IN THE MATTER OF DAVID THOMAS STECKLER
VSB Docket No. 00-000-3308/CRESPA
THIS MATTER came on to be heard on November 17, 2000, before a panel of the Disciplinary Board consisting of First Vice-Chair William M. Moffet, Chester J. Cahoon, Jr., Robert E. Eicher, D. Stan Barnhill and Randy I. Bellows. The State Bar was represented by Barbara Ann Williams, Esq. The respondent, David Thomas Steckler ("Steckler"), after receiving due notice by certified mailing to the last address provided to the State Bar, failed to appear either in person or by counsel.
This matter came before the Board pursuant to a Notice of CRESPA Violations, issued by Bar Counsel on June 26, 2000, and a Show Cause Order, entered by the Board on October 5, 2000. Following the introduction of all evidence concerning this matter, the Board retired to deliberate. Deliberations were stayed in order for the Board to resolve several matters of procedure and interpretation. On March 14, 2001, by telephone conference call, all panel members being present, deliberations were resumed and concluded.
Three matters were consolidated for hearing on November 17, 2000. They were as follows:
VSB Docket No. 00-000-1274 came before the Board on a Motion and Notice of Show Cause Proceeding to Further Suspend or Revoke License to Practice Law for Failure to Comply with Rules of Court, Part Six, ßIV, Paragraph 13. This proceeding arose out of Steckler's failure to comply with the terms of a one year suspension imposed by a three-judge circuit court panel, specifically the requirements of Part Six, ßIV, Paragraph 13(K)(1). At the conclusion of the hearing on this matter, the Board found by clear and convincing evidence that respondent had failed to comply with requirements of Paragraph 13(K)(1) and ordered that Steckler's license to practice law in the Courts of this Commonwealth be revoked, effective November 17, 2000. See In the Matter of David Thomas Steckler, VSB Docket No. 00-000-1274.
VSB Docket No. 00-060-1972 came before the Board pursuant to a direct certification from a subcommittee of the Sixth District Committee, alleging violations of various Disciplinary Rules arising out of Steckler's services as settlement agent for a client's home mortgage refinancing. At the conclusion of the hearing on this matter, the Board found by clear and convincing evidence that Steckler violated DR 1-102 and DR 9-102 and ordered that Steckler's license to practice law in the Courts of this Commonwealth be revoked, effective November 17, 2000. See In the Matter of David Thomas Steckler, VSB Docket No. 00-060-1972.
VSB Docket No. 00-000-3308/CRESPA is the instant proceeding. It arises out of the same factual circumstances as VSB Docket No. 00-060-1972.
This proceeding presents the Board with two matters of first impression concerning the Consumer Real Estate Settlement Protection Act ("CRESPA"), which was enacted by the 1997 session of the General Assembly of Virginia and went into effect on July 1, 1997. Therefore, it is appropriate as a preliminary matter to address these issues, particularly as they are certain to reoccur in subsequent proceedings involving CRESPA.
CRESPA, Va. Code ß6.1-2.19 through ß6.1-2.29, authorizes licensed Virginia attorneys, title insurance companies and agents, real estate brokers and financial institutions to serve as settlement agents and provide escrow, closing and settlement services if they register with the Virginia State Bar and meet other conditions of their regulatory agencies. The purpose of CRESPA, as set forth by the Virginia State Bar Council in the Unauthorized Practice of Law (UPL) Guidelines for Real Estate Settlement Agents under the Virginia Consumer Real Estate Settlement Protection Act, approved on June 19, 1997, is "to provide consumer protection safeguards and to define who can lawfully provide real estate settlement services in Virginia."
Pursuant to CRESPA, the Virginia State Bar promulgated a set of Regulations (hereafter "CRESPA Regulations"), effective July 1, 1997, concerning both the administration of CRESPA and procedures for handling CRESPA complaints lodged against attorney settlement agents.
The first issue the Board addresses is the standard of proof governing the Board's determination of whether a CRESPA violation has been committed.
It is well established, of course, that the standard of proof governing Board proceedings involving allegations of professional misconduct is "clear and convincing evidence." See Part 6, ßIV, Paragraph 13.K(8) of the Rules of the Supreme Court of Virginia. CRESPA does not explicitly adopt this or any other standard of proof and, therefore, the issue before the Board is whether the standard of proof governing misconduct proceedings before the Board should also govern CRESPA proceedings before the Board. We conclude that the "clear and convincing" standard must also govern CRESPA proceedings.
