In Re Petition for DISCIPLINARY ACTION AGAINST Larry S. SEVERSON, a Minnesota Attorney, Registration No. 99363
Lead Opinion
OPINION
In July 2013 the Director of the Office of Lawyers Professional Responsibility filed a petition for disciplinary action alleging that respondent Larry S. Severson violated the rules of professional conduct by entering into an investment agreement with a client, D.S., and having D.S. sign an assignment and mortgage without disclosing his personal interest. The Director also alleged that Severson made several misrepresentations to D.S.,- to opposing counsel in connection with a civil lawsuit to be brought by D.S., and to the Director. Following a hearing, the referee made findings of fact and conclusions of law that Severson engaged in the majority of the misconduct alleged in the petition and that Severson’s lack of remorse was not an aggravating factor. The referee recommended that Severson be suspended from the practice of law for 90 days. Because we conclude the referee clearly erred in finding that Severson’s lack of remorse was not an aggravating factor, and that
Severson was admitted to practice law in Minnesota in 1975, and was a shareholder in the law firm of Severson, Sheldon, Dougherty and Molenda, P.A. (law firm) until 2012. Severson recently started a new law firm with two other attorneys. Severson was also engaged in extensive business dealings in car dealerships, banks, and commercial real estate redevelopment projects.-
The misconduct in this case relates to D.S., who was a member of Severson’s household. D.S.’s childhood history was tragic. When D.S. was 3 months old, her parents were killed in a car accident. D:S. was the sole beneficiary of various insurance proceeds that were placed in a con-servatorship administered by her adoptive mother (mother). When D.S. was in high school, she experienced serious conflicts with her stepfather that they could not resolve. As a result, D.S. asked and Sev-erson agreed that she would become a member of the Severson household. The Seversons thereafter treated D.S. like a daughter.
Investment Agreement
When D.S. turned 18 in April 1996, she was informed by her mother that the con-servatorship should- be closed, and the funds transferred to D.S. D.S. discussed the matter with Severson, and Severson told her that his law firm could assist her. D.S. also discussed with Severson how to invest the funds she would be receiving from the conservatorship. She told Sever-son she wanted to go to college and use the inheritance to pay for college. Sever-son offered to invest D.S.’s inheritance and pay her 9% interest annually to cover her living expenses and tuition.
Severson’s law firm prepared the documents necessary to close the conservator-ship. A paralegal and an associate at the firm performed most of this work, although Severson was listed as an attorney on court filings. The conservatorship was closed on May 31, 1996, and on June 5, 1996, $541,868 was deposited in the law firm’s trust account for D.S.
Severson prepared an investment agreement that was signed by D.S. and Sever-son on June 4, 1996. The investment agreement provided that Severson would invest the principal of approximately $500,-000
D.S. initially attended college at Mount Holyoke College in Massachusetts, and then transferred to Saint Catherine University in Saint Paul to be closer to her ailing mother, who died in 2000. As a result of the transfer and the emotional toll of her mother’s death, D.S. did not graduate from college in 2000. As contemplated by the agreement, D.S. and Sever-son orally agreed to extend the investment agreement, but at a reduced interest rate of 8%.
The law firm did other legal work for D.S. Severson arranged for another attorney at his firm to prepare estate planning documents for D.S., which were executed in 2000. Between 2004 and 2007, Severson represented D.S. in a dispute she had with a former landlord over a security deposit. In 2006, Severson drafted a contract for a business D.S. started and filed the necessary documents to form a limited liability corporation.
. Severson’s Financial Difficulties
In January 2007, D.S. requested that Severson return the $500,000 to her. Because Severson was unable to consummate a sale of the FSSCF stock, Severson was unable to return D.S.’s principal. By 2008, Severson was in serious financial trouble. Notably, Severson had acquired an equine center in 2007 and later sold the facility for $1.5 million on a contract for deed, but the purchasers defaulted on the contract. Thereafter, Severson assigned his seller’s interest in the equine center to D.S. as security for her principal, and had D.S. sign a $250,000 mortgage regarding their interest in the equine center; but Sever-son did not explain to D.S. that he had her sign the documents because of his financial difficulties.
