Pennsylvania Supreme Court Reports
OFFICE OF DISCIPLINARY COUNSEL v. RAINONE, 1164 (Pa.
12-21-2006) OFFICE OF DISCIPLINARY COUNSEL, Petitioner v.
SEBASTIAN M. RAINONE, Respondent. 1164 Disciplinary Docket
No. 3. Supreme Court of Pennsylvania. Argued:December 5,
2006 Decided: December 21, 2006
Attorney Registration No. 16046. (Philadelphia)
ORDER
PER CURIAM.
Following oral argument, the Court adopts the findings of
fact, conclusions of law and the reasoning set forth in the
attached Report and Recommendation of the Disciplinary
Board dated May 11, 2006.
We hereby ORDER that Sebastian M. Rainone be and he is
disbarred from the Bar of this Commonwealth and he shall
comply with all the provisions of Rule 217, Pa.R.D.E. It is
further ORDERED that respondent shall pay costs to the
Disciplinary Board pursuant to Rule 208(g), Pa.R.D.E.
Madame Justice Newman did not participate in the
consideration or decision of this case.
REPORT AND RECOMMENDATIONS OF THE DISCIPLINARY
BOARD OF THE SUPREME COURT OF PENNSYLVANIA
TO THE HONORABLE CHIEF JUSTICE AND JUSTICES OF THE SUPREME COURT OF PENNSYLVANIA:
Pursuant to Rule 208(d)(2)(iii) of the Pennsylvania Rules
of Disciplinary Enforcement, the Disciplinary Board of the
Supreme Court of Pennsylvania (“Board”) herewith submits
its findings and recommendations to your Honorable Court
with respect to the above-captioned Petition for
Discipline.
I. HISTORY OF PROCEEDINGS
On April 12, 2004, Office of Disciplinary Counsel filed a
Petition for Discipline against Sebastian M. Rainone,
Respondent. The Petition charged Respondent with
professional misconduct in five client matters and one
matter involving Respondent’s attorney registration form.
Respondent filed an Answer to Petition for Discipline on May
7, 2004.
A pre-hearing conference was held on July 7, 2004. This
conference was attended by Petitioner, Respondent and his
counsel, Samuel C. Stretton, Esquire. The parties informed
the Chair of the Hearing Committee that they had executed a
Stipulation which covered and admitted all of the charges.
The disciplinary hearing was rescheduled for October 14,
2004, due to Mr. Stretton’s trial schedule. Within days of
that hearing, Respondent discharged Mr. Stretton and
retained Christopher D. Mannix, Esquire. Respondent gave
notice that he planned to withdraw his consent to the
admission of the Stipulation.
The disciplinary hearing convened on November 15, 2004,
before a District I Hearing Committee comprised of Chair
Leigh M. Skipper, Esquire and Members Kelley A. Grady,
Esquire, and Charles Eppolito, III, Esquire. Respondent was
represented by Mr. Mannix. Argument was made on the
admissibility of the Stipulation. Following the submission
of briefs by the parties, the Hearing Committee issued an
Order on January 26, 2005, admitting the Stipulation into
evidence. An additional hearing was held on February 2,
2005. The Stipulation was introduced by Petitioner.
Respondent objected to the admission of the Stipulation.
Respondent attempted to introduce an Amended Answer which
had not been filed or previously submitted to the
Committee. The Committee did not receive the Amended Answer
as substantive evidence.
Following the close of the record the parties submitted
briefs and the Hearing Committee filed a Report on May 31,
2005. The Committee found that Respondent engaged in
professional misconduct and recommended that he be
disbarred.
Respondent filed a Brief on Exceptions on June 28, 2005 and
requested oral argument before the Disciplinary Board.
Petitioner filed a Brief Opposing Exceptions on July 28,
2005.
Oral argument was held on August 25, 2005 before a three
member panel of the Disciplinary Board chaired by Louis N.
Teti, Esquire, with Marc S. Raspanti, Esquire, and Min S.
Suh, Esquire.
The Disciplinary Board adjudicated this matter at the
meeting on September 12, 2005. By Order of the Dsciplinary
Board dated September 21, 2005, the Board appointed John W.
