In the Matter of Priamos (Review Dept. 1998) 3 Cal. State Bar Ct. Rptr. 824

Overview

Attorney Paul D. Priamos was disbarred after engaging in extensive self-dealing and breaches of fiduciary duty involving more than $500,000 of client investment funds over a seven-year period. The Review Department found clear and convincing evidence that he violated the former business-transaction rule and committed acts of moral turpitude by exploiting a vulnerable client, failing to account for funds, and unilaterally paying himself hundreds of thousands of dollars in fees.

Facts

Priamos represented a client in a dissolution matter and secured substantial assets for her, including nearly $750,000. The client later asked him to manage her investments so she could live off conservative income sources such as certificates of deposit. He knew she suffered from manic-depressive episodes and was periodically hospitalized.

Instead of investing conservatively, Priamos used his client’s funds to finance speculative ventures in which he had personal financial interests. These included real estate purchases, horse breeding operations, and business investments. He frequently held title in his own name or his wife’s name, without disclosing the transactions to the client.

Over time, he handled approximately $2.1 million of the client’s money. Evidence showed that more than $500,000 was diverted into undisclosed ventures. He never provided proper accountings despite repeated requests by the client and her son.

Priamos also paid himself approximately $450,000 in management and legal fees from the client’s funds without authorization. When the client eventually discovered the misconduct, she revoked his power of attorney and sued him. A civil judgment later determined that he owed her roughly $1 million, which remained unpaid.

Misconduct Findings

• Entering business transactions with a client without disclosure or informed consent
• Failure to provide accountings
• Self-dealing and conflicts of interest
• Failure to maintain proper records
• Moral turpitude under Business and Professions Code § 6106

Legal Analysis

The court emphasized that attorneys who undertake investment management duties remain bound by fiduciary obligations and professional conduct rules. The respondent’s broad power of attorney did not excuse compliance with ethical requirements governing business transactions with clients.

His conduct was treated as functionally equivalent to misappropriation because he treated the client’s funds as a personal resource pool. The court highlighted his failure to maintain records, disclose conflicts, and protect his client’s interests.

Aggravating Factors

• Massive financial harm to client
• Pattern of misconduct over many years
• Lack of remorse or insight
• Failure to make restitution

Mitigation

• No prior discipline at the time misconduct began
• Personal family pressures (given limited weight)

Disposition

Key Takeaway

When an attorney manages a client’s investments, the fiduciary duty of utmost loyalty applies. Extensive self-dealing, failure to disclose conflicts, and lack of accountability will support a finding of moral turpitude and warrant disbarment.