IN THE SUPREME COURT OF FLORIDA

(Before a Referee)

THE FLORIDA BAR,

Complainant, Case No. SC11-1578

TFB File No. 2012-30,103(09B)(OSC)

v.

CLINT JOHNSON, Case No. SC11-2343

Respondent. TFB Case No. 2012-30,727(09B)(OSC)

____________________________/

REPORT OF REFEREE

I. SUMMARY OF PROCEEDINGS

Pursuant to the undersigned being duly appointed as referee to conduct

disciplinary proceedings herein according to Rule 3-7.6, Rules of Discipline, a

contempt hearing was held in which evidence and testimony adduced by the parties

and arguments of counsel were considered.

Procedural History

The contempt action of SC11-1578 originated with a Petition For Contempt

and Order to Show Cause filed by The Florida Bar (“TFB”) against the

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Respondent, Clint Johnson, in August of 2011. The gravamen of The Bar’s

Petition was that the Johnson violated the Supreme Court’s emergency suspension

order dated April 11, 2011 by allowing disbursements and withdrawals from

certain frozen trust and operating accounts; by not duly notifying all banks and

financial institutions regarding the emergency suspension order; and by failing to

immediately furnish all 13,230 of his debt management clients with a copy of the

emergency suspension order.

The contempt action of SC11-2343 originated with a Petition for Contempt

and Order to Show Cause filed by The Bar in December of 2011. The gravamen of

The Bar’s Petition was that Mr. Johnson willfully disobeyed the July 14, 2011

Order of the Supreme Court which had approved a stipulation of the parties dated

June 13, 2011 in which Mr. Johnson agreed that he would retain the professional

receivership services of Leslie W. Eiserman, CPA to audit his trust and operating

accounts but didn’t.

This referee was appointed on March 7, 2012 to conduct, try, and determine

the matters presented and thereafter submit findings of fact and recommendations

to the Supreme Court of Florida as provided in the Rules Regulating The Florida

Bar.

On April 23, 2012, the referee entered an Order for Consolidation in the

interest of judicial economy for both matters to be heard at one final hearing with

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the entry of one Report of Referee. Hearings were held on July 16, 2012, July 17,

2012, and July 19, 2012. The pleadings, notices, motions, orders, transcripts and

exhibits, all of which are forwarded to The Supreme Court of Florida with this

report, constitute the record in this case.

The above-captioned case is factually related to two other case involving

Mr. Johnson heard by this referee, cases SC11-622 and SC11-1136. In order to

fully understand the conduct of Mr. Johnson in this case, it is necessary to

understand the factual context of all 4 cases. A description of the factual context

underlying these cases in contained in Section III: Findings of Fact section of this

report.

The following attorneys appeared as counsel for the parties.

For The Florida Bar - Patricia Ann Toro Savitz and

Frances R. Brown- Lewis

For The Respondent - Thomas Devlin Sommerville

II. BURDEN OF PROOF, PROOF STANDARD, AND ROLE OF REFEREE: TFB bears the burden of proof in disciplinary proceedings, and the standard

of proof at the final hearing stage in a contempt case is the traditional clear and

convincing standard. Florida Bar v. Shoureas, 913 So.2d 554, 561 (Fla. 2005);

Florida Bar v. Forrester, 916 So.2d 647, 651 (Fla. 2005), (in the disciplinary

setting, contempt proceedings are civil in nature and The Bar’s required proof

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standard is that of clear and convincing evidence). Just as with any other alleged

disciplinary violation, it is the task of the referee to weigh the evidence and

determine its sufficiency. Florida Bar v. Weiss, 586 So.2d 1051, 1053 (Fla. 1991).

III. FINDINGS OF FACT

A. Jurisdictional Statement: Respondent is, and at all times mentioned

during this investigation was, a member of The Florida Bar, subject to the

jurisdiction and Disciplinary Rules of the Supreme Court of Florida.

B. Findings of Fact as to the Violations of the Court Orders of Which the

Respondent Is Charged: All the pleadings and evidence, pertinent portions of

which are commented on below and supported by the record, were duly considered

by the referee. Accordingly, the referee makes these findings by the standard of

clear and convincing evidence regarding respondent’s violations of the orders

entered by The Florida Supreme Court dated April 11, 2011 and July 14, 2011.

The referee considered the testimony of the witnesses that testified at the final

hearing, pertinent portions of which are commented on below and supported by the

record evidence. The testimony was received through affidavits and transcripts as

well as by telephone and live testimony. In addition, the referee received into

evidence, without objection, The Florida Bar’s Exhibits 1-32, and Respondent’s

Exhibits 1-12 hereinafter referred to “TFB Exhibit 61” and “R Exhibit 62,”

respectively. The referee also heard and considered testimony and evidence

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regarding aggravation and mitigation, pertinent portions of which are commented

on below and supported by the record evidence.

These contempt proceedings can be traced back to an Emergency

Suspension Order entered on April 11, 2011 prohibiting Johnson from practicing

law. At that time, Johnson was the principal and senior attorney in the Johnson

Law Group, a law firm in Orlando. He was also the principal of several debt

management and debt settlement companies. These companies assisted debtors in

negotiating and settling consumer debts. Debtors sent money to these companies

and these companies deposited the money into Trust Accounts maintained by

Johnson. Each of the three debt management companies had at least one trust

account subject to the provisions of Rule 5. The debt management companies

negotiated with creditors, like credit card companies, to reduce the debtor’s credit

card balances or interest rate in exchange for the promise of a discounted lump

sum or consistent periodic payment. The debt settlement account operated like a

savings account in which the debtor accumulated money over time from which to

negotiate satisfaction of the debt for a lump sum payment. Under these

arrangements, most of the money deposited into the trust account was disbursed by

lump sum or periodic payments to the creditors but some of the money was

disbursed to the law firm for fees and costs.

