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SJC-12073

                   IN THE MATTER OF DAVID ZAK.


                         April 10, 2017.


Attorney at Law, Disciplinary proceeding, Commingling of funds,
     Fee-sharing agreement, Advertising, Disbarment.


     The respondent attorney, David Zak, appeals from a judgment
of a single justice of this court disbarring him from the
practice of law.1 We affirm.

     Background. Bar counsel filed a seven-count petition for
discipline with the Board of Bar Overseers (board) against the
respondent arising out of the respondent's solicitation and
handling of a substantial number of mortgage loan modification
cases over more than a four-year period. See note 10, infra.
Count one alleged that the respondent made payments to others to
recommend his services and to solicit professional employment
for the respondent from prospective clients;2 shared fees with
nonlawyers;3 failed to instruct and supervise his employees and

     1
       This bar discipline appeal is subject to S.J.C. Rule 2:23
(c), 471 Mass. 1303 (2015). Pursuant to the rule, we dispense
with oral argument, and decide the case on the basis of the
materials filed by the respondent.
     2
       These acts were alleged to be in violations of Mass. R.
Prof. C. 7.2 (c), as appearing in 430 Mass. 1306 (1999); Mass.
R. Prof. C. 7.3 (d) & (f), as amended, 431 Mass. 1302 (2000);
and Mass. R. Prof. C. 8.4 (a), 426 Mass. 1429 (1998).
     3
       This act was alleged to be in violation of Mass. R. Prof.
C. 5.4 (a), as appearing in 430 Mass. 1303 (1999).
                                                                   2


agents adequately;4 and engaged in the practice of law with a
person who was not a lawyer.5 Count two charged that the
respondent made false and misleading advertisements about
himself, his law firm, and his loan modification services, in
Massachusetts and other jurisdictions.6 Count three alleged that
the respondent charged and collected advance fees for loan
modification services, in violation of Federal and State
statutes and regulations, and that the fees he charged were
either excessive or illegal, or both.7 Count four alleged that
the respondent provided or caused to be provided to clients
false, deceptive or misleading information about his loan
modification services.8 Counts five, six, and seven alleged
misconduct during the respondent's handling of three specific
loan modification matters, and in connection with bar counsel's
investigation of complaints filed by those clients.

     The petition was referred to a special hearing officer.
After a hearing, at which the respondent was represented by
counsel, the hearing officer made detailed findings of fact and
conclusions of law against the respondent on all counts, and
recommended that the respondent be disbarred. The hearing
officer also recommended that the respondent be required to make
restitution. The respondent appealed to the board, focusing

     4
       This failure was alleged to be in violation of Mass. R.
Prof. C. 5.3 (a), (b) & (c), 426 Mass. 1408 (1998).
     5
       This act was alleged to be in violation of Mass. R. Prof.
C. 5.4 (b), as appearing in 430 Mass. 1303 (1999).
     6
       Count two alleged violations of Mass. R. Prof. C. 7.1, as
appearing in 430 Mass. 1305 (1999); Mass. R. Prof. C. 7.2 (a),
as appearing in 430 Mass. 1306 (1999); and Mass. R. Prof. C. 8.4
(c), 426 Mass. 1429 (1998). The petition for discipline also
charged violation of the rules of professional conduct in
Virginia, New York, Pennsylvania, and Rhode Island.
     7
       Count three alleged violations of Mass. R. Prof. C. 1.5
(a), as appearing in 459 Mass. 1301 (2011). The petition for
discipline also charged violation of rules of professional
conduct of Rhode Island.
     8
       Count four alleged violation of Mass. R. Prof. C. 1.1, 426
Mass. 1308 (1998); Mass. R. Prof. C. 1.2 (c), 426 Mass. 1310
(1998); Mass. R. Prof. C. 1.4 (b), 426 Mass. 1314 (1998); Mass.
R. Prof. C. 5.3 (a) & (b), 426 Mass. 1408 (1998); and Mass. R.
Prof. C. 8.4 (a) & (c).
                                                                   3


primarily on the disciplinary recommendation. The board adopted
the hearing officer's findings of fact and conclusions of law,
and voted to recommend that the respondent be disbarred.
Although it declined to recommend that restitution be ordered,
the board observed that failure to make restitution reflects
poorly on an attorney's moral fitness to practice law. The
board thereafter filed an information in the county court,
pursuant to S.J.C. 4:01, § 8 (6), as appearing in 453 Mass. 1310
(2009). After a hearing, the single justice concluded that the
special hearing officer's findings were supported by substantial
evidence, see S.J.C. Rule 4:01, § 8 (5) (a) and (6), and that
those findings supported the board's conclusions regarding
violations of the disciplinary rules. She accepted the
recommendation of the board as to sanction, and ordered that the
respondent be disbarred.

