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10/25/89 In Re James Alan Chatz

October 25, 1989

IN RE JAMES ALAN CHATZ, ATTORNEY, RESPONDENT


SUPREME COURT OF ILLINOIS

546 N.E.2d 613, 131 Ill. 2d 499, 137 Ill. Dec. 668 1989.IL.1678

Disciplinary proceeding.

APPELLATE Judges:

JUSTICE RYAN delivered the opinion of the court. CHIEF JUSTICE MORAN took no part in the consideration or decision of this case.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE RYAN

On September 10, 1986, the Administrator of the Attorney Registration and Disciplinary Commission filed a two-count complaint charging that respondent had violated Disciplinary Rule 7 -- 110of the Illinois Code of Professional Responsibility (1977) (Code). The Hearing Board filed a report recommending that both counts be dismissed. The Review Board agreed with the Hearing Board on the dismissal of count I, but found that count II, charging that respondent, in 1978, loaned $5,000 to then Judge Reginald Holzer, stated a violation of DR 7 -- 110. As a result, the Review Board recommended that respondent be suspended from the practice of law for six months. Respondent filed exceptions with this court pursuant to Supreme Court Rule 753(e)(5) (107 Ill. 2d R. 753(e)(5)).

The issues presented for review are whether respondent's conduct violated DR 7 -- 110of the Code and, if so, what sanction, if any, should be imposed.

Respondent was licensed to practice law in Illinois in 1958. Since that time, respondent has practiced with a variety of Chicago-based firms. During the time period at issue here, he was a member of the firm of Chatz, Sugarman and Abrams. After his admission to the bar, respondent concentrated his practice in the areas of commercial law, bankruptcy, and debtor-creditor rights. He has taught at the John Marshall Law School, Northwestern University's Graduate School of Management, and the Illinois Institute of Continuing Legal Education. Respondent has lectured extensively, and has authored numerous articles in the area of commercial law. He is active in various charitable and civic organizations. Before the Hearing Board, prominent members of the legal profession, as well as other respected professionals, attested to respondent's excellent reputation.

Respondent first met Reginald Holzer at Republican Party meetings during the 1960s. Thereafter, although they were not personal friends, respondent would see Holzer at various political and religious functions. In 1976, Holzer, then a circuit Judge in Cook County, told respondent that he was going to run for the office of supreme court Justice and suggested that respondent's name be placed in nomination for circuit court Judge in Cook County. Both respondent and Holzer lost these election bids. In 1978, respondent was selected to become a member of the Republican Judicial Candidates Committee . The committee's duties included slating Republican judicial candidates and conducting fundraising endeavors. Respondent stated that he was selected to the RJCC and named its chairman in February 1978.

In February or March of 1978, Judge Holzer told respondent that he had problems with unpaid debts from his 1976 supreme court judicial campaign, and asked if the RJCC could assist him. Respondent told Holzer that the RJCC could not help. Holzer then asked if respondent would contact the Exchange National Bank in Chicago to see if one of Holzer's loans could be extended. Respondent telephoned the Exchange and helped arrange an extension for Holzer. This refinancing service was the substance of count I of the Administrator's complaint, and is no longer directly at issue here. Nevertheless, respondent at this point knew that Holzer allegedly had problems with campaign finances. On May 10, 1978, Holzer met with respondent for breakfast and told respondent that he was still having problems with campaign debts, and asked respondent for a $5,000 loan. Respondent agreed to make the loan, but told Holzer that he did not have the money and would have to borrow it. Respondent then arranged a short-term loan of $5,000, at 8% interest, from his bank.

On or about May 17, 1978, Holzer telephoned respondent and asked him how the loan was coming along. Respondent told the Judge that a bank had agreed to lend respondent money. Respondent then asked Judge Holzer to whom the check should be made payable. Holzer replied that he was administering his own campaign fund and respondent should make the check out to Holzer personally. Holzer agreed to sign a promissory note for the loan.

On May 23, 1978, respondent met with Holzer and gave him a $5,000 check, payable to "Reginald Holzer." Holzer signed and returned a promissory note to respondent. Neither the note nor the check indicated that the funds were for campaign purposes. The loan was to be repaid on June 30, 1978, with no interest being charged.

Holzer failed to satisfy the loan when due, and respondent had to "roll over" his loan with his bank to avoid default. Respondent repeatedly discussed repayment of the loan with Holzer. Finally, respondent collected $3,000 from Holzer on October 19, 1978, and the balance of $2,000 in January of 1979.

Between 1978 and 1982, respondent's law firm had 12 cases pending before Holzer. In July of 1978, respondent petitioned for a receiver's fee in Schafer v. Three Star Enterprises, 78 -- CH -- 574, a case presided over by Holzer. Two days after respondent contacted Holzer regarding satisfaction of the $5,000 loan, Holzer ordered the plaintiff in the Schafer case to pay respondent $2,650 in fees, plus expenses. Respondent never revealed to opposing ...


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