Morris, Esquire, as Special Master and remanded the matter
to the Special Master to determine the validity of the
Stipulation entered into by the parties.
A Special Master Hearing was held on October 27, 2005.
The Special Master filed a Report on January 3, 2006. He
concluded that the Stipulation was validly executed and
became binding on the parties; Respondent presented no
valid grounds for withdrawing the Stipulation; the Hearing
Committee properly admitted the Stipulation and correctly
ruled that Respondent could not contradict the Stipulation;
Respondent thereafter presented no valid grounds for
withdrawing the Stipulation; Respondent’s choice to present
no mitigation evidence should result in a closing of the
record. The Special Master recommended that the record be
submitted to the Board for adjudication.
This matter was adjudicated by the Board at the meeting on
February 1, 2006.
II. FINDINGS OF FACT
The Board makes the following findings of fact:
The following Findings of the Special Master are
incorporated herein:
1. Respondent knowingly and intelligently executed a
Stipulation on July 7, 2004, in which he admitted the
violations charged in the Petition for Discipline.
2. At the pre-hearing conference held on July 7, 2004,
counsel for Petitioner and for Respondent, in Respondent’s
presence, notified the Chair of the execution of the
Stipulation and of that fact that all of the offenses were
being admitted.
3. Shortly before the scheduled disciplinary hearing,
Respondent discharged his attorney and engaged a new
attorney who notified Office of Disciplinary Counsel and
the Chair of the Hearing Committee of his intent to
withdraw the Stipulation.
4. Petitioner objected to the attempt to withdraw the
Stipulation.
5. Petitioner would not have suffered actual prejudice from
a withdrawal of the Stipulation and could have presented
its case through witnesses and exhibits.
6. After considering evidence presented by the parties,
arguments, and briefs, the Hearing Committee ruled on
January 27, 2005, that the Stipulation would be admitted
into evidence.
7. On February 2, 2005, the Hearing Committee found that
violations had been committed as to all of the charges
against Respondent. The Hearing Committee announced that it
would begin the discipline stage of the proceedings.
8. Respondent, despite repeated invitation by the Hearing
Committee, declined to present evidence in mitigation of
punishment.
9. Respondent’s decision to offer no mitigation evidence
was knowing and intelligent and remains unchanged.
The following Joint Stipulations are incorporated herein:
1. Petitioner, whose principal office is located at Suite
1400, 200 North Third Street, Harrisburg, Pennsylvania, is
invested pursuant to Rule 207 of the Pennsylvania Rules of
Disciplinary Enforcement, with the power and duty to
investigate all matters involving alleged misconduct of an
attorney admitted to practice law in the Commonwealth of
Pennsylvania and to prosecute all disciplinary proceedings
brought in accordance with the various provisions of said
Rules of Disciplinary Enforcement.
2. Respondent, Sebastian M. Rainone, was admitted to
practice law in the Commonwealth in 1972. He maintains an
office for the practice of law at 200 Bar Harbor Drive,
Suite 400, West Conshohocken PA 19428. Respondent is
subject to the jurisdiction of the Disciplinary Board of
the Supreme Court of Pennsylvania.
3. Respondent has no prior history of discipline.
4. Respondent has a Master’s Degree in Taxation and is a
full-time professor in the business school at Villanova
University in the M.B.A. program.
Charge I — DeVuono Hunter Matter
5. On June 19, 1998, DeVuono Hunter retained Respondent to
represent him in pursuing an EEOC complaint against the
United States Postal Service.
6. By letter dated June 19, 1998, Respondent’s agent
advised Mr. Hunter of the terms of representation,
including:
a. Respondent would charge an hourly fee of $150.00, to
be billed in fractions of 1/10 hour;
b. Mr. Hunter was to pay costs;
c. Mr. Hunter was to pay a retainer of $1,500, to be paid
in installments by June 29, 2000; and,
d. Respondent would bill monthly and expected current
payments.
7. Respondent advised Mr. Hunter that if he prevailed in
his case, then Respondent would seek payment of his fee
from the Postal Service and Mr. Hunter would be reimbursed
for any fees he had paid to Respondent.
8. Thereafter, Respondent billed Mr. Hunter from time to
time, by bills reflecting the activity and the time spent
on each activity.
