CBA Record

Special Issue l THE NEWYLS

beneficiaries of the estate, which was valued at approximately $700,000. Approximately six months after being appointed the independent administrator, Karavidas began withdrawing funds from the estate’s assets for his own personal use, which quickly became a pattern of Karavidas with- drawing and repaying funds from the estate’s assets. Karavidas ultimately made loans to him- self in the total amount of nearly $450,000. In 2006, Karavidas’s sister retained a lawyer to represent her and her mother, and sought to terminate the independent administration and remove him as execu- tor. The petition alleged that Karavidas had failed to provide an inventory or an accounting of his administration. The probate court terminated the indepen- dent administration of the estate, and Karavidas’s sister succeeded him as execu- tor. Following that, the ARDC initiated proceedings, and charged Karavidas in a one-count complaint, alleging that he engaged in conversion, breached his fiduciary duties, violated Illinois Rule of Professional Conduct 8.4(a)(4) by engag- ing in conduct involving dishonesty, fraud, deceit, or misrepresentation, violated IRPC 8.4(a)(5) by engaging in conduct prejudi- cial to the administration of justice, and violated Illinois Supreme Court Rule 770 by engaging in conduct which tends to defeat the administration of justice or to bring the courts of the legal profession into disrepute. The ARDC’s Hearing Board found against Karavidas on all charges, with the exception of finding that since Karavidas took no affirmative steps to con- ceal his dishonesty and because he repaid the amounts that he borrowed, Karavidas did not violate IRPC 8.4(a)(4). The Hear- ing Board recommended that Karavidas be suspended from the practice of law for four months. Both parties appealed to the Review Board, which reversed the Hearing Board’s decision, and recommended that the charges against Karavidas be dismissed in their entirety, because the Administra- tor did not prove by clear and convincing evidence that Karavidas had violated the Rules of Professional Conduct.

charitable trust for the benefit of St. Mark’s Roman Catholic Church and its associ- ated school in Peoria, Illinois. Edmonds agreed, and after the death of the testator in 2000, Edmonds became the trustee of the charitable trust. At that time, the trust was valued at approximately $3.36 million. Almost immediately, Edmonds began investing the trust’s assets in a Canadian energy company, and by February 2001 Edmonds had invested nearly all of the trust’s assets in that one company. In March 2003, the British Columbia Secu- rities Commission suspended trading of the company’s stock due to the company’s failure to file required documents. A subse- quent lawsuit, brought by another investor, rendered a $14 million judgment for the benefit of the trust. Thereafter, Edmonds took steps on behalf of the trust to settle the judgment for two $1 million payments. Despite the significant deterioration of the financial condition of the trust, Edmonds continued to make sporadic distributions to St. Mark’s, primarily by depositing his own personal funds into the trust account and then making distri- butions from the trust account. In 2005, St. Mark’s pastor and parish trustee met with Edmonds to discuss the trust assets. At that meeting, Edmonds explained that he had shifted the trust’s assets to oil and natural gas. Edmonds provided a report on the trust’s assets (the “August 2005 Report”), which stated that the trust held a 20% interest in the energy company and “various additional equity holdings.” The August 2005 Report also indicated that the value of the trust was approximately $3 million and that the health of the trust had not changed significantly since Sep- tember 2001. The August 2005 Report did not disclose that the energy company had failed to make payments pursuant to the forbearance agreement. Beginning in 2006, after the trust’s payments to the church became sporadic, the church began demanding more infor- mation about the trust’s assets and hold- ings, which Edmonds refused to provide. In September 2008, St. Mark’s filed suit

On appeal, the Supreme Court agreed with the Review Board. The Supreme Court found that while Karavidas did breach his fiduciary duties to the estate in a number of ways, “an attorney’s breach of fiduciary duty or conversion does not, standing alone, warrant the imposition of professional discipline.” Karavidas, at ¶ 78. The Supreme Court went on to say that “discipline for conduct occurring outside the attorney-client relationship should be limited to situations where the attorney’s conduct violates the Rules by demon- strating a lack of professional or personal honesty which renders him unworthy of public confidence.” In sum, “professional discipline may be imposed only upon a showing by clear and convincing evidence that the respondent attorney has violated one or more of the Rules of Professional Conduct. Mere bad behavior that does not violate one of the Rules is insufficient.” Karavidas, at ¶ 79. At the time Karavidas was issued, many considered it to be a departure from the Supreme Court’s earlier jurisprudence, including Justice Robert Thomas. As Jus- tice Thomas explained in his dissent, the Supreme Court had previously held in multiple cases that an attorney may be dis- ciplined for conduct not specifically prohib- ited by the Rules. Karavidas, at ¶ 107. The Court itself noted as much in the majority opinion, stating that “[t]o the extent that any of our prior cases suggest that an attorney may be subjected to professional discipline for conduct that is not prohibited by the Rules of Professional Conduct or defined as misconduct therein, we hereby reject such a suggestion.” Karavidas, at ¶ 103. In the wake of the Supreme Court’s shift, practitioners were left wondering how further jurisprudence would develop. Almost exactly one year later, on November 20, 2014, the Supreme Court issued its decision in Karavidas’s companion case, In re Edmonds. In re Edmonds In 1998, John P. Edmonds was asked to assist in rewriting a will and establishing a

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