Case Number(s): 09-O-11970
In the Matter of: Matthew Simone, Bar # 109915, A Member of the State Bar of California, (Respondent).
Counsel For The State Bar: Mia Ellis, State Bar of California
1149 South Hill Street
Los Angeles, CA 90015
Bar # 228235,
Counsel for Respondent: Arthur Margolis, Margolis & Margolis LLP
2000 Riverside Drive
Los Angeles, CA 90039-3758
Bar #57703,
Submitted to: Assigned Judge
<<not>> checked. PREVIOUS STIPULATION REJECTED
Note: All information required by this form and any additional information which cannot be provided in the space provided, must be set forth in an attachment to this stipulation under specific headings, e.g., "Facts," "Dismissals," "Conclusions of Law," "Supporting Authority," etc.
1. Respondent is a member of the State Bar of California, admitted December 12, 1983
2. The parties agree to be bound by the factual stipulations contained herein even if conclusions of law or disposition are rejected or changed by the Supreme Court.
3. All investigations or proceedings listed by case number in the caption of this stipulation are entirely resolved by this stipulation and are deemed consolidated. Dismissed charge(s)/count(s) are listed under "Dismissals." The stipulation consists of 10 pages, not including the order.
4. A statement of acts or omissions acknowledged by Respondent as cause or causes for discipline is included under "Facts."
5. Conclusions of law, drawn from and specifically referring to the facts are also included under "Conclusions of Law".
6. The parties must include supporting authority for the recommended level of discipline under the heading "Supporting Authority."
7. No more than 30 days prior to the filing of this stipulation, Respondent has been advised in writing of any pending investigation/proceeding not resolved by this stipulation, except for criminal investigations.
8. Payment of Disciplinary Costs-Respondent acknowledges the provisions of Bus. & Prof. Code §§6086.10 & 6140.7. (Check one option only):
<<not>> checked. Until costs are paid in full, Respondent will remain actually suspended from the practice of law unless relief is obtained per rule 5.130, Rules of Procedure.
checked. Costs are to be paid in equal amounts prior to February 1 for the following membership years: the next two billing cycles following the effective date of the Supreme Court order.(Hardship, special circumstances or other good cause per rule 5.132, Rules of Procedure.) If Respondent fails to pay any installment as described above, or as may be modified by the State Bar Court, the remaining balance is due and payable immediately.
<<not>> checked. Costs are waived in part as set forth in a separate attachment entitled "Partial Waiver of Costs".
<<not>> checked. Costs are entirely waived.
IN THE MATTER OF: Mathew Simone
CASE NUMBER(S): 09-O-11970
FACTS AND CONCLUSIONS OF LAW.
Respondent admits that the following facts are true and that he is culpable of violations of the specified statutes and/or Rules of Professional Conduct.
1. Beginning in 1999, Sanford (also known as Sandy) and Sharon Letter Kaplan ("Kaplans") employed Respondent to provide accounting, tax and legal services.
2. Between 1999 and 2005, Respondent prepared tax returns for the Kaplans.
3. In March 2005, Respondent introduced the Kaplans to another client, Erwin Denk ("Denk"), who was owner and President of Girzi Line USA, a California corporation, ("Girzi").
4. In February 2005, the California Franchise Tax Board had suspended Girzi.
5. Between 2004 to 2005, Respondent loaned Girzi money.
6. Respondent and Denk represented that Girzi was a skin care company that needed a short term investment of capital to fund inventory from Europe. The Kaplans were offered the opportunity to enter into a short term loan agreement to Girzi, which would be repaid within four months, with ten percent (10%) interest.
7. On March 31, 2005, Sanford Kaplan ("Mr. Kaplan") loaned $50,000 to Girzi. On that same date, Respondent and Denk executed a secured promissory note to pay Mr. Kaplan $50,000 with interest from March 31, 2005 on unpaid principal at the rate often percent (10%) per annum, principal and interest payable as follows: the balance, including accrued interest, all due and payable July 31, 2005. The note was secured by a Security Agreement signed by Respondent and Denk on March 31, 2005.
8. On March 31, 2005, Sharon Letter Kaplan ("Mrs. Kaplan") also loaned $50,000 to Girzi. On that same date, Respondent and Denk executed a secured promissory note to pay Mrs. Kaplan $50,000 with interest from March 31, 2005 on unpaid principal at the rate often percent (10%) per annum, principal and interest payable as follows: the balance, including accrued interest, all due and payable July 29, 2005. The note was secured by a Security Agreement signed by Respondent and Denk on March 31, 2005.
