Facts
- In 1995, Leon Currie contacted Iowa attorney Oscar E. Jones and claimed he had a Nigerian pipeline contract for which he was owed $25,300,000.
- Currie said he needed an additional $5,000 to complete payment of a “risk insurance” premium before the Nigerian government would release the funds.
- Currie asked Jones to find someone to lend the $5,000 and promised that, if Jones succeeded and Currie was paid, Currie would buy Jones a $2 million annuity.
- Jones made no meaningful effort to verify Currie’s story and accepted it at face value.
- Jones attempted to obtain the loan from several banks; they refused, citing serious risk in Nigerian transactions. He also contacted several individuals who declined to lend the money.
- On May 17, 1997, Jones contacted Delbert Jones (no relation), a 74-year-old man whom Jones had represented in a divorce more than twenty years earlier.
- Jones told Delbert that Currie needed a $5,000 loan and that Currie would repay $15,000 within thirty days.
- Jones did not tell Delbert that banks and other potential lenders had refused because of the risk involved.
- Jones did not disclose Currie’s promise to purchase a $2 million annuity for Jones if Jones secured the lender.
- Jones assured Delbert that he could trust Currie, even though Jones had not verified Currie’s claims.
- Delbert borrowed $5,000 from his credit union and forwarded it to Currie. Jones signed a promissory note payable to Delbert on Currie’s behalf.
- Currie never repaid Delbert. After obtaining extensions on the credit-union loan, Delbert ultimately paid the loan and interest himself.
- The Iowa Supreme Court Board of Professional Ethics and Conduct brought a disciplinary complaint alleging violations of the Iowa Code of Professional Responsibility. A grievance commission recommended a reprimand.
Issues
- Whether Jones committed professional misconduct by arranging a loan from a former client to Jones’s client while failing to disclose material risk information and Jones’s own financial interest in the transaction.
- Whether Jones’s assurances and omissions in connection with the loan constituted conduct involving dishonesty, fraud, deceit, or misrepresentation under the Iowa Code of Professional Responsibility.
- Whether a reprimand was an adequate sanction, or whether suspension was required to address the seriousness of the misconduct.
Decision
- The Supreme Court of Iowa reviewed the disciplinary record de novo, applying the “convincing preponderance of the evidence” standard.
- The court found that Jones violated the Iowa Code of Professional Responsibility by participating in the transaction without full and fair disclosure, including nondisclosure of known risk signals and nondisclosure of Jones’s promised personal benefit.
- The court concluded that the misconduct warranted more than a reprimand.
- The court suspended Jones’s license to practice law.
Legal Principles
- In Iowa attorney discipline, the supreme court reviews the record de novo and is not bound by the grievance commission’s recommended sanction.
- The Board must prove lawyer misconduct by a convincing preponderance of the evidence (greater than the usual civil standard, less than beyond a reasonable doubt).
- When a lawyer enters, or helps arrange, a business or financial transaction with a client (and, in appropriate circumstances, with a former client who relies on the lawyer), the lawyer must ensure the dealing is fair and must make full disclosure of material facts, including conflicts and the lawyer’s personal stake.
- Nondisclosure of material information in a setting where the other party is relying on the lawyer’s judgment can amount to misrepresentation or deceit, even without an express false statement.
- Lawyer discipline is imposed to safeguard the public and maintain confidence in the legal profession; sanctions increase with the seriousness of the misconduct and the harm caused.
Conclusion
The Iowa Supreme Court disciplined Oscar E. Jones for inducing a former client to fund a highly risky loan to Currie while vouching for Currie and withholding key information, including prior lender refusals and Jones’s own promised $2 million annuity; rejecting the grievance commission’s recommendation of a reprimand, the court ordered suspension.