Opinions and Orders

STATE OF MICHIGAN Attorney Discipline Board

Grievance Administrator,

filED AH ORNEY DISCIPLINE BOARD

" APR 18 AH fl: 35

Petitioner/Appellant,

v Ronald G. Kraft, P 16196, Respondent!A ppellee, Case No. 09-59-GA Decided: April 18, 2011 Appearances: Frances A. Rosinski, for the Grievance Administrator, Petitioner/Appellant Ronald G. Kraft, Respondent!A ppellee

BOARD OPINION

Respondent, Ronald G. Kraft, was the subject of an order ofr evocation and restitution issued by Tri-County Hearing Panel #72 of the Attorney Discipline Board on September 28, 2010. Respondent petitioned for review of that order on the grounds that his letter of resignation from active membership in the State Bar of Michigan, submitted prior to the hearing before the panel, deprived the panel ofj urisdiction. The Attorney Discipline Board has conducted review proceedings in accordance with MCR 9.118 and has considered the arguments and briefs submitted by the parties. For the reasons discussed below, we conclude that respondent's argument is without merit and that the hearing panel's order of revocation and restitution should be affirmed. ProceedinKs Before the HearinK Panel The Grievance Administrator filed a formal complaint on June 29, 2009, alleging five separate counts of professional misconduct. As of that date, respondent's license had already been suspended for approximately 16 months as the result of an order of suspension and restitution suspending his license for 48 months effective February 21, 2008. Grievance Administrator v Ronald G. Kraft, ADB Case No. 07-37-GA. Respondent's default for failure to file an answer to the

Grievance Administrator v Ronald G. Kraft, Case No. 09-59-GA -- Board Opinion

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complaint was entered on August 13, 2009. On September 24, 2009, respondent faxed to the Attorney Grievance Commission a proposed "Resignation Pursuant to an Order of Revocation," accompanied by a copy of his handwritten letter stating that he wished to take that action because "I do not intend to return to the practice oflaw or have hearings related to same." Upon receiving a copy of that message, the Attorney I?iscipline Board's Executive Director wrote to the parties, citing MCR 9 .115(M) which states that a lawyer who is the subj ect of formal discipline proceedings cannot resign except through an order of revocation and inquiring whether the Grievance Administrator had any objection to the immediate entry of an order revoking respondent's license. The Administrator's counsel responded by stating that while the Administrator had no objection to the entry of such an order, the Administrator was requesting a formal hearing before the panel "so that the order of revocation may accurately reflect that respondent is in default for failing to answer the formal complaint and so that the Grievance Administrator may present argument for restitution." On October 9, 2009, the hearing panel entered an order expressing the panel's intent to enter an order ofr evocation but giving the Grievance Administrator an opportunity to object and to submit an itemized statement of the amounts which would be claimed for restitution should the matter proceed to a hearing. The Administrator filed a written request for restitution to four complainants in the total amount of $20 1,751.77. That itemization prompted a written response from respondent denying that he owed any money to the listed individuals and/or that he could not reply because he was bound by certain attorney/client privileges. Respondent formally submitted his resignation, with an agreement to the entry of an order of revocation, to the panel on October 26, 2009. A hearing before the panel was scheduled for June 14, 2010. The week before that hearing, respondent Kraft submitted a two page letter, with 43 pages of attachments, stating that "upon my resignation 1 believe 1 am not within the jurisdictional control of the Attorney Discipline Board or the Attorney Grievance Commission. As such, 1 will not be appearing at the scheduled hearing on June 14,2010, at 9:30 am." True to his word, respondent did not appear. The panel announced that respondent had taken no steps to set aside the default filed ten months earlier and that the misconduct charged in the complaint was therefore deemed to be admitted. The panel further announced that because respondent was not present and had waived his opportunity to offer any evidence in mitigation, there would be no point in considering aggravating factors since the panel had already clearly announced

Grievance Administrator v Ronald G. Kraft, Case No. 09-59-GA -- Board Opinion

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its intention to impose the sanction of revocation. The remainder of the hearing was therefore devoted to the Grievance Administrator's presentation of testimony and documentary evidence in support of the claims for restitution. The hearing panel's order ofr evocation and restitution entered September 28,2010, includes an order ofr estitution to the four complainants in the aggregate amount of$160,042.00. The charges of misconduct and the hearing panel's findings are set forth in the formal complaint, attached to this opinion as Appendix A. The hearing panel's report of September 28, 2010, is attached as Appendix B. Discussion The respondent's petition for review presents this issue: Did respondent's written offer of resignation and request for the entry of an order of revocation deprive the hearing panel ofj urisdiction to consider the Grievance Administrator's request for restitution?

