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Kevin G. Healy (WSBA No. 16307, admitted 1986), of Seattle, resigned in lieu of disbarment, effective August 13, 2008. Kevin G. Healy is to be distinguished from Kevin M. Healy of Sacramento. In connection with his resignation in lieu of disbarment, Mr. Healy admitted that the WSBA could prove by a clear preponderance of the evidence sufficient violations of the Rules of Professional conduct to result in his disbarment, but did not admit any specific misconduct. The misconduct and violations described in the Statement of Alleged Misconduct (none of which is specifically admitted by Mr. Healy) are as follows:
At all relevant times, Mr. Healy owned, managed, and operated two limited liability companies. Between 1989 and 2007, Mr. Healy had attorney-client relationships with six individuals (including two married couples). During the course of and as a result of these attorney-client relationships, Mr. Healy learned that these individuals all had substantial assets. Beginning in 2006, Mr. Healy convinced one married couple to refinance their home to obtain $160,000 and invest that sum in his company. He later solicited an additional investment of $67,000 from the same couple. Mr. Healy convinced the couple’s son and daughter-in-law to also refinance their home to obtain $200,000 and invest that sum in his company. In 2006 and 2007, Mr. Healy solicited contributions in the amounts of $500,000 and $400,000 from two other clients or former clients, and a total of $300,000 from two other individuals. Based upon Mr. Healy’s representations, the two clients and two other individuals used their residences to borrow the money that they loaned to Mr. Healy. Mr. Healy convinced one client, who was a 92-year-old widow, to form a limited liability company for the sole purpose of inducing her to invest over $1,425,000 of her personal funds in his company by refinancing her previously un-mortgaged home and by liquidating her life savings.
Mr. Healy told the investors that he would use the investment monies to purchase and renovate properties between Seattle and Tacoma situated at or near a light-rail line. Mr. Healy documented the transactions in unsecured promissory notes (with the exception of one client, who received no documentation for his $400,000 loan). The promissory notes included provisions that Mr. Healy would make all principal and interest payments each month on the loans, would pay the principal of the loans off by certain dates, and individuals would receive additional cash. Mr. Healy told one client who wanted his loan secured by real property that he would receive a deed in real property to hold as part of the loan transaction. In April 2007, Mr. Healy gave the client a statutory warranty deed to an apartment building in Tacoma, but specifically told the client not to record the deed, thereby providing no security interest for the client.
Mr. Healy never informed these individuals that his companies had substantial debts or of the risks involved in the investments, nor did he suggest that they seek the advice of independent counsel before investing their money. The terms of the investment transactions were not fair and reasonable. Mr. Healy told many of these individuals that their investments would be perfectly safe. He made such statements as “trustworthiness is the heart of this deal” and “I would not do this deal if I did not trust you and feel in turn that you trust me.” He declared in written statements that even his brother was refinancing his home to invest in the company.
Beginning in October 2007, Mr. Healy failed to make payments as required under the terms of his promissory note with one of the individuals. After January 2008, Mr. Healy had failed to make payments as required under the financial agreements with the other individuals. Mr. Healy owes debts to nine individuals, each debt ranging between $190,000 and $1,425,000.
The violations stated in the Statement of Alleged Misconduct constitute a violation of RPC 1.8(a), prohibiting a lawyer from entering into a business transaction with a client or knowingly acquiring an ownership, possessory, security, or other pecuniary interest adverse to a client unless the transaction and terms on which the lawyer acquires the interest are fair and reasonable, the client is advised in writing and given a reasonable opportunity to seek the advice of independent legal counsel, and the client gives informed consent; RPC 1.8(b), prohibiting a lawyer from using information relating to representation of a client to the disadvantage of the client unless the client gives informed consent; RPC 1.9(c), prohibiting a lawyer who has formerly represented a client in a matter, or whose present or former firm has formerly represented a client in a matter, from thereafter using information relating to the representation to the disadvantage of the client or from revealing information relating to the representation, except as permitted by the rules; and RPC 8.4(c), prohibiting a lawyer from engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation.
Kathleen A.T. Dassel represented the Bar Association. John A. Holmes represented Mr. Healy. |