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In re Petition for Disciplinary Action against David A. Overboe: ETHICS - suspension for trust account violations, commingling, misrepresentations, deceit, non-cooperation, more

1
STATE OF MINNESOTA
IN SUPREME COURT
A07-259
Original Jurisdiction Per Curiam
Took no part, Dietzen, J.
In re Petition for Disciplinary Action against
David A. Overboe, a Minnesota Attorney,
Registration No. 83318.
Filed: March 13, 2008
Office of Appellate Courts
S Y L L A B U S
Suspension from the practice of law for a minimum of 1 year is warranted for a
lawyer who deceptively labeled a personal account as a trust account to shield his
personal funds from judgment creditors, improperly kept personal funds in his client trust
account, commingled client and personal funds, and made misrepresentations to and
failed to cooperate with the Office of Lawyers Professional Responsibility, when the
lawyer also had two prior instances of similar misconduct, failed to recognize the
wrongfulness of his conduct, and failed to place client retainers in a trust account.
Heard, considered, and decided by the court en banc.
O P I N I O N
PER CURIAM.
In September 2004, the Director of the Office of Lawyers Professional
Responsibility initiated a formal disciplinary investigation of David A. Overboe that was
2
triggered by an overdraft on Overboes client trust account. Following numerous
communications between the Director and Overboe, the Director filed a petition for
disciplinary action against Overboe alleging that Overboe had 1) deceptively used a trust
account to shield his personal funds from judgment creditors; 2) made misrepresentations
and failed to cooperate with the Director during a disciplinary investigation; and
3) commingled client funds with personal funds. The referee assigned to hear the case
found that Overboes conduct violated the Minnesota Rules of Professional Conduct and
the Minnesota Rules on Lawyers Professional Responsibility, and recommended that
Overboe be suspended from the practice of law for a minimum of 1 year. Overboe
appeals the referees findings of fact, conclusions of law, and recommendation. We
conclude that the referees findings were not clearly erroneous and that the appropriate
discipline under these facts is to suspend Overboe from the practice of law for a
minimum of 1 year.
David A. Overboe was admitted to the practice of law in Minnesota on June 13,
1980. Overboe is also licensed to practice law in North Dakota. At all times relevant to
this matter, Overboes law practice was located in North Dakota. Overboe maintained
two relevant bank accounts in North Dakota: 1) an account at Western State Bank entitled
Overboe Trust Account (WSB trust account); and 2) an Interest on Lawyers Trust
Accounts (IOLTA) account at Wells Fargo Bank, also entitled Overboe Trust Account
(IOLTA account). In 2003, Overboe certified on his annual Minnesota attorney license
application that his IOLTA account at Wells Fargo Bank was his client trust account. On
3
March 16, 2004, Overboe had an overdraft on his IOLTA account. Overboe had written
an ,000 check on the account when the account balance was only 5.67.
Correspondence with the Director of the Office of Lawyers Professional Responsibility
Pursuant to Minn. R. Prof. Conduct 1.15(l), Wells Fargo Bank notified the Office
of Lawyers Professional Responsibility of Overboes IOLTA account overdraft. On
March 19, 2004, the Director sent Overboe a notice of the overdraft, requesting an
explanation and documents pertaining to the account, such as client ledgers. On
March 29, 2004, Overboe responded that [t]he check was written to transfer funds to
[his] family farm account, which is in his wifes name. Overboe also stated that [t]here
were no client funds in the account at the time that check was issued and there had not
been client funds in the account since April 21, 2003. He did not include client ledgers
with his response. Overboe further explained:
At the time the check was written I believed that there was [sic] sufficient
funds in the account to cover the ,000.00 check. I wrote the check
without checking. The check was written on March 15th, 2004. On March
16th I checked to see if there were sufficient funds to cover the check and
found that there was not. I promptly deposited two checks totaling
,500.00 in the account on March 16th, 2004.
In this exchange of letters, Overboe made no mention of his WSB trust account.
On May 3, 2004, the Director requested additional information regarding the
overdraft. The Director asked Overboe to explain the basis on which Overboe believed
there were sufficient funds in his IOLTA account because at the time of the overdraft, the
account balance was only 5.67. The Director also indicated that the IOLTA account
had since been closed and that a check for the ,985.67 balance in the account was made
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payable to Overboe Trust Account. The Director asked for an explanation of why the
IOLTA funds were placed in the Overboe Trust Account and requested the books and
records for that account. In his response on May 14, Overboe stated:
The ,000 check was supposed to be drawn on a different account.
I was going to deposit the funds in that account to cover the check when I
realized the check has been drawn on this account. * * *
The 5.57 balance in the trust account was my funds * * * .
Overboe did not mention or include any records of his WSB trust account with the
May 14 letter. Overboe again stated that no client funds were involved in the overdraft.
The Director then requested further explanation, specifically concerning the
different account Overboe referred to in his previous response. Overboe responded
that the other account that he meant to draw the check from was a personal accountthe
Overboe Trust Account at Western State Bank. This was the first time Overboe
identified the WSB trust account to the Director. Overboe suggested that because both
the IOLTA account and WSB trust account bore the same name and the checks for each
account looked similar, he mistakenly wrote a check from the IOLTA account when he
actually meant to write it from his personal WSB trust account.1 According to Overboe,
the WSB trust account was opened for the purpose of transactions between [his] wife
and [him], and not for client funds. Overboe also stated:
1 Overboe included copies of checks from his IOLTA account and his WSB trust
account to demonstrate the similarity of the checks.