As the Grievance Administrator properly points out, respondent cannot avoid accountability for his alleged wrongdoing by submitting a "resignation" and choosing to walk away from the proceeding. MCR 9.115(M) speaks plainly to the situation presented here: An attorney's request that his or her name be stricken from the official register of attorneys may not be accepted while a request for investigation or a complaint is pending, except pursuant to an order of revocation.

In this case, respondent does not claim that his resignation - either his faxed letter to the Grievance Commission of September 24,2009, or his submission to the hearing panel on October 26,2009-was "accepted" by the hearing panel, the State Bar of Michigan, the clerk of the Supreme Court or any other body charged with maintaining an official register of actively licensed attorneys. Instead, respondent argues that he was not notified that his resignation was not accepted. In fact, the hearing panel made it quite plain to respondent that his attempted resignation had not been accepted and that further proceedings before the panel might be held. In its order of October 9,2009, the panel stated its intention to follow MCR 9. 115(M) by issuing an order revoking respondent's license but, the panel continued, Any objection to the entry of such an order must be filed, in writing, no later than 14 days after the date of this order. If the Grievance Administrator wishes to seek restitution, a written request for restitution must be filed within 14 days of the date ofthis order and

Grievance Administrator v Ronald G. Kraft, Case No. 09-59-GA -- Board Opinion

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shall include an itemization of the amounts claimed in restitution. Respondent may file a response to a request for restitution within 14 days after the request is filed. Copies of requests or objections regarding restitution should be served upon the complainants.

The panel's order then concluded: Respondent's resignation pursuant to MCR 9 .115(M) has been taken under advisement by the hearing panel pending its review of any objections and/or requests submitted by the parties in accordance with this notice.

As stated above, the Administrator's counsel provided a written itemization oft he restitution claimed on behalf of four complainants and respondent filed written objections. There should have been no question in respondent's mind that the issue of restitution had been joined and that restitution would be the focus of the hearing subsequently scheduled by the panel. At the review hearing conducted by the Board on March 9, 2011, respondent offered a brief explanation as to why the panel's findings on restitution were not meritorious. He was then asked by a member of the Board why he did not choose to make those arguments to the panel: Mr. Kienbaum: You apparently just took the position they don't have jurisdiction, I'm not going to show up. That's a heck of a gamble. Why did you take that gamble?

Mr. Kraft: Mr. Kienbaum: Mr. Kraft: Mr. Kienbaum: Mr. Kraft:

Well, to me it wasn't a gamble. I felt that-You thought you were right? I thought I was absolutely right. You still think you're right? I think I'm absolutely right right now. [Tr 03/09/11, p 8.]

Notwithstanding respondent's certainty, we do not find any ambiguity in the language of MCR 9.115(M), nor do we find any error in the procedure utilized by the hearing panel. Moreover, the plain language ofMCR 9 .115(M) and its application in this case is entirely consistent with Rule 3 (E) of the Supreme Court's Rules Governing the State Bar: Resignation does not deprive the Attorney Grievance Commission or the Attorney Discipline Board ofj urisdiction over the resignee with respect to misconduct that occurred before the effective date of the resignation.

Grievance Administrator v Ronald G. Kraft, Case No. 09-59-GA -- Board Opinion

Page 5

Conclusion The rules governing discipline proceedings in Michigan make it clear that a lawyer facing disciplinary charges cannot avoid a discipline proceeding - including proceedings to determine restitution - by offering to resign if an investigation or formal proceedings have commenced. With knowledge of the potential consequences, respondent elected not to answer the formal complaint in this case and chose not appear before the panel to contest the evidence submitted by the Grievance Administrator in support of claims for restitution. The proceedings before the hearing panel were consistent with the applicable rules and the resulting order of revocation and restitution is affirmed.

Board Members William J. Danhof, Thomas G. Kienbaum, Andrea L. Solak, Rosalind E. Griffin, M.D., Carl E. Ver Beek, Craig H. Lubben, James M. Cameron, Jr., and Sylvia P. Whitmer, Ph.D., concur in this decision.