9. In April 2005, the Kaplans were asked to invest additional funds for Girzi to purchase inventory.
10. On April 14, 2005, Mr. Kaplan loaned Girzi $100,000. On that same date, Respondent and Denk
executed a secured promissory note to pay Mr. Kaplan $100,000 with interest from April 14, 2005 on unpaid principal at the rate of ten percent (10%) per annum, principal and interest payable as follows: the balance, including accrued interest, all due and payable August 14, 2005. The note was secured by a Security Agreement signed by Respondent and Denk on April 14, 2005. Prior to Girzi accepting the loans on March 31 and April 14, 2005, Respondent did not advise the Kaplans in writing that they may seek advice of an independent lawyer of their choice. Prior to Girzi accepting the loans on March 31 and April 14, 2005, Respondent did not give the Kaplans a reasonable opportunity to seek that advice. Respondent did not obtain the Kaplans’ written consent to the terms of the loan transaction.
11. On May 5, 2005, Respondent became Girzi’s agent for service of process.
12. As of August 14, 2005, the amount due and owing to the Kaplans for all three loans was approximately $220,000.
13. After August 14, 2005, the Kaplans demanded that Girzi, Respondent and Denk pay the principal and interest owing on the loans.
15. As of March 24, 2006, Mr. Kaplan was owed approximately $155,207 in principal, interest and late charges, and Mrs. Kaplan was owed approximately $45,388 in principal, interest and late charges.
16. On April 13, 2006, a complaint for damages was filed entitled Kaplan v. Denk et al., San Diego County Superior Court, in case number GIN051848, alleging breach of contract, fraud, breach of fiduciary duties, account stated, and conversion ("lawsuit").
17. On January 5, 2007, the parties entered into a Settlement Agreement and Mutual General Release of Claims ("January 2007 Settlement Agreement") in which Respondent, Denk and Girzi agreed to pay the Kaplans a total of $190,000 in monthly payment but no later than August 1, 2007. The lawsuit was dismissed.
18. In the January 2007 Settlement Agreement, Respondent attempted to include language that stated that as long as Defendants do not default on payment of the settlement, the Kaplans, their attorneys, and agents agree that they will not file, or cause to be filed, any type of complaint with the State Bar of California. During this time, Respondent experienced serious medical problems and contends that he lacked the best judgment.
19. The Kaplans were not paid in accordance with the January 2007 Settlement Agreement.
20. The Kaplans filed a second lawsuit to enforce judgment against Denk, Respondent, and Girzi in Kaplan v. Denk, et al, in San Diego Superior Court, case number 37-2007-00057766-CU-BC-NC.
21. On November 12, 2008, the court entered judgment for the Kaplans in the amount of approximately $190,000 plus interest commencing on or about August 1, 2007.
22. In August 2009, the Kaplans, and Respondent, Denk and Girzi entered into a stipulation to stay the enforcement, payments and order. The stipulation provided that Respondent would pay the Kaplans $12,000 no later than August 21, 2009. Respondent, Denk and Girzi would then pay $2500 per month to the Kaplans beginning September 15, 2009 and continuing until it was paid in full, including a $15,000 payment on July 15 of each year.
23. On August 7, 2009, Respondent wrote a letter to Sampson. In the letter, Respondent asked that language be added to a stipulation that provides that upon creditors, including the Kaplans, receiving the initial payment of $12,000, they will write a letter to the State Bar of California withdrawing their complaint against Respondent. During this time, Respondent experienced serious medical problems and contends that he lacked the best judgment.
24. On August 24, 2009, Respondent paid $12,000 to the Kaplans attorney.
Conclusions of Law
By introducing the Kaplans to the investment transaction with Girzi without fully disclosing his relationship with Girzi, by executing the three promissory notes and three Security Agreements, and by failing to advise the Kaplans that they may seek the advice of independent counsel, and without obtaining their informed written consent to the terms of the business transaction, Respondent improperly entered into a business transaction with a client in wilfull violation of Rules of Professional Conduct, role 3-300.