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Approximately 15 years ago a judgment was taken against me for 1
and 1/2 million dollars as a result of my investing ,000.00 in a farmer
cooperative. It is necessary for me to be careful about transferring funds
between by [sic] wife and me. It is also important that I not keep a great
deal of money in my own account, because the law firm that obtained the
Judgment is right next door to me.
This judgment was entered against Overboe in North Dakota federal court on May 22,
1990.
On September 9, 2004, the Director sent a letter notifying Overboe that the Office
of Lawyers Professional Responsibility had initiated a formal investigation into his
conduct. The Director made a request under Rule 25 of the Rules on Lawyers
Professional Responsibility (RLPR) that Overboe provide further information regarding
his trust accounts within 14 days. On September 28, 2004, Overboe responded with a
letter stating that the purpose of his WSB trust account was to handle funds between
[his] wife and [him]. [He] handle[s] her business affairs. [He] did not want her funds
levied on and tied up in court for months because of a Judgment against [him]. A joint
account would not have worked. Concerning the IOLTA account, Overboe explained
that on December 31, 2003, all the funds in his IOLTA account,515.67were his
and on February 16, 2004, he wrote a 00 check on the account to himself, leaving the
5.67 balance in the account at the time of the overdraft.
On December 29, 2004, in a response to another letter from the Director, Overboe
agreed that he had designated his IOLTA account as his client trust account on his
Minnesota annual attorney license application. In response to the Directors
September 2005 request for further information regarding the clients whose funds were
6
kept in the IOLTA account at various times, Overboe stated that he believed providing
this information would violate N.D. R. Prof. Conduct 1.6. Overboe and the Director
continued to exchange letters concerning this issue. Eventually, Overboe requested that
the North Dakota Ethics Committee issue an advisory opinion on the matter. After the
North Dakota Ethics Committee issued its advisory opinion, Overboe provided
information about one client. After another request, Overboe eventually provided the
Director with the remainder of the requested client information.
The Director filed a petition for disciplinary action on February 5, 2007. In the
petition, the Director alleged that Overboe: 1) violated Minn. R. Prof. Conduct 8.4(c) by
deceptively using a trust account; 2) violated Minn. R. Prof. Conduct 8.1(a) and 8.4(c), as
well as Rule 25, RLPR, through his misrepresentations to and noncooperation with the
Director during the disciplinary investigation; and 3) violated Minn. R. Prof. Conduct
1.15(a) by commingling client funds and his personal funds in his IOLTA account.
Referee Hearing
On March 27, 2007, we appointed a referee to hear this matter. In preparation for
the hearing, Overboe served the Director with Interrogatories and a Request for
Production of Documents. The Director filed a response approximately one month later.
Overboe requested that the Director respond more adequately to the interrogatories and
document requests. Overboe then filed a Motion to Compel Discovery and for a
Continuance of the hearing. The referee denied Overboes motions.
At the hearing, Overboe testified that the WSB trust account was a personal
account opened to handle funds between himself and his wife. Overboe acknowledged
7
that the purpose of the WSB trust account was to protect his wifes funds from
attachment by Overboes judgment creditors because if he had a joint account with his
wife the funds could be seized due to the outstanding judgment against him. But
Overboe stated that the purpose of the WSB trust account was not to protect his own
funds, because even if in the account, his funds are subject to levy. Overboe later stated
that his funds in the WSB trust account are not subject to levy because they are exempt
under North Dakota Law due to an exemption in lieu of homestead. Nevertheless,
Overboe admitted and provided no explanation for the fact that in his responses to the
Directors letters he stated that the purpose of the WSB trust account was to protect his
own funds as well as his wifes.
The Director submitted to the referee a spreadsheet of activity for Overboes WSB
trust account from March 13, 2003, to January 27, 2004. According to the information
on the spreadsheet, Overboe was the source of every deposit into the trust account, and
the majority of the funds deposited in the account were Overboes earned fees for legal
services. Further, Overboe was the payee of approximately half the checks written on the
account. Only two of the checks were made out to Overboes wife.
The Director also offered into evidence a spreadsheet of Overboes IOLTA
account activity from April 16, 2003, to March 19, 2004. According to the information
on the spreadsheet, at all times before the overdraft that triggered the current disciplinary
proceedings, the account had a surplus, meaning that the overall amount of funds in the
account was greater than the amount of client funds in the account. Further, the
spreadsheet showed that on April 16, 2003, Overboe deposited ,675 into his IOLTA
8
account on behalf of a client and on July 25, 2003, Overboe deposited 0 into the
IOLTA account on behalf of another client. At the time that these client funds were in
the account, Overboe had over ,000 of his own funds in the account. Overboe agreed
that the numbers on the spreadsheet were accurate but asserted that the amount of surplus
was nonetheless overstated for two reasons. First, Overboe stated that his wife was a
client, so her funds in the IOLTA account should not have been considered part of the
surplus. Overboe asserted that using this analysis, the surplus amount in the IOLTA
account when client funds were also in the account only reached a maximum of .67.2
Overboe provided no documentation evidencing that his wife was a client.
