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Doc 188

Doc 188

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Published by: Circuit Media on Oct 11, 2011
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SUPREMECOURT,STATEOFCOLORADOCaseNumber:
IlPDJ008
ORIGINALPROCEEDINGINDISCIPLINEBEFORETHEOFFICEOFTHEPRESIDINGDISCIPLINARYUDGE1560BROADWAY,SUITE·675DENVER,CO
B0202
Complainant:
THEPEOPLEOFTHESTATEOFCOLORADO
Respondent:
STEVENJ.MASCARENAS
OPINIONANDDECISIONIMPOSINGSANCTIONSPURSUANTTOC.R.C.P.251.19(c)
OnAugust26,2011,thePresidingDisciplinaryJudge("theCourt")heldasanctionshearingpursuanttoC.R.C.P.251.15(b).MargaretB.FunkappearedonbehalfoftheOfficeofAttorneyRegulationCounsel("thePeople").StevenJ.Mascarenas("Respondent")didnotappear,nordidcounselappearonhisbehalf.TheCourtnowissuesthefollowing"OpinionandDecisionImposingSanctionsPursuanttoC.R.C.P.251.19(c)."
I.SUMMARY
RespondentengagedinanelaborateschemetodefraudtheprospectivepurchaserofastoreownedbyRespondent'swife,therebyviolatingColo.RPC
B.4(c).
AsaresultofRespondent'sdishonesty,thepurchaserlostoverfive-hundredthousanddollars.Respondenthasneitherpaidacivilarbitrationawardtothevictimnorpartictpatedinthisdisciplinaryproceeding.TheCourtconcludesthatRespondent'sflagrantanddeleteriousmisconductwarrantsdisbarment.
II.PROCEDURALHISTORY
OnNovember23,2010,thePeoplepetitionedtheColoradoSupremeCourttoimmediatelysuspendRespondentbasedonhisfailuretocooperateindisciplinaryinvestigations.Respondentdidnotparticipateinthatproceeding,andtheColoradoSupremeCourtimmediatelysuspendedRespondentonDecember13,2010.ThePeoplefiledacomplaintinthismatteronFebruary9,2011,allegingRespondentviolatedColo.RPC
B.4(c).
Thatday,thePeoplemailedthe
 
complaintbycertifiedandregularmailtoRespondent'sregisteredbusinessaddressof
12021
PennsylvaniaAvenue,Suite
201,
Thornton,Colorado
80241,1
ThemailwasreturnedtothePeople,andRespondentdidnotanswerthecomplaint.OnApril
25,
2011,
thePeoplefiledamotionfordefault,towhichRespondentdidnotrespond.TheCourtenteredadefaultjudgmentagainstRespondentonJune
6,2011.
Upontheentryofdefault,theCourtdeemsthewell-pledfactssetforthinthecomplaintadmittedandallruleviolationsestablishedbyclearandconvincingevidence.
2
III.ESTABLISHEDFACTSANDRULEVIOLATIONS
TheCourtherebyadoptsandincorporatesbyreferencethefactualbackgroundofthiscase,asfullydetailed
in
theadmittedcomplaint.
3
RespondenttooktheoathofadmissionandwasadmittedtothebaroftheColoradoSupremeCourtonMay
21,1986.
Heisregisteredupontheofficialrecordsunderattorneyregistrationnumber
15612
andisthereforesubjecttothejurisdictionoftheCourtpursuanttoC.R.C.P.
251.1.
InMay
2009,
TomRoberts("Roberts")soughttopurchaseaSubwaysandwichstoreinColorado.RobertscontactedSubwayDevelopmentofColorado("SDC"),theregionalrepresentativeofDoctor'sAssociates,Inc.("DAI"),whichisthenationalfranchisorofSubwaystores.SDCreferredRobertstoKathyMascarenas,Respondent'swife.KathyMascarenasagreedtosellRobertstherighttooperateherWestminsterSubwayshopfor
$495.000.00.
RespondentprovidedRobertswithaproposedcontracthehaddraftedandpersuadedRobertstosignit.RespondentdidnotadviseRobertshewasanattorneyatthattimeoratanylaterdate.ThecontractlistedastheselleranentityownedbyKathyMascarenasbutdoingbusinessas"StandleyLakeSubway,"eventhoughDAI'sfranchiseagreementwaswithKathyMascarenas.Whenexecutingthecontract,RespondentdidnotinformRobertsthatDAIhadnevergrantedapprovalforacorporationoralimitedliabilitycompanytoholdthestore.NordidRespondentdisclosetoRobertsthatDAI'spriorapprovalwasrequiredforanytransferoftherighttooperatethestoreorthatDAIhadacontractualrightoffirstrefusalofanycontractfortransfer.RespondentnevergavethecontracttoDAIorSDCtoobtainDAI'swaiverofitsrightoffirstrefusaloritspriorapprovalofthetransferoftheoperatingrightsforthestore.
1
ThePeoplealsomailedthecomplainttoanadditionalpossibleaddresstheyhadobtainedforRespondent:8381CircleDrive.Westminster,Colorado80031.Thismailingwasreturned.
2
See
C.R.C.P.251.15[b);
Peoplev.Richards.
748P.2d341,346[Colo.1987).
3
See
thePeople'scomplaintforfurtherdetailedfindingsoffact.
2
 
