His secretary just didn’t think it sounded right.
Her boss, Michael C. Hodes, had asked her to prepare a promissory note showing he had borrowed $270,000 from a deceased client’s charitable foundation.
“I just felt uncomfortable with the document,” Donna Zurowski said Wednesday. “That it should not be mixing with clients of the firm.”
Zurowski testified in Baltimore County Circuit Court as part of the evidentiary hearing in the Attorney Grievance Commission’s disciplinary proceeding against Hodes. The court also heard from several attorneys at Hodes’ former firm, the current and past dean of the University of Baltimore School of Law, and Hodes’ wife.
Zurowski testified that she drafted the note in April 2012, showing a March 2011 loan from the “Gloria S. Ominsky Irrevocable Trust” to Mikelen Gallery LLC, a company formed by Hodes and his current wife to operate an art and antiques gallery, which never launched.
However, her discomfort made her take the draft to estate planning attorney Helen M. Smith, and attorneys Kevin F. Bress and Kimberly L. Battaglia were also notified.
Smith, Bress and Battaglia then had a conversation with Hodes about their concerns.
“We didn’t know what to do because we were not sure he was going to do it,” Smith told the court.
Both Smith and Bress testified that Hodes assured them he was meeting with an outside accountant to make sure he complied with regulations for private foundations.
“He gave the impression he was rethinking it,” Bress testified.
Smith said she discussed the matter with the firm’s managing director, Drake Zaharris, on April 25, 2012, a Wednesday.
Zaharris told the court that he reviewed Ominsky’s files and informed a few other firm members of the situation.
“I was concerned enough at that point, I felt it was going to be a difficult situation,” Zaharris said in court.
Zaharris and other partners confirmed the following Friday that Hodes had cashed the check and called an “emergency” partner meeting that Sunday.
Zaharris said the mood among partners over the situation was “volatile” and that the group decided they did not want to practice law with Hodes.
“It could have been catastrophic for us,” Zaharris told the court.
Hodes left the firm he helped found, Hodes, Pessin & Katz P.A. in Towson, soon after the discovery. He returned the money to the account as part of his severance agreement from what is now Pessin Katz Law P.A.
While offered by Bar Counsel, the testimony by Zurowski and Hodes’ former colleagues lawyers supported Hodes’ contention that others in the firm were aware of his actions.
His attorney in the disciplinary case, Andrew Jay Graham of Kramon & Graham P.A. in Baltimore, pointed out that Hodes did not ask Zurowski to keep the note a secret and knew others in the office would eventually see it.
Graham continued to highlight, through cross-examination, Hodes’ role as a prominent rainmaker for the firm, his busy work schedule and his tendency to sometimes not pay attention to detail.
Hodes current wife, Ellen Hodes, testified that she ran errands for Ominsky, for which she was paid $25 an hour. Hodes and Ellen also used Ominsky’s car and billed her for gas, speeding and parking tickets, according to the commission’s petition.
“[Michael Hodes] is extremely attentive to [clients] and cares about the way he does things…,” Ellen Hodes testified. “It upsets him that it’s being tarnished.”
Ellen Hodes said in court Wednesday that she once received a ticket while running errands for Ominsky, who agreed to pay for the ticket. She married Michael Hodes in 2009.
She said she and the HPK attorneys and staff were like “family” to Ominsky.
“She was very lonely,” Ellen Hodes said. “She had no one around her. There was virtually no one in her house… Yes, she wanted us there.”
Ominsky, she said, cared about her husband.
“She adored him,” Ellen Hodes said. “She was very proud that such a prominent attorney was spending so much time together with her.”
Graham also called in University of Baltimore School of Law Dean Ron Weich as a character witness.
“I came to see Michael as someone I could rely upon as a supporter of the law school,” Weich said in court.
Weich also told the court that Hodes and Ominsky’s foundation had donated a total of $100,000 toward the new law school building, 75 percent of which came from the foundation.
Former UB Law dean and current professor Phillip J. Closius also testified as a character witness.
“I’ve found [Hodes] to be as helpful and reliable as anyone I know,” Closius said in court. “I was surprised to learn of his problems.”
Judge Vicki Ballou-Watts will eventually issue what she believes are the factual findings in the case. Both sides can then challenge and the Court of Appeals will decide if and how Hodes will be sanctioned.
Ominsky granted Hodes power of attorney and designated him as the personal representative of the estate in 2009, according to the commission’s petition for remedial action filed in October last year.
Ominsky died in February 2011, leaving behind $400,000 in assets which were to be established as The Ominsky Family Charitable Foundation, according to the commission.
Hodes opened an account at M&T Bank for the foundation in March 2012.
A few weeks later, Hodes took out $270,000 for the Mikelen Gallery and another check for $3,500 to Michael C. Hodes Financial Consultants Ltd., his financial planning firm.
Hodes then transferred a majority of the funds for the Mikelen Gallery to his personal checking account.
Bar counsel has said he used the money to pay his personal expenses, including $100,000 in credit card debt.
The commission claimed Hodes also wrote checks from Ominsky’s account after her death then back-dated them – one for $775 for his wife and one for $14,500 to his financial planning firm.
Graham has said in court that this was money owed to Hodes for work done for Ominsky.
Hodes paid back the $270,000, part of which was made up of the $216,000 he received from the firm as severance.
Hodes opened his own firm in May 2012 with offices in Towson, Columbia and Salisbury.
ATTORNEY GRIEVANCE COMM. V. HODES
Bar counsel says:
Michael C. Hodes took advantage of an elderly client during her life and took $270,000 from her charitable foundation after she died, later attempting to disguise it as a loan.
His client authorized the actions he took during her lifetime, and would have approved the loan at 5% interest because that was the purpose of the foundation.
Judge Vicki Ballou-Watts will forward her findings to the Court of Appeals, which will hear each side’s exceptions, determine whether Hodes violated professional conduct rules and, if so, what the appropriate sanction is.