For his second reason, Overboe stated that ,500 of the surplus in the IOLTA
account at one time was money Overboe had deposited with the purpose of donating it to
the local V.F.W for a war veterans memorial. While Overboe acknowledged that the
V.F.W. was not a client, he stated that the money was properly in his IOLTA account
because he was setting it aside for the benefit of the V.F.W. memorial. Overboe also
admitted that part of the reason for putting the donation money into the IOLTA account
was to avoid the possibility that judgment creditors would levy on it. Overboe stated that
after the V.F.W. notified him that it no longer needed his donation, he eventually took the
,500 out of the trust account for himself.
2 Overboe also offered as an exhibit a letter to the Director stating that he had made
a mistake when he stated in his December 29, 2004, letter that his IOLTA account
contained no client funds on May 30, 2003.
9
Referees Findings of Fact, Conclusions of Law, and Recommendation for Discipline
Deceptive Use of a Trust Account. The referee found that Overboe did not use
the WSB trust account as a fiduciary account in his capacity as a lawyer, but instead as a
personal account. In light of the .4 million judgment against him and his admissions
that the account was opened to protect his personal funds, the referee concluded that
Overboes use of the WSB trust account was deceptive and violated Minn. R. Prof.
Conduct 8.4(c).
Misrepresentations to and Noncooperation with the Director. The referee found
that Overboe made false statements to the Director about the purpose and nature of his
WSB trust account because Overboe was not using the account in a fiduciary capacity.
The referee also found that Overboes testimony that the majority of the surplus funds in
the IOLTA account belonged to his wife as a client was inconsistent with his numerous
prior statements to the Director that there were no client funds in the IOLTA account and
that the testimony was false. The referee concluded that these actions violated Minn. R.
Prof. Conduct 8.1(a) and 8.4(c), as well as Rule 25, RLPR.
Commingling and Other Trust Account Improprieties. The referee found that on
April 16, 2003, the total balance of Overboes IOLTA account consisted of his personal
funds. Additionally, the referee concluded that Overboe violated Minn. R. Prof. Conduct
1.15(a), and put his clients funds at risk of attachment by commingling personal funds
with client funds when he deposited ,675 in client funds into the account on April 16,
2003, and 0 in client funds into the account on July 25, 2003, while maintaining
approximately ,100 of his own funds in the account.
10
Prior Discipline. The referee also found that Overboe had been disciplined for
professional misconduct on two previous occasions. In 1987, the North Dakota Supreme
Court suspended him from the practice of law for 6 months for practicing law under a
misleading firm name and for misusing funds in a client trust account. In re Overboe,
403 N.W.2d 1, 1-3 (N.D. 1987). In that case, Overboe withdrew ,000 from his client
trust account for his own personal use. Id. at 2. Overboe subsequently wrote a check to a
client from the same account, which resulted in an overdraft on the account. Id. Overboe
then used a dishonored check from another overdrawn account to pay for the nonsufficient
funds (NSF) check. Id. In 1988, the North Dakota Supreme Court suspended
Overboe for 90 days for, inter alia, 1) [e]ngag[ing] in conduct involving dishonesty,
fraud, deceit, or misrepresentation; 2) [c]onceal[ing] or knowingly fail[ing] to disclose
that which he is required by law to reveal; 3) [k]nowingly mak[ing] a false statement of
law or fact; and 4) counsel[ing] or assist[ing] his client in conduct that [he knew] to be
illegal or fraudulent. In re Overboe, 417 N.W.2d 853, 853-54 (N.D. 1988).
Recommendation for Discipline. While the referee found that no clients were
harmed by Overboes actions, he found numerous aggravating factors, including that
Overboe: 1) committed multiple acts of professional misconduct [in this case] over an
extended period of time; 2) has a history of discipline for similar misconduct involving
dishonesty and misuse of client funds; 3) made false statements during the hearing
before the referee; and 4) refused to acknowledge the wrongful nature of his
misconduct. Further, the referee found that Overboe did not deposit checks from clients
for unearned retainers into a client trust account, which is a violation of Minn. R. Prof.
11
Conduct 1.15(a). Based on Overboes conduct and these aggravating factors, the referee
recommended that Overboe be suspended from the practice of law in Minnesota and be
ineligible for reinstatement for a minimum of 1 year.
I.
Overboe first argues that the referee abused his discretion when he denied
Overboes Motion to Compel Discovery regarding the interrogatories and document
requests Overboe served on the Director. In his motion to compel discovery, Overboe
asserted that the Director provided insufficient answers to nine of the twenty-seven
interrogatories and failed to provide documents for two of the five document requests. In
five of the nine interrogatories and the two document requests Overboe sought to compel,
Overboe asked the Director to provide case law or statutory law that supported the
Directors allegations.3 Overboe also asked the Director to explain how titling his WSB
account as a trust account involved dishonesty and deceit in violation of Minn. R. Prof.
Conduct 8.4(c). Overboe went on to request that the Director provide the dates on which
Overboe maintained a balance of personal funds in his IOLTA account over the amount
allowed by N.D. R. Prof. Conduct 1.15. Overboe also asked the Director to provide
evidence that the personal funds in his WSB trust account were not exempt from legal
3 In two interrogatories Overboe asked for a list of cases that supports the Directors
allegation that Overboes use of his WSB account was dishonest. Overboe also asked the
Director to provide case law that supports the contention that Overboes use of a trust
account could shield money from creditors. In an interrogatory and a document request,
Overboe asked the Director to provide a copy of North Dakota Rule of Professional
Conduct 1.15 that states the maximum amount of personal funds a lawyer can have in his
client account.
