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Lawyer disbarred for dishonest transactions with former client

Montgomery County lawyer Jonathan C. Dailey was disbarred Wednesday by the Maryland Court of Appeals, which found that Dailey solicited $27,000 from a former client for his own use after telling the client that the money would be an investment in his payday in a separate case.

Dailey was admitted to the Maryland bar in 1995 and maintained a solo practice since 2009, according to the findings by Montgomery County Circuit Court Judge Margaret M. Schweitzer, who served as the trial judge and who is quoted in the Court of Appeals opinion filed Wednesday and written by Senior Judge Irma S. Raker, who was sitting by special assignment.

In May 2012, a few days after Dailey finalized a settlement for his client Sherry Gaither in an employment discrimination case, Dailey sent Gaither an email asking if she would like to invest in a malpractice lawsuit he was handling, which Dailey described as a “real money-maker” that could potentially double her investment, according to Schweitzer’s findings. 

Dailey then sent Gaither a letter of agreement, requiring Gaither to pay a $27,000 “investment amount,” which was “for the purpose of advancing the litigation,” Schweitzer wrote. He also “guaranteed” that the $27,000 would be repaid to Gaither, who then wired Dailey the money, according to Schweitzer.

Several months later, in August 2012, Dailey settled the malpractice case for $400,000; while he received $140,000 for his work, he did not repay Gaither by the end of the fiscal year as promised, Schweitzer stated.

Dailey never intended to repay the money, and the agreement was just “alluring provisions to entice Ms. Gaither into turning over funds to the Respondent,” Schweitzer found.

From May 15 to June 18, 2012, records show that Dailey used $26,200 of Gaither’s funds from his operating account to pay for personal expenses unrelated to the malpractice case, according to the judge. These include purchases at Revel Casino, Lacy Couture Apparel, Netflix and Classic Beer and Wine. 

By June 18, 2012, Dailey had used up all of Gaither’s funds and his operating account had a negative balance of $1,056.20, Schweitzer said.

Dailey later asked Gaither if she wanted to invest in three additional cases, using a similar agreement form that “guaranteed” she would be repaid. Schweitzer said Daily again deceived Gaither into thinking she was making an investment.

The judge also found that Dailey violated a rule of professional conduct that states attorneys shall not reveal information related to the representation of a client unless the client gives consent.

Dailey did not return calls Thursday or Friday.

Gaither filed a complaint with the office of Maryland Bar Counsel Lydia Lawless in November 2017. Lawless declined to comment on the case. 

The court found that Dailey had violated one of the Maryland Attorneys’ Rules of Professional Conduct by engaging in “conduct involving dishonesty, fraud, deceit or misrepresentation.”

According to the opinion, Dailey argued that the matter should be treated as a common law contract dispute and not as an attorney misconduct case.

“The [Commission] has taken what amounts to a business transaction between two individuals and attempted to construe it as [a] violation of an attorney’s fiduciary duties to a client,” Dailey said in the opinion. “This is simply untrue. The Maryland Lawyers’ Rules of Professional Conduct are rules that should be interpreted and applied to the purposes of legal representation and of the law itself.”

In response, Raker said the court maintains that Dailey violated the rule because it extends to actions by an attorney in both business and personal affairs.

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