PEOPLE v. COSTELLO, 781 P.2d 85 (Colo. 1989)

The People of the State of Colorado, Complainant, v. Eugene F. Costello, Attorney-Respondent.

No. 89SA373Supreme Court of Colorado.
Decided October 16, 1989.

Original Proceeding in Discipline

Linda Donnelly, Disciplinary Counsel, George S. Meyer, Deputy Disciplinary Counsel, for Complainant.

Haddon, Morgan Foreman, P.C., Harold A. Haddon, for Attorney-Respondent.

EN BANC

JUSTICE VOLLACK delivered the Opinion of the Court.

[1] In this disciplinary proceeding respondent Eugene F. Costello, who is represented by counsel, and the People entered into a Stipulation, Agreement, and Conditional Admission of Misconduct (stipulation) on August 23, 1989. An inquiry panel of the Grievance Committee approved the stipulation on September 16, 1989, and referred the matter to this court. We placed respondent under immediate suspension on August 25, 1989. We approve the stipulation and order that respondent be disbarred and that he be required to pay restitution.

Page 86

I.
[2] Respondent Eugene Costello was admitted to the bar of this court on September 29, 1954, and is therefore subject to the jurisdiction of this court and its Grievance Committee.

II.
[3] The stipulation in this matter detailed four counts of misconduct by respondent. Respondent admitted the allegations contained in the four counts on the condition that the inquiry panel and this court accept the stipulation.

[4] Count one of the stipulation states that in approximately 1983 respondent served as the personal representative of the Estate of Alta Collier. At the same time respondent was a shareholder in, and the secretary of, a publicly traded corporation. The corporation was involved in litigation and needed to post an appeal bond in order to avoid execution on a judgment. Respondent withdrew $152,000 from the Collier estate to post the bond.

[5] When the corporation lost its appeal it lacked the funds to repay the Collier estate, so respondent withdrew funds from two other estates, the Estate of John Hughes and the Estate of Edna Lowe, to repay the Collier estate. Respondent presently owes approximately $125,000 to the Hughes Estate and $100,000 to the Lowe Estate.

[6] Count two of the stipulation states that from approximately 1986 to 1987 respondent converted funds from four estates while serving as personal representative for them. The stipulation identifies the Estate of John Williams, the Estate of Verna Hankins, and the Estate of Kurt Von Kaulla as estates from which respondent converted funds. Respondent has repaid most of the money to the Hankins Estate, but respondent still owes approximately $230,000 to the Williams and Von Kaulla estates.

[7] Count three of the stipulation states that in 1988 and 1989, respondent converted $32,000 of settlement proceeds placed into his trust fund account for the benefit of two of his clients, Mrs. Orrell Newstrom and Mrs. Virginia Razee. Respondent has not repaid Mrs. Newstrom or Mrs. Razee.

[8] Count four of the stipulation states that while respondent was serving as the President of the Laradon Endowment Foundation, respondent transferred $300,000 of foundation funds into his trust account and converted those funds. The board of directors of the foundation did not approve this transfer of funds, and respondent has not repaid the foundation.

[9] Respondent admits that the conduct described in the four counts of the stipulation violated Rule 241.6(1), (3), and (5)[1] of the Colorado Supreme Court Rules concerning discipline of attorneys, as well as DR 1-102(A)(1) and (3)-(6),[2] DR 7-101(A)(1),[3] and

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DR 9-102(B)(4).[4]

[10] Respondent does not have a record of prior misconduct.

III.
[11] In the stipulation, respondent agrees to “an order of restitution requiring him to make whole any and all clients injured by respondent’s conversion of funds.” The stipulation contains respondent’s consent to his disbarment. We approve the stipulation and its disciplinary recommendations.

[12] Respondent’s decision to accept disbarment is consistent with Section 4.11 of the ABA Standards for Imposing Lawyer Sanctions (1986), which provides that: “Disbarment is generally appropriate when a lawyer knowingly converts client property and causes injury or potential injury to a client.” We have previously held that “[m]isuse of funds by a lawyer strikes at the heart of the legal profession by destroying public confidence in lawyers,” and that “[t]he most severe punishment is required when a lawyer disregards his professional obligations and converts his clients’ funds to his own use.” People v. Buckles, 673 P.2d 1008, 1012
(Colo. 1984).

[13] We order that the respondent, Eugene Costello, be disbarred and that his name be stricken from the roll of lawyers authorized to practice before this court. Respondent is further ordered to pay restitution and interest pursuant to section 5-12-106(2), 2 C.R.S. (1988 Supp.), and section 13-21-101(3), 6A C.R.S. (1987), from the date of conversion.