Case Number(s): 09-O-13589;09-O-13845;09-O-17413;09-O-18914;09-O-19279; 09-O-19316;10-O-01289;10-O-03162;10-O-03507;10-O-03674;10-O-03809 + Unfiled matters(see stipulation attachment)
In the Matter of: Zachary Gonzalez, Bar # 259663, A Member of the State Bar of California, (Respondent).
Counsel For The State Bar: Melanie J. Lawrence, 1149 South Hill Street, Los Angeles, CA 90015, (213)765-1066, Bar # 230102
Counsel for Respondent: In Pro Per Respondent Zachary Gonzalez, P.O. Box 1487, Guasti, CA 91743, Bar # 259663
Submitted to: Settlement Judge – State Bar Court Clerk’s Office Los Angeles.
Filed: January 12, 2011
<<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 8, 2008.
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 15 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 284, Rules of Procedure.
checked. Costs are to be paid in equal amounts prior to February 1 for the following membership years: 3 billing cycles following the effective date of the Supreme Court order. (Hardship, special circumstances or other good cause per rule 284, Rules of Procedure.)
<<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.
Additional aggravating circumstances:
Attachment language (if any):
Case Number(s): 09-O-13589 et. al.
In the Matter of: Zachary Ian Gonzalez
a. Restitution
checked. Respondent must pay restitution (including the principal amount, plus interest of 10% per annum) to the payee(s) listed below. If the Client Security Fund (“CSF”) has reimbursed one or more of the payee(s) for all or any portion of the principal amount(s) listed below, Respondent must also pay restitution to CSF in the amount(s) paid, plus applicable interest and costs.
1. Payee: Kenneth Lamers
Principal Amount: $2,594.40
Interest Accrues From: April 2, 2010
2. Payee: Eva Torres
Principal Amount: $2,700
Interest Accrues From: June 5, 2009
3. Payee:
Principal Amount:
Interest Accrues From:
4. Payee:
Principal Amount:
Interest Accrues From:
checked. Respondent must pay above-referenced restitution and provide satisfactory proof of payment to the Office of Probation not later than one year after the effective date of the discipline.
<<not>> checked. Respondent must pay the above-referenced restitution on the payment schedule set forth below. Respondent must provide satisfactory proof of payment to the Office of Probation with each quarterly probation report, or as otherwise directed by the Office of Probation. No later than 30 days prior to the expiration of the period of probation (or period of reproval), Respondent must make any necessary final payment(s) in order to complete the payment of restitution, including interest, in full.
1. Payee/CSF (as applicable)
Minimum Payment Amount
Payment Frequency
2. Payee/CSF (as applicable)
Minimum Payment Amount
Payment Frequency
3. Payee/CSF (as applicable)
Minimum Payment Amount
Payment Frequency
4. Payee/CSF (as applicable)
Minimum Payment Amount
Payment Frequency
<<not>> checked.
1. If Respondent possesses client funds at any time during the period covered by a required quarterly report, Respondent must file with each required report a certificate from Respondent and/or a certified public accountant or other financial professional approved by the Office of Probation, certifying that:
a. Respondent has maintained a bank account in a bank authorized to do business in the State of California, at a branch located within the State of California, and that such account is designated as a “Trust Account” or “Clients’ Funds Account”;
b. Respondent has kept and maintained the following:
i. A written ledger for each client on whose behalf funds are held that sets forth:
1. the name of such client;
2. the date, amount and source of all funds received on behalf of such client;
3. the date, amount, payee and purpose of each disbursement made on behalf of such client; and,
4. the current balance for such client.
ii. a written journal for each client trust fund account that sets forth:
1. the name of such account;
2. the date, amount and client affected by each debit and credit; and,
3. the current balance in such account.
iii. all bank statements and cancelled checks for each client trust account; and,
iv. each monthly reconciliation (balancing) of (i), (ii), and (iii), above, and if there are any differences between the monthly total balances reflected in (i), (ii), and (iii), above, the reasons for the differences.
c. Respondent has maintained a written journal of securities or other properties held for clients that specifies:
i. each item of security and property held;
ii. the person on whose behalf the security or property is held;
iii. the date of receipt of the security or property;
iv. the date of distribution of the security or property; and,
v. the person to whom the security or property was distributed.
