In the Matter of William Benson Peavey, Jr.
4 Cal. State Bar Ct. Rptr. 483 (Review Dept. 2002)
Overview
Attorney William Benson Peavey, Jr. was found culpable of multiple acts of professional misconduct arising from loans he obtained from current and former clients to finance publication of his book, Dignity of the Soul. The Review Department affirmed the Hearing Judge’s findings and recommended discipline of three years’ stayed suspension with two years’ actual suspension and restitution.
Summary of Facts
The Henson Matter
Peavey had represented the Hensons intermittently since the 1970s. In 1994, while that fiduciary relationship still existed, he borrowed $25,000 from them at 10% interest to finance publication of his book. The Hensons borrowed $24,000 at 12% interest from their credit union in reliance on Peavey’s assurances that:
- The book would be financially successful
- They would be repaid in full within six months
- Mr. Henson would not have to continue working
The loan was unsecured. Peavey did not advise them in writing to seek independent counsel and did not obtain written consent to the transaction.
The book venture was not profitable. Copies remained in storage. Peavey repeatedly assured the Hensons that repayment was imminent, citing fictional funding sources and anticipated sales. No payment was made.
The Hensons obtained a default judgment of $124,188.33, including punitive damages. Peavey failed to report the civil judgment for fraud and breach of fiduciary duty to the State Bar.
The Chamberlain Matter
Kevin Chamberlain was also a client in personal injury matters. In 1996, Peavey borrowed $25,000 from him, promising repayment of $30,000 plus interest within six months.
Again:
- The loan was unsecured
- No written advisement to seek independent counsel was provided
- No written consent was obtained
Peavey misrepresented that funds were needed for a “second printing,” although unsold copies from the first printing remained. He repeatedly told Chamberlain that repayment was “imminent,” inducing him to make financial commitments in reliance on those promises.
Chamberlain obtained a judgment for $43,794.89.
The Herger Loan (Aggravation)
Peavey also borrowed $37,500 from a former client and friend, Donald Herger. This misconduct was uncharged but considered as aggravation.
Defenses Raised
- No attorney-client relationship existed at the time of the loans
- The judgments were merely unpaid debts, not reportable misconduct
- Inability to repay does not constitute moral turpitude
- He always intended to repay the loans
- Two years’ actual suspension was excessive
The Review Department rejected these arguments, finding that the fiduciary relationship continued due to ongoing trust and influence, and that repeated misrepresentations elevated the conduct to moral turpitude under Business & Professions Code §6106.
Mitigation
- No prior discipline in 21 years of practice
- Extensive pro bono work in the Filipino community
- Character testimony from six witnesses
However, the court discounted some mitigation because witnesses lacked full understanding of the misconduct.
Aggravation
- Multiple acts of misconduct
- Significant financial harm to clients
- Indifference toward restitution
- Uncharged similar misconduct (Herger loan)
- Repeated dishonesty over several years
Detailed Sanctions & Misconduct Table
| Count / Issue | Rule or Statute Violated | Nature of Misconduct | Client Harm | Discipline Impact |
|---|---|---|---|---|
| Failure to report civil judgment (Henson) | Bus. & Prof. Code §6068(o)(2) | Did not report civil fraud judgment to State Bar | Delayed regulatory oversight | Independent violation; increased seriousness |
| Improper business transaction (Henson) | Rule 3-300 | Unsecured loan; no written advisement or consent | $124,188.33 judgment; elderly clients burdened with debt | Major discipline driver |
| Moral turpitude (Henson) | Bus. & Prof. Code §6106 | Repeated misrepresentations regarding repayment and business status | Clients misled for years | Triggered Standard 2.3 – actual suspension required |
| Improper business transaction (Chamberlain) | Rule 3-300 | Unsecured loan; failure to advise independent counsel | $43,794.89 judgment | Compounded misconduct pattern |
| Moral turpitude (Chamberlain) | Bus. & Prof. Code §6106 | False statements about second printing and imminent payment | Financial reliance damages | Significant aggravation |
| Uncharged misconduct (Herger) | Considered under Std. 1.2(b) | Similar unpaid loan to former client | Retirement funds affected | Aggravating factor |
| Restitution Requirement | Standard 1.4(c)(ii) | Must repay judgments with interest | Full financial restoration required | Actual suspension continues until paid |
| Final Discipline | Standards 2.3 & 1.4(c)(ii) | Moral turpitude & fiduciary breach | Multiple victims | 3-year stayed suspension; 2-year actual suspension; restitution; proof of rehabilitation |
Final Disposition
The Review Department recommended:
- Three years’ suspension (stayed)
- Three years’ probation
- Two years’ actual suspension
- Restitution to Hensons and Chamberlain with 10% interest
- Proof of rehabilitation before reinstatement
The court emphasized that repeated dishonesty and breach of fiduciary trust warranted substantial actual suspension under Standard 2.3.