Bankruptcy Lawyer Misconduct Listed In Suspension Order

10 May Bankruptcy Lawyer Misconduct Listed In Suspension Order

A California bankruptcy court recently cited a catalog of misconduct in suspending a lawyerfrom practice and imposing a steep fine as a sanction for violating Rule 9011.

In re Tran, 2010 WL 1255617 (Bky.N.D.Cal. April 2, 2010), resulted in a thirty day suspension from practice before the bankruptcy court; a $7,500 fine, with $5,000 stayed if the lawyer refrained from filing any more cases without the debtors’ signatures; and disgorgement of the $2,400 in fees paid for the case.

The court found that bankruptcy lawyer Joel J. Margolis had filed bankruptcypapers which had not been signed by the debtors, and thus they contained numerous inaccuracies and omissions. Among these were failure to list a 2008 Mercedes, a furniture store filled with furniture, real estate, and a $13,000 bank account.

The court also found that due to the recurring nature of the lawyer’s misconduct, the bankruptcy court needed to take immediate action to protect the public, rather than waiting for the State Bar to take action. The lawyer’s wife was Vietnamese, and although not a lawyer, she was his principal assistant. “Her main value [was] that she is Vietnamese,” the court noted, and the lawyer “advertise[d] in Vietnamese-language periodicals.” The lawyer “has filed approximately 100 bankruptcy cases for Vietnamese clients.” The court acted to prevent “the continuing victimization of the Vietnamese community.”

The court found that the lawyer had done the following:

He allowed his wife, a non-lawyer, to conduct the initial interview with the debtors, advise them as to the chapter they should file under, and prepare their schedules. Margolis himself spent a total of only about 15 minutes, perhaps less, speaking to the debtors himself. He completely abdicated his responsibilities to his clients, leaving them in the hands of untrained non-lawyers.

Worse, Margolis completely failed to instill in his own staff the importance of the schedulesor the need for complete honesty and disclosure…. The debtors … got the idea that it was normal and expected that they conceal property they wanted to keep…. That led directly to the denial of their discharge.

Consequently, the court suspended the lawyer, imposed monetary sanctions, and set forth educational requirements to be met by the lawyer prior to filing any further bankruptcy cases.

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Craig W. Andresen is a consumer bankruptcy lawyer in Bloomington, Minnesota, with 22 years’ experience in consumer and small business bankruptcy cases. He is the Minnesota chair of the National Association of Consumer Bankruptcy Attorneys, and is a member of the Minnesota State Bar Association’s Bankruptcy Section. Mr. Andresen lectures often on the topic of consumer bankruptcy at local and national legal seminars.
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