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The debt management money was deposited by the client with special

instructions or conditions related to the deal negotiated by the credit management

company with the creditor. For instance, a client might enter into an agreement

with a credit card company to pay off a $1,000.00 debt by paying $50/month on

the first of each month for 10 consecutive months. If they do, the credit card

company agrees to waive the balance of the debt and the interest. If they don’t, the

deal is rescinded. These agreements are totally dependent on the timely payment of

an agreed amount. Any payment of a lesser amount or any late payment, even just

a day late, can result in the loss of the benefit of the negotiated deal and the

forfeiture of any payments already made. Over time Johnson accumulated over

13,600 debt management and debt settlement accounts in several states. Johnson

also maintained a more traditional trust account and operating account for his law

firm.

Violation of Emergency Suspension Order dated April 11, 2011:

Based on an extensive bar investigation lasting over a year, an emergency

suspension order was entered by the Supreme Court on April 11, 2011. The ESO

was broad in scope and application and TFB contends that Johnson failed to

comply in 5 areas. First, Johnson was required to cease representing clients as of

May 11, 2011. The evidence clearly establishes that in at least three particular

personal injury cases Johnson failed to comply with this particular provision of the

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Court's order. See TFB Exhibits 1; 8; 9; 10; 11; 13; 30 and 31. Respondent

continued to represent these clients after the suspension took effect, rationalizing

that the settlements of these personal injury cases occurred before the suspension

and he was just concluding the settlement for the client as he had agreed to do.

Johnson actively negotiated for his clients and disbursed funds pursuant to those

negotiations after prohibited by the ESO from doing so.

There was an issue regarding respondent holding himself out as practicing

law. To the extent that the record and evidence include respondent’s admissions

and letters on respondent’s law firm letterhead dealing with respondent’s

settlement of three particular personal injury cases after the effective date of the

Court’s April 11, 2011 order, this constitutes a technical violation in that regard.

With regard to the letters to the clients on firm letterhead that were mandated

by Rule 3-5.1(g) and sent to the debt management and debt settlement clients along

with a copy of the suspension order in August 2011, the letter plainly stated that

Johnson was suspended and enclosed a copy of the Court’s emergency suspension

order for reference. No reasonable client would perceive the letter and enclosure to

suggest that Johnson was holding himself out as an actively practicing lawyer at

that time. Accordingly, this referee does not find that respondent’s August 2011

letters to his debt management and debt settlement clients are violations of the

Court’s order.

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Second, the ESO required Johnson to provide copies of the suspension order

to all clients, opposing counsel and courts before which Johnson was counsel of

record. The testimony and evidence show that Johnson provided copies of the

order to opposing counsel and hand delivered copies to the courts in which he had

matters pending. Johnson properly and timely notified all of his law firm clients of

the suspension. However, the undisputed evidence and testimony proved that

Johnson failed to notify all of his clients of his suspension and provide all of his

clients with a copy of the emergency suspension order.

Nathan Green testified regarding his duties and responsibilities as the Office

Manager for respondent’s law firm. He testified that it was impossible to reassign

13,000 debt management and settlement clients within 30 days and acknowledged

that these clients were not immediately notified of Johnson’s suspension. One of

Mr. Green’s responsibilities was to assist with the daily transfers, withdrawals and

disbursements from respondent’s trust and operating accounts. Mr. Green testified

that these transactions continued to take place on a daily basis until August, 2011.

In fact, Mr. Green testified that Johnson himself actually made these transfers

himself by going to Bank of America each morning and personally arranging

transfers, deposits and disbursements. If he didn’t, clients would have defaulted on

their agreements with creditors.

Lisa Chason, Compliance Coordinator for The Florida Bar testified that

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Johnson’s sworn affidavit provided to TFB on or around April 26, 2011

specifically stated that respondent notified all of his clients of his suspension. See,

TFB Exhibits 1; 3; 5; and 17. Contrary to the affidavit, he did not notify his debt

management and debt settlement clients of his suspension until August 10, 2011,

or sometime thereafter, as shown by copies of respondent’s letters to these clients

which were received into evidence. See TFB Exhibits 1; 3; 16; 17; 18; 19; 27; and

R’s Exhibit 11. Moreover, Johnson’s own testimony established that this failure

was intentional and knowingly done when he decided not to tell his debt

management clients of the suspension until he had found other counsel to handle

their matters. The search for successor counsel turned out to be arduous and

involved. While Johnson’s desire to arrange successor counsel to protect the

clients’ interests is noble indeed, it does not justify his knowing and direct

violation of the ESO.

As further excuse of his tardy notification of clients, Johnson contends that

the cost of providing notice by certified mail delayed notification to the debt

management/settlement clients. While true - the cost of certified mail to 13,600

clients was steep, it was Johnson that created the need to use certified mail, not the

court’s order. Johnson decided to notify the clients that their case was being

transferred to another firm, at the same time he notified them of his suspension.

Such notice must be done by certified mail. Johnson chose to combine both

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notices into one and cannot be heard to complain of the significantly increased

costs associated by this decision.

Third, the ESO directed that Johnson stop disbursing money from his trust

and/or operating accounts. He didn’t stop. The clear and unrefuted evidence shows

that Johnson did not stop disbursing and withdrawing funds from his trust and

operating accounts. Even his “compliance trust” account at Bank of America

(#8965), opened after his suspension, was riddled by over 30 withdrawals from

May through July, 2011.

Matthew Herdeker, Certified Public Accountant and Auditor for the Orlando

Branch of The Florida Bar testified regarding his review and analysis of all

respondent’s bank accounts maintained at Bank of America for the period of

January 2011to March 2012. This review and analysis by Mr. Herdeker identified

numerous impermissible disbursements, transfers and withdrawals from

respondent’s trust and operating accounts maintained at Bank of America, all of

which continued through September 2011. Additionally, Mr. Herdeker further

testified that respondent made several disbursements from the compliance trust

account he opened subsequent to the emergency suspension order dated April 11,

2011. According to respondent’s bank statement for the period ending June 30,

2011, respondent made 31 withdrawals from the compliance trust account. The

disbursements were to clients, third parties and medical providers. It was Mr.

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Herdeker’s expert opinion that all the disbursements were contrary to the Court’s

order dated April 11, 2011. See TFB Exhibits 1; 4; 7; 8; 9; 10; 11; 12; 13; 22; 24;

and 25.

