company named EquiCredit, sustained losses in excess of $1,000,000.00. During the two to three year period that Toro served as closing attorney for EquiCredit, he handled approximately 300 transactions. In many of these closings Toro represented the seller and the buyer, as well as EquiCredit, so that no other attorney was involved. Toro's wrongful conduct involved the preparation of settlement statements, commonly called HUD-1s, that did not accurately reflect the manner in which the loan proceeds or purchase price proceeds were to be distributed. Toro has admitted that 23 of the approximately 300 HUD-1 statements contained false information.
Although Toro pleaded guilty to a single violation of 18 U.S.C. § 1001, the original underlying indictment charged 22 additional instances of alleged felonious conduct. The HUD-1 form contains the following statement: "The HUD-1 settlement statement which I have prepared is a true and accurate account of this transaction. I have caused the funds to be disbursed in accordance with this statement." Right below the signature line is a notice emboldened, "Warning: it is a crime to knowingly make false statements to the United States on this or any other similar form. Penalties upon conviction can include a fine and imprisonment. For details see Title 18 U.S. Code Section 1001 and Section 1010."
At the time of this misconduct, Toro had been practicing law for more than thirty years and had an extensive and exclusive residential and commercial real estate practice. He has acknowledged that these transactions raised red flags, flags that he chose to ignore on multiple occasions. While Toro does not seem to be able to explain why he failed to follow up on these warnings and exercised poor judgment at that time, it is clear to the panel that he was motivated by a desire to keep the client, the legal work and the accompanying fees.
The panel also believes Toro had a further incentive to ignore the red flags. When he testified under oath during the July 23, 2008 hearing before the panel, Toro denied receiving any profits from the fraudulent scheme other than his legal fees. The Government, however, had proffered evidence at Toro's sentencing showing that he received payments of $130,000.00 from the originator of the scheme and that when the scheme unraveled, Toro had a conversation with that individual in which he tried to concoct an explanation for these payments because he knew they exceeded the legitimate fees to which he would have been entitled for handling the closings. On September 10, 2008, Toro continued to dispute this evidence, but the panel finds United States District Court Judge Peter Dorsey's description of the scheme persuasive: "EquiCredit would not have made the money available to pay if they knew truly what was involved, and then what would happen eventually was that some funds, in the form of a slush fund, were available, some of which was paid to the borrower and some of which found its way to Mr. Toro." (June 5, 2003, Sentencing Transcript, p. 24.) Although Toro still expresses surprise at the perceived harshness of his sentence, it is clear to the panel that Judge Dorsey believed this evidence and also disbelieved Toro's claim that he had fully accepted responsibility for his actions.
The same individual was also the seller of most of the properties, and he or one of his agents had often procured the buyer and arranged the financing with EquiCredit.
IV.
Practice Book § 2.53 does not directly address the criteria to be used in acting upon an application for reinstatement to the bar. However, "Connecticut courts reviewing attorney misconduct have looked to the American Bar Association's Standards for Imposing Lawyer Sanctions (Standards), which do provide guidance. The Standards, which were officially promulgated in 1986, have not been officially adopted in Connecticut. They are, however, used frequently by the Superior Court in evaluating attorney misconduct and in determining discipline . . ." Statewide Grievance Committee v. Glass, 46 Conn.App. 472, 481, CT Page 18122 699 A.2d 1058 (1997). Section 2.3 of the Standards provides, in relevant part: "Procedures should be established to allow suspended lawyers to apply for reinstatement, but the lawyer who has been suspended should not be permitted to return to practice until he has completed a reinstatement process demonstrating rehabilitation, compliance with all applicable discipline or disability orders and rules, and fitness to practice law."
The panel relies on the Standards to evaluate the committee's recommendation in this case. The criteria set forth in Section 2.3 take into account the interests of the attorney applicant, the interests of the bar and the interests of the public in promoting public confidence in the bar and the legal system. These criteria address the concerns of the panel in fulfilling its responsibility to assess Toro's present fitness to practice law.
A.
Rehabilitation: The committee concluded that Toro had "accepted responsibility for his error." Acceptance of responsibility is a measure of rehabilitation. The panel concludes that this conclusion is not supported by the record before the committee and before the panel.
The panel is not satisfied that the record before the committee contains sufficient evidence to demonstrate Toro's rehabilitation. One ground for reinstatement advanced by the committee was that Toro has complied with the conditions of his criminal sentence. The panel would expect any applicant for reinstatement to have complied with the terms of his sentence. Compliance alone, however, does not demonstrate rehabilitation. In the time since he was released from supervision, there is no evidence that Toro has done anything appreciable to repair the damage he has caused to the legal profession and to the public's confidence that lawyers will act with integrity.
Toro's continued service at the Branford Community Dining Room, while admirable, does not address the panel's concern.
Notwithstanding the fact that he closed approximately 300 loan transactions for EquiCredit, Toro has only admitted that he was involved in making a false statement under oath in the one transaction to which he pleaded guilty, while conceding that there was false information in the 22 other transactions charged in the original indictment. Although he has acknowledged that his role as closing attorney was critical to the success of the scheme, he has sought to shift responsibility to those he claims concocted it. The panel agrees with Judge Dorsey who, in June 2003, characterized Toro's acceptance of responsibility as "begrudging" at best. (June 5, 2003 Sentencing Transcript, p. 85). Nothing appears to have changed in the more than five years since his sentencing.
