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In re Member of Bar of Supreme Court of State of Delaware

Supreme Court of Delaware

April 12, 2017

IN THE MATTER OF A MEMBER OF THE BAR OF THE SUPREME COURT OF THE STATE OF DELAWARE: TABATHA L. CASTRO

          Submitted: April 5, 2017

          Before STRINE, Chief Justice; VALIHURA and SEITZ, Justices.

          ORDER

          LEO E. STRINE, JR. CHIEF JUSTICE

         This 12th day of April 2017, it appears to the Court that:

         (1) This is a lawyer disciplinary proceeding. On January 3, 2017, the Board on Professional Responsibility ("the Board") filed a report with this Court recommending, among other things, that the respondent, Tabatha L. Castro, be publicly reprimanded and placed on a period of probation for two years. A copy of the Board's report and recommendation is attached to this order.

         (2) The Office of Disciplinary Counsel ("ODC") did not file any objections to the Board's report. Castro filed objections, contending that the Board's recommendation of a public reprimand was based on its misapplication of the ABA Standards for Imposing Lawyer Sanctions ("the ABA Standards") and its failure to give due weight to the mitigating circumstances in her case. In response, the ODC asserts that the Board did not err in holding that a public reprimand is the presumptive sanction under the circumstances and that, even considering the mitigating factors, a reduction of the sanction was not warranted and that a public reprimand was consistent with this Court's prior cases.

         (3) The Court has considered the matter carefully. Castro admitted that she failed to properly maintain her firm's books and records for three consecutive years, that she filed inaccurate Certificates of Compliance with this Court for three consecutive years, and that she failed to give her flat fee clients proper notice that the fee was refundable if not earned by her. We agree with the Board's conclusion that a public reprimand was the presumptive sanction under the ABA Standards. We also agree that, even considering the mitigating circumstances, a reduction of the sanction was not warranted, and a public reprimand is more consistent with our precedent.

         (4) In a case involving similar recordkeeping violations, in which we found the mitigating factors to be "substantial, "[1] we nonetheless were unpersuaded that any lesser sanction than a reprimand was justified.[2] We held in that case:

[A] public sanction affords the Court the opportunity to underscore how serious the Court considers a lawyer's obligation to maintain orderly books and records. The failure to fulfill this obligation presents serious risks of harm to a lawyer's clients. A public sanction also serves as an important preventive measure in cases such as this in which the violations could be readily repeated without prompt detection. A public sanction puts clients on notice of past problems and allows them to take any steps deemed necessary to protect their own interests.[3]
(4) Thus, we accept the Board's findings and recommendation of a public reprimand with a two-year period of probation. We incorporate the Board's findings and recommendation by reference.

         NOW, THEREFORE, IT IS ORDERED that the Board's report is hereby ACCEPTED. Castro is hereby reprimanded and placed on probation for two years subject to the following conditions:

a) Before filing both her 2018 and 2019 Certificate of Compliance, Castro shall be audited by a licensed CPA who is knowledgeable of the accounting procedures used for audits under Rule 1.15(d) and has attended the training offered by the Lawyers' Fund for Client Protection. The auditor must report on the status of Castro's compliance or non-compliance.
b) Castro shall provide the ODC with a copy of the required pre-certification.
c) Castro shall pay the costs associated with the investigation of this matter by the ODC, including the costs of the Lawyers' Fund audit.

         Board Case No. 112749-B

         REPORT OF THE BOARD ON THE PETITION FOR DISCIPLINE

         I. Procedural Background

         Pending before a panel of the Board on Professional Responsibility (the "Board") is a Petition for Discipline filed by the Office of Disciplinary Counsel (the "ODC") on August 3, 2016 in Board Case No. 112749-B (the "Petition") against Tabatha L. Castro, Esquire ("Respondent"), a member of the Bar of the Supreme Court of the State of Delaware. The Petition alleged violations of Rules 1.5(f), 1.15(a), 1.15(d), 5.3, 8.4(c), and 8.4(d). Respondent, through her counsel, Charles Slanina, Esquire, filed an Answer to the Petition on August 23, 2016 (the "Answer").

         The Board convened a hearing (the "Hearing") by the panel on October 20, 2016.[1] The members of the panel of the Board were Melissa Thoroughgood, Gerald J. Hager, Esquire, and Seth L. Thompson, Esquire, Chair (the "Panel"). Patricia Bartley Schwartz, Esquire represented the ODC. Charles Slanina, Esquire represented the Respondent.