More problematic are the continuous disbursements in the debt management

accounts into August and September, 2011. The account statements and audits

unquestionably reflect numerous and continuing deposits to as well as

disbursements from the debt management accounts. TFB presented the testimony

of their retired chief auditor, Clark V. Pearson. Mr. Pearson prepared an affidavit

which included a schedule of all withdrawals and disbursements from respondent’s

bank statements for the month ending June 30, 2011 and respondent’s compliance

trust account for the month ending May 31, 2011. The schedule clearly established

the significant withdrawals from nearly all respondent’s trust and operating

accounts maintained at Bank of America. The schedule reflected that in at least

two separate accounts there were 63 disbursements totaling $4,198,016.93 and 529

checks or disbursements totaling $646,767.51, respectively.

It was Mr. Pearson’s expert opinion that all respondent’s disbursements and

withdrawals as referenced in his chart were in violation of the provisions of the

Court’s emergency suspension order. Mr. Pearson further opined that pursuant to

the provisions of the Court’s order, the compliance trust account was strictly for

deposits of funds received after the entry of the order and no disbursements were

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authorized or proper. See, TFB Exhibits 1; 7; 8; 9; 10; 11; 13; 22; 24; 25; 28; 30;

and 31.

Isaac Bobbe, President of CBDC, and Antony Murigu, President of Debt

Wave, both of whom are employed with debt management/settlement processing

companies testified that CBDC and Debt Wave had their trust and operating

accounts linked with respondent’s trust and operating accounts. Staff from both

companies made disbursements, withdrawals and transfers to and from Johnson’s

trust and operating accounts on a daily basis. These transactions continued into

August, 2011.

Walter Tuller, Staff Investigator for The Florida Bar, testified in the case in

chief, as well as part of the sanction hearing. Mr. Tuller is TFB’s investigator

assigned to the case. He testified that some of Johnson’s clients contacted The

Supreme Court of Florida and The Florida Bar in order to find out the status of

their funds held in Johnson’s trust accounts. These debt management clients told

Mr. Tuller that their funds continued to be automatically debited from their

personal accounts and transferred into respondent’s trust accounts after the

effective date of the emergency suspension order.

Unquestionably, the debt management money did not belong to Johnson. He

held it in trust. He knew that this money had to be disbursed timely and in

compliance with a negotiated agreement, in order to protect his clients. In his own

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words, he felt a “moral” obligation to disburse this money and protect his clients

even though he knew to do so was a violation of the order. Mr. Johnson has

testified, without contradiction, that he believed himself morally obligated to

follow a course of action while the emergency suspension order was in effect that

he perceived as the only remaining and effective means of protecting his thousands

of debt-management clients from needlessly becoming the “collateral damage” of

these disciplinary proceedings focusing on his negligent trust account

mismanagement. He testified his conduct was the product of a decision he

agonized over because he realized that if he acted to protect his debt clients, he

would further jeopardize his valued license to practice law. Although Johnson

petitioned the Court for guidance and permission to disburse the debt management

funds, all these transactions were made without the approval of the Florida

Supreme Court, as required by the April 11, 2011 order.

It should be noted that Johnson did not disburse from the debt settlement

accounts after the ESO. Those accounts were used to accumulate funds for the

client and did not require regular, timely disbursements. Although these funds

totaling over $3.5 million clearly belong to the clients, the funds were “frozen” and

not disbursed by Johnson in full compliance with the order. Only the debt

management accounts requiring regular payment to preserve the client’s

agreement with a creditor saw disbursements. Although the difference in these two

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accounts does not justify violation of the ESO, it does help explain why Johnson

believed that he needed to protect his clients by disbursing debt management

money. It should also be noted that during this entire time since all accounts were

frozen in April 2011, Johnson has not taken any fees, even earned fees, from his

law practice or the debt management/settlement accounts.

Fourth, the Order requires Johnson to notify all bank and financial

institutions in which Johnson had an account related to the practice of law about

his suspension. Johnson testified that he did notify his bank, Bank of America,

personally by hand delivering a letter along with a copy of the ESO to his

“personal banker” Gladys Coto. Ms. Cotto testified via telephone that respondent

came to the bank in or around April 12, 2011 and told her he had been suspended

by the Court. She further testified that he showed her a cover letter and the

emergency suspension order but did not give her a copy of the order. Her

testimony is not only in direct conflict to Johnson’s testimony but in conflict with

generally accepted business practice and common sense. This referee accepts

Johnson’s testimony on this point and specifically finds Ms.Cotto’s testimony

lacking in all credibility. Moreover, for unexplained reasons, the bank chose to

ignore this notification and did not freeze Johnson’s accounts, including the debt

management accounts. Had they done so, many of the offending transactions

could not have occurred. Why they failed to take any action is anyone’s guess.

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Finally, the Court’s order required respondent to provide Staff Counsel for

The Florida Bar with an affidavit regarding notification to his clients of his

suspension. This referee previously made findings regarding respondent’s failure

to notify all his clients pursuant to the provisions of the order. Johnson provided

an affidavit to The Florida Bar that was inaccurate to the extent that respondent

had not notified any of his debt management and debt settlement clients at the time

he filed his affidavit. Johnson never filed an amended or supplemental affidavit

with TFB as he should have, after his August letters notifying his debt

management and debt settlement clients of his suspension.

Violation of Order appointing receiver, dated July 14, 2011:

As a result of negotiations between the parties, they agreed by stipulation on

June 13, 2011 to the appointment of Leslie W. Eiserman, Certified Public

Accountant, as receiver in Case No. SC11-622. The stipulation clearly provided

that respondent would be liable for the costs associated with the receiver, who

would be responsible for conducting a forensic audit, making determinations about

claims concerning the trust funds, and disbursement of funds as required. The

Court approved the stipulation and appointed Mr. Eiserman by order on July 14,

2011. Although Johnson admits to the agreement and even admits to meeting Mr.

Eiserman after the stipulation to retain his services, Johnson contends that Mr.

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Eiserman wouldn’t commit to a specific fee (other than an open ended hourly

retainer) and Johnson did not have the money to hire him on that basis.

