Case

IARDC – In re George Clive Hook – Commission No. 98 CH 50

In HK on December 27, 2008 at 10:31 pm

 

Filed July 26, 2005

In re George Clive Hook
Commission No. 98 CH 50

Synopsis of Hearing Board Report and Recommendation

NATURE OF THE CASE: committing criminal acts that reflect adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects; conduct involving dishonesty, fraud, deceit or misrepresentation; and conduct that is prejudicial to the administration of justice, or which tends to defeat the administration of justice or to bring the courts or the legal profession into disrepute

RULES DISCUSSED: 8.4(a)(3) of the Illinois Rules of Professional Conduct (1990); 8.4(a)(4); 8.4(a)(5) and Supreme Court 771

SANCTION: Disbarment

DATE OF OPINION: July 26, 2005

HEARING PANEL: Joseph A. Barthlomew, William E. Hornsby, Jr. and Albert C. Baldermann

ADMINISTRATOR'S COUNSEL: Athena T. Taite

RESPONDENT'S COUNSEL: Pro se

BEFORE THE HEARING BOARD
OF THE
ILLINOIS ATTORNEY REGISTRATION
AND
DISCIPLINARY COMMISSION

In the Matter of:

GEORGE CLIVE HOOK,

Attorney-Respondent,

No. 1256432.

Commission No. 98 CH 50

REPORT AND RECOMMENDATION OF THE HEARING BOARD

The hearing in this matter and was held on February 2-3, March 16 and April 19, 2005 at the offices of the Attorney Registration and Disciplinary Commission, Chicago, Illinois, before a Panel of the Hearing Board consisting of Joseph A. Bartholomew, Chair, William E. Hornsby, Jr. and Albert C. Baldermann. Athena T. Taite appeared on behalf of the Administrator and Respondent, George Clive Hook, appeared pro se.

PLEADINGS AND PRE-HEARING RECORD

In a one-count Complaint filed pursuant to Supreme Court Rule 761(d) on June 11, 1998, the Administrator alleges that due to Respondent's May 29, 1997 conviction in the U.S. District Court, Central Division of Illinois in United States of America v. George C. Hook, No. 1L95CR10010-002, Respondent has engaged in the following misconduct: committing criminal acts that reflect adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects; conduct involving dishonesty, fraud, deceit or misrepresentation; and conduct that is prejudicial to the administration of justice, or which tends to defeat the administration of justice or to bring the courts or the legal profession into disrepute. (See Adm. Compl. at para. 1-7; Adm. Ex. 1)

PAGE 2:

On November 19, 1999 the Illinois Supreme Court, pursuant to the rule to show cause under Supreme Court Rule 761 that issued to Respondent on June 17, 1998 and continued until August 11, 1998, ordered Respondent suspended from the practice of law effective immediately and until further order of Court. On September 5, 2000 Respondent filed his Answer to the Administrator's Complaint. On March 30, 2001 the Administrator's Motion to Strike Respondent's Answers and Exhibits was granted and Respondent was allowed to file an Amended Answer to the Administrator's Complaint in compliance with Commission Rule 233 on or before April 16, 2001. On April 20, 2001 Respondent filed his Answer and Verified Third Party Complaints. On April 26, 2001 the Administrator filed a Motion to Strike Respondent's Third Party Complaints. On May 15, 2001 Respondent filed a Response to the Administrator's Motion to Strike his Third Party Complaints. On June 4, 2001 the Chair granted the Administrator's Motion to Strike Respondent's Third Party Complaints and ordered that pages 26-40 of Respondent's April 20, 2001 Amended Answer be stricken. Respondent's Answer denies virtually all of the allegations of the Administrator's Complaint.

On May 17, 2002 Respondent filed a Motion in Limine to preclude use of his federal conviction. On May 29, 2002 the Administrator filed a response to Respondent's Motion in Limine. On June 18, 2002 the Administrator filed a Motion in Limine to preclude argument and evidence contradicting Court rulings regarding PBGC v. Wittek and its relationship to U.S. v. Hook, a Motion in Limine to preclude argument and evidence concerning whether Respondent received a full and fair hearing, and a Motion to Strike certain affirmative defenses. On July 31, 2002 Respondent filed his response to both of the Administrator's Motions in Limine, a response to the Administrator's Motion to Strike and a reply in support of his Motion in Limine to preclude use of his federal conviction. On September 10, 2002 the Chair denied Respondent's

PAGE 3:

Motion in Limine to preclude use of his federal conviction and granted the Administrator's Motion in Limine to preclude argument and evidence contracting court rulings regarding PBGC v. Wittek and its relationship to U.S. v. Hook as well as the Administrator's Motion in Limine to preclude argument and evidence concerning whether Respondent received a full and fair hearing. The Chair further deemed the Administrator's Motion to Strike certain affirmative defenses moot based on the ruling on other motions.

