OGDEN – A judge found Monday that an Ogden attorney violated the rules of professional ethics by pocketing and pretending to be a client’s dispute settlement and lying about it after he was caught.
At the end of a two-and-a-half-day trial in the Second District Court, Judge Noel Hyde ruled that Richard H. Reeve had been guilty of dishonesty, failed to seize three clients’ funds, and wrongly granted a paralegal curtailment of a settlement.
Hyde also objected to statements made by Reeve during the trial, saying there was “no evidence” to support some of Reeve’s allegations, “even under oath on his testimony during that trial.”
The judge said Reeve “stopped short of deliberate perjury, but there were certainly shades and artful answers to questions.”
Hyde hosted a status conference on February 25 that gave Reeve and Barbara Townsend, an attorney for the Office of Professional Conduct at the Utah State Bar, time to prepare for the trial.
Possible penalties range from a warning to a ban.
The OPC filed the case in 2017, accusing Reeve of processing a $ 380,000 severance payment awarded to Jean Tonioli in a 2015 death against a drug company. The Roy wife’s husband, Bob, died in New York City when the couple returned from a Baltic vacation in 2011.
The previous Monday, Townsend interviewed Reeve about two withdrawals he made in August and September 2015 from the personal credit union account where he had deposited Tonioli’s stake of approximately $ 254,000 in February.
Reeve testified that he withdrew $ 22,110 on Aug. 1 to pay a car dealer for a vehicle and on Sept. 9, he withdrew $ 16,000 to pay a woman who later became a wife.
Townsend said those withdrawals came “after he testified there was trouble” when he was able to pay Tonioli because by then much of her money had been spent.
Last week, Reeve blamed his ex-wife for at least two large withdrawals earlier this year that he said still had access to the account during the divorce.
In her concluding argument, Townsend said, even if his ex-wife spent part of Tonioli’s money, “He’s the attorney in charge of the settlement money. It doesn’t matter what (the first wife) did.”
“Over the course of seven months, he spent not only $ 99,000 on what was his (part of the settlement) but also $ 167,000 of Tonioli’s money,” Townsend said.
Last week Townsend detailed other expenses, such as trips to Las Vegas, San Antonio and Jackson Hole, Wyoming, and purchases from wedding chapels and rings.
Reeve, who represented himself in the ethics process, admitted in his final argument that he had endangered his integrity, put his legal partners in a difficult position and violated Tonioli’s trust.
“I deeply regret the behavior I demonstrated,” he said, adding that he “tried to take immediate steps to correct the problems.”
Townsend argued that the evidence is overwhelming that Reeve is violating the rule of ethics that prevents a lawyer from engaging in “dishonesty, fraud, deception or misconduct”.
According to testimony, Reeve ordered his trainee attorney to have the billing check forwarded to him, not the usual procedure on the law firm’s escrow account.
That was in February 2015. The paralegal eventually went to executives at a law firm in Ogden, where she and Reeve were working on his failure to pay Tonioli and his client’s stone wall when she asked for the money.
Reeve was confronted with this in September 2015, saying the money was in an escrow account and Tonioli knew about it. After the company investigated, Reeve changed its story, saying the settlement was still pending in federal court, which was also wrong.
The company fired Reeve on September 16, and he met with Tonioli and her son the next day to pay for the money they had come.
But as evidence, the OPC produced a document Reeve had prepared for that meeting, which Townsend said covered up the truth about what had happened to the money.
“He made up this document to show for the Toniolis’ that it was all in there all along,” said Townsend. “Don’t be fooled by what Mr. Reeve said.”
Hyde ruled that several of the arguments Reeve made in his defense were “not credible”, including his description of that September 17 document.
The document, a screenshot of what was presented as a credit union banking record, “is in and of itself a misrepresentation and Mr. Reeve knew it at the time he was preparing it,” said Hyde.
Hyde said he found it “very worrying” that Reeve would “go to considerable effort in attempting to create the appearance of a justification for this document” by this process.
Last week Reeve testified that he had sold part of his stake in a limited liability company to his brother so that he could raise enough money to pay Tonioli what she owed.
But Hyde said Reeves’ details on these moves “weighs on credibility” because there is no record of such a transaction and no evidence of the source of the $ 167,000 Reeve deposited to offset what he spent.
The judge found that Reeve had broken rules not to trust the custody of client funds in the Tonioli matter and two other cases where Reeve had directed the trainee attorney to send settlements to him.
Hyde also confirmed allegations that Reeve violated restrictions on attorney independence by seeing the trainee attorney received approximately $ 3,000 from his share of court profits.