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process under North Dakota law. Finally, Overboe asked the Director to disclose the
basis of the allegation that Overboe did not cooperate with the Director.
A referee has broad discretion to issue discovery orders and will be reversed on
appeal only upon an abuse of such discretion. In re File No. 17139, 720 N.W.2d 807,
811 (Minn. 2006) (quoting Minn. Twins Pship v. State ex rel. Hatch, 592 N.W.2d 847,
850 (Minn.1999)). The objective of our rules of discovery is to encourage the exchange
of relevant information by the parties prior to trial and to discourage and prevent unjust
surprise and prejudice at trial * * * . Gale v. County of Hennepin, 609 N.W.2d 887,
891 (Minn. 2000). Thus, [p]arties may obtain discovery regarding any matter, not
privileged, that is relevant to a claim or defense of any party. Minn. R. Civ. P. 26.02(a).
But discoverable information must be reasonably calculated to lead to the discovery of
admissible evidence. Id. Evidence is admissible only if it is relevant evidence, Minn. R.
Evid. 402, which relevant evidence is defined as evidence having any tendency to make
the existence of any fact that is of consequence to the determination of the action more
probable or less probable than it would be without the evidence, Minn. R. Evid. 401.
The Director asserts that he adequately responded to or properly objected to each
of Overboes interrogatories and documents requests. We have reviewed the Directors
answers and objections, and we conclude that the Director sufficiently answered or
properly objected to each interrogatory and document request. We note that for a number
of the interrogatories to which the Director objected, he still provided an answer. We
further note that a number of Overboes interrogatories and document requests fell
13
outside the scope of permissible discovery. We therefore hold that the referee did not
abuse his discretion in denying Overboes motion to compel discovery.
II.
Before reviewing the referees findings and conclusions, we must as a preliminary
matter determine whether the Minnesota or North Dakota professional responsibility
rules apply to Overboes conduct.4 The Minnesota Rules of Professional Conduct state
that [a] lawyer admitted to practice in this jurisdiction is subject to the disciplinary
authority of this jurisdiction, regardless of where the lawyers conduct occurs. Minn. R.
Prof. Conduct 8.5(a). Thus, Overboe is subject to our disciplinary authority because he is
admitted to practice law in Minnesota. But Rule 8.5 further states that when the conduct
in question is not connected to a matter pending before a tribunal, the rules of
professional conduct that apply are
the rules of the jurisdiction in which the lawyers conduct occurred, or, if
the predominant effect of the conduct is in a different jurisdiction, the rules
of that jurisdiction shall be applied to the conduct. A lawyer shall not be
subject to discipline if the lawyers conduct conforms to the rules of a
jurisdiction in which the lawyer reasonably believes the predominant effect
of the lawyers conduct will occur.
Minn. R. Prof. Conduct 8.5(b)(2). Therefore, the question for each allegation of
misconduct iswhere did the conduct and its predominant effect occur?
4 We note that while we address this issue, the relevant North Dakota Rules of
Professional Responsibility and Minnesota Rules of Professional Responsibility are
nearly identical.
14
The Director first alleges that Overboe deceptively labeled a personal account as a
trust account, the WSB trust account, to shield Overboes personal funds from judgment
creditors. The WSB trust account was held in a North Dakota bank. The judgment
against Overboe was entered in the United States District Court for the District of North
Dakota. Further, no clients in Minnesota or North Dakota were harmed by Overboes
conduct regarding the WSB trust account. Because Overboe held this personal account in
North Dakota and because the use of the account did not have any predominant effects in
Minnesota, we conclude that the North Dakota Rules of Professional Conduct apply to
the allegations that Overboe deceptively used a personal trust account.
The second allegation against Overboe is that he made misrepresentations to and
failed to cooperate with the Director during his disciplinary investigation. The Director is
the representative of Minnesotas Office of Lawyers Professional Responsibility. Thus,
regardless of where the conduct that is being investigated occurred, any conduct
constituting misrepresentations to and noncooperation with the Director has its
predominant effects in Minnesota. We therefore conclude that as to Overboes alleged
misrepresentations to and noncooperation with the Director, the Minnesota professional
conduct rules apply.
Overboes IOLTA account was held in a North Dakota bank. The alleged
misconduct concerning the IOLTA account is that Overboe commingled client funds and
personal funds in the account and maintained personal funds in the account that were not
for permissible client purposes. At all times relevant to this matter, the funds held in the
account were funds of Overboe, his wife, or North Dakota clients. While Overboe
15
certified to our court on his annual Minnesota attorney license application that the
IOLTA account was his client trust account, the conduct at issueimproper use of a trust
account and commingling client fundsoccurred in North Dakota. Further, the possible
effects of the conductthe risk that judgment creditors would attach client fundsalso
occurred in North Dakota. Moreover, it was reasonable for Overboe to believe that the
predominant effect of his conduct concerning his IOLTA account would occur in North
Dakota. See Minn. R. Prof. Conduct 8.5(b)(2). We therefore conclude that Overboes
alleged IOLTA account misconduct is subject to review under the North Dakota Rules of
Professional Conduct.
III.
