In re the Disciplinary Proceeding Against McGrath
178 Wash. 2d 280
| Wash. | 2013Background
- McGrath appeals WSBA Disciplinary Board’s unanimous recommendation to disbar for bankruptcy fraud, trust account misuse, and related misrepresentations; the hearing officer found willful, intentional misconduct and multiple aggravating factors with no mitigating factors.
- McGrath represented his wife and her corporations in Ellison litigation, arranged fraudulent encumbrances and notes, and shifted funds into his trust account to conceal assets from creditors.
- Bankruptcy filings for Maxwell and CWC contained material misstatements/omissions, including failure to disclose insider status, assets shifted into the trust account, and opaque financing instruments.
- McGrath attempted ex parte contact with a bankruptcy judge after removal from the cases; the WSBA charged nine counts of misconduct under multiple RPC provisions and federal statutes.
- The Board adopted the hearing officer’s findings and recommended disbarment; the court reviews the record de novo, upholding substantial evidence for the nine counts and affirming disbarment as the presumptive sanction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Counts 1 and 2 were proven by substantial evidence. | McGrath argues hearsay/credibility issues; he denies intentional misstatements. | WSBA contends misstatements and encumbrances were intentional and deceptive. | Yes; substantial evidence supports intentional misstatements and concealment (Counts 1–2). |
| Whether McGrath violated 18 U.S.C. § 152 (bankruptcy fraud). | McGrath claims lack of knowing intent; errors were negligent and alleged misstatements were inadvertent. | Record shows deliberate, not negligent, conduct and intent to hinder creditors. | Yes; court found willful and intentional acts violated § 152 and RPC 8.4(b). |
| Whether McGrath violated trust accounting and commingling rules (RPC 1.15A). | McGrath contends funds were properly part of client funds and permissible to deposit. | Him holding and commingling funds violated trust account rules and increased risk of misappropriation. | Yes; findings on commingling and trust account mismanagement affirmed. |
| Whether disbarment is an appropriate sanction given the conduct. | Disbarment is the presumptive sanction under ABA Standards for serious misconduct. | Appropriate sanction should align with precedents and proportionality considerations. | Yes; disbarment affirmed as the correct presumptive sanction given serious, willful misconduct and prior discipline. |
Key Cases Cited
- In re Disciplinary Proceeding Against Behrman, 165 Wn.2d 414 (2008) (sanctions standards reviewed; holdings on de novo review of facts and law)
- In re Disciplinary Proceeding Against Van Camp, 171 Wn.2d 781 (2011) (clear standard of proof and deference to hearing officer’s credibility determinations)
- In re Disciplinary Proceeding Against Poole, 156 Wn.2d 196 (2006) (established governing standard for disciplinary findings of fact and conclusions of law)