The referee finds that there is a violation of the July 14, 2011 order. Johnson

agreed to retain the receiver and pay him. He did neither. The receiver did not start

working on respondent’s accounts because he was never paid to do so.

Unquestionably, Johnson violated the Court’s order regarding the appointment of

a receiver. The question is whether his violation is a knowing and willful

violation, punishable by contempt.

Johnson testified that he signed the June 13, 2011 stipulation for the

appointment of a receiver in good-faith—but without any workable understanding

of Mr. Eiserman’s required fee structure. All he knew when he signed the

stipulation was that on or about May 28, 2011, the Board of Governors had voted

to recommend the appointment of a receiver to the Supreme Court; and he had no

objection to Mr. Eiserman performing as a receiver. He contends that the

stipulation regarding the use of Mr. Eiserman was reached with The Bar before

there was any discussion with Mr. Eiserman on the subject of what his fee

requirements might be.

This conclusion is fully supported by Mr. Eiserman’s corroborating affidavit

testimony which established that the first time his fee requirements were ever

identified came during a June 16, 2011 meeting with Respondent’s counsel in

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Eiserman’s office. During that June 16th meeting, Mr. Eiserman explained he

would require a $10,000.00 upfront retainer, and that his hourly rate was $325.00.

Other hourly rates would apply for other accountants on his staff and other

members of his firm’s support staff. Johnson would be required to replenish the

retainer on a monthly basis based on the unknown number of hours incurred by

unknown numbers of accountants and support staff in performing an undetermined

amount of work in the anticipated receivership during the indeterminate period of

the suspension. During the June 16th meeting, Respondent’s counsel candidly

informed Mr. Eiserman that since all of Johnson’s operating accounts were frozen,

his finances were almost an insurmountable issue to his ability to retain Eiserman.

Johnson also expressed that he did not have the funds to pay the initial retainer,

much less the funds needed to pay Mr. Eiserman and his team of accountants and

support staff over an indefinite and open-ended time period.

On June 24, 2011, Johnson promptly advised TFB by motion that he could

not pay Mr. Eiserman’s quoted receivership fees without an agreement that such

fees and costs to be paid out of Johnson’s frozen accounts. TFB opposed using

funds in Johnson’s frozen operating accounts to satisfy Mr. Eiserman’s retainer

and professional fees and communicated its position to respondent’s counsel and

also to Mr. Eiserman. Johnson next alerted the Florida Supreme Court of his

inability to pay Eiserman and his request for a release of operating funds on July

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11, 2011, a few days before the Court issued its July 14, 2011 order appointing

Mr. Eiserman as the Receiver. The Florida Supreme Court later denied Johnson’s

motion.

Johnson’s position is that his failure to retain the services of Mr. Eiserman

and his firm cannot properly be found to be an act of willful contempt when he

lacked the necessary funds to commit to that seemingly monumental undertaking.

TFB appears to at least tacitly acknowledge that Mr. Johnson may have lacked the

financial wherewithal to retain Mr. Eiserman and his firm in June and July, 2011.

However, it maintains he willfully violated the July 14, 2011 order by not retaining

Eiserman after receiving payment for the sale and transfer of his debt-management

clients in August, 2011.

In fact, the evidence shows that Johnson received over $391,000.00 between

August and October, 2011. TFB’s auditor, Mathew Herdeker analyzed numerous

wire transfers to Johnson’s personal account at Bank of America from August

2011 through October 2011. The wire transfers totaled $392,382.80 and were

received by Johnson after appointment of the receiver. During the same period,

debits in the account totaled $216,933.32. According to Mr. Herdeker, respondent

also received deposits totaling $207,946.52 from November 15, 2011 through

February 13, 2012 into another personal account, at M & I Bank.

In his review and analysis of respondent’s bank statements, Mr. Herdeker

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also identified personal uses from the $392,382.80 transferred into respondent’s

personal account at Bank of America between August 2011 and October 2011.

The uses included numerous cash withdrawals and payments for automobiles,

restaurants and stores.

On August 5, 2011, Johnson received an advance of approximately

$50,000.00 from the sale, which he contends he, in turn, then applied to cover the

cost associated with complying with Bar Rule 4-1.17 (Sale of Law Practice) and

notifying his thousands of debt-clients that he was suspended from the practice of

law. The evidence is undisputed that he continued to receive 6 more payments,

one about every two weeks, the smallest being $15,000 and the final and largest

payment received on October 17, 2011, for $167,382.80.

Johnson testified that he continued to incur debt following the emergency

suspension as he continued to incur personal and firm related financial obligations.

Johnson testified that he borrowed money from friends and family during the

summer of 2011 to support his wife and children, ex-wife, mother, 3 houses, and

their corresponding living expenses. In addition, he funded the substantial costs of

hiring experts and counsel to save his license to practice law. He also funded the

rent, salaries and other business expenses necessary to operate his law practice and

debt management/settlement companies while he wound them down. With his

accounts and fee income frozen, it is little wonder that he rapidly depleted his

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savings and reserves. By August, 2011, these significant financial obligations

greatly exceeded his ability to pay.

Fortunately, Johnson did receive some income in August, 2011. Rodger

Moss, Jr., a fellow member of The Florida Bar, testifying by deposition, he assisted

with the sale of Johnson’s 13,000 debt management and debt settlement cases.

From August 2011 through January 2012, well after the Court appointed the

receiver on July 14, 2011, Mr. Moss transferred the approximately $391,000.00

sales proceeds to Johnson’s personal account at Bank of America, an account not

frozen by these proceedings. See TFB Exhibits 1; 14; 22; and 32.

Not surprisingly, these funds were quickly depleted and respondent failed to

use any of the funds to retain the services of the receiver. Instead, he elected to

repay the loans from friends and family from the funds he received from the sale of

his practice. Right or wrong, Johnson had a choice and he consciously made it.

Johnson contends that he simply did not have the funds to retain Mr. Eiserman to

undertake a Rule 5 compliance audit of thousands of debt clients and still meet his

other personal, business and professional obligations. That is regrettably true. But,

the clear evidence in the record shows that Johnson received more than sufficient

income to retain Mr. Eiserman but chose instead to pay that income to other,

perhaps more worthy or needy recipients.