Having determined the appropriate rules under which to review each allegation,
we now turn to the referees findings. Overboe ordered a transcript of the hearing in this
case, thereby preserving his right to challenge the referees findings. Rule 14(e), RLPR;
In re Nelson, 733 N.W.2d 458, 461 (Minn. 2007). Nevertheless, we give great
deference to a referees findings, Nelson, 733 N.W.2d at 461, and will uphold them if
they have evidentiary support in the record and are not clearly erroneous, In re Moulton,
721 N.W.2d 900, 905 (Minn. 2006). Moreover, [d]eference to the referee is particularly
appropriate when the findings are based on a respondents demeanor, credibility, or
sincerity. Id. We will therefore only reverse a referees findings if, upon review of
the entire evidence, [we are] left with the definite and firm conviction that a mistake has
been made. Id. (quoting In re Pinotti, 585 N.W.2d 55, 62 (Minn. 1998)).
16
Deceptive Use of a Trust Account
The Director asserts that Overboe deceptively labeled a personal account that
contained only Overboes funds as a trust account in order to shield his funds from
judgment creditors. Overboe argues that it is neither unethical nor illegal for a lawyer to
have a personal trust account such as his WSB trust account. The referee agreed with the
Director and concluded that Overboes establishment and use of the WSB trust account
violated Minn. R. Prof. Conduct 8.4(c), which states that [i]t is professional misconduct
for a lawyer to * * * engage in conduct involving dishonesty, fraud, deceit, or
misrepresentation.
The North Dakota Supreme Court, like our court, has made clear that lawyers have
a high duty of candor, stating that [t]ruth and candor are synonymous with justice,
and honesty is an implicit characteristic of the legal profession. In re Johnson,
743 N.W.2d 117, 125 (N.D. 2007) (quoting In re Kaiser, 484 N.W.2d 102, 108
(N.D. 1992). Further, N.D. R. Prof. Conduct 8.4(c) makes it professional misconduct
for a lawyer to * * * engage in conduct involving dishonesty, fraud, deceit, or
misrepresentation that reflects adversely on the lawyers fitness as a lawyer. North
Dakota Rules for Lawyer Discipline 1.2A(3) states that a lawyer may be disciplined for
[e]ngaging in conduct involving dishonesty, fraud, deceit or misrepresentation. Deceit
is defined as [t]he act of intentionally giving a false impression. Blacks Law
Dictionary, 435 (8th ed. 2004). We emphasize that to be disciplined under these rules, a
lawyers conduct need only be dishonest, fraudulent, deceitful, or misrepresentative, not
necessarily illegal. See, e.g., In re Howe, 621 N.W.2d 361, 364 (N.D. 2001) (imposing
17
discipline on a lawyer for conduct that was not illegal but still violated the professional
responsibility rules); see also N.D. R. Prof. Conduct 8.4(b) (providing a separate ground
to impose discipline when the lawyer has committed a criminal act).
Whether Overboes use of his WSB trust account was deceptive depends on the
proper use of a trust account. North Dakota requires that a trust and its terms [are] for
the benefit of its beneficiaries, N.D. Cent. Code 59-09-05(2)(c) (2007), and that the
same person is not the sole trustee and sole beneficiary, N.D. Cent. Code 59-12-02(1)
(2007).5 Moreover, North Dakota law mandates that [a] trustee shall administer the trust
solely in the interests of the beneficiaries. N.D. Cent. Code 59-16-02(1) (2007).
Based on this definition of a trust, we conclude that a trust account must in some
manner further the fiduciary relationship between the trustee and beneficiaries and must
be held by a trustee for the benefit of at least one other person besides the trustee.
It is undisputed that Overboe has had a .4 million dollar judgment against him
since 1990 and that the judgment remains unpaid. Further, in his letters to the Director
before and during the disciplinary investigation, Overboe stated that the purpose of his
WSB trust account was to protect his and his wifes funds from judgment creditors.
Overboe emphasized that it was important for him to not keep a great deal of money in
5 The Restatement (Third) of Trusts 2 (2003) defines trust as:
a fiduciary relationship with respect to property, arising from a
manifestation of intention to create that relationship and subjecting the
person who holds title to the property to duties to deal with it for the benefit
of charity or for one or more persons, at least one of whom is not the sole
trustee.
18
[his] own account, because the law firm that obtained the Judgment is right next door to
[him]. Evidence presented at the hearing also showed that Overboe was the source of
every deposit into the WSB trust account and the payee of approximately half of the
withdrawals. Additionally, the majority of the funds deposited into the account were
Overboes earned legal fees. Only two checks written on the account were in the name of
Overboes wife.
In light of Overboes admissions, and the evidence presented at the hearing, we
conclude that the referee was not clearly erroneous in finding that Overboe did not use
his WSB trust account as a trustee in a fiduciary capacity but instead used it as his own
personal account. Therefore, in light of the .4 judgment against Overboe, it was not
clearly erroneous for the referee to conclude that Overboe acted deceptively when he
labeled his WSB account as a trust account for the purpose of shielding his personal
funds from judgment creditors. While the referee incorrectly applied Minn. R. Prof.
Conduct 8.4(c) to Overboes conduct, North Dakota has parallel rulesN.D. R. Prof.
Conduct 8.4(c) and N.D. R. Lawyer Discipl. 1.2A(3). Therefore, we conclude that
Overboe violated N.D. R. Prof. Conduct 8.4(c) and N.D. R. Lawyer Discipl. 1.2A(3) by
engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation.