     Discussion. The respondent does not dispute that he
engaged in the conduct described in the hearing officer's
findings, which were adopted by the board. We have thoroughly
reviewed the record, and agree with the single justice that
these findings were supported by substantial evidence. There is
no need to repeat the single justice's detailed discussion here.
Quoting the board, the single justice observed that the
respondent:

    "systematically extracted illegal and excessive fees from
    numerous vulnerable and desperate clients with deceptive
    advertisements, misleading contractual arrangements, and
    deceptive and useless services such as the 'lender benefit
    analysis' and the 'forensic loan audit.' In addition, he
    engaged in unlawful fee-splitting to provide his partner
    and his employees with the financial incentive to use the
    machinations to enhance his personal financial interest at
    the expense of his clients."

We focus instead on the respondent's claim that this misconduct
warrants a public reprimand rather than disbarment. For the
reasons that follow, we reject that claim and conclude that
disbarment is appropriate.

     a. Specific challenges regarding disciplinary rule
violations. For the most part, the respondent does not dispute
the board's determination that his actions violated numerous
rules of professional conduct over a period of years. See notes
2-8, supra. He does not, for example, dispute that he paid
nonlawyers to recommend his services; charged and collected
excessive fees; failed to return unearned portions of fees; made
                                                                  4


or caused to be made intentionally misleading statements to
vulnerable clients about the services he could or would provide;
and with respect to one matter, charged and collected advance
fees without depositing them in a client trust account and
commingled personal and client funds. Instead, he focuses his
appeal on three aspects of the misconduct determinations. We
conclude that the single justice neither erred nor abused her
discretion in rejecting his claims.

     1. Advance fees. Both State and Federal law prohibits a
lawyer from charging advance fees for mortgage assistance relief
services unless the fees are deposited into a client trust
account. See 940 Code Mass. Regs. § 25.02 (2) (2007); 12 C.F.R.
§§ 1015.5 and 1015.7 (2017). The respondent does not dispute
either that he charged advance fees or that the advance fees
were not deposited into a client trust account. He argues
instead that his conduct did not violate Mass. R. Prof. C. 1.5,
as appearing in 459 Mass. 1301 (2011), which he says creates an
independent right to collect advance fees for legal services.
The single justice correctly rejected that claim. Although the
rule does not categorically proscribe collection of advance
fees, it expressly prohibits lawyers from "collect[ing] an
illegal or clearly excessive fee." Fees charged or collected in
violation of Federal or State statutes or regulations are
prohibited under rule 1.5 (a). See, e.g., Matter of Dialessi-
Lafley, 26 Mass. Att'y Discipline Rep. 133 (2010) (fee illegal
where it violated Federal statute prohibiting collection of fees
for acting as representative payee). There was no error in the
single justice's determination that the respondent violated rule
1.5 (a).

     2. Compensation. The respondent does not dispute that, by
paying nonlawyers (Elizabeth Reed and others) between $1,000 and
$1,500 for referring clients to him, and encouraging them to
solicit clients for a fee, he violated Mass. R. Prof. C. 5.4, as
appearing in 430 Mass. 1303 (1999), multiple times. He argues
only that the particular profit-sharing agreement he had with
Reed -- under which he expressly agreed to share with her the
fees earned by a business entity and his law firm on loan
modification cases -- did not violate the rule. See Mass. R.
Prof. C. 5.4 (a) (3).

     The limitations on fee sharing contained in rule 5.4 are
intended to protect a lawyer's professional independence of
judgment. See Mass. R. Prof. C. 5.4, comment 1. See also
Restatement (Third) of the Law Governing Lawyers § 10 comment b
(2000) (person entitled to portion of fee may attempt to
                                                                   5


influence lawyer's services to maximize fees). The rule also
recognizes, however, that lawyers may compensate nonlawyer
employees though a profit-sharing arrangement. See Mass. R.
Prof. C. 5.4 (a) (3). We recognize that there is some support
in other jurisdictions for the board's determination that, read
in context, rule 5.4 (a) (3) permits a lawyer to share aggregate
profits from legal fees with nonlawyer employees, but not
profits that are tied to specific clients or cases. See, e.g.,
American Bar Association Standing Comm. on Ethics and Prof.
Responsibility, Formal Op. 13-464 at 2 (2013) ("exception for
firm compensation and retirement plans depends on whether the
profits being shared are 'tied to particular clients or
particular matters'"), citing E.J. Bennett, E.J. Cohen & M.
Wittaker, Annotated Model Rules of Prof. C. 461 (7th ed. 2011).
Contrast In re Disciplinary Proceedings Against Weigel, 342
Wis. 2d 129, 149-150 (2012) (bonus structure based on net
profits of specific practice area rather than on net profits of
firm's entire practice permissible). We need not, however,
resolve the issue in this case. As the single justice observed:

    "even if the exception applies to the profit sharing
    agreement, the respondent's undisputed conduct in paying
    Reed, and the agents, $1,000 to $1,500 for each client they
    acquired, and for condoning and encouraging their
    solicitation of potential clients for a fee, itself clearly
    violates Mass. R. Prof. C. 5.4."

The single justice did not err in finding that the respondent
violated rule 5.4.

     3. False advertising. The respondent did not challenge in
the county court the board's findings that he violated Mass. R.
Prof. C. 7.1, as appearing in 430 Mass. 1305 (1999) (prohibiting
false or misleading communications about lawyer or lawyer's
services). The single justice, however, considered the issue
and properly determined that the respondent violated the rule in
myriad ways. The advertisements were made in States where the
respondent neither was admitted to practice nor had business
relationships with lawyers who were licensed. Among other
things, the advertisements misrepresented that the respondent
was the only lawyer who knew how to obtain permanent loan
modifications and that he would obtain trial loan modifications
within thirty to sixty days, and they failed to acknowledge that
it is the lender that makes modification decisions. The
advertisements additionally misrepresented that the respondent
"sued the bank in every case," and that he would "pre-qualify"
clients for Federal mortgages at no cost, when the clients were
                                                                   6


actually charged a substantial fee. The advertisements also
omitted other significant and relevant information. In
addition, the respondent's Web site misrepresented facts such as
the respondent's association with established, experienced
attorneys in other jurisdictions; misstated the jurisdictions in
which the his firm practiced; and misstated his prior
employment, experience, training, and his own firm's tenure.

     The board determined, and the single justice agreed, that
the advertisements contained false, material, misrepresentations
of fact that violated rule 7.1 and Mass. R. Prof. C. 7.2 (a), as
appearing in 430 Mass. 1306 (1999) (communication of services),
and Mass. R. Prof. C. 8.4 (c), 426 Mass. 1429 (1998)
(prohibiting dishonesty, fraud, deceit and misrepresentation).
On the evidence before it, the board was warranted in rejecting
the respondent's claims -- which he presses on appeal -- that
the misrepresentations were "mere puffery," or inadvertent or
sloppy use of language. As the single justice's decision makes
plain, there was substantial evidence to support the board's
determination that the statements included deliberate falsehoods
concerning the respondent's firm, and the results that he would
be able to achieve. There need not be evidence that a client
was misled or deceived to establish a violation of the rules of
professional conduct. See Matter of Angwafo, 453 Mass. 28, 35
(2009) (reliance not required).9

     b. Sanction. The rules of professional conduct, and the
disciplinary proceedings that accompany their violation, exist
to "protect the public and maintain its confidence in the
integrity of the bar and the fairness and impartiality of our
legal system." Matter of Curry, 450 Mass. 503, 520-521 (2008).
Accordingly, "[t]he appropriate level of discipline is that
which is necessary to deter other attorneys and to protect the
public." Id. at 530. While that determination ultimately is
for this court, we, like the single justice, give deference to

    9
       We decline to consider the respondent's claim that the
board erred in allowing bar counsel's prehearing motion to
establish, on the basis of issue preclusion, certain facts
concerning the respondent's association with Reed. See Loan
Modification Group, Inc. v. Reed, 694 F.3d 145, 147-148 (1st
Cir. 2012) (jury determined that Reed and respondent agreed to
enter into loan modification business together; and that
respondent formed Loan Modification Group, Inc., as entity that
would conduct "partnership business together with Reed"). The
respondent did not raise this claim before the single justice.
See Matter of Hoicka, 442 Mass. 1004, 1007 n.5 (2004).
                                                                   7


"the board's recommendation, its experience, and its expertise
to try and dispose of disciplinary matters uniformly." Matter
of Eisenhauer, 426 Mass. 448, 455, cert. denied, 524 U.S. 919
(1998). See Matter of Foley, 439 Mass. 324, 333 (2003). We
agree with the single justice that the board's recommended
sanction of disbarment is appropriate in this case.