Based on the reassignment of this matter to another Hearing Board Chair, on March 20, 2003, Respondent filed a Motion to Reconsider preclusion of his federal conviction and a Motion to Reinstate Third Party Complaints. Four days later, the Administrator filed responses to Respondent's Motion to Reinstate Third Party Complaints and the Motion to Reconsider. On March 25, 2003 Respondent filed a Motion to Reconsider Motion to Compel pursuant to Supreme Court Rule 219. On April 3, 2003 the Administrator filed her response to Respondent's Motion to Reconsider Motion to Compel and her responses to Respondent's Motion to Reconsider preclusion of argument and evidence regarding PBGC v. Wittek and Motion to Reconsider permitting argument and evidence that U.S. v. Hook was not a full and fair hearing. On April 15, 2003, Respondent filed a reply in support of the Motion to Reconsider preclusion of federal conviction.

Additionally, On May 19, 2003 the Chair ordered that a hearing in this matter was tentatively scheduled for July 29 and 30, 2003. The tentative hearing was to be held, pending confirmation, at the Metropolitan Correctional Center where Respondent was incarcerated. On July 16, 2003 Respondent filed an In Chambers Motion to Place Motions Under Seal and a Motion to Postpone Proceedings. On July 22, 2003 the Chair ordered, with no objection by the

PAGE 4:

Administrator, that Respondent's Motion to Postpone Proceedings be granted and thereby vacated the previously scheduled July 29 and 30, 2003 hearing dates.

On August 17, 2004 the Chair denied Respondent's Motion to Reinstate Third Party Complaints and his Motion to Reconsider Preclusion of Federal Conviction. On August 23, 2004 Respondent sent the Chair, a letter requesting reconsideration of the August 17, 2004 order which denied his Motion to Reinstate Third Party Complaints. On September 1, 2004 the Chair denied Respondent's Motion to Reconsider the Denial of his Motion to Reinstate Third Party Complaints and the Motion to Reconsider Denial of his Motion to Reconsider Preclusion of Federal Conviction.

On September 30, 2004 the Chair scheduled the hearing for December 2 and 3, 2004 at the Chicago offices of the ARDC. On November 11, 2004 the Chair ordered that the Administrator and Respondent file any motions in limine or motions to bar or exclude testimony on or before November 12, 2004. The Chair further ordered that the Administrator and Respondent shall respond to any motions in limine or motions to bar or exclude testimony on or before November 23, 2004 and that the hearing remain scheduled for December 2 and 3, 2004.

On November 12, 2004 the Administrator filed a Motion to Limit Character Witnesses and Motion in Limine to Bar Witness Testimony. On November 23, 2004 Respondent filed responses to the Administrator's Motions. On November 30, 2004 the Administrator's Motion in Limine to Bar Witness Testimony was granted, but the Administrator's Motion to Limit Character Witnesses was denied.

EVIDENCE

The Administrator presented the testimony of Robert Schnitz, Drake Boutwell and Exhibits 1-3 which are, respectively, the certified judgment and opinion in United States of

PAGE 5:

America v. George C. Hook, No. 1L95CR10010-002, and the July 13, 1992 letter from Drake Boutwell to Carmen Viana. Respondent presented his own testimony along with the testimony of Richard Baran, Robert Neil Rudman, Theodore W. Grippo, Joseph Pankus, Carol Petersen, Glen Canwitt, Michael C. Osajda, Albert L. Grasso, Nicolas C. Hindman and Exhibits 4, 17, 21, 22, 24, 24-B, 25, 26-7-A, 26-9-A, 26-B, 27, 28, 28-A, 29, 32, 34, 37, 40, 45, 46, 46-A, 53, 55, 56-A, 56, 57, 58, 59, 59-A, 59-B, 59-C, 59-D, 60, 61, 61-A, 63, 63-B, 64, 66, and 67. The testimony of the witnesses and the Exhibits established the following facts:

On September 13, 1996, a federal grand jury returned a seven-count indictment alleging that beginning in June of 1992 and continuing to, at least September of 1992, Respondent conspired with Carmen Viana ("Viana") to commit wire fraud, money laundering and theft. The indictment alleged that Viana was the sole owner, Chairman and CEO of Wittek Industries, Inc. ("Wittek"). Wittek was the employer and plan sponsor for an employee benefit plan ("Plan"). The Plan was an employee benefit plan subject to the provisions of Title 1 of the Employee Retirement Income Security Act of 1974 ("ERISA). Certain provisions of ERISA prohibited the lending or transfer of Plan funds to or for the benefit or a party in interest, such as an employer (Wittek). The assets and funds of the Plan were held and managed by Manufacturer's Bank in Detroit, Michigan. The indictment further alleged that Respondent conspired with Viana to form a "shell" corporation to serve as a conduit for money to flow from the Plan to Wittek. The purpose of the conspiracy was to obtain funds to provide additional operating capital to Wittek. Between July 17, 1992 and August 7, 1992, Respondent conspired with Viana to transmit and receive by wire transfer, approximately $989,000 belonging to the Plan, and that Respondent placed those funds in a "shell" corporation account and a client trust account for the purpose of concealing the source of these funds. The indictment also alleged that between August 6, 1992,

PAGE 6:

and September 18, 1992, Respondent laundered $660,000 belonging to the Plan with the intent of concealing the nature, location, source, ownership and control of the funds. Respondent was also charged with willfully converting $36,800 of the funds from the Plan. (See Adm. Compl. para. 1-5; Adm. Ex. 2 at pp. 3-6)).

