Posted Nov 21, 2011 02:03 pm CST
A Louisiana hearing committee has recommended a fully deferred 60-day suspension for an attorney who failed to detect that a lawyer he employed in his high-volume real estate practice oversaw closings in a house-flipping scheme.
The hearing committee recommended that the sanction for Owen Trahant Jr. be deferred if he completes ethics courses and stays out of ethics trouble during the period. The Legal Profession Blog has a story.
According to the hearing committee report, Trahant hired the lawyer to help with an “exploding” real estate practice and allowed him to work unsupervised. Trahant also inadequately supervised his daughter, who was the office manager, and another employee who worked on real closings, the hearing committee said.
“It is clear from all of the evidence submitted that respondent ran an extremely loose ship of an office,” the report said.
The scheme allegedly operated this way: Home sellers intended to sell their properties directly to the buyers, but instead they unknowingly sold their homes to a financial services company. The company in turn sold the properties to the intended buyers for an inflated price.
The lawyer in Trahant’s office who allegedly facilitated the transactions blamed the document preparer and closing agent. The hearing committee was skeptical of the explanations. The lawyer who worked on the property-flip closings “lacked credibility in all aspects of his testimony, except maybe when he stated his name,” the report said.
Trahant “was a trusting man, to his detriment, and the detriment of the victim buyers,” the hearing committee concluded. “Respondent could have and should have seen the problems associated with the closings.”