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Law of Criminal Defense - One criminal defense lawyer federally disbarred and another suspended 5 years for false testimony about source of cash fee and failure to file Form 8300

One criminal defense lawyer federally disbarred and another suspended 5 years for false testimony about source of cash fee and failure to file Form 8300


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One criminal defense lawyer federally disbarred and another suspended 5 years for false testimony about source of cash fee and failure to file Form 8300

Criminal defense attorneys were disciplined in federal court for false testimony and destroying documents about a cash fee that was unreported under Form 8300. They also violated the rule about independent representation by taking a fee from the person the clients could potentially give up in the case without informing the client of the ability to cooperate. The opinion was forwarded to the USAO and the Texas Bar. In re Disciplinary Proceedings Against Buchanan, 2007 WL 3287353 (N.D. Tex. November 6, 2007):

A. The Representation of Morante by Buchanan and Gilpin at the Behest of His Co-Offender, Martinez, and the Effect Martinez's Role had on the Representation.

Martinez was the supplier of the methamphetamine that was the subject matter of the offenses charged against Morante and his co-defendants in the complaint filed September 15, 2006, in Case No. 4:06-MJ-218 and the indictment filed October 26, 2006, in Case No. 4:06-CR-183-A. Buchanan and Gilpin knew when they undertook to represent Morante that Martinez was a significant participant in the drug transaction in question. The attorneys knew when they undertook to represent Morante that there was a conflict of interest between Morante and Martinez in the sense that Morante could gain a benefit as to the criminal charges against him if he were to provide cooperation with the government by disclosing Martinez's involvement in the drug transaction. By undertaking to represent Morante under the circumstances mentioned above, Buchanan and Gilpin engaged in unethical behavior.

, , ,

Martinez provided the $25,000 cash for payment of the fee to Buchanan and Gilpin for their representation of Morante. Buchanan and Gilpin knew that he did so. The acceptance of that payment by the attorneys violated Rule 1.08(e) of the Texas Rules because it interfered with the independence of their professional judgment and with the attorney-client relationship between the attorneys and Morante. In violation of Rule 2.01 of the Texas Rules, the attorneys did not in their representation of Morante exercise independent professional judgment and render candid advice. Buchanan and Gilpin failed to give to Morante the kind of advice they should have given him concerning the advantage to him of providing information to the government about Martinez's participation in Morante's criminal activities. That failure was the result of allegiance Buchanan and Gilpin had to Martinez arising from Martinez's participation in the employment of Buchanan and Gilpin to represent Morante.

All of the conduct of Buchanan and Gilpin described in this subsection A constitutes conduct unbecoming a member of the bar of this court as well as being unethical conduct.

B. False Information and Testimony Provided by Buchanan and Gilpin Relative to the October 16, 2006, Meeting.

On October 16, 2006, there was a meeting in the Fort Worth office of Buchanan and Gilpin at which Morante's parents, Martinez, a woman in her thirties who was identified as Martinez's wife, and the attorneys, Buchanan and Gilpin, were in attendance. At that meeting Buchanan and Gilpin were employed to represent Morante in his criminal case. Martinez had arranged for the meeting, and he is the one who arranged for Buchanan and Gilpin to represent Morante. Buchanan and Gilpin knew those to be the facts.

The fee paid at the meeting for the representation was $25,000 cash, with an understanding that another $10,000 would be paid if Morante were to be charged with an offense related to the death of his deceased co-offender, Davila. The $25,000 cash fee payment was provided by Martinez. The woman who was identified as Martinez's wife had the $25,000 cash in her purse. She took the cash, at Buchanan's direction, to the secretary, Zuniga, in the law office in payment of the fee. Zuniga counted the $25,000, put it in an envelope, and left it where she normally would leave monies received as fees. She gave the woman who delivered the money to her a receipt, showing the money was paid by “Ofilia Gomez.” After Zuniga went home from the office the early evening of October 16, Gilpin and Buchanan took the money from the envelope and divided it fifty/fifty, with each taking and keeping $12,500 out of the $25,000 fee payment.

Buchanan or Gilpin, or both of them, gave false testimony and provided false information to the court about most of the facts surrounding the events of October 16, 2006, as they are described above.