On May 29, 1997 Respondent was found guilty of each charge set forth in the indictment, (three counts of wire fraud, 18 U.S.C. § 1343, one count of theft from an employee benefit plan, 18 U.S.C. § 664, and three counts of money laundering, 18 U.S.C. § 1956) and on May 27, 1998 Respondent was sentenced to eighty-four months imprisonment and ordered to pay restitution in the amount of $735,566.00. (See Adm. Compl. para. 6-7; Adm. Ex. 1; Adm. Ex. 2 at pp. 7-8).

Testimony of Respondent

Respondent testified that Viana described to him a very simple transaction involving Wittek's Plan which involved Wittek's three properties and how she wanted to sell one of those properties to the Plan. Respondent advised Viana that he did not regard himself as an expert in pension law, but knew such a transaction required an ERISA lawyer because it might be a prohibited transaction. Respondent knew enough about pension law to know an ERISA expert was required, but that was the extent of his knowledge. In a meeting between Viana and Boutwell, Viana described the transaction she wanted Boutwell to complete. Boutwell informed Viana that such a transaction was prohibited, but he thought the transaction could be structured in a way to accomplish Viana's goals which was to cure the under-funding of the Plan which was approximately $800,000.00. The transaction, if accomplished, would also provide working capital to Wittek. (Tr. 290-300).

Boutwell testified against Respondent in his criminal trial. Respondent does not know if Boutwell received immunity from the prosecution for his testimony. Boutwell's testimony in the

PAGE 7:

criminal proceeding was that it was untrue that the Pineville Real Estate Operation Corporation assets were not Plan assets. (Tr. 301)

Respondent testified that the money (a little less than $700,000.00) went to Wittek in the form of a loan from Pineville Real Estate Operation Corporation. Those funds were used to operate Wittek. Viana was not taking her full salary during this time period. (Tr. 341).

According to Respondent, Viana did not flee the country after her indictment; instead she tried to resuscitate the company until the middle of 1994 when she realized she could not do that. Viana put herself and Wittek into bankruptcy and then she went to Brazil expecting to come back for the federal hearings. Viana had periodic medical problems. Viana was indicted in February of 1995 and was Respondent's co-defendant. The government attempted to extradite her from Brazil and trick her to come back, but that did not work. The government was also planning on indicting Viana for tax evasion dating back to a period of time long before Respondent ever knew her. Viana was a New York resident and citizen of Brazil. (Tr. 341-344).

Respondent testified that he was not counsel for the Plan although the plan's money went from Manufacturer's Bank to his firm's trust account even though the Plan was not his client, since his clients were Pineville and Wittek. Respondent never expected those funds to go to his firm's trust account. According to Respondent the firm's trust account was used an an accommodation account. Respondent agreed he wired the funds to Wittek which used the funds for operating expenses. (Tr. 370-371).

Respondent did not wire the funds back to the bank and wait to get another account in a few days and have the funds sent to the appropriate bank. Respondent viewed his responsibility to Viana, not to the bank which had no further relationship with the Plan, even though Respondent agreed he did not represent Viana. Respondent thought he did not have the authority

PAGE 8:

to direct the funds unless he asked the trustee of the Plan what to do and Viana told him to send the funds to Wittek's COBRA account. Respondent initially thought he was sending the funds to a trust account Wittek's comptroller, Mr. Lumen, had established. Respondent admitted that sending of the funds to Wittek's COBRA account without documentation can be interpreted as giving the appearance of impropriety. Respondent again stated he did not feel comfortable with doing anything with the funds without conferring with the trustee, Viana. Respondent believes what he did was proper, and he does not view it as a mistake. (Tr. 373-379, 382).

Respondent further testified that Viana was upset that annuities were purchased with money from the Plan without her authorization because she was the one who was ultimately responsible for the pension and profit sharing plans. (Tr. 485-521).

Respondent stated that the prosecution's theory in his criminal case was that he assisted Viana to steal money from Wittek's pension funds. Respondent testified that his main objective was to secure the Plan from these unauthorized activities. Respondent thought it was important to get the funds out of the hands of Manufacturer's Bank. Respondent wanted to avoid litigation with Manufacturer's Bank and he was happy when the attorney, Mr. Buschmann, became involved because Respondent thought Buschmann would establish the requirements Manufacturer's Bank needed in order to transfer funds. Respondent thought Wittek would be able to satisfy those requirements and therefore the Plan would not end up in litigation. During this time period there were already numerous law suits going on involving Wittek. (Tr. 523, 535-536).