Additionally, Prosperan Bank, the mortgage holder on one of Severson’s real estate projects, threatened to foreclose on the mortgage when Severson’s partner in the project declared bankruptcy. To avoid foreclosure, Severson had D.S. assign her seller’s interest in the equine center to Prosperan, telling her that it would help him repay her principal. The assignment represented, among other things, that D.S. was Severson’s daughter and that she would benefit from the forbearance of the mortgage foreclosure. Subsequently, D.S. received a delinquent tax notice in 2009 on the equine center, and in 2010 the mortgage holder brought a foreclosure action naming D.S. as a co-defendant.
Misrepresentations
D.S. hired an attorney who sent a demand letter in October 2009 to Severson seeking return of the $500,000 and an accounting. Severson responded that he owed D.S. about $410,000, subject to a final accounting. Severson’s accountant determined the amount owing was $871,363 after subtracting four legal invoices purportedly from the law firm to D.S. for services rendered. The Director discovered, however, that the four legal invoices were not prepared by the law firm; instead the invoices were prepared by Severson for the final accounting. In July 2010, D.S. sued Severson seeking return of her principal. The case was settled in December 2010 for $435,000, from which $135,000 was paid by D.S. for attorney fees. Thus, D.S. recovered only $300,000 of the $500,000 she had originally given to Severson.
Severson’s misconduct was reported to the Director. During the disciplinary investigation Severson stated, through counsel,
The Director filed a petition for disciplinary action alleging multiple acts of misconduct: (1) Severson entered into an investment agreement with D.S. in 1996, in violation of Minn. R. Prof. Conduct 1.7(b) (1996) and 1.8(a) (1996); (2) Severson misrepresented that checks issued from D.S.’s funds in 1996 were used for real estate purchases, in violation of Minn. R. Prof. Conduct 8.4(c);
The referee concluded that Severson engaged in acts of misconduct (1), (8), (4), (5), (6), and (7) described above in violation of the applicable rules of professional conduct but found no violation with respect to act of misconduct (2). The referee also found that remorse was neither an aggravating nor a mitigating factor. Further, the referee found that Severson’s repayment of D.S. was both an aggravating and mitigating factor; and that Severson’s charitable contributions, pro bono work, and community service mitigated his misconduct. The referee recommended a 90-day suspension without the requirement that Sev-erson petition for reinstatement.
I.
The Director bears the burden of proving professional misconduct by clear and convincing evidence. In re Voss,
.A.
Severson first argues that the referee erred in finding that he violated the conflict of interest rules when he entered into the investment agreement with D.S.
To establish a violation of the conflict of interest rules, the Director must first prove the existence of an attorney-client relationship at the time of the alleged wrongful conduct. See In re Perry,
An attorney-client relationship is created under the tort theory “whenever an individual seeks and receives legal advice from an attorney in circumstances in which a reasonable person would rely on such advice.” Perry,
There is ample evidence in the record to support the referee’s conclusion that D.S. sought legal services from Severson. D.S. approached Severson to help her close the conservatorship and invest her money, and Severson indicated that his law firm could assist her.
The record further shows that D.S. received legal advice from Severson. Along with the investment agreement, Severson prepared and then had D.S. sign a power of attorney that made him attorney in fact for D.S. with respect to several bank accounts. While a power of attorney does not need to be drafted by a lawyer, it is a legal document that lawyers typically draft for clients. Cf. Perry,
Finally, the record establishes that a reasonable person in D.S.’s shoes would have relied on the legal advice Severson provided to D.S. D.S. asked Severson for help, and Severson told D.S. that his law firm could help her. Thus, it was Sever-son’s own words that indicated he was going to perform legal work for D.S. The power of attorney form, which was signed in order to assist Severson in investing D.S.’s money, has a stamp on the bottom of it indicating it was drafted by Sever-son’s law firm. Severson never told D.S. that he was not acting as her lawyer when he drafted this legal document. In addition, the funds from the conservatorship that Severson was going to invest for D.S. were transferred into Severson’s law firm’s client trust account. Based on all of these facts, the referee did not clearly err when he concluded that it was reasonable for D.S. to have relied on Severson’s legal advice.