We come to this judgment principally due to the very serious nature of the sanctions available to the Board in the event of a finding of a CRESPA violation. Specifically, CRESPA provides, inter alia, for revocation or suspension of a settlement agent's license. Such revocation or suspension may prevent the individual from carrying on his livelihood, a "heavy sanction" that warrants a standard of proof as high as "clear and convincing" evidence. See Collins Security Corp. v. Securities and Exchange Commission, 562 F.2d 824, 825 (D.C. Cir. 1977) (holding that SEC's consideration as to whether to deprive an entity of its securities license based on allegations of fraud warranted a "clear and convincing" evidentiary standard.) Moreover, since the allegations leading to a CRESPA proceeding will also frequently lead to disciplinary proceedings, it would create a troubling and confusing inconsistency to have different proof standards governing the Board's consideration of the same factual circumstances. Finally, we conclude below that CRESPA also authorizes the Board to revoke or suspend not only an attorney's registration as a settlement agent but also his license to practice law. It would be plainly inconsistent with both the letter and spirit of the Rules of the Supreme Court of Virginia to permit the Board to revoke or suspend an attorney's license to practice law on a proof standard less than "clear and convincing" evidence. Therefore, we adopt the "clear and convincing" standard as the proof standard applicable to CRESPA proceedings.
As stated above, the second issue the Board addresses is whether CRESPA provides the Board authority to revoke or suspend not only an attorney's registration as a settlement agent but also the attorney's license to practice law. We conclude that it does. We come to this conclusion principally because of the broad language used in CRESPA concerning sanctions. It reads in part that, upon finding a CRESPA violation, the "appropriate licensing authority," may revoke or suspend "applicable licenses." Va. Code ß6.1-2.27(2). If the legislature had intended to limit the Board's authority to revocation or suspension of a settlement agent's registration, we must assume that the legislature would have used such language. Instead, the language used clearly encompasses the license to practice law (in the case of an attorney). Further support for this position is found in the concluding language of the sanctions provision of CRESPA, which reads as follows: "Nothing in this section shall affect the right of the appropriate licensing authority to impose any other penalties provided by law or regulation." Va. Code ß6.1-2.27.B. In concluding that CRESPA provides this Board authority to revoke or suspend an attorney's license to practice law, we note that this is the same position adopted by the Virginia State Bar in its CRESPA Regulations. Those regulations, at Section V(3)(E)(2) and (3), specifically provide that the Board may both revoke or suspend the attorney settlement agent's registration and impose "[a]ny other sanction available to the Disciplinary Board in attorney disciplinary proceedings under the rules of the Virginia Supreme Court, including, but not limited to, revocation or suspension of the attorney settlement agent's license to practice law." We conclude that this is a correct reading of the authority vested in this Board by CRESPA.
The Board makes the following findings of fact on the basis of clear and convincing evidence:
1. From April 26, 1983, until July 16, 1999, Steckler was an attorney licensed and in good standing to practice law in the Commonwealth of Virginia. Until October 25, 1999, Steckler was also registered as an attorney settlement agent with the Virginia State Bar.
2. Before July 8, 1999, Michael E. McShane ("McShane") hired Steckler to serve as settlement agent for McShane's home mortgage refinancing.
3. McShane picked up the closing papers (including a HUD settlement
statement that Steckler had already signed) at Steckler's office, took the papers home and signed them, then mailed the papers back to Steckler's office; McShane never met Steckler.
4. The HUD Settlement Statement dated July 8, 1999, directed Steckler as
settlement agent to make mortgage payoffs in the amount of $9,929.93 and $96,830.41, and to pay the borrower, McShane, $15,808.66.
5. On July 8, 1999, Steckler, or his employees, closed the refinancing and
deposited a loan disbursement check in the amount of $125,000.00, drawn on a NationsBank account and made payable to David T. Steckler & Michael McShane, in account number 7911345360, titled DAVID T. STECKLER ATTORNEY AT LAW TRUST ACCOUNT, at Wachovia Bank, formerly known as Central Fidelity Bank.
6. Check # 8080 in the amount of $15,808.66, drawn on Steckler's trust account, and made payable to McShane as payment for loan proceeds due to him as borrower, was issued on July 8, 1999, and deposited by McShane on July 20, 1999.
7. Check #8085 in the amount of $9,929.93, drawn on Steckler's trust account
and made payable to First Virginia Bank as payment in full of a mortgage loan to McShane, was issued on July 8, 1999, and deposited on July 19, 1999.
8. Check # 8086 in the amount of $96,830.41, drawn on Steckler's trust account
and made payable to NationsBank as payment in full of a mortgage loan to McShane, was issued on July 8, 1999.
9. Bank of America, which merged with NationsBank and accepts, processes and
endorses checks payable to NationsBank, received Check #8086 on July 15, 1999, and unsuccessfully attempted to deposit it on July 19, and again on July 23, 1999.