Respondent stated that around June 9 or 10, 1992 Viana and Boutwell discussed the transaction that Viana wanted to implement in which Wittek would sell one of three pieces of property to the Plan. Boutwell indicated that would be a prohibited transaction and he proposed

PAGE 9:

an alternate structure to accomplish Viana's goal of curing the under funding of the Plan which would also provide working capital for Wittek. The premise of Boutwell's structure was Department of Labor/IRS Regulation 2510.3-101. Boutwell stated that as long as the Plan did not have more than a 51% interest in the underlying company (Wittek), the assets of that company would not be Plan assets and the underlying assets would not be subject to ERISA regulations. Boutwell's structure was the whole premise of the transaction which would provide working capital to Wittek. Under the transaction, 51% of Pineville's shares would be owned by the Plan and 49% would be owned by Viana. Respondent prepared the subscription agreements which were executed by Viana as trustee of the Plan and by Viana individually; however, the stock was never issued. Boutwell acceded to Bushmann's concerns and recommended that the Plan own 100%, which Respondent thought was contrary to the regulations and would have meant that Wittek could not have transferred the property to Pineville Real Estate Operation Corporation because it could not transfer it to an entity which was 100% owned by the Plan. (Resp. Exs. 4, 24; Tr. 539-542, 551-553).

Respondent believed the structured transaction would cure the under funding of the Plan and provide working capital for Wittek. According to Respondent, the whole question was how could this be done, legally. Respondent did not know the answer to this question and consulted an ERISA expert since Respondent could not make that determination. (Tr. 554, 569-570, 727).

Respondent also testified that he caused the incorporation of the Pineville Real Estate Operation Corporation in North Carolina. Respondent prepared the documentation which he had Boutwell review and comment on. Boutwell advised that a deed in trust to reflect the security interest between Wittek and Pineville not be filed in order to assure that the Plan would not be subject to any subordination of a purchase money mortgage. Boutwell's advice was reflected in

PAGE 10:

the documents. When Respondent was terminated as Wittek's counsel in 1994 the documents he had involving Wittek and Pineville were taken by Viana from him and all of the documents presented at this hearing are documents the federal government obtained in its criminal discovery process. (Tr. 698).

Respondent further testified that the Plan was not his client, but Pineville Real Estate Operating Corporation and Wittek were his clients, and it was appropriate for him to confer with Viana and receive direction from her. Even if these entities were not his clients Respondent would have sought the advice of the person whose funds they were and that is exactly what he did. (Tr. 701).

Respondent stated that Viana would have benefited from the Pineville transaction since she would have been a 49% shareholder in Pineville. If the Pineville property had been sold Viana would have received 49% of the proceeds and Wittek would have received the loan from the Plan as well as $1.5 million in payments. The transaction was intended to be a good deal for everyone. (Tr. 732, 738-739). Respondent also stated that Viana could have cured the under funding of the Plan with the proceeds from the sale of the LaGrange property or the Pineville Property. Respondent testified that, various adjustments had been made by the actuary, there actually would have been no under-funding of the Plan. (Resp. Ex. 64; Tr. 743-744, 748).

Respondent further testified that the structuring of the equity in Pineville was done because the pension plan could not have all of the equity interest and if Viana had more than a 50% interest under the interested/disqualified person provision, would be regarded as receiving those plan assets, and that would adversely affect Boutwell's structuring therefore, a 51%/49% arrangement was necessary to comply with the law. According to Respondent, Boutwell acknowledged in his July 13th letter that Viana was a fiduciary under the Pineville structuring,

PAGE 11:

but was not personally receiving anything from the Plan that would have made it a prohibited transaction. The only source of revenue that she would receive from Pineville was as a shareholder which, according to Respondent, was not a prohibited transaction since there was no transfer of Plan assets from the pension plan to Wittek. (Adm. Ex. 3; Tr. 786-787, 790-791).

On cross-examination Respondent admitted that in 1992 Wittek was strapped for cash and therefore he tried to obtain financing for Wittek, but could only obtain financing from the Pineville Real Estate Operation transaction and from one of John Darrah's companies. Part of the financing for Wittek was with respect to the Pineville transactions. (Tr. 806).

Respondent agreed on cross-examination that Boutwell consistently gave advice that Wittek could not receive Plan assets. Respondent agreed that the language in Respondent's Exhibit 59 specifically discusses the loan proceeds. Respondent stated that they were to use the Plan's money as working capital which was a very broad term. (Resp. Ex. 59; Tr. 807-810).

Respondent agreed he was convicted of money laundering and stated he was also convicted of unlawful conversion of pension plan assets to the use of another and wire fraud for misrepresentations occurring in the July 15, 1992 and July 30, 1992 communications to the Bank of Detroit. Respondent stated he was ordered to pay restitution in the amount of $735,000. Respondent is unable to pay the full amount of restitution and is currently paying $200 per month which is the maximum amount that he can afford to pay in his present circumstances. (Tr. 811-813).

