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George Trejo Jr. (WSBA No. 19758, admitted 1990), of Yakima, was suspended for three months, effective June 12, 2008, by order of the Washington State Supreme Court following an appeal. This discipline resulted from conduct involving trust-account irregularities and lack of supervision of a non-lawyer assistant. The suspension is to be followed by two years’ probation. For more information, see In re Disciplinary Proceeding Against Trejo, 185 P.3d 1160 (2008).
Since 1995, Mr. Trejo maintained a solo practice with one employee (Ms. G). In May 2003, the Bar Association received notification that Mr. Trejo’s trust account was overdrawn. A few days later, a certified public accountant employed as an auditor by the WSBA requested an explanation of the overdraft. Mr. Trejo explained that Ms. G, after being confronted, admitted to writing checks to herself from the trust account without Mr. Trejo’s permission. Ms. G would deposit the check into her personal checking account to cover personal debts and, later, when her personal account was sufficiently funded, she would write a check back to the trust account. This happened approximately 12 times in amounts ranging from $20 to $2,050.
Ms. G’s check-floating scheme delayed payments to one of Mr. Trejo’s clients, who was receiving checks every two weeks from the Department of Labor and Industries (L&I). The L&I check was deposited into Mr. Trejo’s trust account. Mr. Trejo would then issue a check for 90 percent of the L&I check to the client and issue a check to either himself or to Ms. G for the remaining 10 percent. During the period of January 2002 to May 2003, there were insufficient funds in the client trust account to timely pay the client on five separate occasions. The shortages lasted from a few days to a few weeks. Once Ms. G replenished the trust account, a check was written to the client. Around May 2003, Ms. G’s check to the trust account bounced. This, in turn, caused the check issued to the client to bounce and resulted in an overdraft notification.
Ms. G also admitted to misappropriating two payments for her personal use. She took a check for $860, endorsed it by signing Mr. Trejo’s name, cashed the check, and then misappropriated the funds. Another incident involved a wire transfer of $2,000 into the trust account. Ms. G issued to herself a check for $2,000, again signing Mr. Trejo’s name without his permission. Ms. G was authorized to sign checks using Mr. Trejo’s name, but Mr. Trejo was unaware of any of these activities prior to the May 2003 overdraft notification, because he did not review his bank statements. Mr. Trejo’s law office maintained inadequate trust-accounting procedures and records. His records for the trust account “consisted solely of a handwritten journal that listed the number of the checks written out of the trust account, the date on which the check was issued, the payee, and the amount of the check.” Some of the checks noted which client was associated with the check. Three trust-account checks were not accounted for in the journal. The journal did not track deposits or reflect a running balance. Mr. Trejo kept his monthly bank statements, but did not review them. Mr. Trejo did not reconcile his journal with the bank statements. Mr. Trejo did not maintain individual client ledgers or any records that could be that could be used to accurately determine client balances in the trust account. Thus, Mr. Trejo could not identify the funds in the trust account that belong to each client.
Mr. Trejo did not maintain a bank account in Washington for his personal or business funds. When Mr. Trejo received a check or wire transfer from a client, the funds were deposited into the trust account regardless of their nature. Earned fees were deposited into the trust account 66 times during the audit period. The earned fees constituted $117,782.74 of the $150,599.66 deposited into the trust account from January 2002 to May 2003. Once the earned fees were deposited, a trust-account check was issued to Mr. Trejo or Ms. G, who then cashed the check and kept the cash in Mr. Trejo’s office. Other than the L&I check deposits, client funds were deposited into the client trust account nine times during the audit period. In one instance, Mr. Trejo deposited money into the client trust account and then issued a trust-account check to pay for a personal debt. At the conclusion of her audit, the WSBA auditor explained the proper procedures for handling a trust account and keeping complete records. In March 2004, the auditor conducted a follow-up audit of Mr. Trejo’s trust account. The auditor concluded that Mr. Trejo implemented a number of her recommendations; however, the auditor also found that Mr. Trejo failed to use client ledgers consistently, failed to identify deposits by clients, and failed to reconcile the client ledgers to the check register. Mr. Trejo also continued to deposit earned fees into the client trust account.
Mr. Trejo’s conduct violated former RPC 1.14(a), requiring all funds of a client paid to a lawyer or law firm be deposited in one or more interest-bearing trust accounts maintained as set forth in the rules; former RPC 1.14(b)(3), requiring a lawyer to maintain complete records of all funds, securities, and other properties of a client coming into possession of the lawyer and render appropriate accounts to his or her client regarding them; and former RPC5.3(b), requiring a lawyer having direct supervisory authority over a non-lawyer to make reasonable efforts to ensure that the person’s conduct is compatible with the professional obligations of the lawyer.
Debra J. Slater represented the Bar Association. Mr. Trejo represented himself. Richard B. Price was the hearing officer. |