By writing and sending Sampson the letter dated August 7, 2009, Respondent sought agreement that the Kaplans would withdraw a disciplinary complaint made against Respondent to the State Bar of California as a disciplinary agency in wilfull violation of Business and Professions Code, section 6090.5(a)(2).
By executing the January 2007 Settlement Agreement with the Non-Disclosure of Settlement language, Respondent sought agreement that his professional misconduct or the terms of the settlement of a claim for professional misconduct would not be reported to the State Bar as a disciplinary agency in wilfull violation of Business and Professions Code, section 6090.5 (a)(1).
PENDING PROCEEDINGS.
The disclosure date referred to, on page 2, paragraph A(7), was April 13,2011
COSTS OF DISCIPLINARY PROCEEDINGS.
Respondent acknowledges that the Office of the Chief Trial Counsel has informed respondent that as of April 13, 2011, the prosecution costs in this matter are $2903.50. Respondent further acknowledges that should this stipulation be rejected or should relief from the stipulation be granted, the costs in this matter may increase due to the cost of further proceedings.
MITIGATING FACTORS
Although the misconduct is serious, Respondent has had no prior record of discipline since being admitted to the practice of law on December 12, 1983.
AUTHORITIES SUPPORTING DISCIPLINE.
Standard 2.8 provides that culpability of a member of a wilful violation of rule 3-300, Rules of Professional Conduct, shall result in suspension unless the extent of the member’s misconduct and the harm to the client are minimal, in which case, the degree of discipline shall be reproval.
STATE BAR ETHICS SCHOOL.
Because Respondent has agreed to attend State Bar Ethics School as part of this stipulation, Respondent may receive Minimum Continuing Legal Education credit upon the satisfactory completion of State Bar Ethics School.
Case Number(s): 09-O-11970
In the Matter of: Mathew Simone
By their signatures below, the parties and their counsel, as applicable, signify their agreement with each of the recitation and each of the terms and conditions of this Stipulation Re Facts, Conclusions of Law and Disposition.
Signed by:
Respondent: Mathew Simone
Date: April 14, 2011
Respondent’s Counsel: Arthur Margolis
Date: April 14, 2011
Deputy Trial Counsel: Mia Ellis
Date: April 14, 2011
Case Number(s): 09-O-11970
In the Matter of: Mathew Simone
Finding the stipulation to be fair to the parties and that it adequately protects the public, IT IS ORDERED that the requested dismissal of counts/charges, if any is GRANTED without prejudice, and:
checked. The stipulated facts and disposition are APPROVED and the DISCIPLINE RECOMMENDED to the Supreme Court.
<<not>> checked. The stipulated facts and disposition are APPROVED AS MODIFIED as set forth below, and the DISCIPLINE IS RECOMMENDED to the Supreme Court.
<<not>> checked. All Hearing dates are vacated.
The parties are bound by the stipulation as approved unless: 1) a motion to withdraw or modify the stipulation, filed within 15 days after service of this order, is granted; or 2) this court modifies or further modifies the approved stipulation. (See rule 5.58 (E) & (F), Rules of Procedure.) The effective date of this disposition is the effective date of the Supreme Court order herein, normally 30 days after the file date. (See rule 9.18(a), California Rules of Court.)
Signed by:
Richard A. Honn
Judge of the State Bar Court
Date: May 2, 2011
[Rules Proc. of State Bar; Rule 5.27(B); Code Civ. Proc., § 1013a(4)]
I am a Case Administrator of the State Bar Court of California. I am over the age of eighteen and not a party to the within proceeding. Pursuant to standard court practice, in the City and County of Los Angeles, on May 4, 2011, I deposited a true copy of the following document(s):
STIPULATION RE FACTS, CONCLUSIONS OF LAW
AND DISPOSITION AND ORDER APPROVING
in a sealed envelope for collection and mailing on that date as follows:
checked. by first-class mail, with postage thereon fully prepaid, through the United States Postal Service at Los Angeles, California, addressed as follows:
ARTHUR LEWIS MARGOLIS
MARGOLIS & MARGOLIS LLP
2000 RIVERSIDE DR
LOS ANGELES, CA 90039
checked. by interoffice mail through a facility regularly maintained by the State Bar of California addressed as follows:
Mia R. Ellis, Enforcement, Los Angeles
I hereby certify that the foregoing is true and correct. Executed in Los Angeles, California, on May 4, 2011.
Signed by: Cristina Potter
Case Administrator
State Bar Court