9. Mr. Hunter paid Respondent by checks, as follows:
CHECK DATE AMOUNT 6/22/98 $750 7/02/98 $750 7/23/98
$930 8/03/98 $500 9/10/98 $500 10/06/98 $467.50
11/19/98 $500 12/13/98 $640 2/02/99 $500 4/02/99 $500
7/02/99 $750 8/_/99 $500 2/04/00 $1,837.10 8/21/00
$3,000 TOTAL $12,124.60
10. By Decision dated July 7, 2000, the EEOC ruled in Mr.
Hunter’s favor, and awarded, inter alia, attorney’s fees,
directing a verified statement of fees to be submitted by
Mr. Hunter’s attorney to be paid by the Postal Service.
11. In July 2000, Respondent submitted to the Postal
Service an Affidavit for Reasonable Attorney’s Fees, with a
breakdown of fees and costs of $34,248.80.
12. Respondent documented his attorney fees by attaching to
his affidavit a series of “invoices” ostensibly addressed
to Mr. Hunter.
13. He described these attachments to the Postal Service as
invoices.
14. These “invoices” differ from the invoices he sent to
Mr. Hunter and which Mr. Hunter paid.
15. The “invoices” submitted to the Postal Service carry a
higher billable rate for Respondent’s time than Respondent
charged Mr. Hunter, and reflected more hours than
Respondent charged Mr. Hunter for performing work on his
case.
16. The “invoices” submitted to the Postal Service showed
Respondent’s hourly rate as $275.00, with a total of 124.25
hours, commencing June 19, 1998.
17. Respondent and the Postal Service negotiated his fee
petition, agreeing to a compromise of $27,000, and the
Postal Service issued a check in that amount to Respondent
on December 26, 2000.
18. Of that money, $12,124.60 constituted client funds.
19. Respondent did not tell Mr. Hunter about Respondent’s
receipt of funds in which Mr. Hunter had an interest.
20. Respondent failed to remit to Mr. Hunter the fees that
Mr. Hunter had paid.
21. Respondent failed to hold Mr. Hunter’s funds intact in
a segregated escrow account, and instead placed them into
his operating account.
22. From time to time, commencing in January 2001, Mr.
Hunter called Respondent to ascertain the status of the fee
payment.
23. In a conversation on January 16, 2001, Respondent
advised Mr. Hunter that Respondent had not received his fee
from the Postal Service, and that if Mr. Hunter would
accept $7,000, instead of $13,000, then the Postal Service
might send the funds sooner.
24. Mr. Hunter informed Respondent that he was unwilling to
accept only $7,000 and that he would wait for the full
refund.
25. Thereafter, Mr. Hunter called Respondent on several
occasions, and at least once a month.
26. When Mr. Hunter was able to reach Respondent on several
occasions, Respondent told him that he had not yet received
payment.
27. By letter from the Postal Service dated September 27,
2001, Mr. Hunter first learned that Respondent had received
$27,000 from the Postal Service in December 2000.
28. Upon receipt of the letter from the Postal Service, Mr.
Hunter contacted Respondent about this information.
29. Respondent told Mr. Hunter that:
a. Respondent was a poor record keeper;
b. Respondent had received the funds but had not properly
credited Mr. Hunter;
c. Respondent was not in the position to refund the money
at this time; and,
d. Respondent would pay Mr. Hunter his money.
30. Respondent failed to promptly pay Mr. Hunter the funds
due.
31. By certified letters dated December 27, 2001 and
January 7, 2002, Mr. Hunter asked Respondent to remit the
funds due.
32. Respondent failed to promptly respond to those letters
and to remit the funds.
33. Mr. Hunter filed a complaint against Respondent with
the Philadelphia Bar Association’s Fee Dispute Committee.
34. In March 2002, Mr. Hunter and Respondent submitted the
matter to the Fee Dispute Committee.
35. As a result of the mediation, Respondent agreed to pay
Mr. Hunter $12,000, plus interest, by May 3, 2002.
36. Respondent paid Mr. Hunter $3,000 by check dated May
10, 2002.
37. By check dated July 18, 2002, Respondent paid Mr.
Hunter the remaining $10,000, which satisfied the debt.