It is also significant to the panel that Toro did not directly respond to the U.S. Attorney's proffer with regard to the $130,000.00 in excess payments in June 2003, that he denied getting any monetary benefits other than legal fees before the committee on May 29, 2008 and that he did not address this issue during the first day of testimony before the panel. It was only after this panel requested the opportunity to review the transcript of the sentencing that these issues came to light and Toro attempted to address the panel's concerns. His explanations were not persuasive.
The panel concludes that there was no evidence before the committee, or before us, that Toro has fully accepted responsibility for his wrongful conduct. Although Toro did not directly take money from EquiCredit, his false statements on the closing documents caused substantial losses to his client and to others. This was a significant breach of his fiduciary duties. His lack of acknowledgment of the extent of his involvement in a fraudulent real estate loan scheme causes grave concern about whether he would do things differently if confronted with a similar situation in the future. This concern is enhanced because Toro seeks reinstatement primarily so that he can return to the practice of real estate law.
Further, very little time has passed since the interim suspension was imposed, and Toro has only recently completed his criminal sentence. There is therefore no basis upon which one could determine whether he has rehabilitated himself absent a criminal sentence to motivate his behavior, and, indeed, Toro has presented neither the committee nor the panel with any credible evidence that he has done so.
B.
Compliance with all Applicable Discipline Orders: There is ample evidence that Toro has complied with all of the conditions that were imposed as a part of his criminal sentence. He has completed a period of incarceration, complied with the conditions of his release and has made and continues to make restitution payments.
Because Toro was placed under an order of interim suspension within a short period of time following his sentencing, no disciplinary actions were taken against him for his alleged violation of Rule 8.4 of the Code of Professional Responsibility. The Statewide Grievance Committee moved for a hearing to determine the discipline, but Toro opposed it because he was incarcerated and unavailable for a hearing: "So long as [Toro] remains suspended on an interim basis, there is no risk to anyone being harmed by deferring final judgment to a time when the respondent has completed his sentence and is available to participate with counsel in the preparation of a proceeding determining final discipline." Respondent's Objection to Motion for Hearing, pleading no. 103, filed November 6, 2003. The next filing in the court's file is the present application for reinstatement to the Connecticut Bar, dated November 13, 2007. This sequence of events causes the panel to be concerned that there has neither been an admission of an ethical violation nor, in the absence of an admission, a hearing to evaluate Toro's conduct under the Rules of Professional Conduct.
Rule 8.4(2) provides: "It is professional misconduct for a lawyer to: Commit a criminal act that reflects adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects."
CT Page 18124
C.
Fitness to Practice Law: Toro hopes to return to practice real estate law with his old law firm. He has taken and passed the multistate bar examination with regard to ethics. Presumably, since Toro practiced law up until five years ago, he could regain his competence to practice real estate law by taking continuing legal education courses. The committee tempered its reinstatement recommendation by suggesting that the court order a practice mentor to monitor Toro's practice for a period of one year. The committee, however, failed to support its recommendation with any specific evidence that demonstrates Tore's present fitness to practice.We have an obligation to the public to protect it against the possibility of any future misconduct. See In The Matter of Presnick, 19 Conn.App. 340, 345, 563 A.2d 299, cert. denied, 213 Conn. 801, 567 A.2d 873 (1989). "An attorney as an officer of the court in the administration of justice, is continually accountable to it for the manner in which he exercises the privilege which has been accorded him. His admission is upon the implied condition that his continued enjoyment of the right conferred is dependent upon his remaining a fit and safe person to exercise it, so that when he, by misconduct in any capacity, discloses that he has become or is an unfit or unsafe person to be entrusted with the responsibilities and obligations of an attorney, his right to continue in the enjoyment of his professional privilege may and ought to be declared forfeited." (Citations omitted; internal quotation marks omitted.) Massameno v. Statewide Grievance Committee, 234 Conn. 539, 554-55, 663 A.2d 317 (1995).
Toro's criminal conduct involved the core of his professional responsibilities and obligations. He was not a neophyte. Rather, he had practiced residential and commercial real estate law exclusively for over thirty years at the time he broke the law. Thus, these are the questions that must be satisfactorily answered before Toro may be reinstated: Can he act as the "confidential manager of the affairs and business of others entrusted to his care?" In re Kone, supra, 90 Conn. at 442. Can he be trusted to fulfill his fiduciary obligations? Is he able to conform his conduct to the requirements of the Rules of Professional Conduct even when it will cost him a fee or a client relationship? Will he, if confronted by a "red flag," recognize it and act ethically and appropriately, or will he bury his head in the sand as he did in the past? Is he fit to practice real estate law? These questions were not answered in the presentations to the committee and to the panel.
Before the committee and the panel, Toro offered his own testimony with regard to his acceptance of responsibility and his recognition that he has made a significant mistake in judgment. For the most part, however, his "remorse" was expressed as self-pity, rather than self-reproach, as embarrassment for himself and his family, rather than concern about the harm his violation of federal criminal law caused to his clients, the legal profession and the public. It is evident from the letters supporting this application that at one time Toro was a respected member of the New Haven County Bar. Unfortunately, many of the writers of these letters acknowledged that they were unfamiliar with the details of the conduct that resulted in Toro's criminal conviction, rendering their expressions of support less helpful than they intended. All told, the testimony and the supporting letters are insufficient to demonstrate that Toro is presently fit to resume the practice of law.
V.
In summary, the evidence before the committee and the panel does not reasonably support the committee's recommendation that the court grant the application for reinstatement. Accordingly, the application for reinstatement is denied.