REGULARS

DISCIPLINE

The review department upheld a State Bar Court hearing judge's recommendation that Priamos be disbarred as a result of mishandling about half of his client's $2.1 million in assets. The California Supreme Court denied his petition for review.

Priamos began to manage investments for his client, Mary C., in 1980, after he represented her in a divorce. He was aware that Mary suffered from bouts of manic depression, some severe enough to require hospitalization. During one of these episodes, she signed a general power of attorney giving Priamos broad authority in buying and selling any property for her.

Between 1981 and 1988, Priamos handled about $2.1 million of Mary C.'s funds. However, the bar court found that his investments of more than $500,000 were in speculative ventures in which he had a financial interest which he did not disclose to Mary.

He also did not tell her about the investments themselves or obtain her consent. Some of the invest-ments were not in his client's name, and Priamos never responded to her request for an accounting.

In addition, he paid himself attorney and management fees of about $450,000 from Mary C.'s funds.

Priamos created a partnership with Mary C. for the purpose of making investments. He used the general power of attorney as authority to sign the partnership agreement on the client's behalf. The agreement called for an even division of profits and losses and gave Priamos the power to make investment decisions and receive a "reasonable" hourly fee.

He did not give the client an opportunity to seek independent review of the agreement.

Elaborate investments

Among the partnership investments Priamos made were a horse farm in Tennessee, 13 horses, undeveloped land in Molokai, and land in Nevada.

Title to the farm was held only in the names of Priamos and his wife, even though $104,000 of Mary's funds were used for the down payment and extinguishment of a second mortgage.

Priamos issued unsecured promissory notes to Mary C., promising to repay the money in five years with 10 percent interest.

When Priamos was divorced, the horse farm went to his wife, who sold it for $245,000, according to Priamos' testimony.

Priamos also used $353,875 of Mary C.'s money to buy 13 horses for the partnership. Neither Mary nor the partnership were listed as owners, however. Priamos testified that he did not list Mary C.'s name in order to protect her from liability under federal law concerning protection for horses. Neither the State Bar Court nor the review department found his testimony credible.

Priamos also used $26,000 of Mary's funds, and some of his own money, to buy undeveloped property on Molokai for the partnership. Neither Mary nor the partnership was named in the title, and the property was later sold at a profit.

Priamos also excluded the partnership and Mary from title to a Nevada property he bought using $10,000 of her funds. After Priamos was divorced, title to that property was held by him and his brother.

Tip from newspaper

Mary C. became concerned about her investments and assets when she read in the newspaper that her property taxes were delinquent. She and her son attempted to obtain an accounting from Priamos but they were largely unsuccessful. Only when they located an accountant for the partnership did they learn of the existence of the partnership and the investments.

The client sued Priamos for fraud and breach of fiduciary duty. Priamos declared bankruptcy and listed Mary C. as an unsecured creditor with a $1 million claim.

In 1995, after Priamos failed to satisfy an earlier bankruptcy court order that he pay the client $500,000, a bankruptcy judge ruled that Mary C.'s claim was a non-dischargeable debt.

Although Priamos paid her $86,000 in 1989, he has not paid the $1 million judgment, and the client has not realized any of the value of the investments.

Priamos disputed the bar court's findings, but the review department said he failed to produce adequate records to support his position. The hearing judge also did not believe Priamos' explanation for excluding his client's name from title to the assets (he claimed she became upset when she had to sign financial documents).

Moral turpitude

The review department also found that Priamos committed acts of moral turpitude and violated basic fiduciary duties.

"From the very outset of his investment dealings with (his client) to his discharge seven years later, (Priamos) ignored his duties," wrote review Judge Ron Stovitz.

Priamos also was disciplined in 1995 for commingling and misappropriating $12,558 in trust funds he received in 1989 as counsel for the representative of a decedent's estate.