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Adding UPL to Indiana RICO statute

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An Indiana Supreme Court case involving an estate planning “trust mill” has led to a policy discussion about whether certain types of unauthorized practice of law should rise above a misdemeanor crime and involve a racketeering component.

The Indiana General Assembly will likely be asked to consider a proposal during its next session, following an interim Probate Code Study Commission recommendation for changes to state statute about how the state targets those individuals or businesses that illegally practice law. Specifically, lawmakers could address whether a pattern of UPL should be added to the list of three dozen crimes covered by the Racketeer Influenced and Corrupt Organizations statute.

foley-ralph-mug.jpg Foley

“This is a phenomenon we’ve tried to address in the past,” said Rep. Ralph Foley, R-Martinsville, an attorney who practices probate law and chairs the study committee. “The problem is that these are charlatans trying to deceive people. They aren’t lawyers and are nothing but a bad way to separate people from their money.”

The case against Indianapolis-based United Financial Systems Corp. initiated this policy discussion. The Indiana Supreme Court determined United Financial was illegally practicing law when preparing and selling estate planning documents and services to people. The Indiana State Bar Association filed a “trust mill” suit three years ago, and in April 2010 the justices determined United Financial should have known what it was doing was UPL and ordered the disgorgement of fees the company received from its UPL. All of the Indiana estate plan customers going back to 1995 were to be notified of the decision, but the company refused to pay those refunds immediately, and the justices in December 2010 ordered United Financial to notify those customers and return the fees as previously ordered.

An exact monetary figure of refunds or claims isn’t outlined in the order or in court filings. But in the court’s ruling, it provided context for the potential amount: from October 2006 through May 2009, the company’s Indiana business included 1,306 estate plans grossing more than $2.7 million. Nationally, 18.8 percent of United Financial’s total income was reported to have come from estate planning services in this state.

The Indiana Supreme Court in June said it wouldn’t reconsider its 2010 ruling, and now former Monroe Circuit Judge Viola Taliaferro is acting as commissioner and deciding what resolution is best for the case.

Earlier in the year, she determined that United Financial had failed without good cause to pay refunds to 346 customers, and she’s now determining whether contempt sanctions should be imposed. At a hearing in late October, the commissioner heard evidence about the company’s information on past customers, tax returns and financial documentation, and both sides have submitted proposed findings for Taliaferro to consider. The proposals call for repaying the restitution amount over the course of seven years, according to attorneys in the case.

Separate from the restitution action before Taliaferro, two lawsuits against United Financial are pending in Marion and Fulton counties as a result of the Supreme Court’s decision about the company’s prior activity.

The lawsuits and judicial action sparked legislative discussion about strengthening state criminal and probate code to address what some consider racketeering.

At the probate commission meeting Oct. 12, members voted 11-2 in support of recommending law changes to the General Assembly.

The changes would add UPL, currently a Class B misdemeanor outlined in Indiana Code 33-43-2, to the list of crimes covered under the RICO statute in IC 35-45-6. By definition, a pattern of racketeering activity occurs when a business or person engages in two or more incidents that had the same or similar intent, result, method of commission or was otherwise interrelated by distinguishing characteristics to other incidents. The current statute lists 36 crimes or activities including murder, arson, theft, child solicitation, promoting professional gambling and money laundering.

Proposed legislation would take effect July 1, 2012. It would allow for enhanced penalties under the racketeering statute, such as giving prosecutors the discretion to make UPL a Class C felony.

Vincennes attorney Jeff Kolb, who chaired the ISBA’s UPL section during the initial United Financial investigation, said he agrees this UPL activity fits into the racketeering definition and that a law change would strengthen the ability to collect restitution or even obtain attorneys fees from the prosecution of these actions.

Foley said that he and former Rep. Trent Van Haaften, D-Mount Vernon, had previously tried unsuccessfully to add UPL to the list of racketeering activities and that now is the time to move forward.

