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In re Application for Disciplinary Action Against Overboe

April 2, 2009

IN THE MATTER OF THE APPLICATION FOR DISCIPLINARY ACTION AGAINST DAVID A. OVERBOE, A MEMBER OF THE BAR OF THE STATE OF NORTH DAKOTA
DISCIPLINARY BOARD OF THE SUPREME COURT OF THE STATE OF NORTH DAKOTA, PETITIONER
v.
DAVID A. OVERBOE, RESPONDENT



Per curiam.

Application for disciplinary action.

SUSPENSION ORDERED.

[¶1] David A. Overboe objects to a Report of a Hearing Panel of the Disciplinary Board of this Court, which recommended reciprocal discipline against him after the Minnesota Supreme Court suspended his license to practice law in Minnesota for a minimum of one year and ordered him to pay $900 in costs. See In re Disciplinary Action Against Overboe, 745 N.W.2d 852 (Minn. 2008). We conclude Overboe has not demonstrated that reciprocal discipline should not be imposed against him under the criteria in N.D.R. Lawyer Discipl. 4.4(D). We accept the hearing panel's report, and we suspend Overboe's license to practice law in North Dakota for one year and order him to pay $1,934 in costs.

I.

[¶2] Overboe was admitted to practice law in North Dakota in 1972, and he was admitted to practice law in Minnesota in 1980.

[¶3] In 2004, Minnesota disciplinary authorities filed a formal disciplinary action against Overboe in that state, alleging he had deceptively used a trust account to shield his personal funds from judgment creditors, he had made misrepresentations and failed to cooperate with Minnesota disciplinary authorities during the disciplinary investigation, and he had commingled client funds with personal funds in a trust account. The charges related to two separate trust accounts Overboe maintained in North Dakota, a Western State Bank trust account and a Wells Fargo IOLTA trust account, and were triggered by an overdraft on his IOLTA trust account, which Overboe had designated on his Minnesota license application as his client trust account. Overboe, 745 N.W.2d at 855-56. Both trust accounts were entitled "Overboe Trust Account." Id. at 856. As required by Minnesota rules, Wells Fargo notified Minnesota disciplinary authorities of the overdraft on the IOLTA Overboe Trust Account, which resulted in Minnesota authorities asking Overboe for an explanation and documents about that account. Id. That request resulted in further inquiries to Overboe for information, which ultimately lead to Overboe's disclosure of the Western State Bank Overboe Trust Account and the disciplinary proceedings. Id. at 856-60.

[¶4] After a hearing, a Minnesota referee found Overboe had violated Minnesota Rules of Professional Conduct and recommended suspension of Overboe's license to practice law in Minnesota for a minimum of one year. The referee found Overboe did not use the Western State Bank Overboe Trust Account as a fiduciary account in his capacity as a lawyer, but as a personal account, and in view of a $1.4 million judgment against him and his admission that the account was to protect his personal funds, the referee found the use of that trust account was deceptive under Minnesota rules. Overboe, 745 N.W.2d at 859. The referee found Overboe's representations to Minnesota disciplinary authorities about his trust accounts were false and inconsistent and violated Minnesota rules. Id. The referee also found Overboe had commingled personal and client funds in his IOLTA Overboe Trust Account in violation of Minnesota rules. Id.

[¶5] In March 2008, the Minnesota Supreme Court held the referee's findings were not clearly erroneous and suspended Overboe's license to practice law in Minnesota for a minimum of one year and ordered him to pay $900 in costs. Overboe, 745 N.W.2d at 862-69. The Minnesota Supreme Court held that North Dakota Rules of Professional Conduct applied to the charges involving the two trust accounts Overboe maintained in North Dakota and that Minnesota rules applied to his representations to Minnesota disciplinary authorities. Id. at 861-62.

[¶6] For the allegations involving the deceptive use of the Western State Bank trust account, the Minnesota Supreme Court said the proper use of a trust account was to further a fiduciary relationship between the trustee and beneficiaries and to benefit at least one other person besides the trustee. Overboe, 745 N.W.2d at 863. The court cited the lawyer's duty of truth and candor and concluded:

It is undisputed that Overboe has had a $1.4 million dollar judgment against him since 1990 and that the judgment remains unpaid. Further, in his letters to the Director before and during the disciplinary investigation, Overboe stated that the purpose of his WSB trust account was to protect his and his wife's funds from judgment creditors. Overboe emphasized that it was important for him to "not keep a great deal of money in [his] own account, because the law firm that obtained the Judgment is right next door to [him]." Evidence presented at the hearing also showed that Overboe was the source of every deposit into the WSB trust account and the payee of approximately half of the withdrawals. Additionally, the majority of the funds deposited into the account were Overboe's earned legal fees. Only two checks written on the account were in the name of Overboe's wife.

In light of Overboe's admissions, and the evidence presented at the hearing, we conclude that the referee was not clearly erroneous in finding that Overboe did not use his WSB trust account as a trustee in a fiduciary capacity but instead used it as his own personal account. Therefore, in light of the $1.4 judgment against Overboe, it was not clearly erroneous for the referee to conclude that Overboe acted deceptively when he labeled his WSB account as a "trust" account for the purpose of shielding his personal funds from judgment creditors. While the referee incorrectly applied Minn. R. Prof. Conduct 8.4(c) to Overboe's conduct, North Dakota has parallel rules-N.D. R. Prof. Conduct 8.4(c) and N.D. R. Lawyer Discipl. 1.2A(3). Therefore, we conclude that Overboe violated N.D. R. Prof. Conduct 8.4(c) and N.D. R. Lawyer Discipl. 1.2A(3) by engaging in "conduct involving dishonesty, fraud, deceit, or misrepresentation."

Overboe, at 863-64.

[¶7] For the allegations involving commingling of client and personal funds in the IOLTA trust account, the Minnesota Supreme Court said:

Evidence presented at the hearing included numerous letters from Overboe to the Director indicating that there were "no client funds" in his IOLTA account at the time of the overdraft and since April 2003. Overboe asserted that the majority of the surplus in his IOLTA account when client funds were in the account was his wife's money and that his wife was a client. But Overboe did not make this assertion until well into the investigatory process and after the Director notified Overboe that having his personal funds in an IOLTA account violates the professional conduct rules. Further, Overboe offered no specific evidence that his wife was a client. Overboe also admitted at the hearing that the $4,500 he deposited into the IOLTA account on October 6, 2003, was not client money. Finally, Overboe offered no evidence that any of the personal funds in the IOLTA account were for the permissible purpose of "paying bank service charges, fees associated with credit card payments, or wire transfers related to that account." N.D. R. Prof. Conduct 1.15(b).

Based on the evidence and on Overboe's own statements, we conclude that it was not clearly erroneous for the referee to find that Overboe maintained personal funds in his IOLTA account and that he commingled personal and client funds in the account. While the referee applied the Minnesota rules in making this legal conclusion, we conclude that Overboe violated the parallel North Dakota rule, N.D. R. Prof. Conduct ...


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