38. Respondent knew that his statements to Mr. Hunter were
false when he told Mr. Hunter that the funds had not
arrived from the Postal Service.
CHARGE II — Susan Mullen Matter
39. In 1994 or 1995, Susan Mullen consulted with Marc
Pachtman, Esquire, about handling her employment
discrimination case.
40. Mr. Pachtman referred Ms. Mullen’s case to Respondent.
41. Respondent had an ongoing relationship with Mr.
Pachtman, in which Respondent would pay Mr. Pachtman a
referral fee of 1/3 of the attorney fee at the time of
settlement.
42. On March 6, 1995, Respondent filed a civil complaint on
behalf of Susan Mullen against Gregory Oldsmobile in the
Court of Common Pleas of Delaware County.
43. On March 3, 1997, following a non-jury trial, the court
found in favor of Susan Mullen and against Gregory
Oldsmobile in the amount of $98,425.
44. From time to time, Mr. Pachtman would call Respondent
about the settlement funds, and Respondent would tell Mr.
Pachtman that he did not have them.
45. On August 28, 1998, Respondent settled the case against
Gregory Oldsmobile for $68,000.
46. At the time of settlement, Respondent received $68,000,
which included his fee of $21,646.07.
47. Respondent failed to inform Mr. Pachtman that
Respondent had received $21,646.07 as his fee.
48. After Respondent received the settlement funds,
Respondent’s representations to Mr. Pachtman that he could
not collect his fee were false and he knew them to be false
when he made them.
49. Respondent failed to pay Mr. Pachtman his referral fee
of $7,215.35.
50. Respondent failed to deposit or maintain Mr. Pachtman’s
referral fee in an escrow account.
51. Respondent deposited the fee proceeds into his
operating account, thereby commingling Mr. Pachtman’s funds
with his own funds.
52. Respondent took Mr. Pachtman’s referral fee and
converted the funds to his own use.
53. In January 2001, Mr. Pachtman discovered that
Respondent had collected his fee of $21,646 from Gregory
Oldsmobile and confronted Respondent.
54. By letter dated February 13, 2001, Respondent wrote to
Mr. Pachtman and confirmed that he would pay him a
$7,215.35 referral fee.
55. By letter to Respondent dated April 14, 2001, Mr.
Pachtman wrote that he had not received his referral fee,
and if he did not receive it by the end of April, he would
file a civil suit and a Disciplinary Board complaint
against Respondent.
56. By letter dated May 31, 2001, from Respondent to Mr.
Pachtman, Respondent enclosed a check for $2,000 and stated
his intent to make final payment in no later than 60 days.
57. Respondent paid Mr. Pachtman the balance of his
referral fee, from his attorney operating account, as
follows:
a. $2,000 on September 7, 2001
b. $3,215.35 on December 21, 2001.
CHARGE III — Allen Starr Matter
58. Allen Starr retained Respondent to represent him in a
case against Creative Furniture Industries.
59. On May 15, 2001, Respondent received a $8,476.05 check
from Creative Furniture Industries made payable to Allen
Starr.
60. On May 15, 2001, Respondent deposited the check into
his attorney operating account, thereby commingling Mr.
Starr’s funds with his own funds.
61. Respondent failed to deposit Mr. Starr’s funds in a
separate escrow account.
62. Respondent was required to hold inviolate not less than
$4,658.53 on behalf of Allen Starr.
63. On May 18, 2001, Respondent wrote check number 2582, in
the amount of $4,658.53, payable to Allen Starr, from his
attorney operating account.
64. On Respondent’s check register, he noted that this was
“Final Settlement”.
65. On May 29, 2001, Mr. Starr presented check number 2582
to PNC Bank.
66. On May 30, 2001, PNC Bank returned check number 2582
for insufficient funds.
67. Between May 18, 2001 and May 29, 2001, Respondent
converted Mr. Starr’s funds to his own use, making ATM
withdrawals and writing personal checks from his operating
account, including checks to Patricia S.M. Rainone, and for
rent.
68. On June 6, 2001, Respondent wrote a check to Allen
Starr for $4,658.53 from his attorney operating account.
69. Respondent wrote a notation on the check that it was a
“reissue” of check number 2582.