     The respondent's misconduct involved repeated and multiple
ethical violations in connection with loan modification and
mortgage foreclosure cases over a number of years.10 We
acknowledge that a single violation of one of the disciplinary
rules at issue here might typically result in an admonition,
public reprimand, or, perhaps, a term suspension. But it is
well established that disciplinary violations are not viewed in
isolation. We consider instead the "cumulative effect of the
several violations committed by the respondent." Matter of
Palmer, 413 Mass. 33, 38 (1992). See Matter of Crossen, 450
Mass. 533, 574 (2008) ("[c]umulative and wide-ranging misconduct
may warrant the sanction of disbarment, even if the individual
instances of unethical conduct would not warrant so severe a
sanction"); Matter of Saab, 406 Mass. 315, 326-327 (1989). As
the board observed, "[e]ven minor violations, when aggregated,
can result in a substantial sanction exceeding what each alone
would receive."
     The repeated nature of the respondent's misconduct, over a
period of years, involving hundreds of economically,
educationally, and linguistically disadvantaged clients in

    10
       At the hearing before the single justice, it was not
disputed that the respondent had more than 500 loan modification
clients; that between forty and sixty of them have filed claims
with the Attorney General; and that approximately twenty clients
filed complaints with the Massachusetts Commission Against
Discrimination. The respondent's counsel suggested that
restitution of the amounts at issue would be in the hundreds of
thousands of dollars.

     Clients of the respondent who were harmed by his dishonest
conduct may be able to obtain reimbursement for their losses
from the Clients' Security Board, established pursuant to S.J.C.
Rule 4:04, § 1, as amended, 428 Mass. 1301 (1998). We
understand that, as a matter of course, the board and bar
counsel inform victimized clients of that possibility in
appropriate cases, and we ask that they ensure that the
appropriate victims in this case are so informed. We express no
view here as to whether any such claimants in this case ought to
be compensated by the Clients' Security Board.
                                                                 8


strained financial circumstances, evidenced by threatened
foreclosure of their homes, warrants a substantial sanction.
See Matter of Lupo, 447 Mass. 345, 358 (2006) (pattern of self-
dealing and self-enrichment at expense of elderly,
unsophisticated and vulnerable warranted indefinite suspension).
See also Matter of Greene, 476 Mass. 1006, 1010-1011 (2016)
(accepting board's recommendation of indefinite suspension for
misconduct in connection with residential mortgage foreclosure
"rescue transactions"). In addition, the respondent has refused
to return unearned fees. See Matter of Sharif, 459 Mass. 558,
571 (2011) (three-year suspension for conduct including
intentional misuse of client fees, with aggravating and
mitigating factors). Through the date of the hearing before the
single justice, the respondent continued to practice law,
notwithstanding the recommendation of disbarment. Matter of
Cobb, 445 Mass. 452, 480 (2005). In at least two matters, the
respondent advised clients who were not facing foreclosure to
stop making mortgage payments (in one case, so the client could
pay the respondent), see Matter of Lupo, supra at 359, and they
were forced into foreclosure and lost their homes. See Matter
of Pike, 408 Mass. 740, 745 (1990).

     Although there appears to be no Massachusetts case
involving precisely the same misconduct in connecting with loan
modification clients, the misconduct in Matter of Cammarano, 29
Mass. Att'y Discipline Rep. 82 (2013), is similar. In that
case, the attorney was indefinitely suspended for misconduct in
connection with five immigration matters. Id. at 85. In each
matter, the respondent agreed to file certain immigration
documents, set a flat fee for services, and demanded payment of
retainers and filing fees before beginning work. Id. at 88. In
each case, the immigration documents either were not filed or
were returned because the filing fee was incorrect. Id. In
each case, the board found that the respondent intentionally
misrepresented the status of the matter to the client. Id.
Eventually, successor counsel was able to obtain the desired
result in four of the cases; the fifth case was still pending at
the time of the hearing. Id. The respondent in that case
refused to refund any portion of the fees. Id. The single
justice concluded an indefinite suspension was warranted
because:

    "the respondent neglected multiple client matters, over a
    period of several years, and deliberately and knowingly
    made misrepresentations to those clients concerning the
    status of their cases. He drafted fee agreements which, by
    stating that retainers were nonrefundable, on their faces
                                                                   9


    violated the rules of professional conduct, and was solely
    responsible for enforcement of his firm's improper no-
    refund policy; he has continued to refuse to refund any of
    the fees, notwithstanding the involvement of bar
    counsel. . . .

