In the Matter of Ernest Lee Brazil (1994)

Overview

This case addresses attorney discipline following criminal convictions for grand theft and forgery arising from large-scale financial misconduct outside the practice of law. The Review Department rejected a lengthy stayed suspension recommended by the hearing judge and instead recommended disbarment, concluding that the magnitude and nature of the crimes constituted extreme moral turpitude not outweighed by mitigation.

Facts

Ernest Lee Brazil was admitted to the California Bar in 1974 and had no prior disciplinary record. After serving as a Navy pilot and graduating from Harvard Law School, he held senior legal and executive positions, including serving as California Real Estate Commissioner. In the late 1980s, Brazil was the principal officer of Interbank Mortgage Corporation, a mortgage banking company.

In September and October 1988, Brazil solicited and obtained more than $1 million from an investor, Benjamin Hom, purportedly to fund specific mortgage and municipal bond defeasance transactions. Instead of using the funds for those transactions, Brazil deposited the money into Interbank accounts and used it to reduce the company’s existing debt without disclosing this to Hom.

To secure the loans, Brazil delivered documents falsely representing that he or Interbank held interests in certain properties. In five of six instances, neither he nor the company had any such interest. Brazil also forged the signature and notarial seal of a notary public on six deeds and later reconveyed one property interest without notifying the investor.

The transactions involved usurious interest rates, were not disclosed to Interbank’s board of directors, and were concealed from internal oversight. Ultimately, Interbank was unable to repay the loans, and Hom suffered losses exceeding $1 million, recovering most—but not all—of the loss years later through bankruptcy proceedings.

Criminal Convictions

Mitigation and Aggravation

• Aggravation: Over $1 million in losses; multiple acts of theft and forgery; falsified notarial documents; sophisticated financial misconduct; serious harm to the public and to confidence in the legal profession.
• Mitigation (Discounted): No prior discipline; character testimony; evidence of stress from marital and financial difficulties; partial restitution. The Review Department found this mitigation insufficient and not compelling.

Discipline Analysis

The Review Department emphasized that Brazil’s convictions were conclusive evidence of intent to defraud and permanent deprivation. Although the crimes did not occur in the practice of law and did not directly victimize a client, they involved matters closely related to legal work—such as document authenticity and notarial integrity—and were of extraordinary magnitude.

Applying the Standards for Attorney Sanctions, the court held that disbarment is required for crimes of moral turpitude unless the most compelling mitigation clearly predominates. The court rejected the hearing judge’s conclusion that the misconduct was merely aberrational, finding that stress and personal difficulties do not justify large-scale dishonest conduct by an experienced attorney.

Outcome

The Review Department recommended that Ernest Lee Brazil be disbarred. Because he had been on interim suspension since April 1990, he would be eligible to petition for reinstatement after the applicable waiting period if the Supreme Court adopted the recommendation.

Sanctions Table