Testimony of Drake Boutwell

Drake Boutwell ("Boutwell") is an attorney licensed to practice in Illinois since approximately 1975 or 1976. Boutwell graduated from the University of Alabama Law School

PAGE 12:

and he received his master's in tax from New York University. Boutwell also has a background in accounting. (Tr. 586-587).

Boutwell testified that in 1992 he practiced law and his concentration was in the ERISA. Boutwell preformed legal services for Wittek and he knew Respondent and Viana at that time. Boutwell testified that Administrator's Exhibit 3 is the advisory letter regarding a proposed transaction he sent to Viana on or about July 13, 1992 which was also copied to Respondent. Boutwell agreed that the letter indicated that Pineville was to use Plan assets to develop the real estate. Under this letter, it states that only Pineville could use Plan assets, therefore, Plan assets could not be used for Wittek's working capital or operating expenses. Boutwell also testified that the letter was done only with respect to the legality of the transaction and it was not advice regarding the prudence or advisability of a particular investment. The advice in the letter was regarding whether this would, or would not be a prohibited transaction. (Adm. Ex. 3; Tr. 588-590, 594-595).

Boutwell further testified that around the time of the July 13, 1992 letter, he had conversations with Respondent indicating that Plan assets could not be used as operating expenses, working capital, or by Wittek in any fashion. (Adm. Ex. 3; Tr. 591-592).

On cross-examination Boutwell indicated he regards himself experienced in ERISA at this time, but it is a very broad area and as far as the statute in the letter, he hasn't looked at statutes like that for 10 years. Therefore, Boutwell does not regard himself as an ERISA expert in the same way he did in 1992. (Adm. Ex. 3; Tr. 599).

Boutwell recalled that the July 13, 1992 letter had an error in it. Boutwell could not recall the specific error in the letter, only that in his own mind he misread a complicated regulation. Boutwell recalled making an error regarding the reading of some language in the

PAGE 13:

regulation. Boutwell further testified that he consistently told Respondent and Viana that the Plan's money could not go to Wittek. Boutwell testified in Respondent's criminal case but was not granted immunity. (Adm. Ex. 3; Tr. 633-635, Tr. 641, Tr. 644).

Boutwell stated that he was the only one out of Respondent, Viana and himself who knew anything about real estate operating corporations and the Department of Labor's pension regulations. (Tr. 645).

EVIDENCE OFFERED IN MITIGATION

Testimony of Richard Baran

Richard Baran ("Baran") testified that he recently retired from being a teacher and a coach for the last forty years. Baran graduated from the Missouri Military Academy ("the Academy") and he has bachelor's and master's degrees in business from Loyola University, Chicago. Baran also has a master's of science degree in counseling from Chicago State and a doctorate in education from Vanderbilt University. Besides being a teacher, Baran also worked as a business consultant in the area of stress management in the aviation industry. Currently, Baran is working on six different novels. (Tr. 109-111).

Baran has known Respondent since September of 1952 when they were both freshmen at the Academy. Baran and Respondent would socialize a couple of times each year through their association with the Academy's alumni association and at homecomings. (Tr. 111-112).

Baran testified that he aware of Respondent's reputation regarding his character and when he heard what happened he was, "to put it bluntly—totally floored by all of this" since he has known Respondent so long. Baran stated that Respondent is upright and "honest as the day is long". Baran also testified that he could not ever see Respondent doing the things that he was accused of doing. Baran stated he was aware of the charges that were brought against

PAGE 14:

Respondent and that he was found guilty of those charges by a jury and that Respondent was sentenced to seven years in prison. (Tr. 112-117).

Testimony of Robert Neil Rudman

Robert Neil Rudman ("Rudman") testified that he graduated from the Academy in 1956 and four years later graduated from Westminster College in Fulton, Missouri. After graduating from Westminster College Rudman went into his family businesses which consisted of several enterprises. Rudman met Respondent when they were freshmen at the Academy and he has known Respondent since that time. Rudman and Respondent were roommates during their junior and senior years at the Academy. After graduating from the Academy, Rudman and Respondent kept in touch. Rudman also testified that Respondent was a trustee of the Academy. Respondent attended Rudman's daughter's wedding and his 60th birthday party. Rudman and Respondent got together whenever they could. (Tr. 119-124).

Rudman further testified that the consensus about Respondent's character amongst his peers is that it would be inconceivable that Respondent would be guilty of whatever he was sentenced for because that is not Respondent's nature. Rudman stated he "had no reason not to say you were guilty or innocent to me because it made no difference, really in our friendship. And it's my belief that you aren't guilty." Rudman also stated he has the highest regard for Respondent and that hasn't changed because of his misfortunes. If Rudman had to characterize Respondent in one word it would be "integrity". (Tr. 125-127).

Rudman was aware of the federal charges against Respondent, that he was found guilty of those charges and that he was sentenced to seven years in prison. Rudman's opinion of Respondent has not changed because of Respondent's indictment, conviction or incarceration.

