OHIO – Atty Neal H. Magee II Disbarred After A Long List Of Violations Including Theft From Trustfund

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The Supreme Court disbarred Neal H. Magee II for violating multiple rules governing the conduct of Ohio attorneys when he served as the guardian of a client’s property and a trustee for the client’s trust. Magee also was ordered to pay back more than $168,000 to the trust

OHIO - Atty Neal H. Magee II Disbarred After A Long List Of Violations Including Theft From Trustfund

 

The Ohio Supreme Court today disbarred a Columbus attorney and ordered him to pay more than $312,000 in restitution for improperly transferring funds from a trust he oversaw to his own personal account.

In a 6-0 per curiam opinion, the Supreme Court disbarred Neal H. Magee II for violating multiple rules governing the conduct of Ohio attorneys when he served as the guardian of a client’s property and a trustee for the client’s trust. Magee also was ordered to pay back more than $168,000 to the trust along with payments for attorney fees to the new trustee and the two organizations that were to benefit from the trust funds, and to cover the bill for a forensic accounting of the trust ordered by the Franklin County Probate Court.

Lawyer Drafted Doctor’s Trust
In 2008, Magee drafted a revocable living trust for Dr. William A. Bruce. The trust called for distribution, upon Bruce’s death, of 75 percent of the trust proceeds to Nationwide Children’s Hospital Foundation (NCHF) and 25 percent to Goucher College, a private institution in Towson, Maryland. Bruce was the trustee of the trust, but it provided that if he became disabled or died, Magee would be the trustee. Sometime after establishing the trust, Bruce moved to a senior living facility in the state of Delaware.

In 2010, the Delaware Court of Chancery adjudicated Bruce as incompetent and appointed his brother as guardian of Bruce’s person and Magee as guardian of Bruce’s property.

The order authorized Magee to transfer any assets held solely in Bruce’s name to the trust and to administer the assets in “accordance with the terms” of the trust. Magee was to file an inventory within 30 days, and an audited accounting of the Bruce assets within six months, and then annually. He was also supposed to send copies of the accountings to NCHF and Goucher.

Reports Omitted; Trust Terms Changed
Magee filed the inventory and a list of account activity for the first half of 2010, and the chancery court approved of the financial activity. After receiving that approval, Magee amended the trust to add that his adult children could serve as successor trustees. He also deleted the provision requiring distribution of the full balance of the trust to NCHF and Goucher on Bruce’s death. He added a new provision that authorized the trust to pay the two institutions as little as 5 percent of the trust balance annually — effectively permitting the assets to remain in the trust indefinitely. Magee did not obtain the court’s permission to make those changes.

Bruce died in October 2012 and Magee filed an accounting of Bruce’s assets with the Delaware court at the end of 2012. The chancery court had set Magee’s fee for being the guardian of Bruce’s property at 1 percent of the trust’s value and provided for payment to a specific law firm for legal fees, and had no provision to pay Magee legal fees.

Trust Money Transferred
Magee began paying himself with trust assets beginning about a year after the trust was formed and lasting through September 2013. He paid himself about $149,000 in “trustee fees,” and also paid himself another $34,000 for legal fees, without the chancery court’s approval. In addition to those “fees,” Magee made additional transfers totaling nearly $683,000 to his personal accounts.

In May 2012, Magee told NCHF in a letter that the trust had about $2.1 million in security holdings and about $40,000 in cash in a trust checking account. However, he did not disclose that he had transferred about $442,000 from the trust to his personal account just days before sending the letter

In 2013, NCHF requested a copy of the trustee reports from Magee, but he did not respond. Around the time that NCHF and Goucher signed a notice to remove Magee as the trustee and his children as successor trustees, Magee appeared in Wetzel County, West Virginia, to appoint himself executor of Bruce’s estate and transferred a deed of property Bruce owned there into the trust.  After his removal as trustee, Magee fraudulently transferred the Wetzel County property to himself as executor of Bruce’s estate.

Bank Takes Over Trust
Following Magee’s removal, Fifth Third Bank was installed as successor trustee. Magee transferred about $2.6 million in trust assets to the bank. He also fabricated a statement to make it appear that $424,000 of the funds he had misappropriated were held in an investment account for the trust. He subsequently returned that money to the fund.

NCHF advised Magee that his accounting of the trust fund was insufficient, but Magee did not respond. In 2014, NCHF and Goucher filed a complaint in Franklin County Probate Court to compel Magee to furnish the required reports. Magee did not respond to the lawsuit, and was found in contempt. The court ordered an accounting firm to submit a forensic accounting for the trust at Magee’s expense.

Magee paid $5,000 of the $7,500 sought by the accounting firm and failed to respond to the firm’s request for additional documentation, which made it impossible for the firm to provide a complete accounting.

The firm found Magee had withdrawn a total of $514,000 from the various trust accounts, and while he paid back $424,000 back to the Bruce trust, there was more than $89,000 in unaccounted funds. The probate court ordered Magee to pay about $21,000 for the forensic accounting; $40,000 to NCHF for attorney fees; $21,000 to Goucher College for attorney fees; and $89,000 in restitution to the trust. Magee did not comply with any of the orders.

Action Draws Ethics Complaint
Based on Magee’s handling of the Bruce trust, the Columbus Bar Association filed a complaint with the Ohio Board of Professional Conduct in 2016, alleging that Magee violated several professional conduct rules.

Magee disputed some of the charges against him but agreed that he did not act with reasonable diligence in representing his client, disobeyed court orders, and failed to cooperate in the disciplinary investigation. Magee and the bar association agreed he should be disbarred for the violations.

During the disciplinary proceedings, the board reviewed additional financial records and determined that Magee had received an additional $168,000 from the trust that he had not reimbursed.

The board found Magee repeatedly failed to produce requested documents, amended the trust for self-serving purposes, misappropriated funds, falsified documents, and falsely represented himself to a court as the trustee after his removal from the post. The board found those acts violate a number of ethical rules, including those that prohibit attorneys from falsifying evidence, unlawfully altering or concealing documents, and engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation.

Board Recommends Disbarment
The board agreed to the stipulation by the parties that Magee be disbarred. It recommended he pay $312,400 in restitution to the trust, legal fees to the other parties, and for the accounting. The Court adopted those recommendations.

2017-1737. Columbus Bar Assn. v. Magee, Slip Opinion No. 2018-Ohio-3268.