Board Member William L. Matthews was absent and did not participate.

Appendix A

State of Michigan Attorney Discipline Board

.fiLED AT roRNEY DISCIPLINE BOARD 09 JUN 29 PH 4: 56

Grievance Administrator, Attorney Grievance Commission, State of Michigan,

Petitioner, v Ronald G. Kraft, P-16196, Respondent. ______________________________~ I

Case No. 09-59-GA

Formal Complaint

Petitioner, upon information and belief, states the following:

1. Respondent, Ronald Kraft, was licensed to practice law in Michigan in 1961, and by virtue of said license is a member of the State Bar of Michigan who is subject to the jurisdiction of the Michigan Supreme Court and the Attorney Discipline Board in matters of discipline for professional misconduct. 2. Respondent last maintained an office for the practice of law in the County of Oakland, State of Michigan. 3. As an attorney subject to the rules and regulations of the Michigan Supreme Court, Respondent is subject to the standards for discipline set forth in MCR 9.1 04(A) and MRPC 1.0(b).

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Count One (Kukhahn Estate)

4. On or about June 24, 2004, Respondent appeared in the Estate of Carl F. Kukhahn (Kukhahn Estate) as the attorney for the co-personal representatives, Joanne Hall and Bruce Kukhahn.

5. On June 25, 2004, Bank One issued an $118,800.59 check to the Kukhahn Estate which closed out Cark Kukhahn's two bank accounts. 6. On June 25,2004, Respondent, as a "known customer," opened an account at Fidelity Bank in the name of Estate of Carl Kukhahn, Jr., Dec'd, Bruce D. Kukhahn and Joanne M. Hall, Co-Pers Rep, Ronald G. Kraft Agent, with Respondent's office address (Estate Account). Respondent, Bruce Kukhahn, and Joanne Miller were signatories. 7. On June 25,2004, Respondent deposited the $118,800.59 check into the Estate Account.

8. From June 25, 2004 through November 15, 2006, when the Estate Account was closed, Respondent systematically depleted the account by numerous checks written to himself in varying amounts ranging from $500 to $7,500 for a total of $93,095.00. 9. Respondent deposited at least a portion of the $93,095.00 he took from the Estate Account into his personal account at Comerica Bank in the name of Ronald G. Kraft and Marlene l. Kraft, account no. 373140748 and his business checking account in the name of Ronald G. Kraft, account no. 1840076671. 10. Respondent never informed his clients of his withdrawal of the Estate funds. 11. Respondent did not file an inventory in the Kukhahn Estate identifying the $118,800.59.

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12. In an answer to a request for a Special Fiduciary filed on or about November 24. 2007. Respondent represented to the probate court that the "largest asset of the estate is a house, ... land up North and some cash." 13. On January 29, 2008, the probate court removed Bruce Kukhahn and Joanne Hall as the co-personal representatives. 14. On February 25, 2008, the appointed personal representative, Eric Braverman, filed a petition to surcharge Bruce Kukhahn and Joanne Hall as the co­personal representatives for the monies missing from the Kukhahn Estate. 15. Respondent did not disgorge any portion of the $93,095.00 he took from the Estate Account until he was ordered to do so and jailed by the Wayne County Probate Court after which he paid $25,000. Respondent then filed bankruptcy. 16. By reason of the conduct described above in this complaint, Respondent has violated MCR 9.1 04(A)( 4) by engaging in the' following professional misconduct:

a)

b)

c)

failing to explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation, in violation of MRPC 1.4(b); failing to hold property of clients or third persons in connection with the representation separate from the lawyer's own property, in violation of MRPC 1.15(d); knowingly making a false statement of material fact to a tribunal, in violation of MRPC 3.3(a)(1);

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d)

e)

f)

g)

engaging in conduct involving dishonesty, fraud, deceit, misrepresentation, or violation of the criminal law, where such conduct reflects adversely on the lawyer's honesty, trustworthiness, or fitness as a lawyer, in violation of MRPC 8.4(b); engaging in conduct that exposes the legal profession or the courts to obloquy, contempt, censure, or reproach i~ violation of MCR 9.1 04(A)(2); engaging in conduct contrary to justice, ethics, honesty, or good morals, in violation of MCR 9.104(A)(3); and, violating or· attempting to violate the Rules of Professional Conduct in violation of MRPC 8.4(a).