The deceptions of the attorneys started shortly after Morante's March 4, 2007, letter to the court complaining of Buchanan's conduct. May 3 Order at 4-6. Buchanan's March 14 letter, which purported to be in response to Morante's complaints, was deceptive in not making any mention of Martinez's involvement in the October 16 meeting and the events that led up to it. Id. at 34-35. The deceptions continued in the form of false statements and testimony given by Buchanan and Gilpin at the March 15 and 20/April 4 and May 25/29 hearings. All the deceptions were intentional on the part of the attorneys with the goal of misleading the court.

Because of the circumstances of their employment to represent Morante, and the size of the fee they received, the attorneys are bound to have remembered, and did remember, in the spring of 2007 the events that occurred only a few months earlier, on October 16, 2006, leading up to and surrounding their employment.

The attorneys chose to make serious misrepresentations, including by way of perjured testimony, to the court concerning events that occurred on October 16 and their recollections of the events. Initially the misrepresentations were in response to Morante's complaints about Buchanan's conduct. Once the attorneys realized that the court was not treating Morante's complaints lightly and that disciplinary action was possible, the attorneys set upon an elaborate course of action to conceal, and to mislead the court concerning, incriminating events leading to and surrounding their employment on October 16 to represent Morante. In the end, as the true facts were being uncovered, the lawyers set upon a course of testifying falsely that they did not recall the true facts in an attempt to mitigate previously made misrepresentations. The significant features of this inappropriate conduct on the part of Buchanan and Gilpin are described below: ...

C. The Failure of Buchanan and Gilpin to Report the Cash Payments to the Government.

Buchanan and Gilpin failed to comply with the statutory reporting requirements as to the cash payments that were received on October 16. Neither attorney, either for their partnership or as an individual attorney, filed a Form 8300 reporting the $25,000 cash payment, or any part of it, that the attorneys received for the representation of Morante on October 16 or the $12,500 cash he received as his share. Because of the backgrounds and experiences of the attorneys, they are bound to have known, and did know, that they were obligated to file the reports required by 26 U.S.C. § 6050I and 31 U.S.C. § 5331 as to the $25,000 received by their partnership and as to the $12,500 share each received as an individual attorney. Each of them committed perjury when he testified that he did not know that he was obligated to file the reports as to the $25,000 cash payment or as to the $12,500 each of them received. By doing so, each of them violated Texas Rules 3.03(a)(1), 3.03(a)(5), 8.04(2), and 8.04(3).

If Buchanan and Gilpin had complied with 26 U.S.C. § 6050I, they would have completed and filed with the Internal Revenue Service one or more Form 8300s (a copy of which is in the record as Exhibit 1 to the May 25/29 hearing), by the fifteenth day after October 16, 2006. 26 C.F.R. § 1.60501-1(e)(2). In addition to filing a Form 8300 with the Internal Revenue Service, Buchanan and Gilpin were obligated by 31 U.S.C. § 5331 to file a report concerning the cash transactions of October 16, 2006, with the Financial Crimes Enforcement Network. That report would have been made by the use of the same Form 8300. 26 C.F.R. § 1.6050I-1(a)(ii).

Buchanan said that he did not file the report (Form 8300) because he did not know the fee payment was $25,000. Tr. of May 29 session at 123. That statement is false. The court believes that an explanation Buchanan gave as part of the argument he presented at the conclusion of the May 29 session probably reveals the real reason why Buchanan and Gilpin initially were intent on convincing the court that the total payment was only $15,000, and that each of them received only $7,500 out of the total. Buchanan explained that he believed that the Form 8300 reporting would not be required if he and Gilpin did not have a “true partnership” and individually received out of the total fee payment a cash payment of less than $10,000 each. Id. The court believes, and finds, that the attorneys intentionally misrepresented to the court at the March 15 and 20/April 4 hearing that the total each received from the October 16, 2006, fee payment was $7,500 cash because both of them knew that if there was a disclosure that each of them had received $12,500 cash from the fee payment there would be no basis for any argument, even a tenuous one such as Buchanan made on May 29, that they were not obligated to file Form 8300s.

The failure to file with the government the required Form 8300s relative to the total cash payment of $25,000 and the individual cash payments, out of the total, of $12,500 to each of the attorneys constituted unethical conduct. That conduct violated Rules 8.04(2) and (3) of the Texas Rules. The failure to file the reports reflects adversely on the honesty, trustworthiness, and fitness of Buchanan and Gilpin as lawyers, as well as involving dishonesty. Such conduct also is unbecoming members of the bar of this court.

Buchanan was disbarred from federal court because of his prior disciplinary history, and Gilpin received a five year suspension. The fees were ordered disgorged.

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