Douglas C. Gray (2005)

020

{C0142590.i}

• 02/18/05 Notice of Hearing

Order on Motion to Continue - GRANTED IN PART • 02116105 Cover letter to Parties Motion to Clarify Assented to Motion to Continue e 02/14/05 Cover letter to Hearing Panel

• 02/07/05 Letter to Counsel re: Ruling on Offers of Proof --CONFIRMED

Proposed Order Cover letter from DC • 02/04/05 Cover letter to Hearing Panel Notice of Charges Cover letter to Hearing Panel with Notice of Charges Notice of Hearing • 01120/05 Hearing Panel Appointment

• 01111105 Letter from Disciplinary Counsel ("DC") requesting Hearing Panel

included: The Professional Conduct Committee thoroughly reviewed the record in this matter which

C. Connair. Alan J. Cronheim recused himself from discussion and voting on this matter. Nancy R. Hacking and David N. Page. Members absent included: James R. Martin and Thomas M. Gray, Richard B. McNamara, Stephen B. Stepanek, David N. Cole, Gretchen Rule Hamel, Members present included: Margaret H. Nelson, Chair and Reporter, Benette Pizzimenti, Toni

argument. at its regular monthly meeting. Neither Disciplinary Counsel nor Attorney Gray requested oral On July 19,2005, the Professional Conduct Committee considered the above-referenced matter

Gray, Douglas C. Advs. Attorney Discipline Office and Tammy Gardner #04 -

2. The Audit Report covers the following time-period: July 1, 1999 through June 30, 2004.

2004, from Craig A. Calarnan, CPA ("Audit Report"). 1. The Notice of Charges was based on the content of an audit report dated September 29,

factual fIndings of the Hearing Panel by clear and convincing evidence: The Professional Conduct Committee has determined that the record supports the following

Professional Conduct Committee makes factual fIndings and rulings as detailed below. to Stay Proceedings, and Order on Respondent's Motion to Stay and Hearing Panel Report, the Motion to Stay Proceedings, AffIdavit of Catherine B. Cosgrove, Esquire, Objection to Motion Saturley, Esquire, Request to Stay the Proceedings, Transcript of the March 31, 2005 Hearing, Motion to Clarify, Order on Motion to Continue, Notice of Hearing, Appearance by William Notice of Charges, Proposed Order, Ruling on Offers of Proof, Assented-to Motion to Continue, Having reviewed the record, including the Hearing Panel Appointment, Notice of Hearing,

Attorney Gray. Prior to the PCC meeting, Attorney William Saturley withdrew his appearance on behalf of

Cover letter to PCC With Record • 06/15105 Cover letter to Parties with Hearing Panel Report

• 05/27/05 Order on Respondent's Motion To Stay-DENIED

DC's Objection to Motion to Stay Proceedings Cover letter and Response from Atty. Mathieu Cover letter from DC dated 04122105 • 04/22/05 Cover letter to Hearing Panel Motion to Stay Proceedings and MfIdavit of Catherine B. Cosgrove, Esq. Cover letter from Atty. Saturley • 04118/05 Cover letter to Hearing Panel

• 04/11/05 Cover letter to Hearing Panel with Transcript of 03/31105 Hearing

Letter from HBF confIrming procedure • 04/01/05 Letter from DC re: procedure for submitting position of Atty. Mathieu Mr. Gray's Annual Trust Compliance Cert. for 2000,2001,2002 and 2003 Cover letter from DC dated 04/01/05 • 04/01105 Cover letter to Hearing Panel 1119104 Ltr to T. Gardner from M. Dyner, Complaint Screening Comm. Email from Rouvalis to DC Request to Stay the Proceedings Appearance by William Saturley, Esquire Supreme Court Order In the Matter of Arthur C. Randlett LD 2004-0004 • 03/31105 Letter from Rouvalis to DC p. 3 {C0142590.1 } 3

Successor Trustee. 9. On June 22, 2001, the York County Superior Court in Maine appointed Mr. Gray as

Gardner)." Trust and its corpus are to be used only for the supplemental care of [Michael S. of the Trust:"[T]his is a purely Discretionary Non-Support Spendthrift Trust .... This 8. The trust document, entitled"Supplemental Care Trust Document," describes the purpose

suffered serious complications relating to this birth. malpractice settlement for Michael S. Gardner, then a four-year-old boy, who had 7. The genesis for the First and Second Special Needs Trust Accounts was a 1998 medical

