The State Bar of California has recommended disbarment for two Southern California attorneys, concluding that the amount of money they took from clients over long periods of time outweighed the emotional problems they were suffering at the time.
The bar's appeals department, in two February 7 opinions, found that Gregory Fulton Stannard, a solo practitioner in Culver City, Calif., and Karl Werner Schoth, formerly at Schoth Creyaufmiller & Associates in Glendora, Calif., had misappropriated "large sums of money" from clients. Both have been on inactive status since last year pending the bar's recommendation.
In both cases, the final decision lies with the California Supreme Court.
The panel recommended disbarment for Schoth, 58, despite finding his arguments "impressive." A personal injury attorney who served on the executive board of what is now the Consumer Attorneys of California, Schoth was accused of taking $136,430 from five clients over 1 1/2 years and using that money to pay his family's expenses. According to bar documents, Schoth blamed his conduct on a drinking problem he developed after discovering that his daughter had been raped. He claimed that his personal problems caused his income of $200,000 to $400,000 to drop to less than $50,000, forcing him to withdraw $275,000 from his retirement savings and his wife's inheritance.
The review department found that, although he showed remorse and had repaid the misappropriated funds, Schoth's misconduct put him on the "most serious end of the misappropriation spectrum given the amount of funds involved, the number of clients, and the length of time during which the misappropriations occurred." Specifically, in 2009, Schoth pulled money from a client's trust account. She had died in 2005, but he continued to tell her son, a beneficiary living on disability payments, that the money was tied up in probate.
Schoth also pulled out money from four clients' personal injury settlement accounts, the panel wrote.
The department noted that several attorneys, including former Los Angeles County, Calif., Superior Court Judge Joe Hilberman and former CAOC President Sharon Arkin of the Arkin Law Firm in Los Angeles testified on behalf of Schoth's character. But their testimony was not enough to recommend against disbarment.
"This is not a case of a single careless mistake," the panel wrote. "Schoth deliberately took funds for his personal use with full knowledge that they belonged to his clients or to lienholders. The seriousness of Schoth's misconduct is greatly aggravated by his misrepresentations to a vulnerable client, who was in poor health and need his money to alleviate his problems."
Schoth, a graduate of Southwestern Law School, was admitted to practice law in California in 1984. He could not be reached for comment.
Stannard, 56, was accused of taking more than $68,000 from three clients between 2008 and 2011. A personal injury attorney, he used the money from client settlement accounts to pay personal expenses, such as therapy and his child's private school tuition, the opinion said.
Stannard admitting taking the money but argued against disbarment on the ground that his conduct was "aberrational," due to emotional problems related to his failed marriage, his father's death, his mother's cancer diagnosis and subsequent death, and the foreclosure on his home. He repaid the money and showed remorse, the opinion said, acknowledging testimonials on his behalf and his pro bono representation of eight domestic violence victims.
"Although we do not discount Stannard's emotional difficulties or his other factors in mitigation, these factors are not sufficiently compelling and do not predominate when weighed against his serious misconduct and aggravating factors," the panel wrote.
Stannard, also a graduate of Southwestern Law School, was admitted to practice in California in 1983. He did not return a call for comment.
Edward Lear, a partner at Century Law Group in Los Angeles who has represented both Stannard and Schoth in bar matters, did not return a call for comment.
Contact Amanda Bronstad at abronstad@alm.com.