In summary, the referee’s findings that D.S. sought legal advice from Severson to help her close the conservatorship and invest her money; that she received legal advice from Severson, including the execution of the power of attorney; and that it was reasonable for D.S. to have relied on this legal advice are supported by the record. Consequently, the referee did not clearly err when he found that an attorney-client relationship existed between D.S. and Severson when they executed the investment agreement.
B.
We next examine whether the referee’s finding that Severson violated the conflict of interest rules is supported by the record. Rule 1.7, as it existed in 1996, provided that an attorney was prohibited from representing a client if the representation would be “materially limited ... by the lawyer’s own interests.” Minn. R. Prof., Conduct 1.7(b) (1996). The prohibition did not apply if: “(1) the lawyer reasonably believ[ed] the representation [would] not be adversely affected; and (2) the client consented] after consultation.” Id. An attorney was also prohibited from
Severson violated Rules 1.7(b) and 1.8(a) when he entered into the investment agreement with D.S.
C.
The parties dispute the referee’s findings regarding misrepresentations in four areas. First, the Director argues the referee erred by finding Severson’s withdrawal of D.S.’s funds in 1996 from the law firm’s trust account and payment of those funds to Valley Ford, Inc. did not involve dishonesty, fraud, deceit, or misrepresentation.
Lawyers are prohibited from engaging in conduct that involves “dishonesty, fraud, deceit, or misrepresentation.” Minn. R. Prof. Conduct 8.4(c). The referee found that in 1996 the law firm issued a check from the trust account holding D.S.’s funds for $434,000 payable to Valley Ford, Inc. with the notation on the check “Real' Estate purchase.” It is undisputed that the law firm issued a trust account check in 1996 for $434,000 to Valley Ford, Inc. with the notation “Real Estate purchases.” The Director, however, failed to prove where the funds were invested between 1996 and 2002. Severson stated in a letter that he did not save the accounting records for the time period prior to 2002. Also, Severson’s bank records do not indicate where D.S.’s funds were invested from 1996 to 2002. Severson testified that he did not remember where he invested D.S.’s funds prior to 2002, at which point he
Second, Severson argues the referee erred by finding he made misrepresentations to D.S. regarding the equine center property assignment and mortgage in 2008 and 2009.
Severson admitted that at the time he had D.S. assign and mortgage her interest in the equine center, he was having serious financial difficulties. Severson had D.S. assign and mortgage her interest in the equine center to provide security for a personal loan Severson had outstanding with a creditor. Severson did not explain to D.S. that the purpose of having her mortgage her interest in the equine center was to provide security for one of his creditors. Severson admitted that he failed to explain to D.S. that he was having financial difficulties, and that given his financial difficulties, her funds may be at risk. Consequently, the testimony supports the referee’s finding that Severson intentionally misled D.S. at the time of the assignment.
Third, Severson challenges the referee’s finding that he misrepresented to Prosperan that D.S. was his daughter during negotiations of an assignment and forbearance agreement.
We conclude that the referee’s finding that Severson intentionally misled Pros-peran during the negotiation of the forbearance agreement was clearly erroneous. There is no evidence that Severson misrepresented to Prosperan that D.S. was his daughter. Severson did not sign the assignment, and testified he did not notice the statement in question. Consequently, the referee’s finding is not supported by the record.
