|An attorney who used his client's assets to invest more than $500,000 in
ventures in which he had a financial interest was disbarred in June. The client did not
know about the investments, which included a horse farm in Tennessee and land in Hawaii,
nor was her name included in the title. PAUL DUANE PRIAMOS [#47076], 56, of Cerritos was
disbarred June 12, 1998, and was ordered to comply with rule 955.
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
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
He did not give the client an opportunity to seek independent review of the agreement.
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
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
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
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).
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
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.