10. On or about July 27, 1999, Wachovia Bank returned Check #8086 to Bank of
America for non-sufficient funds.
11. After Bank of America made numerous unsuccessful attempts to contact Steckler about the returned check, on September 6, 1999, Steckler contacted Bank of America and indicated that he had been out of town and his trust account was "out of whack" due to the overpayment of a large amount of bank fees.
12. After Steckler failed to make Check #8086 good, by letter dated October
5, 1999, Bank of America made a claim in the amount of $96,830.41 against Bond #60936704 that CNA - Western Surety issued to Steckler as an attorney settlement agent.
13. On November 4, 1999, Western Surety Company issued a check for $96,830.41
to Bank of America, and as consideration for the payment, Bank of America assigned its claims against Steckler to Western Surety Company.
14. Western Surety Company hired Bonded Collections of Tucson, Inc., to collect the
missing funds from Steckler.
15. After numerous unsuccessful attempts to contact Steckler, Jamie G. Lynch,
Collection Manager for Bonded Collections of Tucson, filed a bar complaint against Steckler with the State Bar on or about February 4, 2000.
16. The State Bar's efforts to locate Steckler have been unsuccessful. He no longer is conducting business at the last known address he provided the State Bar, he has failed to respond to certified mail sent to that address, and his current or former spouse, a professor at Mary Washington College, has failed to respond to all inquires as to his whereabouts.
17. On June 26, 2000, Bar Counsel Barbara Ann Williams sent Steckler by certified mail, return receipt requested, a Notice of CRESPA Violations, specifically alleging violations of Va. Code ß6.1-2.23(B) and Section V(2) of the Virginia State Bar CRESPA Regulations. The notice provided Steckler a 30 day period in which to rectify any violations and/or to request a hearing. There was no response to this notice and, on October 5, 2000, the Board issued a Show Cause Order, setting the matter for November 17, 2000.
Va. Code ß6.1-2.23(B) provides in part as follows:
Funds held in an escrow account shall be disbursed only pursuant to a written instruction or agreement specifying how and to whom such funds may be disbursed * * *
Section V(2) of the CRESPA Regulations provides in part as follows:
Each attorney settlement agent shall maintain one or more separate and distinct fiduciary trust account(s) used only for the purpose of handling funds received in connection with escrow, closing or settlement services. * * *
All funds received by an attorney settlement agent in connection with escrow, closing or settlement services shall be deposited in and disbursed from the separate fiduciary account(s) in conformity with both the Bar's disciplinary rules and the Act. These separate fiduciary trust accounts shall be maintained in the same manner and subject to the same rules as those promulgated by the Bar for other lawyer trust accounts, as well as in conformity with the Act.
The Board finds by clear and convincing evidence that Steckler violated both CRESPA and the CRESPA Regulations by failing to properly disburse the $96,830.41 check to NationsBank in accordance with written instructions and by failing properly to maintain his trust account which should have, but did not, have sufficient funds to cover the $96,830.41 check.
Sanctions Imposed
Due to the gravity of Steckler's intentional misconduct, we impose the most serious sanctions available to the Board under CRESPA. It is hereby ORDERED as follows:
1. Steckler's registration as an attorney settlement agent is REVOKED, effective as of March 14, 2001.
2. Steckler's license to practice law in the Courts of this Commonwealth is REVOKED, and the name of David Thomas Steckler shall be stricken from the roll of attorneys of this Commonwealth, effective as of March 14, 2001.(1)
3. Steckler shall pay a civil penalty in the amount of $5,000, the maximum penalty permitted by Va. Code ß6.1-2.27(1).
It is further ORDERED that the Clerk of the Disciplinary System send a copy of this Order to David Thomas Steckler at his address of record with the Virginia State Bar, 1301 Princess Anne Street, Fredericksburg, Virginia 22401, by certified mail, return receipt requested, and by regular mail, and that a copy be delivered to Barbara Ann Williams, Bar Counsel, Virginia State Bar, 707 East Main Street, Suite 1500, Richmond, VA.
On November 17, 2000, the Court Reporter reporting this matter after being duly sworn was Donna Chandler, at Chandler & Halasz, Registered Professional Reporters, P. O. Box 9349, Richmond, VA 23227, 804/730-1222.
ENTERED this day of April, 2001.
VIRGINIA STATE BAR DISCIPLINARY BOARD
By:
William M. Moffet
1. We recognize, of course, that Steckler's license to practice law was revoked by this Board on November 17, 2000 and, therefore, his name has already been stricken from the roll of attorneys of this Commonwealth. The practical significance of this revocation, therefore, is to establish a third and independent basis for the revocation action which this Board has previously taken.