CHARGE IV — Diamond Furniture Matter
70. Diamond Furniture, Inc., retained Respondent’s services
to bring a lawsuit against Logan Consumer Discount.
71. Respondent filed a civil complaint on behalf of his
client in the Court of Common Pleas of Philadelphia County.
72. During the course of the representation, Respondent
received fiduciary funds on behalf of his client.
73. On January 12, 2001, Respondent had a balance of $161
in his escrow account.
74. On January 24, 2001, Respondent wrote check number 1121
for $3,000, from his escrow account, made payable to
Diamond Furniture.
75. On January 25, 2001, PNC Bank refused to negotiate
check number 1121 due to insufficient funds.
76. Respondent failed to maintain sufficient funds in his
escrow account to support all fiduciary entrustments.
77. On February 8, 2001, Respondent wrote check number
2427, for $3,000, to Diamond Furniture, from his attorney
operating account.
78. Respondent wrote a notation on the check that it was a
replacement for the IOLTA check.
79. Respondent failed to keep Diamond Furniture’s fiduciary
funds in an escrow account separate from his own property.
CHARGE V — Arthur Green Matter
80. In April 2001, Arthur E. Green and Margo Green
consulted with Respondent regarding representation in a
fraudulent investment matter, where Mr. Green claimed to
have lost $50,000 in Maryland.
81. Respondent advised Mr. Green that Respondent was
familiar with the subject matter and experienced in the
necessary litigation, recommended that he pursue claims
through litigation, and agreed to take the case to trial if
necessary.
82. Respondent was not a member of the Maryland bar.
83. By letter dated April 26, 2001, Respondent advised Mr.
Green that a non-refundable retainer of $2,500 would be
required for the representation, and that if a criminal
prosecution resulting in Mr. Green’s receipt of restitution
occurred prior to the filing of a civil suit, then an
additional $2,500 would be due.
84. On May 11, 2001, Mr. Green gave Respondent a check in
the amount of $2,500, which he deposited into an account
titled “Sebastian Rainone DBA Sebastian Rainone &
Associates.”
85. On October 25, 2001, Paul S. Lewis, Esquire, a Maryland
attorney, filed a complaint in the Circuit Court for
Montgomery County, Maryland, captioned Arthur E. Green and
Margo Green v. Zvi Porath, Barbara Porath, and DTH Liss and
Company Inc.
86. On October 25, 2001, Mr. Lewis filed a Pro Hac Vice
Motion on behalf of Respondent, in the Circuit Court for
Montgomery County, Maryland. The motion was denied.
87. On November 26, 2001, Mr. Lewis filed an Amended Motion
for Respondent’s admission.
88. By Order dated December 20, 2001, the Court directed
that Respondent’s appearance be entered on behalf of the
plaintiffs.
89. On December 30, 2001, Mr. Green supplied Respondent
with two boxes containing files in response to discovery
requests relating to his case.
90. By Order dated January 3, 2002, the matter was referred
to Alternative Dispute Resolution (ADR).
91. On January 16, 2002, the parties jointly requested a
stay of the matter pending the ADR proceeding.
92. At a court hearing on January 17, 2002, an Order was
entered noting that as a settlement was agreed upon but
could not be formally concluded, the case was stayed, and
the parties were ordered to submit a Joint Line of
Dismissal with payment of costs.
93. On January 22, 2002, the court ordered that: the case
be stayed for a period of thirty days; the parties were to
file a Joint Line of Dismissal and filing fee within 30
days; and failure to file the Joint Line of Dismissal
within 30 days would result in the case being dismissed
without prejudice and without further order of the court.
94. On March 29, 2002, the case was dismissed pursuant to
the January 22, 2002 Order.
95. On April 9, 2002, an ADR mediation took place, at which
time:
a. No resolution was reached; and,
b. Respondent told Mr. Green that the option of going to
trial remained.
96. By facsimile dated May 20, 2002, Mr. Green advised
Respondent that his case may have been misfiled and that
Mr. Lewis told him to tell Respondent to file a Motion to
Resubmit.
97. By facsimile dated May 28, 2002, Mr. Green reminded
Respondent that Mr. Lewis said that Respondent should file
the Motion to Resubmit.
