OGDEN — A state disciplinary attorney argued Friday the evidence strongly supports disbarment of Ogden lawyer Richard H. Reeve for diverting $254,000 from a widow’s wrongful-death settlement and lying about it when he was caught.
But Reeve asserted he was under mentally “paralyzing” professional and personal stresses when the violations occurred in 2015, and he asked 2nd District Judge Noel Hyde to penalize him short of disbarment.
The arguments came during a video hearing for the penalty phase of the Utah Office of Professional Conduct’s attorney misconduct case against Reeve.
After a 2 ½-day bench trial in January, Hyde ruled Reeve was guilty of dishonesty, failing to safeguard the funds of three clients and improperly giving a paralegal a cut of a settlement.
The OPC filed the case in 2017, accusing Reeve of mishandling a $380,000 settlement awarded to Jean Tonioli in a wrongful-death suit against a drug maker. The Roy woman’s husband, Bob, died in New York City as the couple was returning from a Baltic vacation in 2011.
The funds were awarded early in 2015 and rather than deposit them in his law firm’s account for distribution to Tonioli, Reeve had the money put into his personal account.
OPC attorney Barbara Townsend reviewed evidence that showed Reeve spent $167,000 of Tonioli’s money over the next several months, on items including a vehicle purchase, $16,000 to a woman who would later become his wife, vacations, a wedding ring and marriage chapel expenses.
“I think we have disbarment,” Townsend said, noting misconduct rules prohibiting “dishonesty, fraud, deceit or misrepresentation” were demonstrated in the evidence.
Townsend pointed to a spreadsheet that Reeve created to give to Tonioli and others that she said made it appear “he hadn’t touched the funds” and had deposited them with the law firm in February 2015.
After his employer confronted him upon learning of the problems in September that year, Reeve lied to them about it. Reeve said again Friday that he “panicked” and lied but later that day admitted improprieties, and the next day he paid Tonioli her judgment sum plus interest.
One of the elements justifying disbarment is whether “serious injury” occurred from the attorney’s actions.
“The injury caused was not serious because all client funds were returned,” Reeve said. “There is no evidence of serious injury.”
“Repayment of funds after you’re caught is not really mitigation,” Townsend countered during her closing arguments.
Reeve said he was under tremendous mental pressure at the time because his workload had doubled when he picked up the cases of a colleague who was seriously ill. His marriage also was crumbling and he lived in hotels that year, he said.
“This is not an attempt to justify what is unjustifiable, but specifically to provide context,” he said. “The stress I encountered paralyzed me and I failed to confront my failures and honor my obligations.”
He said he “self-medicated” during that time as well.
Reeve cited as other mitigating factors his service in the community, including the chairmanship on a nonprofit group’s board and regular pro bono legal work for church congregation members.
“I was working too many hours and falling behind,” he said. “You can see how I lost track of the details.” Misuse of the settlement funds, he said, “did not come from any intent to deceive anybody.”
During cross-examination, Townsend asked Reeve if he sought medical treatment or counseling for the stress and anxiety he cited. He said he did not. “As I said, I self-medicated,” he said.
In her closing arguments, Townsend said Reeve provided no evidence to back up his claims of stress, anxiety and an altered mental state.
“His mental state was knowing if not intentional,” she said, pointing to Reeve intercepting the settlement check and having it put into his own account.
She said the harm to Tonioli was serious, even though she eventually got the money. “She went through a nightmare,” Townsend said. “This was tremendously hard on her after the loss of her husband. Then not only does her lawyer lie to her, but he spent a lot of her money.”
She argued his conduct could have been considered criminal, adding that a conviction is not required to justify disbarment in a misconduct case.
Reeve’s actions also harmed the public and the legal system, Townsend said. “People need to be able to trust their lawyers. It’s very important for a lawyer to keep their integrity intact.”
Hyde said he would study the matter and make a written ruling later. Possible penalties range from admonishment to disbarment.