Fourth, Severson argues his statements to the Director indicating that D.S.’s funds were used to purchase FSSCF stock in 1996 were not misrepresentations.
D.
The Director argues that lack of remorse was an aggravating factor. According to the Director, Severson did not express remorse for any of the proven misconduct and the remorse he did express related only to the impact his misconduct had on himself and his family.
The referee found that remorse was neither a mitigating nor an aggravating factor. Specifically, the referee found that Severson was remorseful about losing his relationship with D.S., that Severson understood that the loss of that relationship was harmful to D.S., and acknowledged his responsibility for extremely poor bookkeeping and his inability to repay D.S. upon her request. But the referee also found that Severson had not “internalized or expressed remorse” for his misconduct of failing to advise D.S. when entering into the investment agreement, for his inappropriate investments of D.S.’s money, for “his extremely troubling attitude in 2008 and 2009” that he did not need to adequately explain the additional business transactions D.S. entered into related to the equine center, and for the many steps he took in D.S.’s name “to survive the financial risks he faced.”
An attorney’s remorse can be a mitigating factor in considering the appropriate discipline. In re Rooney,
The referee found, and the record supports the finding that Severson did riot express genuine regret and moral anguish for his misconduct and the effect it had on D.S. Instead, Severson merely expressed regret over the effect the misconduct had on himself. But remorse requires genuine regret and moral anguish for the effect that the misconduct had on the victim, not on the attorney. Here, Severson’s regret directed at himself is not remorse within the meaning of our case law. Also, acknowledging extremely poor record keeping when Severson’s misconduct does not relate to bad record keeping has little to do with remorse.
Severson did not express remorse for how his misconduct affected D.S. or others. Throughout the disciplinary process Severson continued to deny that he committed much of the misconduct, contending that D.S. was not his client in 1996 and that he did not notice the misstatements his attorney made to .the Director. See In re Nathan,
E.
Finally, the Director argues that the referee erred in failing to find that Severson’s conduct was motivated by selfishness. The Director contends that Sev-erson put his own financial well-being, as well as that of his other creditors, ahead of D.S.’s.
An attorney’s selfish motive may be an aggravating factor. See, e.g., In re Fairbairn,
We conclude that the referee’s finding .that Severson’s motivations were not selfish was not clearly erroneous. Severson testified that he intended to subsidize D.S.’s education through the investment agreement because he knew he could not obtain a 9% return on the investment. Severson also testified that the original purpose for assigning the equine center to D.S. was to provide a source of payment for her inheritance. This testimony supports the referee’s finding that Severson’s motivations were not selfish.
In sum, we uphold all but two of the referee’s findings. We conclude the referee clearly erred when he found that Sever-son misrepresented to his bank that D.S. was his daughter, and clearly erred when he did not find that Severson’s lack of remorse was an aggravating factor. We now turn to the appropriate discipline.
II.
The referee recommended that Severson be suspended from the practice of law for 90 days and that he be required to successfully complete the professional responsibility portion of the state bar examination. The Director contends that Severson’s violation of the conflict of interest rules and his misrepresentations warrant an indefinite suspension for a minimum of 3 years. Severson asks us to adopt the referee’s recommendation.
The purpose of disciplinary sanctions for professional misconduct is not to punish the attorney, but rather to protect the public, safeguard the judicial system, and deter future misconduct by the disciplined attorney and other attorneys. In re Rebeau,
A.
Severson’s misconduct is very serious. Severson entered into multiple business transactions with a client in violation of the conflict of interest rules. The investment agreement he entered into with D.S. was essentially an unsecured loan of $500,000 from D.S. to Severson. Severson did not adequately explain the transaction to D.S. or advise her to seek independent counsel, and the terms of the agreement were not fair or reasonable.