98. By facsimile dated May 29, 2002, Mr. Green forwarded to
Respondent a strategy document to review.
99. By e-mail to Respondent dated May 29, 2002, Mr. Green
set forth his ideas about how to argue his case.
100. Between late May and early July 2002, Mr. Green called
Respondent on several occasions, and Respondent repeatedly
promised him that everything would be back on track before
Mr. Green left the country in early July.
101. By facsimile and e-mail dated June 25, 2002, Mr. Green
advised Respondent that he had been recommissioned and
might go overseas as early as July 7 or 8 through Labor
Day; that he wanted to discuss the matter, and that he
needed to find out whether Respondent had filed the motion
to resubmit.
102. By facsimile dated July 2, 2002, Mr. Green informed
Respondent that he would be out of the country from July 12
to Labor Day, advised Respondent that he had tried to
contact him on numerous occasions during the last month,
and asked Respondent when he would be available to talk.
103. On July 8, 2002, Respondent and Mr. Green spoke
regarding Mr. Green’s lawsuit, and Respondent agreed to:
a. Get the case “back on track” immediately;
b. Coordinate with local counsel;
c. Proceed pursuant to the strategy discussed; and,
d. Keep in touch with Mr. Green.
104. By facsimile dated July 9, 2002, Mr. Green confirmed
his conversation of July 8, 2002 with Respondent.
105. By facsimile from Doha, Qatar dated July 17, 2002, Mr.
Green: complained Respondent never got back to him the
previous week; reiterated that it was critical to get “back
on track”; requested that Respondent keep him advised, and
provided his work telephone number, fax number and e-mail
address.
106. Respondent failed to respond to Mr. Green’s fax and
to communicate with Mr. Green.
107. Respondent failed to contact Mr. Lewis and request
that he file a Motion to Resubmit on behalf of the Greens.
108. Respondent failed to take any action to have Mr.
Green’s lawsuit reinstated.
109. By letter dated September 26, 2002, Stephen A. Myrow,
Esquire, a member of the D.C. Bar, wrote to Respondent on
behalf of Mr. Green, set forth Mr. Green’s concerns,
demanded that Respondent refund the fee, and requested that
Respondent surrender the file by October 15, 2002.
110. Respondent contacted Mr. Myrow and advised him that
the file and fee would be returned promptly.
111. Respondent failed to promptly refund the fee.
112. By telephone call to Mr. Myrow on October 28, 2002,
Respondent stated he would surrender the file on November
1, 2002, refund a portion of the fee with the file, and
refund the balance at the end of 30 days.
113. In late October 2002, Respondent forwarded to Mr.
Green a box containing legal papers.
CHARGE VI — Legal Administration
114. On Respondent’s 1999-2000 Annual Attorney Registration
Statement, he failed to identify all accounts in which he
held fiduciary funds; falsely certified that he was in
compliance with RPC 1.15; and falsely certified that all
information on the statement was true and correct.
115. On Respondent’s 2001 – 2002 Annual Attorney
Registration Statement, he failed to identify all accounts
in which he held fiduciary funds; falsely certified that he
was in compliance with RPC 1.15; and falsely certified that
all information on his statement was true and correct.
116. On Respondent’s 2002-2003 Annual Attorney Registration
Statement, he failed to identify all accounts in which he
held fiduciary funds; falsely certified that he was in
compliance with RPC 1.15; and falsely certified that all
information on his statement was true and correct.
117. Respondent failed to maintain accurate contemporaneous
records for transactions involving fiduciary funds for a
period of five years after termination of the
representation.
Mitigating Circumstances
118. Respondent introduced no evidence of mitigating
circumstances surrounding the events giving rise to the
charges.
119. Respondent did not testify about these events.
120. Because Respondent did not testify, the record shows
no evidence of remorse or acceptance of responsibility.
121. The Hearing Committee encouraged Respondent to testify
and/or to offer other mitigating evidence, but he chose not
to do so.
122. At the pre-hearing conference, Respondent’s original
counsel indicated that he expected to offer “four or five
witnesses — a bookkeeper or an accountant, and maybe
someone who at one point was in [Respondent’s] office as to
any changes assuming there are some.” July 7, 2004
Transcript at 5. Additionally, his former counsel stated
that he might offer a report of a clinical psychologist.
