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11/23/87 In Re Michael Masaharu Ushijima

November 23, 1987



518 N.E.2d 73, 119 Ill. 2d 51, 115 Ill. Dec. 548 1987.IL.1735

Disciplinary proceeding.

Rehearing Denied February 2, 1988


JUSTICE SIMON delivered the opinion of the court. JUSTICE WARD took no part in the consideration or decision of this case.


The Administrator of the Attorney Registration and Disciplinary Commission filed a two-count complaint charging the respondent, Michael Masaharu Ushijima, with misappropriation of client funds, and with giving false testimony in a garnishment proceeding in an attempt to conceal that misappropriation. The Hearing Board found that the respondent had inadvertently failed to preserve the identity of client funds but had not converted any funds or knowingly given false testimony. Concluding that the respondent was nevertheless guilty of unprofessional conduct, the Hearing Board recommended that respondent be censured. Based on its own findings that the respondent had converted client funds and had tried to conceal that conversion by giving false testimony, the Review Board reversed the findings of the Hearing Board and recommended that the respondent be suspended for one year. The Administrator argues for more severe sanctions, while the respondent maintains that neither suspension nor censure is justified in this case.

Because the Review Board's factual findings differ substantially from the Hearing Board's, it is important to summarize the record in order to explain those differences. In January 1977, complainants, Monique Zermatten and David and Marcella Meglay met with the respondent to discuss legal problems arising from their investments in a film entitled "The Last Affair" and in Chelex, Ltd., a corporation formed to acquire and operate what was formerly the Playboy Theatre on North Dearborn Street in Chicago. After an unsuccessful attempt to manage the theatre themselves, complainants decided to sell Chelex' leasehold interest in the theatre. Together with an attorney for the other Chelex investors, the respondent prepared the necessary documents and represented complainants in the negotiation and closing of the sublease sale.

Pursuant to the sale contract, the leasehold assignee tendered to the respondent earnest money totaling $11,171.85. Respondent deposited this money into an escrow account from which certain outstanding debts of Chelex, such as State and Federal taxes, were to be disbursed. Complainants maintain that they did not authorize the respondent to withdraw $2,000 in fees from this account; the respondent testified that complainants had authorized this payment. The Hearing Board concluded that the authority should have been in writing, but the Review Board found that the respondent never had the authority to withdraw the $2,000.

By the end of 1977, several other checks were issued from this account: $3,565.11 payable to the Internal Revenue Service in partial payment of Chelex' tax obligations; $259.32 payable to Illinois Department of Revenue in payment of Chelex' obligations to that Department; an additional $2,000 payable to the respondent's office account; and at least two additional checks payable to the respondent in the total amount of $1,350. On January 19, 1978, in a garnishment proceeding brought against Chelex, respondent testified that all the escrow funds had been disbursed and that he had three cancelled checks evidencing the payment of $5,347.42 to the I.R.S. and the State Department of Revenue. On March 15, 1978, respondent filed an affidavit informing the court that his testimony was mistaken: he had no evidence that the revenue authorities had been paid. Here again, the findings of the Hearing Board differ from those of the Review Board; the Hearing Board found that the respondent had not knowingly made a false statement, and the Review Board found that false statements were made in an attempt to conceal the conversion of clients' funds.

In 1979 the I.R.S. contacted the complainants on several occasions concerning the tax obligations of Chelex, which respondent told complainants had been paid. Beginning late in 1979 and continuing through 1981, complainants requested from the respondent an accounting of the disbursements from the escrow fund. On November 20, 1981, in response to an inquiry from the Administrator, the respondent tendered a document that showed that the balance of the escrow fund ($5,347.42) had been transferred to the respondent, purportedly for fees and costs. On November 10, 1983, nearly four months after the Administrator's complaint in this matter had been filed, the respondent issued three checks to the revenue authorities in payment of Chelex' remaining obligations. Respondent testified that he delayed making these payments because he was angry at his clients, who had refused to pay his fees. The Hearing Board found that the balance in the escrow fund had been transferred inadvertently to respondent's general office account and, while this handling of the escrow was sloppy and unprofessional, it did not constitute conversion. In contrast, the Review Board found that respondent's conduct was a conversion of client funds, and that the failure to provide clients with an accounting of escrow disbursements further supported its recommended sanction.

Our review of this matter is guided by the principles set forth in In re Hopper (1981), 85 Ill. 2d 318, 323:

"he hearing panel's recommendation is advisory and not binding; yet, it is entitled to virtually the same weight as that of a trier of fact in a judicial proceeding. (In re Wigoda (1979), 77 Ill. 2d 154, 158.) Where the question is the credibility of witnesses, resolution of conflicting testimony, or other such fact-finding judgments, the hearing panel should be afforded a good deal of deference. There is great advantage, when finding facts, to hearing live witnesses instead of reading a cold record. Thus, the hearing panel's finding is entitled to great weight when the panel is acting as a trier of fact. But when it comes to imposing discipline, the final responsibility rests with this court. [Citation.] The recommendations of the hearing panel and Review Board will be considered only as recommendations, as suggestions. This court is not required to adopt them."

Having reviewed the record, we believe that the Review Board did not give due deference to the trier of fact in making several of its factual findings. In particular, there is conflicting evidence regarding the respondent's authorization to withdraw the first $2,000 and whether the respondent knowingly made false statements in the garnishment proceeding. The Review Board simply reversed the Hearing Board's findings that the respondent was authorized to withdraw $2,000 and had not knowingly made false statements in an attempt to conceal conversion. ...

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