First and Second Special Needs Trust Accounts

amount of$389,053.60 in client trust funds. 6. Over the time-period of the audit, Mr. Gray misappropriated, at a minimum, a total

year following 2000. the Supreme Court when he filed his Trust Accounting Compliance Certificates in every client ledgers or perform monthly reconciliation; and (d) Mr. Gray was not truthful with the maintenance and administration of client trust accounts, as Mr. Gray did not maintain had earned the fees; (c) Mr. Gray did not comply wit.'1 Supreme Court Rule 50 relative to those of Mr. Gray's clients by leaving fees in trust for extended periods of time after he accounts without entitlements to the funds; (b) Mr. Gray commingled his own funds with Mr. Gray converted client funds to his own use by removing funds from particular trust Gray's part with respect to these accounts. These irregularities include the following: (a) 5. By way of summary, the Audit Report reveals numerous financial irregularities on Mr.

(hereinafter"Acevedo Escrow Account"). Acevedo Escrow Account, Citizens Bank Account, account number 330493-200-5 number 330106-677-3 (hereinafter"Harriman Estate Account); and the Anthony Trust Account"); The Estate of Jearmette 1. Harriman, Citizens Bank Account, account Citizens Bank Checking Account, account number 330493-216-1 (hereinafter"Bonner (hereinafter"Second Special Needs Trust Account"); The Deborah Bonner Trust, Needs Trust, Citizens Bank Money Market Account, account number 330636-689-9 (hereinafter"First Special Needs Trust Account"); Michael Shawn Gardner Special Needs Trust, Citizens Bank Money Market Account, account number 330569-050-1 Mr. Gray managed for specific clients as follows: (1) Michael Shawn Gardner Special 4. The Audit Report also discusses financial discrepancies in certain escrow accounts which

operating account"). operating account, account number 330106-677-3 (hereinafter"Mr. Gray's finn's 330135-421-3 (hereinafter"Mr. Gray's firm's trust account"); and (2) Citizens Bank­ accounts as follows: (1 ) Citizens Bank - general client trust account, account number 3. The Audit Report discusses financial discrepancies in two of Mr. Gray's firm's bank p. 4 {C0142590.! } 4

Special Needs Trust Account and into Mr. Gray's firm's operating account. $16,167.33. During 2003, Mr. Gray transferred a total of $13,000.00 out of the First 20. As of Janu~·ry 24,2003, the bala..'1ce in t..lJ.e First Special Needs Trtlst A .. ccount was

Needs Trust Account and deposited these funds into Mr. Gray's firm's operating account. 19. Thereafter, in 2002, Mr. Gray removed a total of $65,000.00 from the Second Special

First special Needs Trust Account as"fees." 18. Two months later, on March 22,2002, Mr. Gray removed another $1,500.00 from the

operating account. Trust Account; Mr. Gray placed t..'1e remai...'1ing $10,000.00 directly into his finn's Account. Rather, Mr. Gray deposited only $358,378.68 into the Second Special Needs Gray did not, however, deposit the full $368,378.68 into the Second Special Needs Trust this, Mr. Gray removed $368,378.68 from the First Special Needs Trust Account. Mr. 17. On January 16,2002, Mr. Gray created the Second Special Needs Trust Account. To do

$84,598.00. Mr. Gray's firm's trust account was out of trust with respect to Michael's money by Gray had transferred into his firm's trust account. Specifically, as of December 31, 2001, 16. Mr. Gray also failed to safeguard the portion of Michael's money ($110,000.00) that Mr.

