An attorney has been disbarred for running a bankruptcy fraud scheme with his wife.
Michael David Fraidin also mismanaged his attorney trust account, according to a Court of Appeals opinion issued Friday.
Fraidin took the funds in his trust account for his and his wife’s personal use during a time when the family was struggling financially. He and his wife also submitted false information to the U.S. Bankruptcy Court in order to stall the foreclosure on their home and its public auction, according to the Court of Appeals opinion.
“[Fraidin’s] motives in this case were dishonest and selfish,” Judge Clayton Greene Jr. wrote.
Fraidin, who had been a member of the Maryland Bar since 1992, was a solo practitioner in Baltimore.
“Given Mr. Fraidin’s intentional mishandling of his trust account, his deceit in his wife’s bankruptcy matter, his attempt to obstruct our investigation and his complete failure to take responsibility for his misconduct, we were compelled to recommend his disbarment,” said Attorney Grievance Commission of Maryland Bar Counsel Glenn M. Grossman. “The Court of Appeals agreed with our assessment.”
Fraidin’s attorney, Gregory P. Johnson of Offit Kurman in Bethesda, declined to comment.
Fraidin and his wife, Mara Fraidin, began to struggle financially in 2009, according to the Court of Appeals opinion.
Chase Bank USA filed a lawsuit against Mara Fraidin in February 2010 for a $9,000 outstanding credit card debt, and she retained her husband as her attorney. The parties reached a settlement in February 2011, with Mara agreeing to pay the full debt in installments.
Though Mara and Michael Fraidin had entered into an attorney fee agreement that he would receive $150 an hour, Michael Fraidin never charged for his representation. He still, however, made payments on behalf of Mara Fraidin through funds in his attorney trust account.
Michael Fraidin also used funds from his trust account to pay off part of $25,000 credit card debt in his name in December 2010.
The Fraidins’ home was foreclosed on in June 2010. Mara Fraidin then filed for bankruptcy two days before the home was scheduled for public auction.
Mara Fraidin sent her bankruptcy trustee checks drawn from Michael Fraidin’s trust account claiming they were for her employment with his law firm.
Though Mara Fraidin claimed in her bankruptcy court filings that she received about $3,000 a month from working for her husband’s law firm as a “marketer,” she never filed a W-2 with the Internal Revenue Service for her employment there, did not have set hours or duties and her payments were not contingent upon any work.
Though Mara Fraidin claimed she was representing herself in the bankruptcy case, Michael Fraidin was actually serving as her attorney, according to the Court of Appeals opinion.
“What is abundantly clear is that [Michael Fraidin] was intimately involved with the preparation and the proceedings in his wife’s bankruptcy case,” Greene wrote in the court’s opinion.
Mara Fraidin also did not disclose her two retirement accounts, which contained a total of $40,000, and her husband’s retirement account in filings in U.S. Bankruptcy Court. Michael Fraidin liquidated his $15,000 retirement account and wire-transferred it into his escrow account.
Mara Fraidin’s bankruptcy trustee filed a complaint with the Attorney Grievance Commission.
Michael Fraidin failed to provide complete copies of his client ledgers and bank records to the commission during its investigation.
The Attorney Grievance Commission filed a petition for disciplinary action against Fraidin in March 2013. He went before a hearing judge in Baltimore City Circuit Court in July 2013.
Michael Fraidin argued that he did not intend to harm clients, but the court found no mitigating factors.
Michael Fraidin asked for a suspension with the right to reapply, while the Attorney Grievance Commission recommended disbarment.
WHAT THE COURT HELD
Attorney Grievance Commission of Maryland v. Michael David Fraidin, No. 6, September Term 2013, Argued April 7, 2014. Decided May 16, 2014. Opinion by Greene, J.
What is the appropriate sanction for an attorney who mismanaged his client trust account and engaged in a bankruptcy fraud scheme with his wife?
The Court of Appeals held the appropriate sanction is disbarment for engaging in misconduct and failing to cooperate with the Attorney Grievance Commission of Maryland’s investigation.
Lydia E. Lawless, Attorney Grievance Commission of Maryland, for petitioner; Gregory P. Johnson, Offit Kurman in Bethesda, for respondent.
RecordFax 14-0516-20 ( 39 pages).