Count Two (Keyotta Miles)

17. In or about April of 2005, Respondent was retained by Keyotta Miles to handle her claims for injuries arising out of an automobile accident that happened on April 23,2005. 18. Ms. Miles signed a written contingent fee agreement which allowed Respondent to be paid 1/3 of the total recovery, plus costs. 19. Respondent negotiated with the Avis Budget Group (Budget) for PIP benefits, including lost wages, and with AAA for liability. 20. In December of 2005, Budget began issuing checks payable to Ms. Miles.

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21. During 2006 and 2007, Ms. Miles asked Respondent about the status of checks from Budget. 22. During 2006 and 2007, Respondent told Ms. Miles that he had not received any checks from Budget. 23. Ms. Miles never gave Respondent or any other person authority to sign her name to any document or check. 24. Respondent signed or caused Ms. Mile's name to be signed as an endorsement on the following checks issued by Budget and then deposited them: Date

12/5/05

3123/06

4/12/06

4/12/06

3/1107

3/2/07 25. On or about October 9, 2006, Respondent received a $3,200.00 check from Budget payable to "Law Office of Ronald Kraft." 26. Respondent never advised Ms. Miles of the $3,200.00 check, nor did he pay her any funds due to her from this check. 27. On December 12, 2005, Respondent deposited the $27,518.75 check into an . account at Fidelity Bank in the name of Ronald G. Kraft, Attorney at law, Clients Trust Account-IOLT A, account number 281 01495 (Fidelity 10LT A). The balance on December 12,2005 was $55,233.47.

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28. Respondent did not advise Ms. Miles of any costs incurred on her behalf as of December 12, 2005, nor was Ms. Miles aware of any costs Respondent could have incurred on her behalf as of December 12, 2005 except for a possible deposition cost. 29. Ms. Miles share of the $27,518.75 was $18,162.37. 30. After the deposit of $27,518.75, Respondent made the following payments from the Fidelity IOLT A to Ms. Miles: Date Amount Check No.

12/19/05

12/19/05

12/28/05

12/28/05

1/10106

$1,000

$1,000

$1,000

$4,000

$3,000

1173

1174

1183

1184

1190

1/18/06 $7,342 1197 with memo "Balance of no-fault benefits" 31. After the deposit of the $27,518.75 check dated December 5,2005 through January of 2006, Respondent made the following withdrawals from the Fidelity IOLT A to himself or on behalf of himself: Date Payee Amount Check No.

12/12/05

12/12/05

12/13/05

12/13/05

12/13/05

12/15/05

Respondent

Respondent

Cash

Respondent

Lord & Taylor

Respondent

$1,000

$1,000

$ 400

$1,000

$ 405

$ 750

1164

1165

1167

1168

1168(sic)

1171

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12/16/05 12/20105 12/2/05 (sic) 12/21/05 12/22/05 12/22/05 12/29/05 12/29/05 1/6/06 1/10106 1/12/06 1/13/06 1/17/06

Respondent Respondent Respondent Marshall Fields Respondent Respondent Respondent Respondent Respondent Respondent Lord & Taylor Respondent Respondent

$2,200 $2,500 $ 850 $ 355 $1,000 $ 500 $1,500 $ 500 $ 500 $ 500 $ 110 $ 500 $1,500

1172 1176 1178 1178(sic) 1180 1181 1185 1186 1188 1189 1192 1194 1195

32. Respondent did not notify Ms. Miles of his receipt of the checks issued in 2006 and 2007, listed above. 33. In or about October 2007, Ms. Miles contacted Budget and was advised of the checks issued in 2006 and 2007. 34. Respondent's representations to Ms. Miles that he had not received any checks from Budget during 2006 and 2007 were false and were known by him to be false for the reason that he had received checks from Budget, as described above.