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IV. RECOMMENDATIONS AS TO GUILT.

This referee makes the following recommendations as to guilt or innocence:

Johnson is guilty of violating the orders entered by The Florida Supreme Court on

April 11, 2011 and July 14, 2011. I recommend that Johnson be found in contempt

of court for his violations of the provisions set forth in the Court’s order dated

April 11, 2011 in Case Number SC11-1578 and order dated July 14, 2011 in Case

Number SC11-2343.

V. STANDARDS FOR IMPOSING LAWYER SANCTIONS

I have considered the following Standards prior to recommending discipline:

3.0 Generally

In imposing a sanction after a finding of lawyer misconduct, a court should

consider the following factors:

(a) the duty violated;

(b) the lawyer’s mental state;

(c) the potential or actual injury caused by the lawyer’s misconduct;

and

(d) the existence of aggravating or mitigating factors.

7.0 Violations of Other Duties Owed as a Professional

7.1 Disbarment is appropriate when a lawyer intentionally engages in

conduct that is a violation of a duty owed as a professional with the intent to obtain

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a benefit for the lawyer or another, and causes serious or potentially serious injury

to a client, the public, or the legal system.

7.2 Suspension is appropriate when a lawyer knowingly engages in conduct

that is a violation of a duty owed as a professional and causes injury or potential

injury to a client, the public, or the legal system.

8.0 Prior Discipline Orders

8.1 8.1 Disbarment is appropriate when a lawyer:

(a) Intentionally violates the terms of a prior disciplinary order and such

violation causes injury to a client, the public, the legal system, or the profession; or

(b) has been suspended for the same or similar misconduct, and intentionally

engages in further similar acts of misconduct.

Aggravating Factors:

9.22 (c) pattern of misconduct;

(d) multiple offenses.

In aggravation, this referee finds that Johnson’s continued disbursements

and withdrawals contrary to the provisions of the April 11, 2011 order and without

the approval of the Court were knowingly and repeatedly made. These violations

continued for four months after the entry of the order, resulting is several hundred

improper disbursements from those accounts. The evidence shows that Johnson’s

continuous disbursements in the debt management accounts and his delay in

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notifying his debt management and debt settlement clients of his suspension were

knowing and intentional decisions made with full knowledge that such acts

constituted a violation of the court’s emergency suspension order. No evidence

was presented that such disbursements injured or harmed any client or the public.

To the contrary, the only evidence concerning such disbursements showed that

some individual clients and their corresponding creditors unquestionably benefitted

by such disbursements. Nevertheless, such disbursements were knowing violations

of the court’s emergency suspension order and injury to the court and to the legal

system by such noncompliance can be presumed.

Also in aggravation, this referee finds respondent’s clear violation of the

court’s order appointing the receiver on July 14, 2011 can be presumed to cause

injury to the legal system and the profession. The evidence did not show any

specific or unique injury to any client or the public generally. The record shows

that Johnson received nearly $500,000.00 between August 2011 and February

2012, yet made no effort whatsoever to use any of the funds to retain the services

of the receiver. His conduct in this regard was knowing and not inadvertent. An

attorney may not simply ignore an order of the court, no matter how genuinely he

may disagree with it.

Mitigating Factors:

9.32(a) Absence of a prior disciplinary record

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The Respondent has no prior disciplinary record that predates the

investigation into his trust account practices. All the disciplinary litigation to date,

including these contempt charges, has stemmed from his trust account

mismanagement, and the freezing of his operating and trust accounts pursuant to an

emergency suspension order.

9.32(b) Absence of a dishonest or selfish motive

Johnson’s violation of the two disciplinary orders was not driven or

accompanied by dishonest or selfish motive. To the contrary, he faced a difficult

choice between protecting his debt management clients and preserving his license

to practice law. A choice of his own making, perhaps, but a difficult choice

nonetheless. He chose the former at the expense of the latter. He believed this to

be the correct moral choice and this referee finds that his belief in the moral

correctness of his decision to be a genuine one. There’s something to be said in our

profession for the redemption of an attorney that prefers his client’s best interest

over his own.

No evidence was offered by TFB to show that any client or the public was

harmed by Johnson’s disbursements from his trust and operating accounts in

violation of the emergency suspension order. Some clients and some creditors no

doubt benefitted by the transfers. And, no evidence was introduced to show that

Johnson benefitted from such transfers. Clearly, he didn’t. He hasn’t taken a single

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fee since his accounts were frozen over 16 months ago. If any of the clients have

been harmed, it has been due to the freezing of the accounts necessitated by these

proceedings.

9.32(e) Full and free disclosure to disciplinary board or cooperative attitude

toward proceedings

It fully appears that the Respondent has been cooperative and forthcoming.

9.32(f) Inexperience in the practice of law

Mr. Johnson was not an experienced lawyer having practiced law for only 6-

7 years. However, most of his disciplinary issues relate to his debt management

business and the incorporation of that business into his more traditional legal

representations. He was particularly inexperienced in the field of debt

management—having actively practiced in that area for only 1 or 2 years at the

time The Bar commenced its investigation. Respondent’s inexperience

undoubtedly played a role in his well-intended but ill-fated decision to place his

debt management business under the umbrella of his traditional law practice. He

made many of the mistakes typical of a new lawyer, hiring inexperienced staff,

giving great discretion to staff, failing to properly supervise staff and neglecting

the administrative duties inherent in running a successful law office. His

inexperience also played a significant role in his resulting inability to manage the

significantly larger client volume associated with his new line of practice. As a

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result, Johnson is particularly suited to and would likely benefit from mentored

supervision of his practice.

9.32(k) Character or reputation

I find from the uncontested evidence that the Respondent is of the highest

moral character and reputation in his community. Respondent previously submitted

evidence considered by this referee regarding his character and reputation in the

community as well as the legal community. Thus, respondent’s character is a

mitigating factor.

9.32(l) Remorse

I find that Johnson is genuinely remorseful at violating the prior disciplinary

orders of the court. As fully expressed in this report, Johnson attempted to make

his clients’ best interests his polestar for navigating his post-suspension actions.