2. If Respondent does not possess any client funds, property or securities during the entire period covered by a report, Respondent must so state under penalty of perjury in the report filed with the Office of Probation for that reporting period. In this circumstance, Respondent need not file the accountant’s certificate described above.
3. The requirements of this condition are in addition to those set forth in rule 4-100, Rules of Professional Conduct.
<<not>> checked. Within one (1) year of the effective date of the discipline herein, Respondent must supply to the Office of Probation satisfactory proof of attendance at a session of the Ethics School Client Trust Accounting School, within the same period of time, and passage of the test given at the end of that session.
IN THE MATTER OF: Zachary Ian Gonzalez, State Bar No. 259663
STATE BAR COURT CASE NUMBER: 09-O-13589;09-O-13845;09-O-17413;09-O-18914;09-O-19279; 09-O-19316;10-O-01289;10-O-03162;10-O-03507;10-O-03674;10-O-03809
UNFILED MATTERS: 10-O-10409, 09-O-16360, 10-O-6923, 10-O-6922, 10-O-4918, 10-O-3043,10-O-9295; 10-O-9298, 10-O-9566,10-O-8301, 10-O-11102, 10-O-6527
WAIVER OF VARIANCE BETWEEN NOTICE OF DISCIPLINARY CHARGES AND
STIPULATED FACTS AND CULPABILITY:
The parties waive any variance between the Notice of Disciplinary Charges filed on September 29, 2010, and the facts and/or conclusions of law contained in this stipulation and waive the issuance of an Amended Notice of Disciplinary Charges. The parties further waive the right to the filing of an Amended Notice of Disciplinary Charges and to a formal hearing on any charge not included in the pending Notice of Disciplinary Charges.
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.
STATEMENT OF FACTS:
1. After having been newly admitted to practice law, in around March 2009, Respondent went to work with Pacific Loan Solutions ("PLS"), a loan modification company owned by a non-attorney and staffed by non-attorneys. Initially he was "corporate counsel" to PLS but a month after going to work there, he began engaging in his own loan modification practice.
2. In pursuit of his practice, Respondent entered into an agreement with PLS, in which he effectively partnered with PLS to perform much of the loan modification work for which clients had hired him. Respondent collected legal fees from his clients and PLS invoiced him monthly for their work. Respondent paid PLS from a portion of the fees he collected. The agreement, which Respondent drafted, did not include that work done by PLS was subject to Respondent’s supervision or control. Thereafter, Respondent failed to adequately supervise work performed by PLS non-attorneys.
3. Respondent or employees of PLS, under his supervision, solicited clients for loan modifications who Respondent did not have a family or prior professional relationship with, by mail and telephone. The mail solicitations were misleading in that they appeared to come from banks or other lending institutions, rather than from Respondent’s law office, and were not identified as an advertisement or solicitation.
4. Respondent did not personally meet with the clients in these matters when they initially signed the retainer agreement. Rather, employees of PLS met with the clients. Some clients Respondent never met or spoke with - others he met with or spoke to once complaints arose.
5. By the terms of Respondent’s own retainer agreement a portion of the fees was refundable depending on what stage the modification process had advanced. For example, it indicates that 70% of the fee is refundable after completion of the loan modification application but only 10% is refundable after negotiation of the modification with specified successful terms.
6. The following clients terminated Respondent before full completion of the modification. However, Respondent did not return any of the advanced fees that had not been earned and did not provide any of the clients with an accounting of the fees:
Case Number: 09-O-19316, Client: Martin Duarte, Date of Hire: September 12, 2009, Total Fees Paid: $1,400.
Case Number: 10-O-01289, Client: Klara Melman, Date of Hire: September 16, 2009, Total Fees Paid: $2,619.
Case Number: 10-O-03162, Client: Enrique Saavedra, Date of Hire: September 5, 2009, Total Fees Paid: $7,724.
