LEWISTON — In June 2007, the secrets of partner John D. Duncan were slowly making their way through the hallways of Portland’s prestigious Verrill Dana law firm.
His secretary had blown the whistle on him.
Ellie Rommel had given other partners in the firm evidence that Duncan had written checks to himself from the account of an elderly client. There were more personal concerns as well.
Rommel had seen pornography on Duncan’s office computer, and claimed he was sending and receiving inappropriate e-mails in connection with a homosexual affair.
As the firm’s managing partner, David Warren had the job of figuring out how to respond.
Telling his story to a judge Monday – the first time his account has been aired publicly – Warren conceded that Verrill Dana could have uncovered the full scope of Duncan’s financial misconduct earlier than it ultimately did.
But Warren said there was no effort to cover up for Duncan. He defended his cautious approach, and said his decisions about how to proceed that summer hinged on two central beliefs.
First, Warren said, he accepted Duncan’s word that he had never stolen from any clients. Duncan initially claimed that he had taken only money that was supposed to go to the partnership.
Secondly, Warren said, he was concerned about Duncan’s safety.
“He was basically an emotional wreck,” Warren told Justice Donald Alexander of the Maine Supreme Judicial Court.
“I was worried that he was on the edge of committing suicide,” Warren said, noting that Duncan was often seen reading the Bible alone in his office. “I did not want to be responsible for pushing him over the edge.”
Duncan was expelled from the firm in November 2007, as the extent of his wrongdoing was coming to light through an external audit. He was permanently disbarred and served two years in federal prison for stealing about $300,000 from multiple clients and his Verrill Dana partners.
More than three years after the scandal shook their firm, Warren and five other Verrill Dana lawyers are in Lewiston District Court this week to face allegations that they violated ethics rules.
J. Scott Davis, lead counsel for the Maine Board of Bar Overseers, claims the lawyers were wrong to have accepted Duncan’s story, and should have immediately begun a thorough investigation of the matter and reported it to the board.
Davis is seeking professional sanctions against Warren and James Kilbreth III, who chaired Verrill Dana’s executive board in 2007. Davis also seeks sanctions against Eric Altholz, Mark Googins, Roger Clement Jr. and Juliet Browne, lawyers who served on the firm’s executive board at the time.
After opening statements Monday morning, Warren testified for the rest of the day. Rommel is expected to testify today. The hearings could conclude this afternoon or continue into Wednesday.
Justice Alexander will decide whether the lawyers broke any professional rules and whether they should be sanctioned. Possible sanctions range from a simple reprimand to disbarment. All six lawyers remain with Verrill Dana.
The most serious claims are against Warren, who led the firm from 1994 until he stepped down as managing partner in the wake of the scandal.
In his opening statement, Davis told the judge that while Warren was concerned about Duncan’s mental health, he was neglecting his duty to protect Verrill Dana’s clients.
Rommel pushed for Duncan to be held accountable, even though it was hard for the secretary to do that, Davis said.
“She couldn’t work there, knowing what was going on with Duncan,” Davis said. “She was the one who was brave enough to finally do something.”
On the witness stand, Warren recounted every step he took in connection with the matter in the summer and fall of 2007.
He said Greg Foster, a lawyer who worked in the trusts and estates department with Duncan, spoke with him on June 13 about information he had received from Rommel. Rommel was particularly concerned about checks that Duncan had written on an account for Janice Thomas. Warren said he asked Foster to bring him copies of all of the checks associated with that account.
After reviewing the checks, a spreadsheet connected to the account and other bank documents, Warren said it appeared that Duncan had deposited $77,500 into a personal account. Warren believed that was money Duncan had earned as a conservator of Thomas’ estate, and it should have been remitted to the partnership, as required by Verrill Dana’s rules.
Warren went to Duncan’s office to confront him on the morning of June 28.
“Tell me about Janice Thomas,” Warren recalled asking.
“He said to me, she was a longtime client, as much a friend as a client. He paused, then he looked back up and said, ‘I’ll pay it all back.’ “
Warren said Duncan looked him in the eye and assured him that the fees had been earned, that they had been appropriately billed, and that there were no other instances in which that had happened. Duncan was embarrassed, profusely apologetic and upset that he had done such a thing.
“I believed him,” Warren said.
At a meeting of the firm’s executive board on July 9, Warren recounted his conversation with Duncan.
He said the board had a discussion and ultimately agreed that Duncan had broken the rules of the Verrill Dana partnership, but he would be allowed to continue with the firm. On behalf of the firm, Warren accepted a check from Duncan the next week, for $77,500.
The next step was for Warren to inform Kurt Klebe, chair of the firm’s trusts and estates department. Warren said he had to ask Klebe to look into the situation and make sure safeguards would be put in place to prevent similar misconduct in the future. But Warren said he did not meet with Klebe until Oct. 2, nearly three months later, primarily because of Duncan’s fragile mental state.
Rommel, who had left the firm in June and declined offers by Warren to return, contacted the firm on Oct. 5 through her lawyer, Daniel Lilley. He demanded that Verrill Dana preserve certain e-mails and other computer evidence for a potential lawsuit by Rommel for wrongful termination and other claims.
Later that month, the firm hired outside lawyers and accountants to do a full review of Duncan’s files. The audit revealed that Duncan had lied, and that he had stolen from several clients and embezzled from the firm over a 10-year period. Duncan illegally wrote checks to himself from several clients’ accounts, totaling $109,000.
A second scheme involved trustee fees that were supposed to go to the partnership but were instead pocketed by Duncan. The total of that scheme was $187,500.
One key question for Justice Alexander is whether Duncan’s thefts would ever have been revealed without the threat of a lawsuit by Rommel.
Warren testified that they would have. He said his Oct. 2 meeting with Klebe got the ball rolling, and Klebe had discovered other instances of potential misconduct by Duncan before Lilley got involved.
Davis disagrees. In court filings, he said that if Rommel had not pressed the issue and gone to Lilley, “Duncan’s misconduct would have remained hidden, covered up and never properly reported by any of the firm’s board members as they were required to do.”
When the external audit of Duncan’s files was complete, the firm reported his misconduct to the Board of Bar Overseers, the Cumberland County district attorney and the U.S. attorney in Portland. Verrill Dana also repaid, with interest, any client who had been harmed by Duncan.
Rommel settled her dispute with Verrill Dana in 2008. Terms of the settlement are confidential.
Duncan pleaded guilty in 2008 to theft and tax evasion. Investigators found no connection between his thefts and the personal behavior that was disclosed by Rommel to the leadership within Verrill Dana.
His lawyer said Duncan was simply haunted by an irrational insecurity about money.
Staff Writer Trevor Maxwell can be contacted at 791-6451 or at: [email protected]