PAGE 15:

Rudman testified that he wrote letters to President Bush and to Attorney General Ashcroft on behalf of Respondent. (Tr. 124-125). (Tr. 127-128).

Testimony of Theodore W. Grippo

Theodore W. Grippo ("Grippo") testified that he is a partner with the law firm Grippo & Elden located in Chicago. Grippo received a bachelor in science from Georgetown University and his law degree from Northwestern University. Grippo also received an LLM degree in taxation from DePaul University. Grippo was the Securities Commissioner for the State of Illinois in 1959 and he practiced law with the law firm Keck, Mahin & Kate, Rubin & Proctor which merged into the law firm Isham, Lincoln & Beale. This firm eventually dissolved. Grippo then formed the law firm of Grippo & Elden. Grippo has known Respondent since approximately 1975 when they both lived at 2650 Lakeview in Chicago. (Tr. 131-135, 141).

Grippo testified that in 1992 he was involved with Wittek. Grippo's involvement with Wittek began because Sidley & Austin was representing Wittek and they had experienced some sort of conflict which caused that firm to withdraw from its representation of Wittek. Upon Sidley & Austin's withdrawal, Wittek retained Grippo & Elden as legal counsel. Grippo handled the Wittek matter since it was more of a corporate matter than a litigation matter even though it involved litigation. It appeared that there was an attempt to take over Wittek by a group of internal officers. The president of the company, Viana, had acquired this company while Sidley & Austin was representing Wittek. Viana moved Wittek from the Chicago area to Galesburg, Illinois. Grippo went to court to seek a temporary restraining order ("TRO") so that the internal employees of Wittek could not take over the company. The Circuit Court issued the TRO. The opponents filed a motion for sanctions against Grippo & Elden alleging that the complaint was not justified. Eventually, over a two year period, the opponent's motion for sanctions was

PAGE 16:

dismissed. Because of the motion of sanctions being filed against Grippo & Elden, Grippo & Elden could no longer represent Wittek and Respondent became Wittek's counsel. (Tr. 136-140).

Grippo testified that due to his association with Respondent he has formed an opinion as to Respondent's character. Grippo stated at the time of the Wittek matter, he felt Respondent had the highest quality of character. He thought Respondent was a fine lawyer and fine man. Grippo testified he is generally aware of the federal charges against Respondent, that Respondent was found guilty of those charges and that he was sentenced to seven years in prison. Grippo wrote Respondent letters while he was in prison. Grippo also wrote a letter to President Clinton asking for Respondent's pardon and he visited Respondent while he was in prison. Grippo also stated that Respondent would be fit to practice law today since he believes Respondent would never make that mistake again. (Tr. 142-145).

Testimony of Joseph Pankus

Joseph Pankus ("Pankus") testified that he graduated with Respondent from Knox College located in Galesburg, Illinois. Pankus was in the advertising business and eventually started his own company called Holiday Publishing. Pankus sold this company and went on to a variety of other jobs and most recently retired as President of Wurlitzer where he spent the last 12 years. Pankus then joined a company called Morris Anderson. (Tr. 153-154).

Pankus has known Respondent for almost fifty years and has periodically kept in touch with Respondent since their graduation from Knox College. Respondent contacted Pankus in 1992 to help revise a poorly structured marketing and sales program at Wittek. Pankus thought Respondent was the attorney for the company at that time. Pankus left Wittek after about four

PAGE 17:

months since it was evident to him that, without major changes, Wittek was not going to make it. (Tr. 154-156).

Pankus stated Respondent asked him to deal with Wittek's marketing and sales strategies which Pankus agreed to do. Pankus discovered that prior to his involvement some Wittek employees tried to sabotage the company with an attempted takeover, and in reviewing the growth of the company, Pankus noticed that the labor cost ratios kept getting higher and higher than the previous labor cost ratios had been at Wittek. According to Pankus, there were too many variables at Wittek that kept increasing from the cost standpoint. Pankus informed Viana and Jim Baughman ("Baughman"), the head of Wittek's quality control, that if they continued selling the products at the same prices they would run out of money within 12 to 18 months. Pankus also showed Viana and Baughman informal data that he collected indicating that at that time Wittek's labor costs were going right through the roof. Viana and Baughman did not respond to Pankus' information. Pankus also testified that he informed Viana and Baughman that they either had to get new equipment or make the company unique, but Wittek could not continue the same way without raising prices. (Resp. Ex. 63; Tr. 158-167).

Pankus testified that he is aware of Respondent's character and that he has never had anybody question Respondent's integrity, honesty or moral fiber. Pankus is aware of the federal charges against Respondent, that Respondent was convicted of those charges and that he was sentenced to seven years in prison. Pankus stated Respondent's criminal conviction has not changed his opinion about Respondent. (Tr. 172-175).