Case Number: 10-O-03507, Client: Jennie Castillo, Date of Hire: June 12, 2009, Total Fees Paid: $6,506.
Case Number: 10-O-03674, Client: Gary Johnson, Date of Hire: September 4, 2009, Total Fees Paid: $3,070.
Case Number: 10-O-03809, Client: Leticia Perez, Date of Hire: June 9, 2009, Total Fees Paid:$8,355.
Case Number: 10-O-10409, Client: Cesar Altamirano, Date of Hire: June 30, 2009, Total Fees Paid:$2,500.
Case Number: 09-O-16360, Client: Carolyn Husband, Date of Hire: May 8, 2009, Total Fees Paid: $6,129.
Case Number: 10-O-6923, Client: Onofre Ramos, Date of Hire: May 23, 2009, Total Fees Paid:$3,345
Case Number: 10-O-6922, Client: Francisco Moreno, Date of Hire: August 1, 2009, Total Fees Paid: $4,918.
Case Number: 10-O-4918, Client: Marciela Hernandez, Date of Hire: May 22, 2009, Total Fees Paid: $6,035
Case Number: 10-O-9293, Client: Jose Soto, Date of Hire: July 25, 2009, Total Fees Paid: $3,592.
Case Number: 10-O-9295, Client: Jose Flores, Date of Hire: May 15, 2009, Total Fees Paid: $2,500.
Case Number: 10-O-9566, Client: Walter Molina, Date of Hire: August 26, 2009, Total Fees Paid: $1,708.
Case Number: 10-O-9298, Client: Paul Lee, Date of Hire: August 10, 2009, Total Fees Paid: $3,170.
Case Number: 10-O-8301, Client: Jose Gomez, Date of Hire: August 11, 2009, Total Fees Paid: $2,944.23.
Case Number: 10-O-11102, Client: Jose Romo, Date of Hire: September 22, 2009, Total Fees Paid: $5,400.
Case Number: 10-O-6527, Client: Kristen Chamberlain, Date of Hire: June 2, 2009, Total Fees Paid: $3,873.
7. On June 4, 2009, Eva Torres employed Respondent to negotiate a loan modification and paid an advanced fee of $2,700, as an initial installment on a total advanced fee of $5,400.
8. On June 5, 2009, Torres faxed a letter to Respondent’s office, which he received, terminating his employment and requesting a refund of her $2,700. Respondent had performed no work on her behalf yet he did not return any of the $2,700 or provide Torres with an accounting.
9. On May 2, 2009, Kenneth Lamers employed Respondent to negotiate a loan modification and paid him an advanced fee of $4,324.
10. In October 2009, Lamers sent a letter to Respondent, which he received, terminating his employment and requesting a refund of his $4,324. On December 10, 2009, Respondent sent a partial refund to Lamers in the amount of $1,729.60. Respondent has never provided Lamers with an accounting.
11. Lamers commenced fee arbitration against Respondent and on April 2, 2010, the Riverside County Bar Association Fee Arbitration Program awarded Lamers a complete refund in the sum of $2,594.40 (the balance of the $4,324 less the partial refund, plus the arbitration fee). Respondent did not appear for the arbitration but he was served a copy of the Findings and Award. He has not paid the award.
12. Many of the above listed clients repeatedly attempted to communicate with Respondent regarding the status of their modifications or refunds, without success.
13. In some instances, in order to sell Respondent’s services, PLS employees overstated Respondent’s ability to obtain a mortgage modification for them and told clients they could not change their mind about employing Respondent after signing the employment agreement.
14. On a few occasions, including in the cases of Martin Duarte and Klara Melman, PLS employees threatened that they would call the police if clients did not leave the premises, or otherwise demanded they leave the premises, when they were there requesting a refund.
15. In about October 2009, Respondent discontinued his association with PLS.
CONCLUSIONS OF LAW
By entering into an agreement with PLS to perform much of the loan modification work for which clients had hired him, Respondent formed a partnership where some of the activities of the partnership consisted of the practice of law, with a person who is not a lawyer, in willful violation of Rule 1-310.
