Facts
- F. Lee Bailey, admitted to The Florida Bar on motion in 1989, represented Claude Duboc in federal drug-smuggling proceedings that included extensive criminal forfeiture claims.
- Bailey negotiated an arrangement with federal prosecutors tied to Duboc’s guilty plea, repatriation of assets, forfeiture of Duboc’s property to the United States, and the handling of fees and expenses.
- To fund the marketing, maintenance, and liquidation of Duboc’s assets (including French properties and other holdings), 602,000 shares of Biochem Pharma stock, valued at approximately $5.89 million at the time of transfer, were moved into Bailey’s Swiss account.
- The Florida Bar alleged, and the referee found, that the stock and its proceeds were placed in Bailey’s control for a limited purpose connected to the forfeiture administration and were not Bailey’s personal property.
- Bailey sold the Biochem stock and handled the proceeds through accounts under his control that were not maintained as proper Florida trust accounts for such funds.
- The referee found Bailey commingled the proceeds with his own money, exercised personal control over the funds inconsistent with the limited-purpose arrangement, used portions for personal expenses, and did not provide an adequate accounting consistent with his fiduciary duties.
- The Florida Bar filed a seven-count disciplinary complaint charging multiple violations of the Rules Regulating the Florida Bar arising from Bailey’s handling of the stock, the proceeds, and related recordkeeping and trust-account practices.
- After a multi-day final hearing, the referee issued a detailed report finding numerous serious rule violations and recommending permanent disbarment.
- Bailey petitioned the Supreme Court of Florida for review, challenging the referee’s factual findings, findings of guilt, and the recommended sanction.
Issues
- Whether competent, substantial evidence supported the referee’s findings that Bailey violated the Rules Regulating the Florida Bar by misappropriating, commingling, and mishandling funds derived from forfeitable assets entrusted to him for a limited purpose.
- Whether Bailey’s claim that he held an ownership or fee interest in the Biochem stock defeated or reduced his fiduciary and trust-account duties under the Florida rules.
- What discipline was appropriate in light of the nature and seriousness of the misconduct, including whether disbarment was warranted.
Decision
- The Supreme Court of Florida exercised jurisdiction under article V, section 15 of the Florida Constitution to review the referee’s report in an attorney discipline matter.
- The Court approved the referee’s findings of fact and, for the charged misconduct sustained by the report, approved the findings of guilt.
- The Court applied the rule that a referee’s findings of fact carry a presumption of correctness and will be upheld when supported by competent, substantial evidence, giving weight to the referee’s credibility determinations.
- The Court rejected Bailey’s argument that he could treat the Biochem stock and its proceeds as his own, concluding the record supported the referee’s view that the assets were entrusted to Bailey for forfeiture-related tasks and therefore had to be handled as entrusted funds subject to strict safeguards.
- The Court ordered that Bailey be disbarred from the practice of law in Florida (noting the referee had recommended “permanent disbarment,” but imposing disbarment as the Court’s discipline).
Legal Principles
- A lawyer who receives money or property for a client or for a defined third-party purpose must hold and handle it as entrusted property, segregate it from personal funds, and maintain required records and accountings.
- Commingling entrusted funds with personal funds and using entrusted funds for personal expenses constitute serious misconduct under the Rules Regulating the Florida Bar.
- In Florida attorney discipline cases, a referee’s factual findings are presumed correct and will be sustained if supported by competent, substantial evidence; the party challenging those findings bears the burden to show a lack of evidentiary support.
- Misappropriation of entrusted funds is among the most serious violations of professional duties and ordinarily results in disbarment, even where the lawyer has a strong reputation or extensive prior experience.
Conclusion
In Fla. Bar v. Bailey, the Florida Supreme Court approved the referee’s findings that F. Lee Bailey mishandled forfeitable Biochem Pharma stock proceeds entrusted to him to maintain and liquidate Duboc’s assets, including commingling and personal use of those funds, and the Court imposed disbarment based on the seriousness of the fiduciary and trust-account violations and the need to protect the public and the legal profession.