Over a year ago, attorney Michael C. Hodes left the law firm he had founded 24 years earlier. Now, if the state’s highest court accepts allegations that have been filed against him, he could lose his law license.
Hodes allegedly took more than $270,000 from a deceased client’s trust account for his personal use when he was supposed to establish a charity with it, according to a petition filed by the Attorney Grievance Commission of Maryland.
The commission’s Office of Bar Counsel alleges Hodes eventually used most of the money to pay off bills, including about $100,000 worth of credit card bills.
According to Bar Counsel, Hodes and the woman who is now his wife frequently used the elderly client’s car and charged her for parking and speeding tickets they had received while driving the car. Hodes also wrote checks to his financial planning company from her account when she was not under contract to receive services from the company.
When his law firm discovered he had moved the funds, Hodes claimed the money was a loan, according to the petition.
Hodes did not respond to several requests for comment on Thursday. However, an attorney representing him in the matter said Hodes was following the wishes of his client.
“Michael Hodes is a very accomplished lawyer,” said the attorney, Andrew Jay Graham of Kramon & Graham P.A. in Baltimore. “He has been for 38 years. He has no history of disciplinary issues. He’s a great lawyer, and he was representing his client in the way she wanted him to represent her.”
The Attorney Grievance Commission’s petition for remedial action was filed Tuesday in the Court of Appeals. While each case is decided on its own merits, the court has often stated that the ordinary and usual sanction for serious misappropriation of client funds is disbarment.
Hodes has run his own firm, Michael Hodes LLC, since May 2012, when he left the firm he had helped found, Hodes, Pessin & Katz P.A.
According to the petition, Hodes left HPK after the firm discovered the financial discrepancy. The firm, now called Pessin Katz Law P.A., reported its findings to the Attorney Grievance Commission four days after Hodes left.
“The firm became aware of the information which it promptly looked into and then reported to Bar Counsel, and we have cooperated with Bar Counsel throughout its investigation,” PK Law attorney Steven A. Allen said in a statement Thursday.
Bar Counsel Glenn M. Grossman declined to comment on the ongoing case.
The alleged misconduct stems from Hodes’ long representation of Gloria S. Ominsky, a retired nurse, starting in 2005.
Ominsky executed a will in April 2009 that granted Hodes power of attorney to act on her behalf in transactions of real property, personal property, stocks and bonds and banking, as well as personal and family maintenance, the petition states.
When Ominsky died in February 2011, she had $400,000 in assets, the petition states. According to her will, the money was supposed to go to a tax-exempt charity to be named The Ominsky Family Charitable Foundation. The will also designated Hodes as the personal representative of the estate.
The money was deposited into an HPK attorney escrow account.
Hodes opened a checking account called “Gloria S. Ominsky Irrevocable Trust” at M&T Bank in March 2012, designating himself as trustee and sole signature authority on the account, Bar Counsel alleges.
One day later, Hodes transferred $375,355 from HPK’s trust account to the M&T Bank account, according to the petition.
After a few weeks, Hodes wrote two checks from the M&T Bank account — one for $270,000 to Mikelen Gallery LLC, a company owned by Hodes and his wife, and the other for $3,500 for Michael C. Hodes Financial Consultants Ltd., Hodes’ financial planning company, Bar Counsel alleges.
Mikelen was founded in 2006 by Hodes and his then wife-to-be, now Ellen Hodes, with the plan to open an art and antiques gallery, according to the petition. The company is not currently in operation.
Bar Counsel alleges Hodes did not tell any other lawyer at HPK of the transactions, hire outside legal counsel to represent the trust’s interests or create any documentation dictating repayment terms of the money.
The firm found out about the money transfer in April 2012 and conducted an internal investigation, at which time Hodes told the firm the money was a loan, the petition says.
Bar Counsel alleges that a day after putting the money into the Mikelen account, Hodes transferred $265,000 to his personal checking account, which at the time of the transfer had balance of negative $3,183.
Over the next two weeks, according to the petition, Hodes proceeded to pay off credit cards with checks drawn from his personal checking account, including:
- $25,010 to M&T Bank
- $30,227 to Bank of America Card
- $4,204 to American Express
- $22,875 to Citi Cards
- $18,000 to Air Tran Visa
Hodes also wrote a check in payment of personal debts — one to “Weingart Trust” for $161,500 and another to “Laurie Manney Trust” for $1,272, the petition states. Over the next month, he also wrote four $9,000 checks to his ex-wife, Lois Hodes, according to the petition.
Bar Counsel claims Hodes then backtracked and asked his secretary to write a promissory note for the transfer of the $270,000 from the trust account. The note is dated March 30, 2011, even though it was created more than a year later, on April 4, 2012. The note says Mikelen will repay with interest the money taken from the Ominsky trust.
The note, however, is unsigned despite Hodes’ assurance to Bar Counsel that he signed the note, according to the petition. Bar Counsel claims Hodes falsely testified that he was personally guaranteed Mikelen’s note and produced a promissory note guaranty, which he claimed he signed on March 28, 2012.
“[Hodes] deceitfully created the Promissory Note Guaranty at some later date and fraudulently back-dated his signature on that document,” the petition states.
Position of trust
The petition alleges Hodes was also engaged in misconduct prior to Ominsky’s death.
Hodes “took advantage of [his] position of trust” to get his wife a job running Ominsky’s personal errands for $25 an hour, the petition states. Hodes once reimbursed himself from Ominsky’s account for filling the tank on both his car and Ominsky’s car and used her money to pay a parking ticket of $32 and a speeding ticket of $75.
Bar Counsel alleges Hodes also wrote two checks from Ominsky’s personal checking account after she died, then back-dated them to a date before her death. One check was for $775 to his wife and the other was for $14,500 to MCH Financial, which had no contract with Ominsky to provide financial services.
As part of Hodes’ separation agreement with HPK, he was required to repay $270,000 to the Ominsky trust, according to the petition. The firm gave Hodes $216,000, an amount he was owed upon his termination, which Hodes deposited in an account created for the Ominsky Foundation, and added an additional $54,000.
The week after Hodes left HPK, Michael Hodes LLC opened its doors with offices in Towson, Columbia and Salisbury with one partner and an associate.
When Hodes left HPK, he told The Daily Record he wanted to strike out on his own and get away from the corporate culture of a large firm.
Hodes, who also has his own show on WBAL Radio about family financial planning, said the split was amicable but said he also had differences with the firm over marketing strategies like using television commercials and radio.
“That’s where there are divisions, but there is not any animosity,” Hodes told The Daily Record in May 2012. “I understand where they are, and I have a different way of doing things.”
Hodes’ disciplinary case will be assigned a hearing judge in circuit court, who will issue findings and report to the Court of Appeals on the facts of the case. Both sides will be able to file exceptions before the Court of Appeals hears the case. The Court of Appeals will make the final decision on whether Hodes should be sanctioned and, if so, to what extent.