Testimony of Carol Petersen

Carol Petersen ("Petersen") testified that she graduated from the University of Illinois, she received her master's and juris doctor degrees from Stanford and she received a master's in

PAGE 18:

tax from IIT Kent. In 1966 Petersen joined the law firm Schiff, Hardin Waite, Dorshell & Britton as an associate and became a partner in 1973. Petersen left that firm in 1979 and went to Hubachek, Kelly, Brown & Kirby. In 1990 Petersen went to the First National Bank of Chicago as a trust advisor for their client services area. (Tr. 177-178).

Petersen first met Respondent when he interviewed for an associate position with Schiff, Hardin, Waite, Dorshell & Britton. In October of 1966, Respondent became an associate at this firm upon his return from the service. Petersen and Respondent started dating each other when they were both associates at Schiff, Hardin, Waite, Dorshell & Britton and were married in 1968. Petersen and Respondent have two children together and they were divorced in 1992. Respondent is currently staying at Petersen's home since he was released from prison in the spring of 2004. (Tr. 178-179).

Petersen testified that as a result of their association she is aware of Respondent's character. According to Petersen Respondent is, "scrupulously honest. … and that you try to do the very best under the circumstances." Petersen is aware of the federal charges for which Respondent was found guilty and that he was sentenced to seven years in prison. She visited Respondent while he was incarcerated. Her knowledge of Respondent's conviction has not altered her opinion of Respondent. (Tr. 180-181).

Petersen stated that during the time frame when Respondent was trying to get Harris Bank to be the Plan's trustee, Respondent did not seek Petersen's counsel about how he should handle the trustee issue. Petersen further testified Respondent did not speak with her about any of the Wittek matters. Petersen testified that the Wittek situation really not did have anything to do with her divorce from Respondent. (Tr. 213-215).

PAGE 19:

Petersen further testified that Respondent was involved in a very, very difficult situation when he was representing Wittek and she was shocked and surprised that Respondent was criminally prosecuted. Petersen further testified that she did not believe Respondent lacked objectivity regarding his client in this matter, but that Respondent tends to zealously represent his clients and, "that can get people's hackles up on the other side." Petersen thinks Respondent got caught up in becoming very close to the client and felt that he zealously had to do things to straighten out the situation at the company. Petersen thinks Respondent became close to the situation in trying to resolve all of the problems of the client in a relatively short period of time while Respondent received his own client's version of things which sometimes can affect objectivity. (Tr. 216-227).

Testimony of Glen Canwitt

Glen Canwitt ("Canwitt") testified that he is an attorney who graduated from Swarthmore College in 1965 and from Columbia Law School in 1968. Upon graduation from law school he joined the law firm of Hopkins & Sutter where he was an associate for six years before becoming partner. Canwitt was a partner with Hopkins & Sutter until it merged with Foley & Lardner in 2001 where Canwitt remains a partner. Canwitt has known Respondent for almost thirty years. Canwit met Respondent through his wife who was friends with Respondent's wife. Canwitt and Respondent also had a case they worked on together in the 1970s. (Tr. 237-239).

Respondent asked Canwitt, who had some experience in tax litigation, advice about what Wittek should do in relation to a seizure controversy involving the Internal Revenue Service and Wittek. Canwitt was basically an expert consultant relating to Wittek's issue with the IRS and he functioned as co-counsel with Respondent in the Wittek takeover case. According to Canwitt, Respondent's representation of Wittek's Board of Directors was effective and honest and he

PAGE 20:

thought Respondent displayed a high amount of integrity. Canwitt thought Respondent gave the Board of Directors a very high degree of professional, independent representation. (Tr. 240-241).

Canwitt testified that as a result of his association with Respondent he is aware of Respondent's character reputation. According to Canwitt, Respondent is a reputable person with a high reputation. Canwitt further stated that this does not mean that Respondent has not made a mistake, but nobody is perfect. Canwitt stated if people's mistakes are an isolated instance that, to him, doesn't affect their integrity. Canwitt is familiar with the federal charges that were brought against Respondent, that Respondent was found guilty of those charges and was aware that Respondent was sentenced to time in prison. This information has not changed Canwitt's opinion of Respondent. (Tr. 242-244).

Testimony of Michael C. Osajda

Michael C. Osajda ("Osajda") testified that he is a commercial attorney and business ethics champion at Motorola. Osajda received a degree in foreign service and a master's of law in taxation from Georgetown University and he received his law degree from Northwestern University. Osajda spent eleven years in active duty in the United States Marine Corp. and remained in the Reserves for thirty years and retired as a Colonel of the United States Marine Corp. Reserves. Osajda spent four years at Much, Shelist, Freed, Denenberg, Ament & Eiger, P.C. ("Much Shelist") and subsequently he became the Deputy General Counsel of Midway Airlines. Osajda spent a period of time in private practice and in 1979 went to Motorola where he is still employed. (Tr. 246-247).

