Florida Board of Bar Examiners re Papy

Citations: 901 So. 2d 870; 30 Fla. L. Weekly Supp. 316; 2005 Fla. LEXIS 758; 2005 WL 984489Docket: No. SC04-1411

Court: Supreme Court of Florida; April 28, 2005; Florida; State Supreme Court

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Stephen A. Papy, Sr. petitioned the Court for review of the Florida Board of Bar Examiners' recommendation to deny his readmission to The Florida Bar. The Court has jurisdiction under Florida Constitution Article V, Section 15. Papy was initially admitted to practice law in Florida in 1984 but resigned in 1998 following disciplinary issues, with the option to seek readmission after three years. 

In June 2001, Papy applied for readmission, during which the Board's investigation uncovered significant character and fitness concerns. The Board outlined two main specifications against him: 

1. **Specification 1** detailed Papy’s misconduct leading to his resignation, including:
   - Misappropriation of client funds for personal use.
   - Withholding over $500,000 from client Ewart Rose, for whom Papy set up an irrevocable trust allowing him to invest the funds, which he misused.
   - An audit prompted by Rose's complaint revealed improper financial practices, including bounced checks.

2. **Specification 2** highlighted Papy's pattern of irresponsibility concerning tax obligations, including:
   - Failure to file federal income tax returns from 1994-1998, leading to IRS penalties.
   - Several federal tax liens for unpaid taxes from 1990 to 1996, with some remaining unsatisfied.

Papy admitted to these specifications, which the Board determined were individually and collectively disqualifying for readmission. To demonstrate rehabilitation at the formal hearing, Papy presented certificates for community service, character affidavits, and testimonies from six character witnesses, along with his own testimony. Despite these efforts, the Court approved the Board's recommendation to deny his readmission to the Bar.

The Board determined that Papy failed to provide sufficient evidence to mitigate the severity of his misconduct during his formal hearing. His actions, including misappropriating $500,000 from a client’s trust funds and ignoring federal tax obligations since 1994, were deemed egregious. The Board found that Papy did not demonstrate rehabilitation as required by Florida Bar Admission Rule 3-13, noting he still owed $10,000 in taxes from 2002 and had not made any quarterly tax deposits for 2003 despite earning $10,000 monthly. Papy also failed to show evidence of restitution; although an insurance company covered a $680,000 judgment for a client, he has not repaid the insurer or compensated the client for his losses. While acknowledging Papy's charitable activities, the Board concluded that these efforts were insufficient to demonstrate rehabilitation given the seriousness of his past actions. Consequently, the Board recommended a two-year disqualification from reapplying for Bar admission. The Court concluded that Papy's serious misconduct and ongoing financial irresponsibility disqualify him from admission, emphasizing that disbarment necessitates clear evidence of rehabilitation for reconsideration. Papy's history of theft from a vulnerable client, particularly funds intended for a life-saving organ transplant, was highlighted as one of the most serious offenses. His failure to rectify his financial irresponsibility and make restitution to those affected by his actions reinforced the decision against his admission to the Bar.

Papy has not compensated Rose despite believing she has not been made whole, citing signed releases among himself, Rose, and the insurance carrier as justification for his inaction. While legally permitted to refrain from repayment after a settlement, Papy's failure to take responsibility or rectify his past actions undermines his claim of good character and fitness for practicing law. Consequently, he should not be readmitted to The Florida Bar until he demonstrates personal financial responsibility toward those he has harmed. The Board's recommendation for Papy's denial of admission is approved, with an option to reapply in two years. Additionally, a third specification against Papy was alleged but ultimately deemed unproven.