$38,668.00. of Michael's money rendered the First Special Needs Trust Account out of trust by 15. As detailed in the Audit Report, as of December 31, 2001, Mr. Gray's misappropriation

"would generate absolutely no income for the Trust." Mr. Gray's firm's trust account, where, as the Audit Report states, the $110,000.00 $25,000.00 and transferred $110,000.00 out of the First Special Needs Trust Account into 14. Within two months of being appointed the Successor Trustee, Mr. Gray paid himself

Trust Account. 13. With this money, on September 7, 2001, Mr. Gray established the First Special Needs

$706,973.25 for Michael's special needs. 12. Thus, as of August 3, 2001, Mr. Gray had been entrusted with a total amount of

deposited the first such monthly settlement check into Mr. Gray's firm's trust account. ($2,501.39) on behalf of the trust from the insurance company. On that date, Mr. Gray 11. On August 3, 2001, Mr. Gray also began receiving the monthly settlement payments

total of$704,554.l5. 10. As of August 2,2001, the prior trustee had wired into Mr. Gray's firm's trust account a p. 5 {COI4259QI} 5

borrower receiving the funds. designation as to whether Mr. Gray was signing as trustee approving the Note or as the 26. The Note is signed by Mr. Gray; Mr. Gray's signature is not witnessed. There is no

(hereinafter referred to as"the Note").

set forth aforesaid. hereunder or make payments on account, prior to any demand as legal and trustee fees earned against any monies advanced been paid in full. Nevertheless, the borrower may take credit for the total balance then due at the time of demand, plus interest, has then be made by the borrower at the rate of $2,000 per month until percent. When payment is demanded hereunder, the payments shall together with interest thereon at the annual rate of three (3) monies as are advanced hereafter by the holder to the borrower, 456 Central Avenue, Dover, NH, or order, on demand, such promise to pay to Michael Gardner Supplemental Needs Trust of I, Douglas C. Gray, of 456 Central Avenue, Dover, NH, Do hereby

funds from Michael's Trust for Mr. Gray's own benefit. Mr. Gray wrote: 25. In a document dated October 12, 2001, Mr. Gray acknowledged that he was removing

total amount of Michael's money that Mr. Gray misappropriated was $389,053.60. 24. Even if each of the disbursements that Mr. Gray classified as"fees" were legitimate, the

= $428,053.60 -total amount out of trust (including"fees") $101,053.60 -removed from Mr. Gray's firm's trust account $224,500.00 -unidentified by Mr. Gray (i. e., memo line on checks left blank) $ 63,500.00 -classified by Mr. Gray as"loans" and"advances" $ 39,000.00 -classified by Mr. Gray as"fees"

follows: 23. The Audit Report delineates the total disbursements from Michael's money to himself as

into Mr. Gray's firm's operating account. Gray removed $80,000.00 from the Second Special Needs Trust Account and deposited it the Second Special Needs Trust Account to himself. From February to April 2004, Mr. 22. Similarly, in the first part of 2004, Mr. Gray continued this pattern of disbursements from

On many of the disbursements, Mr. Gray simply left the memo line on the checks blank. generally wrote the word"fees," and in one instance, Mr. Gray wrote the word"loan." Report, when Mr. Gray described the individual disbursements on the checks, he Account and placed it into Mr. Gray's fIrm's operating account. As detailed in the Audit 21. In that same year, Mr. Gray removed $97,500.00 from the Second Special Needs Trust p. 6 {C0142590.1 } 6

accounts to the Bonner Trust Account. 37. On June 23, 2000, Mr. Gray transferred $40,000.00 from the A. G. Edwards investment

from the Bonner Trust Account to his finn's operating account as an"advance on fees." accounts to the Bonner Trust Account. On June 16,2000, Mr. Gray disbursed $1,800.00 36. On May 23,2000, l\1r. Gray transferred $5,000.00 from the A. G. Edwards investment

into his firm's operating account. Mr. Gray classified these disbursements as an"advance on fees" and placed them directly 35. From the initial deposit, Mr. Gray withdrew in two disbursements a total of$5,000.00.

ofthat date, the Bonner Trust Account totaled $9,786.00. Bonner Trust Account was out of trust by $1,000.00 at its inception on April 24, 2000. As into the Bonner Trust Accollilt, Mr. Gray retained $1,000.00 for himself. As a result, the 34. Indeed, when Mr. Gray made the initial transfer of money from the investment accounts

Gray lost no time in channeling money from that Account to himself. fllilds in the Bonner Trust Account were intended to cover Ms. Bonner's expenses. Mr. 33. On April 24, 2000, Mr. Gray opened the Bonner Trust Account at Citizens Bank. The

maintain the assets of the trust. Ms. Bonner was the settler and beneficiary. 32. Mr. Gray was the sole trustee. Mr. Gray was granted absolute discretion to manage and