123. None of this evidence was offered.
III. CONCLUSIONS OF LAW
By his conduct as set forth above, Respondent violated the
following Rules of Professional Conduct:
1. RPC 1.15(a) – A lawyer shall hold property of
clients or third persons that is in a lawyer’s possession
in connection with a representation separate from the
lawyer’s own property.
2. RPC 1.15(b) – Upon receiving funds or other
property in which a client or third person has an interest,
a lawyer shall promptly notify the client or third person.
A lawyer shall promptly deliver to the client or third
person any funds or other property that the client or third
person is entitled to receive and, upon request by the
client or third person, shall promptly render a full
accounting regarding such property.
3. RPC 1.3 – A lawyer shall act with reasonable
diligence and promptness in representing the client.
4. RPC 1.4(a) – A lawyer shall keep a client
informed about the status of a matter and promptly comply
with reasonable requests for information.
5. RPC 1.4(b) – A lawyer shall explain a matter to
the extent necessary to permit the client to make informed
decisions regarding the representation.
6. RPC 4.1(a) – In the course of representing a
client, a lawyer shall not knowingly make a false statement
of material fact or law to a third person.
7. RPC 8.4(c) – It is professional misconduct for a
lawyer to engage in conduct that is prejudicial to the
administration of justice.
IV. DISCUSSION
This matter comes before the Board on a convoluted
procedural history, which has been set forth above. In an
unusual occurrence, the Board appointed a Special Master to
determine the validity of a Stipulation which had been
entered into between the parties, and from which the
Respondent attempted to withdraw. The Special Master issued
a detailed and concise Report, finding that Respondent
knowingly and intelligently executed a Stipulation on July
7, 2004, in which he admitted the violations charged in the
Petition for Discipline. The Master concluded that the
Stipulation was validly executed and became binding on the
parties, and that Respondent presented no valid grounds for
withdrawing the Stipulation or impeaching the actions of
the Hearing Committee. The Master made a final
recommendation to the Board that the underlying record be
submitted for adjudication. Having accepted the conclusions
reached by the Special Master as sound, the purpose of this
Board Report is not to revisit the Master’s thorough work,
but rather to adjudicate this matter based on the record
before us, which includes the validly executed Stipulation.
This matter presents the case of an attorney with 35 years
of practice and no prior history of discipline, who is
charged with two serious incidents involving dishonesty
with entrusted client funds, three episodes of mishandling
funds, and a derivative technical violation relating to
Respondent’s annual attorney registration statements.
The two critical matters are the Hunter and Mullen
situations. In Hunter, Respondent represented his client in
an EEOC action and received fees from his client at an
agreed hourly rate in a total amount of $12,124.60.
Respondent explained to his client that if they were
successful in the case, counsel fees would be awarded and
Mr. Hunter would be reimbursed the amount which he paid to
Respondent. After successfully concluding the matter,
Respondent applied for an award of counsel fees from the
defendant, eventually compromised the claim, and received
an agreed amount of $27,000 on December 20, 2000.
Respondent did not inform his client that he had received
the money. Over the next nine months, he repeatedly
misrepresented that he had not received any award, and
further suggested that the recovery could be expedited if
Mr. Hunter would accept $7,000 instead of the full amount
of $12,000. In September 2001, Mr. Hunter learned from the
defendant that Respondent had in fact been paid. Mr. Hunter
then confronted Respondent, who admitted receipt of the
funds and promised to pay over the amount due. Respondent
did not promptly pay the $12,124.60. He ignored letters
from his client concerning the matter. Mr. Hunter
eventually took the matter to the Fee Dispute Committee,
where Respondent agreed to make payment of $12,000, plus
interest, by May 3, 2002. In fact, Respondent paid $3,000
on May 10, 2002 and the remainder on July 18, 2002.
