California Bar Journal
OFFICIAL PUBLICATION OF THE STATE BAR OF CALIFORNIA - JANUARY 2000
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California Bar Journal

The State Bar of California


REGULARS

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Front Page - January 2000
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News Briefs
Former Unruh aide appointed to serve on State Bar board
Ardaiz, O'Leary named jurists of the year for '99
Judicial Administration fellowships
Public law section online library
Board meets Feb. 4-5
51.2 percent pass July '99 bar exam
Board hires search firm for new bar chief
Litigation section offers MCLE week in legal London
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Trials Digest
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From the President - Reciprocity reform: The future is now
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Opinion
For most Americans, our system is a failure
Ethics 2000: On target, or lost in space
Letters to the Editor
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Public Comment
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MCLE Self-Study
Of Counsel: Avoiding Conflicts
Self-Assessment Test
MCLE Calendar of Events
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Important Information About Your 2000 Membership Fee
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You Need to Know
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Appointments
Apply to serve on a bar committee
Bar seeks applicants for ABA delegates
Judge evaluation positions open
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Discipline
Ethics Byte - Warding off the foul tort in a new year
Bankruptcy attorney disbarred after abandoning clients
Attorney Discipline

DISCIPLINE

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Bankruptcy attorney disbarred after abandoning clients
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A Riverside bankruptcy attorney who was accused of abandoning clients, including four who lost their homes, was disbarred by the Supreme Court Nov. 4. CAROLE ANN GEARHART [#102694], 45, lost her license to practice after State Bar Court Judge Carlos E. Velarde found that she committed misconduct in 38 different matters.

Accusing Gearhart of “deplorable conduct,” Velarde said she preyed on vulnerable clients who faced serious financial problems and caused them even more difficulty by “wholesale abandonment” of their cases. Further, Velarde said, Gearhart offered no explanation for her behavior.

In his ruling, the judge ticked off the results of Gearhart’s misdeeds:

Four clients lost their homes to foreclosure.

Four bankruptcies were dismissed and a fifth was dismissed three times.

Seven clients were forced to hire new attorneys; one dipped into his retirement fund to pay a new lawyer and another sold personal items to pay his legal fees. Two clients could not afford new counsel.

Four clients had interest or penalties added to mortgage, credit card or IRS payments.

At least seven continued to be harassed by creditors, and the bank accounts or earnings of two clients were levied by creditors.

Velarde found that Gearhart repeatedly failed to perform legal services or communicate with her clients. She also collected $52,561 from her clients, but only refunded $1,235 in advanced unearned fees and costs.

Caught in bar shutdown

Gearhart’s case was one of those caught in the shutdown of the bar’s discipline system in 1998. Prosecutor Jan Oehrle said with almost no staff, the bar was unable to investigate the case, but the Riverside County Bar Association and the bankruptcy court were instrumental in providing information which allowed the bar to proceed.

“The Riverside bar did the groundwork the State Bar otherwise would have done.” Oehrle said. “They were very very helpful at a time when we didn’t have any help.

“The bankruptcy trustee kept us informed as to what court was doing. Together, they were able to provide us with information in the form we could use.”

One of the charges against Gearhart involved a couple who responded to her radio advertise-ment about debt consolidation. The couple met with a non-attorney in Gearhart’s office who suggested they file a Chapter 7 bankruptcy. The couple paid $1,270 in advanced fees and $175 in costs to do so.

Calls spurned

Two months later, they called Gearhart to inquire about the bankruptcy. They then received a letter directing them not to call the office because of its heavy caseload; however, they could leave a message if their concern was urgent.

The couple left several messages which were not returned. A year later, they learned their documents had not been finalized for filing with the court.

Their request for a refund was ignored.

Another client retained Gearhart to file a Chapter 13 bankruptcy, paying her about $2,840 in fees and costs.

The court dismissed the petition because it was improperly filed and contained perjurious statements, and referred the case to the district attorney for prosecution. The client was prohibited from filing a new petition for 180 days.

When Gearhart filed another petition, the client was ordered to make Chapter 13 payments to Gearhart, who was to forward them to the bankruptcy trustee. The client made the payments, Gearhart never forwarded them, and the case was dismissed.

Several months later, Gearhart filed a third petition, the client was again ordered to make payments to Gearhart, who again did not forward them to the trustee. The court dismissed that petition and the client lost his home in a foreclosure action.

In that matter, the court ordered Gearhart to refund fees to her client, but she did not do so.

Significant personal losses

Another couple lost both their home and car when Gearhart failed to file a bankruptcy petition.

Yet another client received an eviction notice after her bankruptcy petition was dismissed without her knowledge. The petition contained incorrect information and false statements.

Gearhart’s “misconduct was surrounded or followed by bad faith, dishonesty, concealment, overreach-ing or other violations of the ethical rules,” Velarde wrote.

“She offered no explanation for her behavior or indication of rehabilitation.”

Gearhart was ordered to comply with rule 955 of the California Rules of Court as part of the disbarment.