Additionally, Severson engaged in multiple acts of dishonesty by: (1) intentionally misleading D.S. as to the purpose of the real estate assignments in 2008 and 2009, thereby hiding a significant risk of loss to her funds because of his financial difficulties, in violation of Rule 8.4(c); (2) intentionally misleading D.S. that the four legal invoices were legitimate invoices of the law firm representing money owed by D.S. that should be deducted from the money Severson owed D.S., in violation of Rule 8.4(c) and (d); (3) intentionally misleading the Director that the invoices were legitimate invoices from the law firm, in violation of Rules 8.1 and 8.4(c); and (4) intentionally misleading the Director that D.S.’s money was at all times invested in FSSCF, in violation of Rules 8.1 and 8.4(c). Making false statements is “misconduct of the highest order and warrants severe discipline.” In re Ruffenach,
B.
“[T]he cumulative weight and severity of multiple disciplinary rule violations may compel severe discipline even when a single act standing alone would not have warranted such discipline.” In re Oberhauser,
The cumulative weight of the disciplinary violations begins with Severson’s misconduct in 1996 when he entered into the investment agreement with D.S., and then continues again in November 2008 when Severson had D.S. assign her vendor’s interest in the equine center to his creditor. The misconduct continued for 2 years with Severson making additional misrepresentations to D.S., the Director, and third parties. Severson’s multiple acts of misconduct over a period of years suggest more than a brief lapse in judgment. In re Hummel,
C.
Severson’s misconduct harmed D.S., who trusted him. It took D.S. several years to recover some of her principal from Sever-son, she had to hire an attorney in order to do so, and in the end, she lost at least one-third of the principal she had given to Severson. See In re Coleman,
D.
The referee found that Severson’s extensive community service, charitable contributions, and pro bono work constitute a mitigating factor. But Severson’s lack of remorse is troubling. Severson presented no evidence that he has any remorse, or even insight, into the harm he caused D.S. or the profession by his multiple violations of the conflict of interest rules and multiple acts of dishonesty. Separately, it is troubling that D.S. was required to commence a lawsuit and incur $135,000 in attorney fees to recover her funds from Sev-erson.
■ E.
Finally, we consider prior cases with similar misconduct for guidance. We believe the most apposite cases are In re Ray,
In Dillon, the attorney borrowed $65,000 from a client, his former sister-in-law, to repay a business debt.
Severson’s case is similar to Ray and Dillon because they all involve improper investment agreements with clients and the failure to comply with the conflict of interest rules. Dillon,
We conclude that when considered in its totality, Severson’s misconduct is very serious. Severson violated the conflict of interest rules by entering into an investment agreement with a client that involved a substantial sum of money and had terms that were unfair and unreasonable. Sever-son further violated the rules by having that same client assign and mortgage her interest in a building without disclosing that doing so was for his benefit. These business transactions harmed the client, who had to sue Severson in order to get her money back and in the end did not recover one-third of the principal she had entrusted with Severson. Moreover, Sev-
Accordingly, we order that:
1. Respondent Larry S. Severson is indefinitely suspended from the practice of law in the State of Minnesota, effective 14 days after the date of the filing of this opinion, with no right to petition for reinstatement for a minimum of 1 year;
2. Respondent may petition for reinstatement pursuant to Rule 18(a) — (d), Rules on Lawyers Professional Responsibility (RLPR). Reinstatement is conditioned on successful completion of the professional responsibility portion of the state bar examination and satisfaction of continuing legal education requirements, pursuant to Rule 18(e), RLPR;
3. Respondent shall comply with Rule 26, RLPR (requiring notice of suspension to clients, opposing counsel, and tribunals); and
4. Respondent shall pay $900 in costs pursuant to Rule 24, RLPR.
Notes
. The same day $541,868 was deposited in the trust account, $41,856 was withdrawn and allegedly paid to D.S., although neither D.S. nor Severson has any specific recollection regarding this withdrawal. In any case, the parties do not dispute that about $500,000 remained in the trust account for D.S.