The Mullen matter was referred to Respondent by Marc
Pachtman, Esquire. It was ultimately settled for $68,000,
which was paid on August 28, 1998. Although Respondent had
an ongoing understanding that he would pay a one-third
referral fee on cases referred by Mr. Pachtman, he neither
paid Mr. Pachtman the referral fee nor informed him that he
had received the settlement proceeds. Respondent repeatedly
misrepresented that he had not received the settlement
funds. Mr. Pachtman eventually discovered the truth in
January of 2001, confronted Respondent and received
Respondent’s promise to pay the referral fee of $7,215.35.
In a series of payments, beginning May 31, 2001, and ending
December 21, 2001, Respondent eventually paid the agreed
amount.
The Starr and Diamond Furniture matters involve
Respondent’s mishandling of client funds, wherein he
bounced a check and within one month successfully paid the
amount due. The Green matter is an attorney neglect case
punctuated by an unfulfilled promise to make a fee refund.
The matter involving “legal administration” is based on the
fact that Respondent’s attorney registration statements for
several years were inaccurate due to his mishandling of
client funds.
The Board is charged with recommending the appropriate
sanction to be imposed on Respondent in light of his
professional misconduct. There is no per se rule for
discipline in cases involving the mishandling of client
funds. Office of Disciplinary Counsel v. Lucarini, 472 A.2d
186 (Pa. 1983). A review of cases indicates that the
discipline to be imposed for charges such as these is very
fact-specific. Aggravating and mitigating factors should be
considered. In re Anonymous No. 35 DB 1988, 8 Pa.D. & C.
4th 344 (1990).
Because of the wide variety of fact patterns involving
commingling, conversion of funds, misrepresentation, and
lack of candor and diligence in handling a client’s case,
sanctions have ranged from short suspensions with practice
or sobriety monitors to disbarment, the most severe
penalty. Office of Disciplinary Counsel v. Karen G. Muir, 79
DB 2002, 891 Disciplinary Docket No. 3 (Pa. March 1, 2004)
(three month suspension); Office of Disciplinary Counsel v.
John T. Olshock, 28 DB 2002, 862 Disciplinary Docket No. 3
(Pa. Oct. 24, 2003) (three year suspension); Office of
Disciplinary Counsel v. Daniel Evans, 152 DB 2000, 810
Disciplinary Docket No. 3 (Pa. Feb. 28, 2003) (disbarment);
Office of Disciplinary Counsel v. Patricia Renfroe, 122 DB
2004, 1066 Disciplinary Docket No. 3 (Pa. Nov. 1, 2005)
(disbarment). The misconduct engaged in by Respondent is
very serious. He lied repeatedly to his client, Mr. Hunter,
regarding the receipt of fees. He deposited the full check
into his own operating account. Even after being confronted
by Mr. Hunter, Respondent did not cooperate and turn over
Mr Hunter’s fees. Instead, Mr. Hunter was forced to take
Respondent to fee dispute mediation. Compounding
Respondent’s bad behavior was his continued failure, even
at that juncture in time, to promptly pay the agreed upon
settlement. Similar conduct occurred in the Mullen matter
with the referral fee. Combined with the other instances of
commingling and neglect, Respondent must face serious
discipline.
The only mitigating factor present in this matter is
Respondent’s unblemished record of discipline during his 35
years of law practice. Respondent’s background makes the
current misconduct all the more astonishing in its gravity.
Respondent chose not to put forth on the record any
explanation of his actions or other mitigating factors.
Respondent’s misconduct raises questions about his fitness
to practice law in an ethical manner. There is no evidence
of record that he has taken remedial actions in his law
practice to ensure that client funds are handled properly.
There is no evidence of record that Respondent understands
his misconduct and feels any regret for his actions. There
is no evidence of record that Respondent can assure this
Board, and the Court, that the misconduct will not occur in
the future. In short, based on the record presented to the
Board, we are persuaded that disbarment is the appropriate
sanction.
V. RECOMMENDATION
The Disciplinary Board of the Supreme Court of
Pennsylvania unanimously recommends that the Respondent,
Sebastian M. Rainone, be disbarred from the practice of
law.
It is further recommended that the expenses incurred in
the investigation and prosecution of this matter are to be
paid by the Respondent.
Respectfully submitted,
THE DISCIPLINARY BOARD OF THE SUPREME COURT OF PENNSYLVANIA
By: s/Louis N. Teti, Board Member
Date: May 11, 2006