By paying PLS from a portion of the legal fees he collected from each of the clients, Respondent shared legal fees with a person who is not a lawyer, in willful violation of Rule 1-320(A).
By entering into an agreement with PLS that did not include that work done by PLS was subject to Respondent’s supervision or control and then, through gross negligence, failing to adequately supervise PLS work, leading to misrepresentations to Respondent’s clients regarding his ability to obtain mortgage modifications for them, the clients ability to terminate Respondent, and threats to some clients Seeking a refund, Respondent willfully violated B&PC § 6106, moral turpitude.
By soliciting prospective clients with whom Respondent had no family or professional relationship with by telephone, Respondent willfully violated Rule 1-400(C).
By soliciting prospective clients by mail that falsely purported to have been sent from banks or financial institutions, and not from Respondent’s law office, Respondent willfully violated B&PC § 6106, moral turpitude.
By failing to refund promptly any part of the advanced fees each of the above listed clients paid, but which had not been earned, Respondent willfully violated Rule 3-700(D)(2).
By failing to respond to his clients’ repeated inquiries regarding the status of their cases or for a refund, Respondent failed to promptly respond to reasonable status inquiries of clients, in willful violation of B&PC § 6068(m).
By failing to provide each of the clients listed in the chart at paragraph 6 above, as well as Kenneth Lamers and Eva Torres, with an accounting of advanced fees they paid, Respondent failed to render appropriate accounts to his clients in willful violation of Rule 4-100(B)(3).
AGGRAVATING CIRCUMSTANCES.
Respondent’s clients were seriously harmed by the above described misconduct. Most, if not all, of the clients who hired Respondent did so because they were financially distressed. Thus, the loss of the use of the money they paid for services that were not performed caused significant harm to Respondent’s clients.
Respondent’s misconduct involves multiple client matters constituting multiple acts of misconduct.
MITIGATING CIRCUMSTANCES.
Respondent has fully cooperated with the State Bar in providing requested information and in resolving this matter without trial.
AUTHORITIES SUPPORTING DISCIPLINE.
Standards:
Standard 1.3 provides that the primary purposes of attorney discipline are, "the protection of the public, the courts and the legal profession; the maintenance of high legal professional standards by attorneys and the preservation of public confidence in the legal profession."
Standard 1.6(a) states that where two or more acts of professional misconduct are charged and different sanctions are prescribed by the standards for the acts, the sanction imposed shall be the more or most severe of the different applicable sanctions.
Standard 2.2(b) applies to the Rule 4-100(B)(3) violations. It requires 3 months actual suspension.
Standard 2.3 applies to offenses involving moral turpitude. It requires actual suspension or disbarment depending upon the extent to which the client was harmed or misled and upon the magnitude .of the act of misconduct and the degree to which it relates to the member’s acts within the practice of law.
Standard 2.6(a) applies to violations of B&PC §6068. It requires disbarment or suspension depending on the gravity of the offense or harm, if any, to the victim.
Standard 2.10 applies to the remaining charges. It requires reproval or suspension according to the gravity of the offense or harm to the victim, and .with due regard for the purposes of imposing discipline.
Case Law:
In Matter of Jones, III (1993) 2 Cal. State Bar Ct. Rptr. 411, the respondent had been in practice less than three years when he allowed a non-lawyer to operate a large scale personal injury practice involving capping, forgery and other illegal and fraudulent practices. Respondent had delegated to a non-attorney, without proper supervision, all aspects of the practice for a two year period. That delegation resulted in the non-attorney engaging in UPL and collecting $600,000 in attorney fees without an attorney performing any service.
The Court found Jones culpable of dividing fees with a non-lawyer and forming a partnership with a non-lawyer, failing to supervise the non-lawyer’s activities and committing moral turpitude: The Court recommended respondent be actually suspended for two years.
DISMISSALS.
The parties respectfully request the Court to dismiss the following alleged violations in the interest of justice:
Case No.: 09-O-17413, Count Alleged: 5-11, Alleged Violation: Rules 3-110(A), 4-200(A), 3-700(D)(2), 4-100(B)(3), B&PC §6106, B&PC §6106, Rule 1-400(C).