. In September 2009, Severson lowered the interest rate in the investment agreement from 8% to 7% because of his financial difficulties. Severson informed D.S., and she acquiesced to the change.
. Severson retained new counsel to represent him before our court.
. Unless otherwise indicated, citations to the Minnesota Rules of Professional Conduct are to the rules currently in effect.
.Severson does not dispute that he violated the conflict of interest rules in act of misconduct (3) and does not dispute the misrepresentation in act of misconduct (6).
. This contention relates to act of misconduct (1).
. The referee based his finding of an attorney-client relationship on the fact that Severson's law firm performed legal work in order to
Because there is sufficient evidence in the record that Severson performed legal work for D.S. with respect to investing her funds, including drafting the power of attorney, it is not necessary to examine the legal work performed for the closing of the conservatorship to determine whether an attorney-client relationship existed when the investment agreement was signed. Also, it is not necessary to decide whether Severson’s firm represented D.S. with respect to the closing of the conser-vatorship, and we express no opinion on that topic.
. The only challenge Severson makes to the referee’s findings and conclusions that he violated Rule 1.7 and 1.8 with respect to the investment agreement is his claim that he did not have an attorney-client relationship with . D.S. in 1996. In fact, Severson admits in his brief to our court that if an attorney-client relationship existed, "then [he] is responsible for not having complied with the Rule 1.8(a).”
. This contention relates to act of misconduct (2).
. This contention relates to act of misconduct (4).
. This contention relates to act of misconduct (5).
. This contention relates to act of misconduct (7).
. Like us, the dissent affirms the referee's findings that Severson and D.S. had an attorney-client relationship in 1996 and that Sev-erson violated the conflict of interest rules when he entered into the investment agreement with D.S. in 1996. When it discusses the appropriate discipline, however, the dissent does not consider Severson’s violation of the conflict of interest rules in 1996. It also does not consider the harm D.S. suffered from entering into the investment agreement with Severson because she had to sue Sever-son in order to get her principal back, and in the end, did not receive $200,000 of her money-
Instead, the dissent contends that "the imposition of discipline is more appropriately focused on” the misrepresentations Severson made to various people. It focuses on the misrepresentations because "the existence of an attorney-client relationship in 1996 is tenuous at best.” The dissent’s focus on some of Severson's misconduct is contrary to our case law, which requires us to look at all of an attorney's misconduct when determining the proper discipline to impose. See, e.g., In re Panel Case No. 35104,
. Severson cites several cases involving misrepresentations to support a 90-day suspension, contending that when an attorney's misconduct includes misrepresentations, "the discipline for the misrepresentation tends to overshadow other misconduct.” We disagree. It would understate the appropriate discipline to focus solely on Severson’s misrepresentations and ignore the serious conflict of interest violations he committed that involved a significant amount of money and harm to the client.
Severson also cites conflict of interest cases that are distinguishable. Specifically, he cites to conflict of interest cases involving admonitions in which the attorneys loaned less than $4,000 to the clients. See In re Fraley, 621
N.W.2d 727, 727 (Minn.2001) (order); In re Panel Matter No. 87-22,
Dissenting Opinion
(dissenting).
Although I agree with the majority’s conclusion that Severson violated Rules 1.7,1.8, 8.1, and 8.4 of the Minnesota Rules of Professional Conduct, I respectfully dissent from the discipline imposed by the majority.
I begin with the observation that determining the appropriate discipline here is not free from doubt and reaching the appropriate result is more challenging than in some of our other cases. While we are the final arbiter of discipline, there is no doubt that our conclusions are informed by the recommendations of the referee. Here the referee recommended a 3-month suspension, concluding that protection of the public did not require a longer suspension. The majority effectively decides that not all of the referee’s findings of -wrongful conduct can be affirmed, but decides nonetheless that a longer suspension is required. I conclude that the referee has the better of the argument here.