G. Edwards. $290,004.30. Mr. Gray placed the majority of these funds into investment accounts at A. 31. After deducting attorney's fees and expenses, the net amount in the Bonner Trust was

Trust was the settlement of a personal injury claim for Ms. Bonner. 30. Mr. Gray created the Deborah Bonner Trust on March 7, 2000. The genesis of the Bonner

ministerial and its delegation would, therefore, require the Co-Trustee's consent. approve the Note. However, even if there were such a document, that power is not 29. During the audit, Mr. Calaman could not locate a document delegating the power to

real estate are required to be acknowledged." writing, signed by the delegating Trustee, and witnessed in the same manner as deeds to already approved expenditures. This delegation must be evidenced by an instrument in states,"... one Trustee may delegate ministerial powers; such as signing checks for Trustee by unanimous consent, except as provided in paragraph 8.7." Paragraph 8.7 of Trustee is occupied by Co-Trustees, such Co-Trustees must exercise the powers of 28. Paragraph 8.1 of the Trust Document states,"During all periods oftime when the office

grandmother, Esther Thompson) was aware of the Note. 27. Neither Michael's representative (his mother, Tammy Gardner) nor the Co-Trustee (his p. 6 p. 7 {C0142590.1 } 7

Mr: Gray's immediate resignation. October 20, 2000, notifying him of Mr. Gray's pending removal as trustee and requesting 47. Ms. Bonner hired new counsel, Nicholas Aeschliman, who wrote Mr. Gray a letter on

explanation. telephoned Mr. Gray and requested an explanation. Mr. Gray did not provide her with an investment company and learned of Mr. Gray's numerous transfers. Ms. Bonner investigated the situation. On or about September 21, 2000, Ms. Bonner contacted the 46. Ms. Bonner became concerned about Mr. Gray's handling of her money, and she

his firm's trust account for Ms. Bonner. Gray's prior misuse of her funds, there were insufficient funds (shortfall of $8,009.17) in $18,907.70 from his finn's trust account for Ms. Bonner. However, as a result ofl\1r. 45. Between October 1,2000, and December 1,2000, Mr. Gray expended a total of

Ms. Bonner, bringing the balance of her funds to $10,895.00. 44. On September 29,2000, Mr. Gray deposited $10,000.00 iuto his finn's trust account for

money for himself as"fees," and wrote checks to himself accordingly. Mr. Gray only spent $2,386.72 on Ms. Bonner. Mr. Gray claimed $7,500.00 of that G. Edwards investment accounts into his fInn's trust account. Notably, of that money, 43. From July 12,2000, to September 20,2000, Mr. Gray deposited $10,785.25 from the A.

Gray began usiug his firm's trust account for all Bonner Trust transactions. 42. Mr. Gray stopped using the Bonner Trust Account after that incident. Thereafter, Mr.

an explanation. Bonner complained to Mr. Gray and sought an explanation. Mr. Gray did not provide her "bounced" due to insufficient funds in the Bonner Trust Account. At that time, Ms. 41. On September 11, 2000, Mr. Gray wrote a $1,000.00 check to Ms. Bonner which

40. At the same time, Mr. Gray also paid himself $3,000.00 as"fees."

investment accounts into the Bonner Trust Account. covered this discrepancy by transferring a total of$30,000.00 from the A. G. Edwards the cost of that real estate purchase. On July 19, 2000, and August 2, 2000, Mr. Gray Trust Account since its inception, there was not enough money in the Account to cover Raymond. As a result of the $16,300.00 that Mr. Gray had diverted out of the Bonner 39. In the summer of2000, Ms. Bonner needed funds to purchase a piece of real estate in

$1,000.00. Mr. Gray cashed this check and wrote nothing iu the memo line. Mr. Gray wrote a check to himself from the Bonner Trust Account in the amount of Trust Account to his finn's operating account as payment for"fees." On July 11, 2000, 38. Shortly thereafter, on June 30, 2000, Mr. Gray disbursed $7,500.00 from the Bonner p. 7 p. 8 {C0142590.1 } 8

which, as the Audit Report explains, was $4,932.00 short of what Mr. Gray owed him. 59. Mr. Gray's [mal disbursement check to Mr. Hall on May 1, 2000, was for $62,697.06,