“They’ve developed a scheme and are taking advantage of people and stealing from them,” Foley said about those engaging in UPL similar to the United Financial activity. “Pure and simple, I think it’s a scheme that is racketeering.”

blakey-robert-mug.jpg Blakey

Not everyone on the probate panel agrees. Sen. Susan Glick, R-LaGrange, a former county prosecutor, said she didn’t believe UPL fit with the other listed crimes such as arson and child solicitation. Two non-attorney committee members – Tom Hardin and David Pendergast – voted against the proposal.

“I just wonder if there’s a need here, and if we’re not using a sledge hammer to hit at this when a misdemeanor should be used,” Hardin said.

University of Notre Dame law professor G. Robert Blakey, who helped craft the federal RICO Act in 1970, and is considered one of the nation’s foremost experts on RICO law, said he thinks the kind of UPL activity at issue in this discussion should be covered by the state racketeering statute.

The predicate may not be the same as other offenses, such as murder or drug trafficking, but Blakey says RICO was designed to target illegal businesses operating as an enterprise.

“Organized crime is not limited to the mob, and white-collar crime equals RICO,” he said. “This sounds like white-collar crime to me and it (the proposed statute revisions) makes a lot of sense to me.”•

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  1. I have been on this program while on parole from 2011-2013. No person should be forced mentally to share private details of their personal life with total strangers. Also giving permission for a mental therapist to report to your parole agent that your not participating in group therapy because you don't have the financial mean to be in the group therapy. I was personally singled out and sent back three times for not having money and also sent back within the six month when you aren't to be sent according to state law. I will work to het this INSOMM's removed from this state. I also had twelve or thirteen parole agents with a fifteen month period. Thanks for your time.

  2. Our nation produces very few jurists of the caliber of Justice DOUGLAS and his peers these days. Here is that great civil libertarian, who recognized government as both a blessing and, when corrupted by ideological interests, a curse: "Once the investigator has only the conscience of government as a guide, the conscience can become ‘ravenous,’ as Cromwell, bent on destroying Thomas More, said in Bolt, A Man For All Seasons (1960), p. 120. The First Amendment mirrors many episodes where men, harried and harassed by government, sought refuge in their conscience, as these lines of Thomas More show: ‘MORE: And when we stand before God, and you are sent to Paradise for doing according to your conscience, *575 and I am damned for not doing according to mine, will you come with me, for fellowship? ‘CRANMER: So those of us whose names are there are damned, Sir Thomas? ‘MORE: I don't know, Your Grace. I have no window to look into another man's conscience. I condemn no one. ‘CRANMER: Then the matter is capable of question? ‘MORE: Certainly. ‘CRANMER: But that you owe obedience to your King is not capable of question. So weigh a doubt against a certainty—and sign. ‘MORE: Some men think the Earth is round, others think it flat; it is a matter capable of question. But if it is flat, will the King's command make it round? And if it is round, will the King's command flatten it? No, I will not sign.’ Id., pp. 132—133. DOUGLAS THEN WROTE: Where government is the Big Brother,11 privacy gives way to surveillance. **909 But our commitment is otherwise. *576 By the First Amendment we have staked our security on freedom to promote a multiplicity of ideas, to associate at will with kindred spirits, and to defy governmental intrusion into these precincts" Gibson v. Florida Legislative Investigation Comm., 372 U.S. 539, 574-76, 83 S. Ct. 889, 908-09, 9 L. Ed. 2d 929 (1963) Mr. Justice DOUGLAS, concurring. I write: Happy Memorial Day to all -- God please bless our fallen who lived and died to preserve constitutional governance in our wonderful series of Republics. And God open the eyes of those government officials who denounce the constitutions of these Republics by arbitrary actions arising out capricious motives.