“[T]he purpose of [attorney] discipline is not primarily punitive but ‘to guard the administration of justice and to protect the courts, the legal profession and the public.’ ” In re Serstock,
Some measure of discipline is warranted here. Severson conceded an attorney-client relationship with D.S. from 2004-2009, and therefore he violated Rules 1.7 and 1.8 during that period, although the referee found that D.S. suffered no losses as a result of those violations. Severson also concedes that the false invoices had a “misleading effect,” although he contends
The majority concludes that Severson and D.S. had an attorney-client relationship when they entered into the investment agreement, based on the referee’s finding that Severson drafted an investment agreement and a power of attorney. Although these findings and conclusions by the referee are not clearly erroneous, the existence of an attorney-client relationship in 1996 is tenuous at best. To his credit, the referee agreed, stating that “a reasonable counter-argument could be made under the facts and especially under the law.” The referee therefore recommended a 3-month suspension, or a public reprimand if we concluded that no attorney-client relationship existed in 1996. By contrast, in the conflict-of-interest cases cited by the majority, the attorney clearly represented the client before the inappropriate business relationship commenced. See In re Dillon,
I therefore conclude, based on the record before us, that the referee’s recommendation of a 3-month suspension is appropriate here, even though there remain substantial questions about investment decisions made by Severson while handling funds belonging to D.S. Although the referee’s findings and conclusions are not binding on us, the referee is in the best position to assess the credibility of witnesses. In this case, the referee, after hearing the testimony of all of the relevant parties, noted that Severson’s actions were not “underhanded, malicious, or predatory,” and that he acted in order to benefit a young woman who was like a daughter to him.
We have imposed the same or lesser penalties on attorneys who committed more serious acts of dishonesty. See, e.g., In re Czarnik,
A lawyer’s first responsibility is to represent his client’s interests. There is great peril for both lawyer and client when, as here, the client’s interests and the lawyer’s interests are intertwined. Severson’s failure to make his client’s interests the paramount concern necessitates discipline. Given the unique facts in this record, however, I would suspend Sev-erson from the practice of law for 3 months as recommended by the referee.
. The majority relies on the drafting of both the investment agreement and the power of attorney in concluding that an attorney-client relationship existed. The power of attorney is clearly a legal document that may be, and often is, drafted by an attorney, and that is sufficient evidence of an attorney-client relationship. I see no reason to reach the question of whether the drafting of the investment agreement also implicates the attorney-client relationship.
. I disagree with the majority’s conclusion that Severson's lack of remorse is an aggravating factor. The referee, who was in the best position to determine Severson’s credibility and demeanor, concluded that remorse was neither an aggravating nor mitigating factor. See In re Moulton, 721 N.W.2d 900, 905 (Minn.2006) ("Deference to the referee is particularly appropriate when the findings are based on a respondent’s demeanor, credibility, or sincerity.” (citing In re Pinotti,
. The majority concludes "the referee’s finding that Severson made intentional misrepresentations in letters to the Director about when D.S.’s money was invested in FSSCF was not clearly erroneous.” This statement is accurate as far as it goes, and I would not disagree with the court’s conclusion. There are additional facts here, however, that suggest the materiality of these misrepresentations may be doubtful. It is undisputed that these communications occurred between Sev-erson’s lawyer during the disciplinary proceedings and the Director, and the initial letter from the lawyer correctly reported that this transaction occurred in 2002. Later communications from the lawyer stated this transaction occurred in 1996 before it was finally reported that the 2002 date initially disclosed was, in fact, the correct date. The significance of these discrepancies is not clear. I am more troubled by Severson's assertion that he does not remember where the $500,000 entrusted to him by D.S. was invested between 1996 and 2002. The referee made no findings on the credibility of Sever-son’s assertion that he does not remember where this substantial sum of money was invested during that 6-year time period. But we impose discipline based on facts found and conclusions reached, not speculation.
Dissenting Opinion
(dissenting).
I join in the dissent of Justice ANDERSON.