Account from his fIrm's operating account. disbursement check to Mr. Hall, Mr. Gray transferred $33,318.00 to the Harriman Estate 58. To cover the shortfall Mr. Gray's misappropriations had caused, before sending a fInal

Gray characterized each of these disbursements as earned fees. to himself totaling $46,007.00, which is $38,250.00 more than Mr. Gray had earned. Mr. 57. While Mr. Gray had control over the Harriman Estate Account, Mr. Gray issued checks

until May 1,2000, when Mr. Gray issued a [mal disbursement check to Mr. Hall. Mr. Hall in the amount of$10,000.00. Mr. Gray retained control over the Harriman funds thereafter. Instead, fourteen months after the closing, Mr. Gray made a partial payment to 56. Mr. Gray should have paid Mr. Hall the money due him and closed the Estate shortly

closing ($82,567.97) into the Harriman Estate Account. the Harriman Estate Account. Mr. Gray deposited the net proceeds to the Estate from the 55. The closing took place on October 2,1998, and, on October 5,1998, Mr. Gray opened

54. The primary asset of her estate was a parcel of real estate which sold for $90,000.00.

A. Hall, as the benefIciary in her Will. 53. Jeanette Harriman died on January 30, 1998. Ms. Harriman named her grandson, Steven..

money. 52: To cover this shortfall in his fIrm's trust account, Mr. Gray necessarily used other clients'

$20,926.34 in Mr. Gray's fIrm's trust account with respect to Ms. Bonner. check ($12,917.11) to Attorney Aeschliman resulted in a cumulative shortfall of 51. Due to Mr. Gray's mishandling of Ms. Bonner's money, Mr. Gray's fInal disbursement

himself out of Ms. Bonner's funds a total of$21,108.00 more than Mr. Gray earned. 50. Taking Mr. Gray's assessment of his"earned fees" as true ($5,692.00), Mr. Gray paid

disbursement on December 1, 2000. November 30, 2000). Mr. Gray listed these fees as being paid in full and in one as the total amount of earned fees (from inception of the trust in March 2000 through it does not mention any of the disbursements Mr. Gray made to himself. It lists $5,692.00 49. Mr. Gray's"accounting" of Ms. Bonner's trust funds is misleading in several ways. First,

Trust in the amount of$12,917.11. the trust money, and a check drawn on Mr. Gray's fIrm's trust account to the Bonner forwarded to Attorney Aeschliman Mr. Gray's resignation as trustee, an"accounting" of 48. Mr. Gray responded more than one month later, on December 4, 2000. Mr. Gray p. 8 p. 9 {C0142590.1 } 9

firm's trust account. trust situation and issued a check to Mr. Acevedo by misappropriating funds from his of his firm's trust account for Mr. Acevedo to $27,106.34. Mr. Gray covered this out of account. As a result, Wl!. Gray's issuance of this check increased"t"'-le out of trust balance On that date, there were no funds available for Mr. Acevedo in Mr. Gray's firm's trust 69. Mr. Gray did not issue Mr. Acevedo's escrow payment ($12,740.67) until July 9, 2001.

account. These disbursements reduced the balance of this account to $2,874.56. $1O,874.56.ln that month, Mr. Gray disbursed to himself another $8,000.00 from that 68. As of the beginning of April, 2001, the balance in the Acevedo Escrow Account equaled

total of$14,365.65. $375.00. Mr. Gray's firm's trust aCCOlli'1t was, therefore, out of trust on this matter by a trust account. At that time, the balance on hand for Mr. Acevedo in that account was only 67. On March 12,2001, Mr. Gray issued Ms. Acevedo's check ($14,740.67) from his firm's

payments, there were insufficient funds in the Acevedo Escrow Account to cover them. 66. As a result of Mr. Gray's misuse of the funds, at the time Mr. Gray made the escrow

these disbursements to himself as"fees." Account into Mr. Gray's firm's operating account. Mr. Gray characterized almost all of 65. Specifically, Mr. Gray transferred a total of$18,500.00 from the Acevedo Escrow

it. money from the Acevedo Escrow Account and emiching himself shortly after he opened 64. But, like other accounts over which Mr. Gray had control, Mr. Gray began removing

disbursement instructions. January 18,2001, the date Mr. Gray received the divorce decree and the court's escrow 63. This money should have remained untouched in the Acevedo Escrow Account until

signatory on the Acevedo Escrow Account. proceeds from the sale of the marital home ($28,634.52). Mr. Gray was the only 62. On April 4, 2000, Mr. Gray opened the Acevedo Escrow Account and deposited the net