Misuse of IOLTA Account and Commingling of Client and Personal Funds
Overboe argues that he did not commingle personal funds with client funds in his
IOLTA account and that he did not improperly keep personal funds in that account. The
referee found that during the times that client funds were in the IOLTA account, the
surplus funds in the account that Overboe claimed belonged to his wife as a client were
19
Overboes personal funds. The referee further found that the ,500 that Overboe
deposited in the account with the intention of donating it to the V.F.W. was Overboes
personal funds. Based on these findings, the referee concluded that Overboe violated
Minn. R. Prof. Conduct 1.15(a)6 by commingling personal and client funds. North
Dakota has a rule similar to the Minnesota ruleN.D. R. Prof. Conduct 1.15which
states in part:
(a) A lawyer shall hold property of clients or third persons that is in a
lawyers possession in connection with a representation separate from the
lawyers own property. * * *
(b) A lawyer may deposit the lawyers own funds in a client trust account
only for the purpose of paying bank service charges, fees associated with
credit card payments, or wire transfers related to that account, but only in
an amount necessary for that purpose.
Evidence presented at the hearing included numerous letters from Overboe to the
Director indicating that there were no client funds in his IOLTA account at the time of
6 Minnesota Rule of Professional Conduct 1.15 states in part:
(a) All funds of clients or third persons held by a lawyer or law firm in
connection with a representation shall be deposited in one or more
identifiable trust accounts * * *. No funds belonging to the lawyer or law
firm shall be deposited therein except as follows:
(1) funds of the lawyer or law firm reasonably sufficient to pay service
charges may be deposited therein;
(2) funds belonging in part to a client or third person and in part presently
or potentially to the lawyer or law firm must be deposited therein.
(b) A lawyer must withdraw earned fees and any other funds belonging to
the lawyer or the law firm from the trust account within a reasonable time
after the fees have been earned or entitlement to the funds has been
established * * * .
20
the overdraft and since April 2003. Overboe asserted that the majority of the surplus in
his IOLTA account when client funds were in the account was his wifes money and that
his wife was a client. But Overboe did not make this assertion until well into the
investigatory process and after the Director notified Overboe that having his personal
funds in an IOLTA account violates the professional conduct rules. Further, Overboe
offered no specific evidence that his wife was a client. Overboe also admitted at the
hearing that the ,500 he deposited into the IOLTA account on October 6, 2003, was not
client money. Finally, Overboe offered no evidence that any of the personal funds in the
IOLTA account were for the permissible purpose of paying bank service charges, fees
associated with credit card payments, or wire transfers related to that account. N.D. R.
Prof. Conduct 1.15(b).
Based on the evidence and on Overboes own statements, we conclude that it was
not clearly erroneous for the referee to find that Overboe maintained personal funds in his
IOLTA account and that he commingled personal and client funds in the account. While
the referee applied the Minnesota rules in making this legal conclusion, we conclude that
Overboe violated the parallel North Dakota rule, N.D. R. Prof. Conduct 1.15, by keeping
personal funds in his IOLTA account and by commingling his personal funds with client
funds.
Misrepresentation and Noncooperation with the Director
Overboe asserts that he accurately and honestly responded to and complied with
all of the Directors inquiries and document requests. The Director asserts that Overboe
did not cooperate and made misrepresentations regarding both the IOLTA account and
21
the WSB trust account. The referee found that Overboe made numerous inconsistent and
incomplete statements to the Director and failed to comply with document requests in
violation of Minn. R. Prof. Conduct 8.1(a) and 8.4(c), and Rule 25, RLPR.
Minnesota Rule of Professional Conduct 8.1 states:
An applicant for admission to the bar, or a lawyer in connection with a bar
admission application or in connection with a disciplinary matter, shall not:
(a) knowingly make a false statement of material fact; or
(b) fail to disclose a fact necessary to correct a misapprehension known by
the person to have arisen in the matter, or knowingly fail to respond to a
lawful demand for information from an admissions or disciplinary
authority, except that this rule does not require disclosure of information
otherwise protected by Rule 1.6.
(Emphasis added.) Further, as stated above, Minn. R. Prof. Conduct 8.4(c) states that it is
misconduct for a lawyer to engage in conduct involving dishonesty, fraud, deceit, or
misrepresentation. Rule 25(a) of the Rules on Lawyers Professional Responsibility
states:
It shall be the duty of any lawyer who is the subject of an investigation or
proceeding under these Rules to cooperate with the District Committee, the
Director, or the Director's staff, the Board, or a Panel, by complying with
reasonable requests, including requests to:
(1) Furnish designated papers, documents or tangible objects;
(2) Furnish in writing a full and complete explanation covering the matter
under consideration;
(3) Appear for conferences and hearings at the times and places designated;
(4) Execute authorizations and releases necessary to investigate alleged
violations of a conditional admission agreement.
22
In his initial letter to Overboe, the Director asked him to provide client ledgers for
his IOLTA account, which Overboe failed to do. In his May 3 letter, the Director asked
Overboe to identify and provide records for the account into which he deposited the
IOLTA funds when he closed the IOLTA account. Overboe did not provide any of the
requested documentation. Overboe also failed to timely provide the Director with the
information requested when the Director notified Overboe that a formal investigation into
Overboes conduct had been initiated. Based on this evidence we conclude that Overboe
1) knowingly fail[ed] to respond to a lawful demand for information, Minn. R. Prof.