         At the outset of the Hearing, the ODC moved to amend the Petition to strike Count Four, relating to Rule 5.3, on the merits. (Tr. at p. 4.) The Respondent had no objection. (Tr. at pp. 4-5.) Also without objection, the ODC amended Paragraph 14 of the Petition to insert the word "client" between "negative" and "balances." (Tr. at p. 5.) As a result, Paragraph 14 provides, "By failing to safeguard client funds, which resulted in negative client balances in Fiduciary Account #0208725606 as noted in the 2013 Gunnip Report, and 2015 LFCP[2] Report, Respondent violated Rule 1.15(a)." (emphasis in original). Based on the amendment to Paragraph 14 of the Petition, the Respondent amended the Answer's Paragraph 14 to "Admitted." (Tr. at p. 6.) Additionally, the Respondent amended the Answer's Paragraph 12, regarding a violation of Rule 1.5(f), to "Admitted, " based on clients who had paid a flat fee but were not given a fee agreement. (Tr. at pp. 7-9.) The amendments resulted in a five-count Petition, with the Respondent admitting all five counts.

         At the Hearing, the Panel received into evidence a joint exhibit book. The Panel also heard testimony from the Respondent. The ODC and the Respondent also stipulated to a proffer of testimony on the Respondent's behalf from Perry Goldlust, Esquire, a member of the Delaware Bar, indicating that Attorney Goldlust has known the Respondent for a number of years and that he knows the Respondent to have good character and reputation with the Bar. (Tr. at pp. 54-55.)

         II. Factual Findings

         Since the Respondent's Answer had admitted the violations alleged in the Petition, the ODC, the Respondent, and the Panel treated the hearing as relating primarily to sanctions. (Tr. at pp. 9-10). Nevertheless, the Panel received testimony from the Respondent and the exhibits relating to factual circumstances surrounding the violations. The exhibits consisted of: 1) an Independent Accountant's Report from Master Sidlow Associates dated November 4, 2013; 2) a 2013 Immigration Fee Agreement; 3) the Respondent's 2013 Delaware Supreme Court Certificate of Compliance; 4) an Independent Accountant's Report from Gunnip and Company dated June 30, 2014; 5) the Respondent's 2014 Delaware Supreme Court Certificate of Compliance; 6) an Independent Accountant's Report from Master Sidlow Associates dated December 18, 2015; 7) a 2015 Will Fee Agreement; and 8)) the Respondent's 2015 Delaware Supreme Court Certificate of Compliance.

         Based on the factual allegations of the Petition admitted by the Respondent and the credible uncontroverted testimony received at the hearing from the Respondent and the submitted exhibits, the Board makes the factual findings which follow.

         1.The Respondent is a member of the Bar of the Supreme Court of Delaware. She was admitted to the Bar in 2004. At all times relevant to the Petition, the Respondent was engaged in the private practice of law in Wilmington, Delaware. (Petition and Answer ¶ 1; Tr. at p. 16.) In October 2006, the Respondent started The Castro Firm. (Tr. at p. 16.) From that time through the day of the firm's last audit, the Respondent was in charge of the firm's books and records. (Tr.atpp. 16-17.)

         2. A random compliance audit of the Respondent's financial books and records was conducted at the Respondent's law offices for the six months ending September 30, 2013 by the auditor for the Lawyer's Fund for Client Protection ("LFCP"). (Petition and Answer ¶ 3; Tr. at p. 17.)

         3. The LFCP provided the ODC with a report (the "2013 Master Sidlow Audit Report") concerning the compliance audit for the six months ending September 30, 2013, and a copy of the 2013 Master Sidlow Audit Report was admitted without objection at the hearing as ODC Exhibit 1. (Petition and Response ¶ 3; Tr. at p. 17.)

         4. The 2013 Master Sidlow Audit Report included the following findings relating to the Respondent's books and records:

Fiduciary Account #0208725606
(a) There were two checks outstanding for longer than six months in the time period reviewed;
(b) The June and September bank reconciliations did not agree to the related general ledger balances;
(c) The subsidiary ledger did not reflect any attorney funds. Consequently, the completeness of fiduciary transactions and balances could not be ascertained;
(d) The reconciled end of month cash balances did not agree to total client funds in any of the months reviewed;
(e) There were negative balances on the monthly listing of client funds during the time period reviewed;
(f) There were three balances that were over six months old for completed cases;
(g) The fiduciary account contained earned attorney's fees;
(h) One out of the five retainer agreements provided did not state "the fee is refundable if not earned"; and
Fiduciary Account #0208725739
(i) The attorney did not prepare a monthly listing of client balances.

(Petition and Answer ¶ 4; Tr. at p. 18.)

         5. The Respondent filed her 2013 Delaware Supreme Court Certificate of Compliance, which was admitted without objection at the hearing as ODC Exhibit 2. (Petition and Answer ¶ 5; Tr. at p. 20.) For Items 2.5, 2.8, 2.9, and 2.12, the Respondent answered "Yes" but should have answered "No." (Petition ¶ 5; Tr. at p. 21.)

         6. The Respondent provided the ODC with an Independent Accountant's Report from Gunnip and Company dated June 30, 2014 (the "2014 Gunnip Audit Report"), and a copy of which was admitted without objection at the hearing as ODC ...


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