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Note: Paul Arthur Johnson (Lawyer) a member of the California and New York Bars served as escrow agent for Arthur Tucker (Fraudster). In two instances, funds were placed in Lawyer’s trust account by Peter DeCuir and Lili Chen (Victims), whom Fraudster had convinced to invest in a fake start-up by means of of a “bank guarantee/standby line of credit”. Victims were to deposit collateral in Lawyer’s trust account to provide a bank with proof of ability to pay. Fraudster told Victims their investment was never at risk as it was safe in Lawyer’s trust account. Lawyer made unilateral payments of both deposits to Fraudster for the balance of the trust accounts without Victims’ consent.

Following the discovery of this action, Lawyer was charged with misconduct by the California State Bar. The California Bar Court recommended that Lawyer be expelled from the bar. Lawyer had argued that he owed no fiduciary duty to Victims as an escrow agent, and therefore had not done anything wrong. The California Bar Court determined that Lawyer owed a duty to protect the funds in its trust account, regardless of general fiduciary duties. The California Bar Court therefore recommended that Lawyer be expelled from the California Bar. The California Supreme Court accepted these recommendations, and expelled Lawyer from the California Bar.

In this action, the Grievance Committee for New York’s Tenth Judicial District concluded that reciprocal punishment was appropriate, and recommended that Lawyer be expelled from the New York Bar. The New York State Supreme Court, Appellate Division, Second Department, Per Curiam, determined that reciprocal punishment was appropriate and expelled Lawyer from New York State Bar.

[ARB]

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