Acevedo, was represented by Attorney Bradley Lown. 61. Mr. Gray represented Anthony Acevedo in his divorce. His wife, Jeanne Marie R.

($72,923.11). indicating that, as of October 8, 1998, Mr. Hall had received the total amount owed him Strafford County Probate Court, Mr. Gray included a receipt signed by Mr. Hall falsely 60. Significantly, in the Estate's Accounting which Mr. Gray filed on October 8, 1999, in p. 9 p. 10 {C0142590.1 } 10

accounts by a minimum of$389,053.60. 77. As of April 30, 2004, Mr. Gray was out of trust with respect to Mr. Gray's clients' trust

Rule 1.15(a)(1): Failure to Safeguard Ciient Property'

violated the following Rules of Professional Conduct: Conduct Committee concludes that there is clear and convincing evidence that Mr. Gray has The above-listed facts having been found by clear and convincing evidence, the Professional

question from his firm's trust account. 76. In all of the above instances, Mr. Gray should have been disbursing the money in

(rather than trust) account. See Audit Report at pp. 42-43. Report lists eight clients on whose behalf payments were made from his firm's operating 75. In addition to retainer refunds from Mr. Gray's firm's operating account, the Audit

Report at pp. 40-42. fifteen clients, ten had no funds available in Mr. Gray's firm's trust account. See Audit firm's operating (rather than trust) account. See Audit Report at pp. 39-42. Of those 74. The Audit report lists fifteen clients to whom Mr. Gray remitted retainer funds from his

of the shortfalls due to his misappropriation of funds in this account. money with his firm's trust account to bolster the overall balance, as Mr. Gray was aware from his firm's trust account. See Audit Report at pp. 32-39. Mr. Gray commingled his 73. The Audit Report also lists numerous instances where Mr. Gray did not remove his fees

out of trust. See Audit Report at pp. 25-30. 72. The Audit Report lists sixteen other clients for whom Mr. Gray's firm's trust account was

$20,926.34, and for the Acevedo Escrow Account, Mr. Gray removed $27,106.34. taking funds from his firm's trust account. For the Bonner Trust, Mr. Gray removed Bonner Trust Account and Acevedo Escrow Account (which Mr. Gray had depleted) by 71. As explained above (and in greater detail in the Audit Report), Mr. Gray reimbursed the

remaining balance into his firm's operating account. On February 22, 2002, Mr. Gray closed the Acevedo Escrow Account by transferring the interest between May 15,2001, and February 15,2002, raising the balance to $2,900.20. 70. The amount remaining in the Acevedo Escrow Account ($2,874.56) earned $25.00 in p. 11 {COI42590_1} 11

9,2001. Acevedo (March 12, 2001). Instead, Mr. Gray held onto Mr. Acevedo's money until July funds (at the latest) on or about the same time Mr. Gray belatedly disbursed funds to Ms. of the escrow funds on January 18,2001. Mr. Gray should have disbursed Wrr. Acevedo's 85. In the Acevedo matter, Mr. Gray received the court's order with respect to disbursement

disbursement check on May 1, 2000, one year and eight months after the closing. which he was entitled shortly thereafter. Instead, Mr. Gray issued Mr. Hall's final Estate) occurred on October 2,1998. Mr. Gray should have paid Mr. Hall the money to for an excessive amount of time. The closing on the real estate (central asset of the 84. In the Harriman matter, Mr. Gray retained control of funds to which Mr. Hall was entitled

