A D.C. lawyer has been ordered to repay more than $13,000 in fees he collected from financially strapped clients who were referred to him by a debt consolidation firm he also represented.
U.S. Bankruptcy Judge Roger M. Whelan, in a 31-page opinion, ruled that lawyer John P. Devers "acted unethically" and violated D.C. Bar disciplinary rules when he collected fees from 33 bankrupt debtors, but performed no significant services for them.
"The value of the services rendered by [Devers] as the attorney of record . . . is zero," Judge Whelan wrote "It is indeed unfortunate that the conduct of this counsel has caused so much of a drain of judicial time and resources . . . "
The judge ordered Devers to repay $13,225 in fees he collected between Oct. 1, 1979, and last Jan. 3.
In addition, Judge Whelan directed the displinary arm of the D.C. Bar to take "appropriate steps" to sanction Devers and asked the District government's lawyer to investigate Dever's relationship with American Financial Services Inc., a local debt consolidation firm.
But Whelan said, "In fairness to the respondent, the court must note that . . . there is no evidence, nor does the court believe, that this attorney engaged in any intentional fraudulent conduct.Rather, the tragic scenario of events . . . came about as the result of ignorance, inattention and negligence -- not a knowing, willful course of fraud."
Attorney Ira C. Wolpert, who represented Devers, said that his client's relationship with the firm was "a proper one" and that he will appeal the judge's decision.
"The judge never told us exactly what the problem was," Wolpert said. "He told us he was generally looking at possible conflicts of interest. He did not get specific until he wrote his opinion."
"I think Mr. Devers simply got caught up in a unusual situation," Wolbert said. "He never expected that the referrals from AFS would turn into such an avalanche."
Four of the 33 clients testified that the debt consolidation firm referred them to Devers, who was an officer of the company until last February.
Devers had been practicing law on a part-time basis when he was hired by the firm in October 1979 to be its counsel, vice president and a corporate director, Whelan found.
The firm attracted clients by advertising in local newspapers, including The Washington Post, and promising to show low-and middle-income families how to "Get Out of Debt," according to the opinion.
Clients were charged between $200 and $300 to have the firm work out a repaymet schedule with their creditors. The firm's employes would then recommend that the debtors seek further counseling and legal services from Devers, whose law office was in the firm's suite at 815 15th St. NW, Whelan said.
Carlton M. Young, one of the complainants, testified that he thought Devers and AFS were working together because they shared the same office complex.
"This confusion or 'impression' in evitably resulted from this attorney's maintenance of his practice in close connection with the business affairs of AFS," the judge wrote. "In fact, a call to the attorney would, of necessity, be answered, 'American Financial Services.'"
According to the opinion, Devers had a "standard retainer agreement" with his clients, who paid an average fee of $400 for 1 1/2 hours to two hours work.
But Judge Whelan found that Devers conducted no independent investigation into his clients' cases and performed "relatively routine type services" for them such as telephoning creditors and making lists of their assets.
Geoffrey Alprin, assistant D.C. corporation counsel and chief of the office's criminal section, said the office is investigating the firm. Edward Yourman, deputy counsel to the D.C. Bar, said a disciplinary committee is expected to hear charges of ethical misconduct against Devers.