:quality(70)/cloudfront-us-east-1.images.arcpublishing.com/shawmedia/XRWXQPPIVZHHRASJLTQJAHWWH4.jpg)
A Crystal Lake attorney faces the temporary suspension of his law license after a finding that he “misappropriated” more than $74,000 from a client trust account, according to the Illinois Attorneys Registration and Disciplinary Commission.
The ARDC recommended the attorney be disciplined after finding he “misappropriated more than $74,000 from his client trust account that he should have been holding on behalf of clients and others for real estate escrows and earnest money deposits,” the ARDC said in a news release.
The attorney, Frank John Zangara, said Tuesday the case was resolved by way of a “consent resolution” and the suspension is due to his lack of keeping proper records of an escrow account. No client’s money was ever “taken” and all of those affected have been made whole, he said.
The Illinois Supreme Court upheld the ARDC’s petition to suspend Zangara’s law license for one year. The suspension will be stayed after four months and he then will be on two years of probation, with conditions, according to a news release from the higher court. Zangara said he will resume practicing law after the four months of suspension is up.
Zangara, who has been licensed to practice law since 1985, has a sole practice that concentrates on commercial and residential real estate transactions and business asset transaction, according to the court’s petition to impose discipline.
In May, a two-count petition was filed claiming Zangara engaged in misconduct and conversion “following a report of insufficient funds” in the client account, called at IOLTA account, at JP Morgan Chase Bank. The account holds real estate, bulk sale and tax escrows. Zangara had been the sole signatory on the account since 1992, according to the petition.
In mitigation the petition said, Zangara, who represented himself, has not been previously disciplined and has cooperated in the disciplinary proceedings by producing records and voluntarily providing a sworn statement. There was also “no evidence that any client or third party did not received funds to which they were entitled in a timely manner,” the petition states.
The petition asserted that prior to the disciplinary proceedings, which began following a report of insufficient funds, Zangara “did not prepare or maintain any ongoing records of the deposits into, or withdrawals from, the IOLTA account. He did not maintain a check register, disbursements of receipts journals or client ledgers and he did not reconcile his IOLTA account on a consistent basis or keep track of funds due clients and others.”
Although the overall balance of the account remained above zero, it did at times fall “below the amount that should have been held on behalf of all clients and third parties,” the petition said.
However, on Nov. 15, 2021, the document asserts Zangara “drew a check on the account which caused the balance to fall below zero. Chase returned the check due to insufficient funds and reported Zangara to the commission,” the petition said. However, the petition said “immediately” after this, Zangara deposited $8,500 of his own funds “to cover the overdraft.” He also issued a second check to the payee which the bank then paid, according to the petition.
The investigation also showed that between 2019 and 2020, Zangara “received and deposited $103,190.34 in escrow funds ... on behalf of seven clients, and made one disbursement of $7,986.10 on behalf of one of those clients,” the petition said.
“Therefore, on July 1, 2020, [Zangara] should have been holding at least $95,204.24 in the account. However, on July 1, 2020, [Zangara] had drawn the balance in the account to $56,929.32, meaning [he] had used for his own purposes, without authority, at least $38,274.92 of escrow funds, which he should have been holding for the benefit of clients or third parties. Respondent’s use of the funds constitutes conversion,” the petition said.
The petition also stated that in October 2021, Zangara wrote a check for $46,987 when the account had a balance of just over $41,800. He also failed to keep his money separate from his clients' and using his clients’ funds for his own use, the petition said.
His “misconduct was not isolated; rather it took place over a period of years ... [putting] funds belonging to clients and others at risk,” the petition said.
However, the petition also said he has since “implemented proper record keeping procedures” and had the case gone to a contested hearing, Zangara “would have presented testimony from witnesses as to his good character.”
Among several conditions he must follow and satisfy before the two-year probation period ends are to cooperate in providing information regarding the investigation and to reimburse the ARDC for costs in connection with the proceedings and incurred during probation.
He also is required to reimburse the ARDC fund for any client protection payments arising from his conduct and must complete the ARDC Professionalism Seminar within the first six month of probation, the petition said.
Zangara said Tuesday the suspension is due to his “failure to keep proper records and not filing Quarterly reports with the ARDC.” The investigation, he said, was prompted by Chase Bank when a check did not clear that he was not aware of and he continued to write checks on that account. When he learned of the ”shortage" he made and redeposited the check and “that erased the shortfall.”
“The reason for the suspension was due to my not keeping proper records and not for ‘taking’ any funds that did not belong to me,“ he said adding he wants “the public to also know that no clients filed a complaint against me or lost any money.”