He deserves credit for that. He knowingly violated the emergency suspension

order and placed his own self interest at risk in order to act in a way he genuinely

believed to be in his clients’ best interests.

VI. CASE LAW

I reviewed the authorities cited by each side and concluded my own research

on the issues. I have considered the following principles of law and holdings prior

to recommending discipline:

The practice of law is a privilege, not a right. The conditional privilege to

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practice law affirmatively includes an attorney’s obligation to uphold the high

ethical standards of the legal profession. “Lawyers are officers of the Court and

members of the third branch of government. That unique and enviable position

carries with it commensurate responsibilities” (See The Florida Bar v. Levine, 498

So. 2d 941, 942 (Fla. 1986)); conditions (See The Florida Bar v. Massfeller, 170

So. 2d 834, 839 (Fla. 1964)); and special burdens (See State v. Fishkind, 107 So.

2d 131, 132 (Fla. 1958)).

The Supreme Court of Florida has long held that “[i]t is essential to the well-

being of the profession that every lawyer square his personal and professional

conduct by the precepts of the Code of Ethics.” Dodd v. The Florida Bar, 118 So.

2d 17, 21 (Fla. 1960). In fact, the Court stated in The Florida Bar v. Bennett, 276

So. 2d 481 (Fla. 1973):

Some may consider it ‘unfortunate’ that attorneys can seldom cast off completely the mantle they enjoy in the profession and simply act with simple business acumen and not be held responsible under the high standards of our profession. It is not often, if ever, that this is the case. In a sense, ‘an attorney is an attorney is an attorney’, much as the military officer remains ‘an officer and a gentleman’ at all times. We do not mean to say that lawyers are to be deprived of business opportunities; in fact we have expressly said to the contrary on occasion; but we do point out that the requirement of remaining above suspicion, as Caesar's wife, is a fact of life for attorneys. They must be on guard and act accordingly, to avoid tarnishing the professional image or damaging the public which may rely upon their professional standing. Id. at 482.

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In The Florida Bar v. Forrester, 916 So. 2d 647 (Fla. 2005), the Court

clarified that contempt in Bar matters serves the purpose of vindicating the

authority of The Florida Supreme Court. It is the Court’s authority that governs all

lawyers, and members who do not comply with that authority must be punished.

Moreover, the purpose of contempt in Bar proceedings is not actually remedial or

to coerce compliance, the way it would be in the traditional sense if you were in a

civil or criminal case.

The Court further held in Forrester that when there are no admissions by the

attorney, the intent to violate can be established by circumstantial evidence. In

contempt proceedings the standard of proof is clear and convincing evidence.

In The Florida Bar v. Adorno, 60 So. 3d 1016, 1018 (Fla. 2011), the Court

held that based on the increasing numbers of attorneys it is the Court’s top priority

to ensure that all attorneys strictly follow the boundaries set forth in The Rules

Regulating The Florida Bar. The Court specifically referenced its prior holdings as

well as the preface to the Florida Standards for Imposing Lawyer Sanctions when it

held that in order to establish intent there must only be a showing that the conduct

was deliberate or knowing. An attorney’s motive is not the determining factor.

The Court also reaffirmed its position that when considering the imposition of

discipline the sanction must be severe enough to deter other attorneys who might

attempt to engage in similar conduct.

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In The Florida Bar v. Herman, 8 So. 3d 1100, 1108 (Fla. 2009), quoting The

Florida Bar v. Rotstein, 835 So. 2d 241, 246 (Fla. 2003) the Court stated “this

Court ‘has moved towards stronger sanctions for attorney misconduct’ in recent

years.”

In The Florida Bar v. Jackson, 494 So. 2d 206 (Fla. 1986), the Court held

that an attorney's intentional defiance of a trial court’s order to appear in court on a

religious holiday was not justified as a good-faith test of the validity of that order

based on the attorney’s belief that the order was an unconstitutional infringement

on his First Amendment rights, where the attorney originally told the court that he

had no objection to setting the trial within that time period, but informed the court

only days before he was to appear at trial that he would not obey the order, and

then disobeyed the order. The Court stated as follows:

If in fact Jackson sincerely believed the trial court's order was an unconstitutional infringement on his first amendment rights, considering the untimeliness of his motion to stay the proceedings and the complexity of the case, this belief was unreasonable. Under the circumstances, we cannot conclude that Jackson's intentional defiance of the trial court's order to appear was a good faith test of the validity of that ruling. To hold otherwise would extend this exception to all cases in which a recalcitrant attorney claims a sincere belief in the invalidity of a ruling, regardless of the reasonableness of that belief. Id. at 209-210.

In The Florida Bar v. Rubin, 549 So.2d 1000 (Fla. 1989), the Court held that

an attorney's refusal to follow an undisturbed court order to proceed to trial at

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which client perjury is feared is punishable as direct contempt. The Bar contended

that Rubin had no right to refuse to obey a lawful court order and that such refusal,

in effect, constitutes a per se ethics violation. The Court stated as follows:

An attorney is not permitted to ignore and refuse to follow a court order based upon his personal belief in the invalidity of that order. To countenance that course is to court pandemonium and a breakdown of the judicial system. As this Court recently noted, if an attorney doubts the validity of court orders, “his option [is] to challenge them legally rather than to ignore them.... [H]e is obligated to obey [court orders] until such time as they are properly and successfully challenged.” The Fla. Bar v. Wishart, 543 So.2d 1250, 1252 (Fla.1989) (emphasis added). To hold otherwise would be to give any attorney claiming a sincere belief in the invalidity of an order carte blanche to disregard that order. See The Fla. Bar v. Jackson, 494 So.2d 206 (Fla.1986). Such a situation would be intolerable. Rubin at 1003.

In The Florida Bar v. Masters, Case No. SC11-961, by order dated May 24,

2012 (no opinion), an attorney was permanently disbarred after violating the

Court’s order dated September 14, 2010, by failing to notify his clients, opposing

counsel and tribunals of his disbarment and by failing to provide The Florida Bar

within 30 days of his disbarment a sworn affidavit listing the names and addresses

of all persons and entities that were furnished a copy of his disbarment order.