         "Considered with the other conduct found by the board,
    see Matter of Palmer, 413 Mass. [at 38] (we consider 'the
    cumulative effect of the several violations committed by
    the respondent'), including the respondent's refusal to
    acknowledge any wrongdoing, his attempts to blame employees
    for his actions, his statements that are inconsistent with
    the record and that the hearing officer found blatantly
    noncredible, and his treatment of particularly vulnerable
    clients, I have little doubt that indefinite suspension is
    the appropriate sanction in this case, in order to preserve
    trust and confidence in the legal profession."

Id. at 105-106. We agree that the respondent's misconduct in
this case is comparable to, but more egregious than, the
attorney's misconduct in Cammarano. We therefore accept the
board's recommendation that disbarment is appropriate.11

     As the hearing officer, the board, and the single justice
all properly recognized, there were no factors that could be
weighed in mitigation of the respondent's misconduct. Factors
that we have considered as not rising to the level of "special

    11
       The single justice additionally found that, with respect
to one client, the respondent charged a "retainer" rather than a
"flat fee," and failed to deposit it into his client trust
account. He also failed to provide the notices, bills, and
accountings before withdrawing funds, as required by the rules
of professional conduct, commingled client funds with his own,
and converted the funds to his own use. Although the respondent
continues to press his claim that the payment was a "flat fee"
that properly could be deposited into an operating account, the
hearing officer, the board, and the single justice concluded
that, based on the language of the fee agreement, the payment
was a retainer. On that basis, the single justice reasoned that
the respondent's deliberate use of those unearned client funds,
with deprivation resulting and without restitution to the
client, merits a presumptive sanction of disbarment by itself.
See, e.g., Matter of Sharif, 459 Mass. 558, 565 (2011). The
respondent's unadorned statement in his memorandum that a "flat
fee" was involved does not rise to the level of appellate
argument.
                                                                 10


mitigating factors" include a "long and distinguished career of
public service and . . . many pro bono services," Matter of
Finneran, 455 Mass. 722, 735 (2010); the absence of "evil motive
or racial animus," id. at 736; a good reputation in the
community, Matter of Moore, 442 Mass. 285, 294 (2004); and
services to an underserved population, id. Although the
respondent claims that he helped "hundreds" of clients avoid
foreclosure, the record does not establish how many or to what
extent those clients many have been aided, whether they were
charged excessive fees for services that had little or no value
to them, or whether the services could have been obtained for
less or no cost. In any event, we do not weigh as a factor in
mitigation that an attorney properly performed legal services
for some clients. As the single justice observed, that "is
simply the type of conduct expected of an ordinary reasonable
attorney." See Matter of Dawkins, 412 Mass. 90, 96 (1992),
S.C., 432 Mass. 1009 (2000) ("we are not so pessimistic about
the ethics of lawyers as to conclude that a lawyer who conforms
to the expected standard of conduct in some respects thereby has
established mitigating circumstances"). Although the respondent
may have served some clients in accordance with his professional
obligations, "that fact alone does not overcome the harm he
visited upon . . . the particular client[s] involved in this
case." Id. at 97.

     Although we see no factors to be weighed in mitigation,
there are multiple factors that the board properly weighed in
aggravation. As the board found, the respondent took advantage
of economically vulnerable clients; acted for selfish and
pecuniary reasons; and failed to acknowledge the wrongfulness of
his conduct. He has refused to return unearned fees and has
refused to acknowledge that his actions caused clients harm,
including the loss of homes through foreclosure. He also failed
to comply with discovery orders, both in the disciplinary
proceeding and in other proceedings. He has not made
restitution. Matter of McCarthy, 23 Mass. Att'y Discipline Rep.
469, 470 (2007).

     Conclusion. The primary factor in bar discipline cases is
"the effect upon, and perception of, the public and the bar"
(citation omitted). Matter of Finnerty, 418 Mass. 821, 829
(2008). Considering the extent of the misconduct, weighing the
presence of the factors in aggravation and the absence of
factors in mitigation, and giving due deference to the board's
recommendation, we conclude there was no error in the single
justice's judgment that disbarment is warranted.
                                                                  11


                                   Judgment of disbarment
                                     affirmed.


     The case was submitted on the papers filed, accompanied by
a memorandum of law.
     Gregory M. Sullivan for the respondent.