Conduct 8.1(b);7 2) failed to [f]urnish designated papers, documents or tangible
objects; and 3) failed to provide a full and complete [written] explanation covering the
matter under consideration, Rule 25, RLPR. Thus we conclude that the referee did not
err in finding that Overboe violated Minn. R. Prof. Conduct 8.1 and 8.4(c), and Rule
25(a), RLPR.
Moreover, when the Director initially asked Overboe to explain the cause of the
overdraft on the IOLTA account, Overboe stated that he thought there were sufficient
funds in the account when he wrote the check and he made no mention of the WSB
7 The Comment to Rule 8.1 states:
it is a separate professional offense for a lawyer to knowingly make a
misrepresentation or omission in connection with a disciplinary
investigation of the lawyer's own conduct. Paragraph (b) of this rule also
requires correction of any prior misstatement in the matter that the applicant
or lawyer may have made and affirmative clarification of any
misunderstanding on the part of the admissions or disciplinary authority of
which the person involved becomes aware.
23
trust account or any other account. Then, in his May 3 letter, the Director also asked
Overboe to explain the grounds on which he thought there were sufficient funds in the
IOLTA account because there had only been 5.67 in the account. It was at this point
that Overboe first stated that he meant to draw the funds from a different account, but
Overboe did not identify the different account. Based on this evidence, we conclude
that the referee did not abuse his discretion in finding that Overboes inconsistent
statements to the Director regarding the cause of the IOLTA account overdraft were false
and misleading under Minn. R. Prof. Conduct 8.4(c).
Overboe also made numerous statements to the Director that the WSB trust
account was opened to protect both his and his wifes funds. When discussing the
purpose of that account in a letter to the Director, Overboe stated that he could not keep a
large amount of money in his own account because of the judgment against him. But
then at the hearing Overboe stated that the account was only meant to protect his wifes
funds. Additionally, the evidence presented at the hearing showed that Overboe did not
hold the WSB trust account in a fiduciary capacity; the records of the account showed
that all deposits in the account were comprised of funds Overboe, and not his wife, had
received. Based on Overboes statements and the evidence presented at the hearing, we
conclude that the referees findings that Overboe made misrepresentations to and failed to
cooperate with the Director were supported by evidence and were not clearly erroneous.
Thus, we conclude that Overboe violated Minn. R. Prof. Conduct 8.1(a) and 8.4(c), and
Rule 25, RLPR.
24
IV.
Having concluded that Overboe violated the Minnesota and North Dakota
professional responsibility rules, we must now determine the appropriate sanction to be
imposed. The referee recommended that Overboe be suspended from the practice of law
and be ineligible to apply for reinstatement for a minimum of 1 year. While we give a
great deal of deference to a referees findings, we retain the final responsibility for
determining the appropriate sanction. Nelson, 733 N.W.2d at 463. When determining
the appropriate sanction, we consider four factors: (1) the nature of the misconduct;
(2) the cumulative weight of the disciplinary violations; (3) the harm to the public; and
(4) the harm to the legal profession. Id. We look to similar cases for guidance in
determining the appropriate sanction, but sanctions must be determined on a case-bycase
basis by examining the acts of misconduct and considering both aggravating and
mitigating circumstances. Id. at 463-64 (quoting In re Mayrand, 723 N.W.2d 261, 268
(Minn. 2006)). Aggravating circumstances may include, but are not limited to, such
factors as an attorneys prior discipline, unwillingness to recognize the wrongfulness of
his conduct, and substantial experience. In re Holker, 730 N.W.2d 768, 775 (2007).
Aggravating Factors
[W]e consider a lawyers prior discipline and professional misconduct when
determining the appropriate discipline for new misconduct and generally impose more
severe sanctions when the current misconduct is similar to misconduct for which the
attorney has already been disciplined. In re Rhodes, 740 N.W.2d 574, 580 (Minn.
2007) (quoting In re Brooks, 696 N.W.2d 84, 88 (Minn. 2005)). Overboe was subject to
25
discipline twice before. Overboes prior misconduct involved misuse of a client trust
account as well as dishonesty, misrepresentations, and false statements. Overboe, 417
N.W.2d at 853; Overboe, 403 N.W.2d at 1-3. Overboes prior misconduct and its
similarity to his current misconduct are aggravating factors in this case.
Overboes failure to acknowledge or express remorse for his misconduct,
Nathan, 671 N.W.2d at 585, as well as his substantial experience as a lawyer, Holker,
730 N.W.2d at 775, both constitute aggravating factors in this case. Moreover, Overboe
admits that when he receives client funds in check form he does not deposit the checks
into a trust account but instead keeps them in a desk drawer and deposits them as he
needs them.8 This practice is a violation of Minn. R. Prof. Conduct 1.15 and N.D. R.
Prof. Conduct 1.15, which both require that a lawyer keep property of clients separate
from the lawyers own property. The Minnesota rule and the Comments to the North
Dakota rule further state that client money must be kept in one or more trust accounts.
Minn. R. Prof. Conduct 1.15(a); N.D. R. Prof. Conduct 1.15, Comment 1; see In re
Mayrand, 723 N.W.2d 251, 266-67 (Minn. 2006). Thus, we conclude that Overboes
violation of Rule 1.15 is an aggravating factor in this case.
