Maryland Lawyer Disbarred For Deceiving Client About Investment

A Maryland attorney who asked his client to invest her settlement proceeds in several of his firm’s litigation cases, used the money for personal expenses, and then lied to her about the results of those cases was disbarred by the state supreme court.

The ‘investment opportunity’ was a deception created by the lawyer to get funds from his client “under false pretenses,” after which he used those funds as an interest-free personal loan,” the Maryland Supreme Court’s Wednesday opinion said.

Jonathan Christian Dailey represented Sherry Renee Gaither in her employment discrimination suit in 2011, according to the court. The case settled and Gaither received a little over $10,000.

Dailey asked if she wanted to invest in an upcoming case, saying her investment would be “guaranteed,” the court said.

Gaither signed an agreement saying she would invest $27,000, that she would get paid in the case of a verdict or settlement within 20 days, and that return sum was “guaranteed,” the court said.

Dailey spent most of her investment on personal expenses, the court said. These included a casino, Apparel Lacy Couture, Classic Beer and Wine, and Netflix.com, it said.

Before the case settled, Dailey told Gaither that the plaintiff wouldn’t settle for less than $1 million, but that this was confidential information and not to be disclosed to anyone, the court said. The plaintiff never authorized Dailey to reveal this information, it said.

But when the case settled for $400,000, Dailey never informed Gaither and she never got her money, it said.

When Gaither asked about the status of the case Dailey told her it “didn’t do well,” the court said. Nevertheless, the court said that he asked her whether she wanted to put what she was owed into other firm cases, saying “you will see a return from one of them.”

But Gaither never got any money and began having financial problems in 2015. She asked Dailey for $15,000 but he gave her $5,000, saying it was a “tight time” for his law practice, the court said. Gaither ultimately filed a complaint with the state bar counsel in 2017.

The court found that Dailey violated the rule on keeping client confidences when he told Gaither the plaintiff in the first case she invested in wouldn’t settle for less than $1 million because he never got the client’s informed consent, it said.

He also violated the rule on dishonesty when he used Gaither’s funds for personal use and the lied about it repeatedly, the court said.

Dailey argued that his conduct was the result of “bad luck” and “unfortunate case results” between “two private citizens,” it said but rejected this defense.

Gaither’s client status doesn’t matter because the rule on dishonesty “extends to an attorney’s dishonest personal dealings outside his practice of law,” the court said.

This was “intentional and calculated dishonesty” that warrants disbarment it said, noting there were no mitigating factors.

The case is Commision v. Dailey, 2020 BL 99784, Md., Misc. Docket AG No. 1, 3/18/20.