Case No.: 09-O-18914, Count Alleged: 12-13, 17, Alleged Violation: Rules 3-110(A), 4-200(A), B&PC §6106.
Case No.: 09-O-19279, Count Alleged: 20,25, Alleged Violation: Rule 4-200(A), B&PC §6106
Case No.: 09-19316, Count Alleged: 27, 31, Alleged Violation: Rule 4-200(A), B&PC §6106
Case No.: 10-O-01289, Count Alleged: 33, 37, Alleged Violation: Rules 4-200(A), 3-400(A)
Case No.: 10-O-03162, Count Alleged: 38-40, 45, Alleged Violation: Rule 3-110(A), 3-110(A), 4-200(A), 3-400(A)
Case No.: 10-O-03507, Count Alleged: 46-47, 50-51, 53, Alleged Violation: Rule 3-110(A), 3-110(A), 4-200(A), B&PC §6106, B&PC §6106, Rule 3-400(A).
Case No.: 10-O-03674, Count Alleged: 54-55,60, Alleged Violation: Rules 3-110(A), 4-200(A), 3-400(A).
Case No.: 10-O-03809, Count Alleged: 61-62, 66, 68, 69, Alleged Violation: Rules 3-110(A), 4-200(A), B&PC §6106, Rule 3-400(A), B&PC §6106.
Case No.: 09-O-13589 et. al., Count Alleged: 70, Alleged Violation: B&PC section 6106.
COSTS OF DISCIPLINARY PROCEEDINGS.
Respondent acknowledges that the Office of the Chief Trial Counsel has informed respondent that as of
December 9, 2010, the prosecution costs in this matter are estimated at $16,167. 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.
PENDING PROCEEDINGS.
The disclosure date referred to, on page 2, paragraph A(7), was December 9, 2010.
FEE ARBITRATION CONDITIONS:
Within 30 days from the effective date of discipline, Respondent shall send notice to each of the clients listed in the chart at paragraph 6, of their right to initiate and participate in binding fee arbitration. Respondent shall send such notices via U.S. certified mail and provide copies of such notices, certified mail receipts, and return receipts, to the Office of probation within the 30-day period.
Within three months of any request for fee arbitration, Respondent shall participate in the fee arbitration proceedings and provide satisfactory proof that he did so to the Office of Probation with each quarterly report.
Respondent shall comply with any award, decision or final determination by the fee arbitrator. Within 30 days after the fee arbitrator’s issuance of an award, decision, or final determination, Respondent shall provide a copy of the award, decision, or final determination to the Office of Probation. If the award, decision, or final determination is in the client’s favor, Respondent shall provide proof of his compliance with or satisfaction thereof.
Case Number(s): 09-O-13589 et. al.
In the Matter of: Zachary Ian Gonzalez
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: Zachary Golzalez
Date: 12/10/10
Respondent’s Counsel:
Date:
Deputy Trial Counsel: Melaine J. Lawrence
Date: 12/22/10
Case Number(s): 09-O-13589 et. al.
In the Matter of: Zachary Ian Gonzalez
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 135 (b), 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:
Judge of the State Bar Court: Donald F. Miles
Date: January 6, 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 January 12, 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:
ZACHARY I GONZALEZ
P.O. BOX 1487
GUASTI, CA 91743
<<not>> checked. by certified mail, No., with return receipt requested, through the United States Postal Service at, California, addressed as follows:
<<not>> checked. by overnight mail at, California, addressed as follows:
<<not>> checked. by fax transmission, at fax number. No error was reported by the fax machine that I used.
<<not>> checked. By personal service by leaving the documents in a sealed envelope or package clearly labeled to identify the attorney being served with a receptionist or a person having charge of the attorney’s office, addressed as follows:
checked. by interoffice mail through a facility regularly maintained by the State Bar of California addressed as follows:
MELANIE LAWRENCE, Enforcement, Los Angeles
I hereby certify that the foregoing is true and correct. Executed in Los Angeles, California, on January 12, 2011.
Signed by:
Angela Carpenter
Case Administrator
State Bar Court