In 1981 Osajda met Respondent after he was hired as an associate at Much Shelist where Respondent was then a partner. According to Osajda he worked under Respondent's tutelage

PAGE 21:

and assisted Respondent on a number of projects in the securities area where Respondent had an expertise and on projects involving the redomestication of insurance companies. (Tr. 247-249).

Osajda stated Respondent is of extreme high moral character and he conducts himself, both professionally and personally, with extreme rectitude. Osajda is aware of the federal charges brought against Respondent, that he was found guilty of those charges and that Respondent was sentenced to seven years in prison. It was Osajda's understanding that there was no personal benefit in the transactions which led to the charges against Respondent. Osajda's stated Respondent's conviction has not changed his opinon of Respondent. (Tr. 250-253).

Testimony of Albert L. Grasso

Albert L. Grasso ("Grasso") testified that he is an attorney who has a master's degree in tax law and primarily concentrates his practice in tax and employee benefits law. Grasso began practicing law in Washington D.C. where he was employed by a small law firm. He obtained both his law degree and master's in tax law from Georgetown University. Grasso then went to work for the law firm Baker & McKenzie. Grasso then joined Much Shelist and became a partner at that law firm. While at Much Shelist Grasso became well acquainted with Respondent. Grasso then went to form his own law firm in 1987 which is Chuhak & Tecson. Grasso has served in various capacities with the American Institute of Certified Public Accountants, although he is not a CPA himself. He has also taught taxation, estate planning and deferred compensation. (Tr. 257-258, 260-261).

In 1997 Respondent went to Grasso, in conjunction with his indictment, regarding questions Respondent had with respect to certain pension law matters and testified as an expert in Respondent's criminal case. (Tr. 259-260, 264-266).

PAGE 22:

Grasso testified that it was not unreasonable for Respondent to rely on Drake Boutwell's advice since Boutwell was an acknowledged ERISA practitioner. It also would have been reasonable not to have followed Boutwell's advise, subsequent to extensive conferences with Boutwell, regarding real estate operating corporation matters that the pension plan should have a 100% interest in the Pineville Real Estate Operation Corporation since under the Department of Labor regulations, with respect to dealing with the definition of plan assets, it is clear that if you own 100% of an entity you are treated as owning the underlying assets of the entity. As soon as Boutwell's proposed structured is understood you know that you could not follow that advice because it would end up that you would be dealing directly with plan assets because of the 100% real estate holding entity. Grasso further testified that when he looked at the transaction he thought to himself that only someone who is familiar with the ERISA requirements would lay out the structure in this fashion and that person is not Respondent. Grasso also knew that Boutwell was the partner who did ERISA work at the firm Respondent was with at that time and he thought that Respondent had to have consulted with Boutwell. Grasso also thought that there would have been a much simpler way of effecting that transaction. Grasso testified that besides Respondent's conviction, he believes Respondent could well serve the bar. (Tr. 274-275, 279-280, 282). (Tr. 282).

Testimony of Nicholas C. Hindman

Nicholas C. Hindman ("Hindman") is the Senior Vice President and Chief Financial Officer of Westel Technologies. Hindman received an accounting degree from the University of Iowa and is a CPA. Hindman began his career with Arthur Andersen which he left in 1977 to begin a career as a tax and insurance manager which he did until 1980. Since 1980 Hindman has

PAGE 23:

had his own CPA firm. In 1980 he helped start Westel and became its CFO in 1999. Hindman has assisted in turning around troubled companies. (Tr. 395-396).

Hindman has known Respondent since the early 1980s when he met Respondent through a mutual client. Hindman stated Respondent contacted him to finish an audit that was delinquent with respect to Wittek's Plan. Hindman prepared an audit for the 6141 pension plan as of December 30, 1990 and he believed he prepared audits for other years, including 1991. (Tr. 396-403, 410, 419-425).

Hindman stated that due to his association with Respondent he is aware of Respondent's character which is very high. Hindman is aware of the federal charges which were brought against Respondent and of Respondent's conviction and sentencing and that has not changed his opinion of Respondent. (Tr. 439-440).

Testimony of Delores Marie Veninga

Delores Marie Veninga ("Veninga") testified that she graduated from Southern Methodist University School of Law in 1971 and then was a research student at Cambridge University for two years. Subsequently, Veninga headed up her family's real estate business in Dallas. In 1981 she was an associate at the law firm Katten, Muchin Pierce & Galler ("Katten"). After that, Veninga went back to Dallas and was associated with the firm Jones, Day Reavis & Pogue. In 1984 she joined the law firm McBride Baker & Coles ("McBride"). Respondent was a partner at McBride Baker & Coles when Veninga joined the firm. According to Veninga she worked with Respondent the entire time she was with McBride Baker & Coles until she was terminated by that firm in 1991. (Tr. 452-453).

PAGE 24:

According to Veninga, Mr. Schnitz, was instrumental in her termination from the McBride law firm. Veninga also testified that she is aware of the bias Schnitz has against Respondent to cause Sch

Posted via email from Case Investigation

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: