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In re A Member of Bar of Supreme Court of State

Supreme Court of Delaware

July 7, 2017

IN THE MATTER OF A MEMBER OF THE BAR OF THE SUPREME COURT OF THE STATE OF DELAWARE: JOHN S. MALIK

          Submitted: June 30, 2017

          Before VALIHURA, VAUGHN, and SEITZ, Justices.

          ORDER

         This 7th day of July 2017, it appears to the Court that:

         (1) This is a lawyer disciplinary proceeding. On June 26, 2017, the Board on Professional Responsibility filed a report with this Court recommending that the respondent, John S. Malik, Esquire, be publicly reprimanded and placed on a period of probation for two years, with the imposition of specific conditions. A copy of the Board's report is attached to this order. Neither the Office of Disciplinary Counsel nor Malik has filed any objections to the Board's report.

         (2) The Court has considered the matter carefully. We find the Board's recommendation of a public reprimand with a two-year period of probation with conditions to be appropriate. Thus, we accept the Board's findings and recommendation for discipline and incorporate the Board's findings and recommendation by reference, NOW, THEREFORE, IT IS ORDERED that the Board's June 26, 2017 report is hereby ACCEPTED. The Office of Disciplinary Counsel shall disseminate this Order in accordance with Rule 14 of the Delaware Lawyers' Rules of Disciplinary Procedure.

         BOARD ON PROFESSIONAL RESPONSIBILITY OF THE SUPREME COURT OF THE STATE OF DELAWARE

         IN THE MATTER OF A MEMBER OF THE BAR OF THE SUPREME COURT OF THE STATE OF DELAWARE:

         JOHN S. MALIK, Respondent.

         Board No. 113101-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 or about February 1, 2017 in Board Case No. U3101-B ("the Petition") against John S. Malik, Esquire ("the 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 his counsel, Charles Slanina, Esquire, filed an Answer to the Petition ("the Answer").

         The Board convened a hearing ("the Hearing") by the panel on April 13, 2017.[1] The members of the panel of the Board were Dennis Klima, Karen V. Sullivan, Esquire, and Seth L. Thompson, Esquire, Chair ("the Panel"). Kathleen Vavala, Esquire represented the ODC. Charles Slanina. Esquire represented the Respondent.

         At the outset of the Hearing, the Respondent moved to file an Amended Answer, with the amendments reflected by underline on pages 10 and 11. (Tr. at p, 5.) The ODC had no objection. (Tr. at p. 5.) The motion was granted, and the Panel received copies of the Amended Answer. The amendments resulted in the Respondent admitting all six counts of the Petition.

         At the Hearing, the Panel received into evidence two joint exhibits binders. The Respondent also submitted a letter dated April 10, 2017 from Dana L. Reynolds, Esquire. The Panel also received: a case law binder[2]; Summaries of Representative Delaware Precedents re: Books and Records Deficiencies. Delinquent Lawyer Tax Obligations, and False Certificates of Compliance; and the Respondent's counsel's highlighted copy of ABA Standard 9.32 on mitigating factors. The Panel heard testimony from the Respondent, Alexander Funk, Esquire, Allen Dale Bowers, Esquire, and William Deely, Esquire.

         II. Factual Findings

         Because the Respondent's Amended 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. 5-6.) Nevertheless, the Panel received testimony from the Respondent and the exhibits relating to factual circumstances surrounding the violations. The first joint exhibits binder consisted of: 1) a Quick Report regarding Joshua Chattin dated October 5, 2016; 2) an invoice regarding Joshua Chattin dated September 30, 2016; 3) a Fee Agreement for Mark Villei dated August 15, 2015; 4) a Quick Report regarding Mark Villei dated October 5, 2016; 5) an invoice regarding Mark Villei dated August 6, 2015; 6) a Fee Agreement for John Vanderhoogt dated April 22, 2015; 7) a Quick Report regarding John Vanderhoogt dated October 5, 2016; 8) an invoice regarding John Vanderhoogt dated April 16, 2015; 9) an Independent Accountant's Report from Master Sidlow Associates dated July 27, 2016; and 10) the Respondent's 2016 Delaware Supreme Court Certificate of Compliance.

         The second joint exhibits binder consisted of the Respondent's five prior private admonitions: ODC File No. 105379-B, dated August 7, 2013; Board Case No. 32, 2005; Board Case No. 67, 1994; Board Case No. 53, 1993; and Board Case No. 17, 1990.

         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. He was admitted to the Bar in 1984. (Petition and Amended Answer ¶ 1; Tr. at p. 13.) At all times relevant to the Petition, the Respondent was engaged in the private practice of law in Wilmington, Delaware, (Tr. at pp. 13-14.) The Respondent has been a solo practitioner for 31.5 years. (Tr. at p. 14.) From 1984 through the day of the firm's last audit, the Respondent was in charge of the firm's books and records. (Petition and Amended Answer ¶ 1.)

         2. A compliance audit of the Respondent's financial books and records was conducted of the Respondent's law offices for the six months ending April 30, 2016 (the "2016 Master Sidlow Audit Report") by the auditor for the Lawyer's Fund for Client Protection ("LFCP"). (Petition ¶ 23.)

         3. The 2016 Master Sidlow Audit Report reflected that the Respondent failed to pay properly his tax obligations to the City of Wilmington. Respondentfailed to file a tax return or pay his 2013 and 2014 City of Wilmington net profits tax until March 15, 2016. (Petition and Amended Answer ¶ 24.)

         4. The 2016 Master Sidlow Audit Report also included the following findings relating to the Respondent's books and records and Fiduciary Account #24074641:

(a) The reconciled end-of-the-month cash balances differed from the total of all client funds held in all six of the months reviewed, with differences ranging from -$3, 031.79 to $3, 963.31;
(b) In one transaction, attorney's fees were withdrawn from the trust account prior to the deposit of client funds, resulting in a negative balance of-$1, 000;
(c) There were 21 client balances that were over six months old for which the attorney will not be providing additional services, with balances ranging from $18 to $1, 250;
(d) In one transaction, the firm did not have documentation in the client's file that supported the disbursement of funds;
(e) The firm could not provide a retainer agreement for one of the five transactions selected for testing; and
(f) The firm did not provide a statement to the client showing the amount withdrawn and the remaining balance of the unearned retainer for any of the five transactions selected for testing.

(Petition and Amended Answer ¶ 25.)

         5. The Respondent required Mr. Chattin to pay an advance fee but failed to provide him with a written statement that the fee is refundable if not earned and the basis upon which the fees shall be considered earned. (Petition and Amended Answer ¶ 21.)

         6. The Respondent failed to provide Mssrs. Chattin, Villei, and Vanderhoogt with statements of the fees earned at the time the funds were withdrawn from the trust account. (Petition and Amended Answer ¶¶ 21-22.)

         7. The Respondent failed to have reasonable safeguards in place to ensure accurate accounting of his law practice books and records and failed to supervise his employee's conduct in reconciling the books and records and timely paying taxes.

         8. The Respondent filed his 2016 Delaware Supreme Court Certificate of Compliance, and for Items 2.9, and 2.11, the Respondent answered "Yes" but should have answered "No." (Petition and Amended Answer ¶ 33.)

         III. Stan ...


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