Rule 1.IS(b): Failure to Promptly Deliver Fuuds to Clients

1.15(a)(2), as well as N.H. Sup. Ct. R 50(2)A, C & F. that Mr. Gray's failure in this regard constitutes a violation ofN.H. R. Prof. Conduct 83. Based upon all of the aforementioned facts, there exists clear and convincing evidence

pages to what Mr. Calaman characterized as"unidentified disbursements." of the recorded transactions with specific clients. The Audit Report devotes two full 82. Due to the inadequacy of Mr. Gray's fmancial records, Mr. Calama.tl could not match all

accounts and special trust accounts. account. Mr. Gray failed in the same respects with Mr. Gray's individual client escrow ledgers for his firm's trust account, nor did Mr. Gray perform reconciliations on this organization to any of [Mr. Gray's] firm's records." Mr. Gray maintained no client Supreme Court Rules. Indeed, as the Audit Report concluded, there"was little or no 81. Mr. Gray did not maintain his accounting records in accordance with New Hampshire

R. Prof. Conduct 1.15(a)(1). that Mr. Gray's failures to safeguard his clients' property constitutes a violation ofN.H. 80. Based upon all of the aforementioned facts, there exists clear and convincing evidence

with their property, which Mr. Gray held in his firm's trust account. 79. Mr. Gray failed to safeguard his clients' property by commingling his earned legal fees

without proper authorization. Gray's client trust accounts for Mr. Gray's own use prior to earning those funds and funds by failing to deposit client retainers into trust, and by withdrawing funds from Mr. Gray's care over a long period of time. At times, Mr. Gray actively misappropriated 78. Mr. Gray failed to safeguard the assets of Mr. Gray's clients which were entrusted to Mr'. p. 12 {C0142590J } 12

deceitful conduct in violation ofN.H. R. Prof. Conduct 8 .4( c). convincing evidence that Mr. Gray's misappropriation of client funds constitutes authorization. Based upon all ofthe aforementioned facts, there exists clear and accounts for Mr. Gray's own use prior to those funds being earned and without proper Mr. Gray actively misappropriated client funds by withdrawing funds from client trust retainer balances to clients. The Audit Report also reveals numerous instances in which funds into a trust account, failed to safeguard client funds, and failed to return unearned 92. The Audit Report reveals numerous instances in which Mr. Gray failed to place client

Rule 8.4(c): Deceit in Misappropriating Client Funds

Gray's part in violation ofN.H. R. Prof. Conduct 8.4( c). also constitute clear and convincing evidence of acts of dishonesty and deceit on Mr. 91. The misrepresentations on Mr. Gray's Annual Trust Accounting Compliance Certificates

Gray violated N.H. R. Prof. Conduct 3.3(a)(3). upon all of the aforementioned facts, there exists clear and convincing evidence that Mr. 90. Mr. Gray knew of the misrepresentations and failed to take any remedial measures. Based

Conduct 3.3(a)(l). Certificates constitute clear and convincing evidence of a violation ofN.H. R. Prof. 89. Mr. Gray's material misrepresentations on his Annual Trust Accounting Compliance

was not the case. in complete compliance with the appropriate rules. In each instance, Mr. Gray knew that accounting system. In each instance, Mr. Gray indicated that his accounting system was with respectto questions 7( a) and 7 (b), regarding the maintenance of an attorney trust Certificates filed with the New Hampshire Supreme Court from the year 2000 forward 88. Mr. Gray made material misrepresentations on the Annual Trust Accounting Compliance

the question in the affirmative when Mr. Gray knew that was not the case. owed to your clients with respect to such accounts?" In each instance, Mr. Gray answered the balance of funds in your clients' trust account equal or exceed the obligations you with respect to question six, which asks:"At all times since filing your last certificate, did Trust Accounting Compliance Certificates filed with the New Hampshire Supreme Court 87. From the year 2000 forward, Mr. Gray made material misrepresentations on the Annual

Laek of Candor Toward New Hampshire Supreme Court

which they were entitled constitutes a violation of N.H. R. Prof. Conduct 1.15(b). that Mr. Gray's failure to deliver promptly to Mr. Hall and Mr. Acevedo the funds to 86. Based upon all of the aforementioned facts, there exists clear and convincing evidence p. 13 {COI42590.1) 13

client. converts client property and causes injury or potential injury to a Disbarment is generally appropriate when a lawyer knowingly

property: Section 4.11 of the Standards provides that in cases involving the failure to preserve client

misconduct; and d) the existence of aggravating or mitigation factors. Standards, §3-0. violated; b) the lawyer's mental state; c) the potential or actual injury caused by the lawyer's The Standards set forth the following factors pertinent to the imposition of sanctions: a) the duty