8 Respondents brief states: Overboe argues that to require an attorney to deposit a
small retainer into a trust account and maintain those ledgers and then take the money
back out after the work is done when the work is done in a short period time [sic] is
burdensome and an unnecessary amount of paperwork which accomplishes nothing.
26
Mitigating Factors
We have considered the absence of harm to clients to be a mitigating factor in
discipline cases. In re Ray, 452 N.W.2d 689, 694 (Minn. 1990). The referee found that
no clients were harmed here. But we do not consider the lack of client harm a mitigating
factor in this case because Overboes commingling of personal and client funds put his
client funds at risk of attachment by Overboes judgment creditors. See In re Haugen,
543 N.W.2d 372, 374 (Minn. 1996.)
Relevant Case Law
In In re Kinnunen we stated:
misuse of trust accounts will almost invariably result in lengthy suspension
at the very least and disbarment at worst. Moreover, an attorneys
responsibility to maintain his or her trust account goes beyond a
requirement to refrain from intentional wrongdoing; even unintentional
misappropriation as the result of poor accounting practices may be grounds
for discipline.
502 N.W.2d 773, 775 (Minn. 1993) (internal citations omitted). But when no aggravating
factors are present, or when mitigating factors are present, we have been more lenient in
the length of suspensions for trust account violations. For example, in In re Edinger, a
lawyer had multiple trust account overdrafts and the lawyer used his trust account as a
personal account. 700 N.W.2d 462, 464-67 (Minn. 2005). While the lawyer made false
statements to the Director during the investigation, we ordered suspension for at least 3
months because the trust account violations presented no risk of harm to clients and the
lawyer had no prior record of misconduct. Id. at 467-69. In In re Gubbins, when no
clients were harmed by the lawyers misconduct, we suspended the lawyer for 4 months
27
for failing to keep proper trust account records and for misappropriating client funds
without intent to defraud clients. 380 N.W.2d 810, 811-12 (Minn. 1986).
When trust account violations are paired with noncooperation with or
misrepresentations to the Director during an investigation and no mitigating factors are
present, we have generally imposed more severe sanctions. In In re Grathwol, a lawyer
had trust account overdrafts, failed to deposit retainers into his trust account, misled and
did not cooperate with the Director in the investigation, failed to communicate with a
client, and failed to return unearned fees. 574 N.W.2d 70, 70 (Minn. 1998). We
accepted a stipulated disposition and suspended the lawyer indefinitely for a minimum of
12 months. Id. In In re Bruender, we again accepted a stipulated disposition and
suspended a lawyer for a minimum of 18 months when the lawyer failed to timely file
employee withholding tax returns, had serious irregularities in the management of his
trust account, including shortages in the account and commingling personal and client
funds, falsely certified that records were properly maintained, and failed to cooperate
with the Director in his investigation. 530 N.W.2d 521, 521 (Minn. 1995).
Similarly, when a lawyer has been subject to prior discipline, we have generally
imposed more severe suspensions. In In re Haugen, a lawyer failed to pay court reporter
fees and improperly handled his trust account by failing to keep proper records, keeping
insufficient funds in the account, commingling earned legal fees with client funds, paying
for personal and business expenses from his client trust account, and falsely certifying to
this court that his books and records were maintained properly. 543 N.W.2d at 374.
While no clients were harmed, the referee in that case concluded that all the client funds
28
in the account were at risk because of the trust account violations. Id. Further, in light of
the fact that the lawyer had been practicing for 40 years, his trust account violations and
his failure to comprehend the trust fund accounting requirements [made] it highly
probable that future violations [would] occur. Id. The lawyer had also been subject to
prior discipline for similar trust account violations. Id. at 375. Based on the above
findings, we suspended the lawyer from the practice of law for a minimum of 12 months.
Id.
In this case, Overboes misconduct involved trust account violations for two
separate bank accountsthe IOLTA account and the WSB trust account. This alone is
grounds for a lengthy suspension. But unlike in Edinger and Gubbins, where we imposed
3 and 4 month suspensions respectively, there are several aggravating factors in this case.
Here, as in Haugen, where we imposed a 12 month suspension, Overboe was previously
disciplined for similar misconduct. Further, while no clients were harmed by Overboes
conduct, his trust account violations put his clients funds at risk because of the .4
million unpaid judgment against him. Additionally, we conclude that in light of
Overboes decades of experience, his failure to properly maintain trust accounts, his
unwillingness to recognize the wrongfulness of his conduct, and his continued failure to
place client retainers in a trust account, it is highly probable that future violations will
occur. Haugen, 543 N.W.2d at 374.
29
Accordingly, we order that:
1. David A. Overboe be suspended from the practice of law in the State of
Minnesota, effectively immediately, and is ineligible to petition for reinstatement for a
minimum of 1 year.
2. If Overboe seeks reinstatement, he must comply with the requirements of
Rule 18 of the Minnesota Rules of Lawyers Professional Responsibility.
3. Overboe shall comply with the requirements of Rule 26 of the Minnesota
Rules of Lawyers Professional Responsibility.
4. Overboe shall pay the Director 0 in costs plus disbursements pursuant
to Rule 24 of the Minnesota Rules of Lawyers Professional Responsibility.
So ordered.
DIETZEN, J., not having been a member of this court at the time of the argument
and submission, took no part in the consideration or decision of this case.
 

 
 
 

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