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 Gearharts
Four clients lost their homes to
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
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
Gearharts case was one of those caught in the shutdown of the
bars 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
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
didnt 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 Gearharts office who suggested they file a Chapter 7 bankruptcy. The couple paid
$1,270 in advanced fees and $175 in costs to do so.
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.
Gearharts misconduct was surrounded or followed by bad
faith, dishonesty, concealment, overreach-ing or other violations of the ethical rules,
She offered no explanation for her behavior or indication of
Gearhart was ordered to comply with rule 955 of the California Rules
of Court as part of the disbarment.