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35. Respondent did not pay Ms. Miles any portion of the $10,273.64, the $9,225.24, orthe $15,725.00 checks, listed above, until after Ms. Miles initiated a Request for Investigation against Respondent on November 8, 2007 with the Attorney Grievance Commission, File no. 2869/07. 36. In or about November of 2006, Respondent negotiated a $90,000 settlement for Ms. Miles with AAA. 37. On November 29,2006, AAA issued a $1,242.89 check to the United States Treasury to satisfy a tax levy against Respondent which was required before Ms. Miles could receive her settlement proceeds. 38. On November 30,2006, AAA issued an $88,757.11 check payable to Ms. Miles and Respondent. 39. Respondent did not advised Ms. Miles of his receipt of the AAA settlement check on or about November 30, 2006. 40. Ms. Miles did not endorse the AAA check. 41. Respondent signed or caused Ms. Mile's name to be signed as an endorsement onto the AAA check. 42. Despite being requested to do so, Respondent has not provided information to the Attorney Grievance Commission about where he deposited the AAA check. 43. Based on their written contingent fee agreement, Ms. Miles was due $60,000, less costs, from the AAA settlement. 44. Respondent did not advise Ms. Miles of any costs incurred on her behalf as of November 30, 2006, nor was Ms. Miles aware of any costs Respondent could have incurred on her behalf as of November 30, 2006.

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45. Respondent never issued a check to Ms. Miles for $60,000 for her share of the AAA settlement. 46. On January 11,2007, Respondent opened an account at TCF Bank in the name of Ronald G. Kraft Attorney at law, 10lTA Trust, account no. 3883556997 (TCF account), with a $30,000 deposit. 47. The TCF account was not an 10lTA. 48. On May 16, 2007, Respondent deposited into the TCF account a $32,000 check issued to him and his wife, Marlene Kraft, as "JTWROS" from Merrill, lynch from an "Office Disbursement Account." 49. On or about May 23,2007, Respondent issued a $30,268 check to Ms. Miles from the TCF account, check no. 1040, which was returned for nonsufficient funds. 50. In October of 2007, Respondent finally paid Ms. Miles $30,268 by cashier's check. 51. Respondent has not paid the balance owed to Ms. Miles from the AAA settlement. 52. Respondent represented to Ms. Miles that he would pay her medical bills from the monies paid by Budget and/or AAA. 53. As of July 2008, Ms. Miles' credit report reflects unpaid medical bills relating to her injuries resulting from the automobile accident in the approximate amount of $1,254.00. 54. During the grievance administrator's investigation of AGC File #2869/07, the grievance administrator demanded that Respondent produce his client file and copies of all

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checks and bank records pertaining to Ms. Miles' funds by letters dated January 16, 2008 and May 13, 2008, and a subpoena dated June 13, 2008. 55. Despite the requested extensions being granted to Respondent for production of the requested information, Respondent never produced his complete client file, copies of any checks, nor any bank records pertaining to Ms. Miles funds. 56. Respondent did not maintain complete records ofthe funds he received on behalf of Ms. Miles or disbursed to her. 57. Neither Respondent nor Ms. Miles can establish whether Ms. Miles has received all of the funds to which she is entitled due to Respondent's lack of records of her funds. 58. By reason of the conduct described above in this complaint, Respondent has violated MCR 9.104(A)(4) by engaging in the following professional misconduct:

a)

b)

c)

failing to keep his clients reasonably informed about the status of his matter and to promptly comp1y with reasonable requests for information, in violation of MRPC 1.4(a); faiting to communicate with his clients to the extent reasonably necessary for the clients to make informed decisions regarding the representation, in violation of MRPC 1.4(b); failing to notify his client when funds in which the client has an interest is received, in violation of MRPC 1.15(b)(1);

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d)

e)

f)

g)

h)

i)

j)

k)

failing to preserve complete records of such account funds, in violation of MRPC 1.15(b) (2); failing to promptly pay funds that his client is entitled to receive and to promptly render a full accounting upon request, in violation of MRPC 1.15(b)(3); knowingly failing to respond to the Grievance Administrator's demand for information, in violation of MRPC 8.1(a)(1); engaging in conduct involving dishonesty, fraud, deceit, misrepresentation, or violation of the criminal law, where such conduct reflects adversely on the lawyer's honesty, trustworthiness, or fitness as a lawyer, in violation of MRPC 8.4(b); engaging in conduct prejudicial to the administration of justice, in violation of MCR 9.104(A)(1); and MRPC 8.4(c); engaging in conduct that exposes the legal profession or the courts to obloquy, contempt, censure, or reproach in violation of MCR 9.1 04(A)(2); engaging in conduct contrary to justice, ethics, honesty, or good morals, in violation of MCR 9.104(A)(3); and, violating or attempting to violate the Rules of Professional Conduct in violation of MRPC 8.4(a).