"considered them when imposing sanctions"). (noting that, although the Court has never formally adopted these Standards, the Court has Coffey's Case, 2005 N.H. LEXIS i26 (N.H. 2005); Shillen's Case, 149 N.H. 132,139 (2003) for Professional Responsibility, Standards for Imposing Lawyer Sanctions (1991). See, e.g., e.g., Feld's Case, 149 N.H. 19,28 (2002). This sanction is also in accord with the ABA Center with the purposes of attorney discipline as described by the New Hampshire Supreme Court. See, concludes that the appropriate discipline in this matter is disbarment. This sanction is in accord Having made the aforementioned findings and rulings, the Professional Conduct Committee

evidence of a violation of N.H. R. Prof. Conduct 8.4(a). the N.H. Rules of Professional Conduct, there necessarily exists clear and convincing 97. Because there exists clear and convincing evidence of the aforementioned violations of

Rule 8.4(a): Misconduct for Violating the Rules of Professional Conduct

Trust funds constitute deceitful conduct in violation ofN.H. R. Prof. Conduct 8.4 (c). that Mr. Gray's misrepresentations in this December 4,2000, "accounting" of the Bonner 96. Based upon all of the aforementioned facts, there exists clear and convincing evidence

Gray made this single disbursement on the eve ofMr. Gray's resignation as Trustee. implied that Mr. Gray had made only one payment to himself as"fees," and that Mr. December 1, 2000, for Mr. Gray's earned fees with respect to Ms. Bonner. This falsely 95. Mr. Gray also included in that"accounting" a single disbursement of $5,692.00 on

made to himself while he was entrusted with Ms. Bonner's money. 94. Mr. Gray failed to include in that"accounting" any of the disbursements that Mr. Gray

December 4, 2000, was misleading and false in material respects. Gray's firm's trust account) which Mr. Gray forwarded to Attorney Aeschliman on 93. The"accounting" of the Bonner Trust monies (in the Bonner Trust Account and Mr.

Rule S.4(c): Deceit Regarding Ms. Bonner's Funds p. 14 {C0142590.1 } 14

File Mark C. Rouvalis, Esquire cc Landya B. McCafferty, Disciplinary Counsel

September 8, 200S

the disbarment of Attorney Douglas C. Gray. directs Disciplinary Counsel to file a Petition with the New Hampshire Supreme Court seeking and its consideration of the appropriate sanction, the Professional Conduct Committee hereby 1.lS(a)(1), l.1S(a)(2), l.lS(b), 3.3(a)(3), 8.4(c), 8.4(a) and Supreme Court Rule SO(2)A, C & F, Based on its findings of violations of the following Rules of Professional Conduct: Rules

disbarment is the appropriate sanction. nature of Attorney Gray's conduct. Accordingly, the Professional Conduct Committee believes into account and which warrant a sanction less than disbarment, given the serious and harmful Professional Conduct Committee is not aware of any mitigating factors which should be taken experience in the practice oflaw. All these aggravating factors are present in this case. The c) a pattern of misconduct; d) multiple offenses; h) vulnerability of victim; and i) substantial as aggravating factors. Under §9.22, aggravating factors include: b) dishonest or selfish motive; trust. Sections 9.2 and 9.3 ofthe Standards layout a variety of factors which can be considered Compliance Certificates which had the effect of concealing his knowing violations of his clients' misrepresentations to the New Hampshire Supreme Court in his Annual Trust Accounting of the trust which his clients placed in Attorney Gray. He also made ongoing material which caused actual or potential injury to his clients. This conduct reflects a devastating breach The conduct engaged in by Attorney Gray constituted knowing conversion of client property

proceedings. significant or potentially significant effect on the legal causes serious or potentially serious injury to a party, or causes a document, or improperly withholds material information and to deceive the court, makes a false statement, submits a false Disbarment is generally appropriate when a lawyer, with the intent

administration of justice or that involves dishonesty, fraud, deceit or misrepresentation to a court: . Section 6.11 of the Standards also indicates that in cases involving conduct prejudicial to the