Respondent stipulated that he had not complied with Rule 3-5.1(g).

The Court held in The Florida Bar v. Ross, 732 So.2d 1037 (Fla. 1998) that

it has continuing jurisdiction over attorneys who may be suspended from the

practice of law. The Court affirmed its position that an attorney stands in contempt

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of court when the attorney is subject to a disciplinary order and subsequently

violates the order. The Court further held that it consistently has imposed

additional sanctions on an already suspended attorney for violations of a

disciplinary order. This also included the failure to file the required affidavit

regarding notice to the clients of the attorney’s suspension.

I am particularly mindful that disbarment is the presumptive sanction for

knowing violation of the court’s orders, particularly disciplinary orders. In The

Florida Bar v. Lobasz, 64 So. 3d 1167 (Fla. 2011), an attorney was disbarred for

contempt after violating the Court’s order of suspension by representing a former

client at an immigration hearing. The lawyer not only attended the hearing but

actively presented argument and testimony to the tribunal. The referee found the

respondent guilty of contempt but recommended a 3 year suspension. The court

overruled that recommendation and imposed the presumptive sanction of

disbarment. The court imposed the greater sanction because the evidence showed

that the attorney’s conduct at the hearing was not isolated but he continued to

actively practice law for more than a year after his suspension. The Court stated as

follows:

“In contempt cases, a respondent's “[c]lear violation of any order or disciplinary status that denies an attorney the license to practice law generally is punishable by disbarment, absent strong extenuating factors.” Fla. Bar v. Brown, 635 So. 2d 13, 13-14 (Fla.1994). Lobasz violated the Court's order of suspension and, consequently, we find him in contempt. Thus,

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the presumptively correct sanction in this case is disbarment unless there are strong extenuating factors. Brown; see also Fla. Bar v. Bitterman, 33 So.3d 686, 688 (Fla.2010) (holding suspended attorney in contempt for engaging in the practice of law and disbarred); Fla. Bar v. D'Ambrosio, 25 So. 3d 1209, 1220 (Fla.2009) (same); Fla. Bar v. Heptner, 887 So. 2d 1036, 1045 (Fla.2004) (same). Lobasz at 1172.”

The Court in The Florida Bar v. Simring, 612 So. 2d 561 (Fla. 1993), found

that a suspended attorney’s conduct involving the use of his law firm’s stationery

without any designation regarding his suspension constituted violations of the

Court’s emergency suspension order. In addition, the suspended attorney still had

his law firm sign on his office door, also without any designation regarding his

suspension. More relevant to the sanction, the suspended attorney continued to

knowingly and intentionally misappropriate client funds long after his suspension,

demonstrating “an attitude that is a danger to the public and the legal profession.”

Accordingly, the Court determined that disbarment was the appropriate sanction.

When determining the appropriate discipline, one principal that must guide

our selection is that the sanction “must be fair to the respondent, being sufficient to

punish a breach of ethics and at the same time encourage reformation and

rehabilitation.” Id. at 570. Disbarment, by its very nature, does little to promote

reformation and rehabilitation in the disbarred lawyer. For that reason, “the

extreme sanction of disbarment is to be imposed only ‘in those rare cases where

rehabilitation is highly improbable;” Florida Bar v. Schiller, 537 So.2d 992

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(Fla.1989) (misusing client funds warranted a three year suspension where clients

were not injured and attorney was “genuinely remorseful” and a good candidate for

rehabilitation); and Florida Bar v. Hartman, 519 So.2d 606, 608 (Fla.1988).

Where violations by younger, less experienced lawyers occur without selfish

or improper motive, suspension may be a more appropriate sanction. Suspension

with probation punishes the violation, protects the public from unethical conduct,

and, at the same time, does not deny the public the services of an otherwise

qualified and compassionate lawyer. Suspension combined with probation also

encourages rehabilitation of a relatively young lawyer with many years of client

and public service in his future. See, Florida Bar v. Kassier, 711 So.2d 515, 517

(Fla.1998).

This referee reviewed and considered the issue of an attorney’s ability to pay

as it specifically pertained to these contempt proceedings. Surprisingly, this

referee could find no cases addressing the ability to pay as a defense to contempt

proceedings filed pursuant to Rules 3-7.7(g) and 3-7.11(f) of The Rules Regulating

The Florida Bar. Nor did counsel for either party direct the referee to any specific

cases addressing this issue. I did review several cases involving the unlicensed

practice of law and contempt proceedings. In those cases, including The Florida

Bar v. Walker, 2011 WL 2027964 (Fla. 2011) and The Florida Bar v. Harris, 985

So.2d 1092 (Fla. 2008), the court declined to hold a respondent in contempt for

34

failing to pay a monetary penalty where the respondent demonstrated an inability

to pay. However, the contempt proceedings in unlicensed practice of law matters

are filed pursuant to Rule 3.840, Fla. R. Crim. P. and Rule 10-7.2 and a similar

requirement of ability to comply with an order does not appear applicable to these

proceedings.

VII. RECOMMENDATION AS TO DISCIPLINARY MEASURES TO BE APPLIED I recognize that disbarment is usually the appropriate sanction for an

attorney’s intentional violation of the court’s orders particularly where, like here,

the orders relate to a suspension and the attorney intentionally continues the same

or similar conduct after the suspension. Section 8.1(b), Florida Standard for

Imposing Lawyer Sanctions. However, after hearing a total of 13 days of

combined testimony in 3 separate matters involving Johnson, I find suspension and

not disbarment would be the appropriate sanction based on application of the

aggravation and mitigation factor to be considered in such matters.

I arrive at this conclusion for 2 simple reasons. First, disbarment is the most

severe remedy, only to be applied when all hope of reformation and rehabilitation

has vanished. I do not believe that is the case here. Johnson is a relatively young

and certainly inexperienced lawyer. He made obvious mistakes typical of new

lawyers. He gave his staff broad discretion, provided too little supervision and put

35

his trust in those that didn’t deserve it. He tended to his clients’ legal matters and

neglected important but administrative aspects of the practice, like balancing the

trust accounts. Unquestionably, he violated the court’s orders following his

emergency suspension by disbursing from the debt management accounts. But he

did so for the right reasons (if that’s possible), e.g. because it protected his clients.