  3. From back in the day before secularism got a stranglehold on Hoosier jurists comes this great excerpt via Indiana federal court judge Allan Sharp, dedicated to those many Indiana government attorneys (with whom I have dealt) who count the law as a mere tool, an optional tool that is not to be used when political correctness compels a more acceptable result than merely following the path that the law directs: ALLEN SHARP, District Judge. I. In a scene following a visit by Henry VIII to the home of Sir Thomas More, playwriter Robert Bolt puts the following words into the mouths of his characters: Margaret: Father, that man's bad. MORE: There is no law against that. ROPER: There is! God's law! MORE: Then God can arrest him. ROPER: Sophistication upon sophistication! MORE: No, sheer simplicity. The law, Roper, the law. I know what's legal not what's right. And I'll stick to what's legal. ROPER: Then you set man's law above God's! MORE: No, far below; but let me draw your attention to a fact I'm not God. The currents and eddies of right and wrong, which you find such plain sailing, I can't navigate. I'm no voyager. But in the thickets of law, oh, there I'm a forester. I doubt if there's a man alive who could follow me there, thank God... ALICE: (Exasperated, pointing after Rich) While you talk, he's gone! MORE: And go he should, if he was the Devil himself, until he broke the law! ROPER: So now you'd give the Devil benefit of law! MORE: Yes. What would you do? Cut a great road through the law to get after the Devil? ROPER: I'd cut down every law in England to do that! MORE: (Roused and excited) Oh? (Advances on Roper) And when the last law was down, and the Devil turned round on you where would you hide, Roper, the laws being flat? (He leaves *1257 him) This country's planted thick with laws from coast to coast man's laws, not God's and if you cut them down and you're just the man to do it d'you really think you would stand upright in the winds that would blow then? (Quietly) Yes, I'd give the Devil benefit of law, for my own safety's sake. ROPER: I have long suspected this; this is the golden calf; the law's your god. MORE: (Wearily) Oh, Roper, you're a fool, God's my god... (Rather bitterly) But I find him rather too (Very bitterly) subtle... I don't know where he is nor what he wants. ROPER: My God wants service, to the end and unremitting; nothing else! MORE: (Dryly) Are you sure that's God! He sounds like Moloch. But indeed it may be God And whoever hunts for me, Roper, God or Devil, will find me hiding in the thickets of the law! And I'll hide my daughter with me! Not hoist her up the mainmast of your seagoing principles! They put about too nimbly! (Exit More. They all look after him). Pgs. 65-67, A MAN FOR ALL SEASONS A Play in Two Acts, Robert Bolt, Random House, New York, 1960. Linley E. Pearson, Atty. Gen. of Indiana, Indianapolis, for defendants. Childs v. Duckworth, 509 F. Supp. 1254, 1256 (N.D. Ind. 1981) aff'd, 705 F.2d 915 (7th Cir. 1983)

  4. "Meanwhile small- and mid-size firms are getting squeezed and likely will not survive unless they become a boutique firm." I've been a business attorney in small, and now mid-size firm for over 30 years, and for over 30 years legal consultants have been preaching this exact same mantra of impending doom for small and mid-sized firms -- verbatim. This claim apparently helps them gin up merger opportunities from smaller firms who become convinced that they need to become larger overnight. The claim that large corporations are interested in cost-saving and efficiency has likewise been preached for decades, and is likewise bunk. If large corporations had any real interest in saving money they wouldn't use large law firms whose rates are substantially higher than those of high-quality mid-sized firms.

  5. The family is the foundation of all human government. That is the Grand Design. Modern governments throw off this Design and make bureaucratic war against the family, as does Hollywood and cultural elitists such as third wave feminists. Since WWII we have been on a ship of fools that way, with both the elite and government and their social engineering hacks relentlessly attacking the very foundation of social order. And their success? See it in the streets of Fergusson, on the food stamp doles (mostly broken families)and in the above article. Reject the Grand Design for true social function, enter the Glorious State to manage social dysfunction. Our Brave New World will be a prison camp, and we will welcome it as the only way to manage given the anarchy without it.

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