As
partofthesaleoftheSubwaystore,RespondentadvisedRobertstowireanagreed-upon$100,000.00deposittoColoradoHomeInvestments,LLC("CHI").RobertsdidsoonMay26,2009,followedbyadditionalwiretransfersmadeatRespondent'srequesttotaling$350,000.00.ThelastofthosetransferstookplaceonJuly16,2009.Robertswastopaytheremainderofthestore'spurchasepricebyMarch1,2010.RespondentandhiswifeturnedoverpossessionoftheshoptoRobertsaroundJuly15or16,2009,assuringhimhewasnowthestore'sowner.Robertsoperatedthestorefornearlythreemonths,workinglonghoursandinvestingabout$18,300.00ofhisownfundsforupgrades.Thestoreperformedwellandgainedvalueunderhisdirection.Duringthistime,RespondentandKathyMascarenasmaintainedsigningauthorityonabankaccountforthestore,tellingRobertstheyneededsuchauthoritytoassisthimwiththeownershiptransition.OnOctober3or4,2009,withoutwarningtoRobertsbutwithherhusband'sknowledge,KathyMascarenaslockedRobertsoutofthestoreandwithdrewallofthefundsheld
in
itsoperatingaccount.RespondentandhiswifehaveneitherreturnedpossessionofthestoretoRobertsnorrestoredanyofthefundswithdrawnfromthestore'soperatingaccount.BythetimeKathyMascarenasreassumedphysicalpossessionoftheshop,Robertshadinvested$468,300.00initspurchaseandoperation.Aroundthistime,RespondentalsodirectedCHItoquitclaimdeedCHI'sonlyhardasset-realpropertythathadbeenvaluedat$270,000.00-fornegligibleconsiderationtoanothercompanyownedbyKathyMascarenas.RespondentthenwithdrewmostofthecashRobertshadwiredtoCHI.TheseactionsleftCHIessentiallyjudgment-proof.InearlyOctober2009,RobertsfiledacivilactioninJeffersonCountyDistrictCourtagainstStandleyLakeSubway,Respondent,KathyMascarenas,andrelatedparties.Thejudgegrantedthedefendants'motiontostaytheactionandcompelarbitration.
An
arbitratorthenawardedRobertscompensatorydamagesof$450,000.00plusinterest,consequentialdamagesof
$IB,300.00
plusinterest,$66,000.00
in
attorney'sfees,and$2,000.00inarbitrationfees.ThearbitratoralsograntedRoberts,pendingsatisfactionofhisaward,aconstructivetrustandequitablelienagainstanyproceedsofthesalebyKathyMascarenas,andagainstanypersonorentityholdingeitherproceedsderivedfromRoberts'swiretransfersof$450,000.000orpropertyobtainedorimprovedthroughtheuseofsuchproceeds.Robertshasnotyetsucceededincollectingtheaward.ThePeopleallege-andtheCourt'sorderofdefaultestablishes-thatRespondentviolatedColo.RPCB.4{c),whichinterdictsconductinvolvingdishonesty,fraud,deceit.ormisrepresentation.Respondent'sdishonesty
3

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