He didn’t do it because it benefitted him in any way. To the contrary, he chose to

protect his clients’ rights and sacrifice his own. A lawyer that shows this level of

commitment to his clients shows the promise of reformation and rehabilitations.

Clearly, he should have followed the court’s orders and pursued other means of

protecting his clients’ rights in compliance with the court and not in opposition to

it. But, his instincts to protect the rights of his clients even at the expense of his

own, deserves mention and consideration.

Johnson also violated the court’s order appointing the receiver by not paying

the receiver. The evidence shows that Johnson had a financially successful

practice before these proceedings. Unfortunately for Johnson, the significant

income generated by his practice was almost matched by his significant and

continuing financial obligations. When accounts were frozen and his fee income

was cut off, his savings were quickly depleted. As a result, Johnson did not have

the financial ability to retain the receiver at the time of the appointment. He did try

to bring his inability to pay to the attention of the court and this referee without

36

success, first on June 24, 2011 and then again after the receiver was appointed.

Undoubtedly, he did receive income thereafter, but it was quickly depleted to pay

other obligations. Ironically, it appears that more than ample fee income is being

held in the frozen accounts that could be used to fund the receiver. Johnson has

taken no fee income since the emergency suspension order. The sanction of

suspension combined with probation seem best suited to punish this

noncompliance while, at the same time, insuring future compliance with this

court’s orders and funding of the receiver.

Here, suspension best protects the public from future unethical conduct, and,

at the same time, does not deny the public the services of an otherwise qualified

and compassionate lawyer. Suspension combined with probation also encourages

rehabilitation of a relatively young lawyer with many years of client and public

service in his future.

The second reason why I recommend suspension over disbarment stems

from the practicalities of the current circumstances. The best interests of the clients

and the public would be served by a proper and timely distribution of the money in

the frozen accounts. Someone has to oversee the disbursements and, more

importantly, be accountable for the proper management and handling of such

disbursements. Clearly, Respondent is in the best position to do this under proper

37

supervision. Accordingly, I find and recommend a 12 month suspension combined

with the following additional conditions of reinstatement:

A. Respondent shall be placed on probation for three year as a condition

of reinstatement and subject to continued and regular audits by TFB. This

probation would be contingent on Respondent’s full cooperation in such audits and

require Respondent to promptly provide all records or documents required by TFB

to assess Respondent’s complete and continued compliance with The Rules

Regulating The Florida Bar concerning trust accounts.

B. The appointed receiver would, at Respondent’s sole cost, immediately

and periodically thereafter complete a full “Rule 5” audit and report to TFB

concerning the status of all Johnson Law Group trust and operating accounts as

well as all debt management or debt settlement trust or operating accounts

managed by Respondent during the probationary period. The ongoing expense of

such audits may be paid in part from fee income held in frozen accounts and

determined by such audit to be immediately due and payable to Respondent.

C. The Respondent, Mr. Johnson would be required to successfully

complete a law office management program offered by the Florida Bar, through

LOMAS.

D. The Respondent, Mr. Johnson would be required to successfully

attend and complete a trust accounting course acceptable to The Florida Bar.

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E. The Respondent, Mr. Johnson would be required to successfully

attend and complete an ethics course approved by The Florida Bar.

F. Additionally, as a special condition of probation, The Respondent,

Mr. Johnson, would practice under the supervision of a mentor. The mentor would

be responsible for providing periodic reports on a quarterly basis to The Bar during

the period of probation.

G. Payment of disciplinary costs in these proceedings.

VIII. PERSONAL HISTORY, PAST DISCIPLINARY RECORD

Prior to recommending discipline pursuant to Rule 3-7.6(k)(1), I considered

the following:

A. Personal History of Respondent:

Age: 40

Date admitted to the Bar: September 18, 2003

Prior disciplinary convictions and disciplinary measures

imposed therein: In The Florida Bar v. Clint Johnson, SC11-622 [TFB Case No.

2011-31,008(09B)(CES)] respondent was emergency suspended for

misappropriating client funds and failure to comply with the rules regarding trust

accounts.

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IX. STATEMENT OF COSTS AND MANNER IN WHICH COSTS SHOULD BE TAXED

I find the following costs were reasonably incurred by The Florida Bar in the

consolidated matters:

Copy Costs $1,107.20 Administrative Fee $1,250.00 Investigative and Audit Costs $7, 096.00 Court Reporters' Fees $2,682.45 Court Call Fee $55.00 Bar Counsel Costs $1,024.64 Witness Costs $5,327.15

TOTAL $18,542.44

It is recommended that such costs be charged to respondent and that interest

at the statutory rate shall accrue and be deemed delinquent 30 days after the

judgment in this case becomes final unless paid in full or otherwise deferred by the

Board of Governors of The Florida Bar.

Dated this 15th day of August, 2012.

_________________________________ TERENCE ROBERT PERKINS Referee

Original to The Supreme Court of Florida

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COPIES TO: Patricia Ann Toro Savitz and Frances R. Brown-Lewis, The Florida Bar, 1000 Legion Place, Suite 1625, Orlando, Florida 32801-5200; Thomas Devlin Sommerville, Counsel for Respondent, at Muller & Sommerville, P. A., Post Office Box 2128, Winter Park, Florida 32790-2128; Kenneth Lawrence Marvin, Staff Counsel, The Florida Bar, 651 E. Jefferson Street, Tallahassee, Florida 32399-2300 this 15th day of August, 2012. __________________________ Judicial Assistant/Deputy Clerk

Thomas Devlin Sommerville Muller & Sommerville, P. A., PO Box 2128 Winter Park, FL 32790-2128

Kenneth Lawrence Marvin, Staff Counsel The Florida Bar 651 E. Jefferson St Tallahassee, FL 32399-2300

Patricia Ann Toro Savitz Frances R. Brown-Lewis The Florida Bar 1000 Legion Place, Ste 1625 Orlando, FL 32801-1050