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Iowa Supreme Court Suspends Lawyer For Failing to Recognize Nigerian Scam

The case is captioned Iowa Supreme Court Attorney Disciplinary Board v. Robert Allan Wright, Jr., 13-0780, December 6, 2013.  The Iowa Supreme Court disciplined Wright for (a) failing to recognize a Nigerian scam and (b) allowing other clients to participate in the scam.  This case has received a fair amount of press attention, but the press has ignored the main issue in the case from a lawyer discipline perspective.

The trouble began when Wright was contacted by a client, Floyd Madison who informed Wright that Madison was the beneficiary of a large bequest from a long-lost cousin in Nigeria. Madison told Wright that he needed to pay $177,660 in inheritance taxes and then he (Madison) would receive the money. Most lawyers would have told Madison that the transaction was a scam. Wright, however, drafted a contingency fee agreement under which Wright would receive 10% of the inheritance in exchange for representing Madison.

Wright then made more mistakes. He urged several of his clients to loan money to Madison to help Madison pay the “inheritance taxes.”  At Wright’s urging, several of his other clients made loans to Madison. Wright placed the proceeds of the loans in his trust account. The opinion states “Wright stipulated that he failed to advise White, Stodden and Nunneman that they should seek independent counsel before making the loans to Madison.”

Wright transferred the funds he collected overseas. Wright did not obtain any legal fee or benefit from the transaction. However, the clients who participated in the scam lost their money and no Nigerian inheritance ever materialized.

According to the opinion, “in the course of his work on behalf of Madison in pursuit of the Nigerian inheritance, Wright communicated with persons he believed were representatives of the ‘Central Bank of Nigeria,’ the ‘African Union,’ and the President of Nigeria. Wright also communicated with Okey Okafor, a person who claimed to be a Nigerian lawyer who had witnessed the decedent’s will. Wright also had communications with a person who claimed to be a lawyer in England named Johnson Walkers. Walkers claimed he had, on Madison’s behalf, traveled to Nigeria and investigated the legitimacy of the inheritance.”  p. 5.

The Supreme Court of Iowa imposed a 12 month suspension of Wright on two grounds, lack of competence and failure to advise the client to obtain independent counsel before entering into a business transaction with the lawyer.

Iowa Rule 32:1.1 requires that attorneys competently represent clients. The Supreme Court found competence lacking where Wright took no steps to verify the identify of any of the persons involved in the Nigerian inheritance.

Iowa Rule 32:1.8(a) regulates attorney business transactions with clients. Wright violated Rule 1.8(a) because he failed to advise his clients that he had a contingent fee arrangement with Madison. The clients were unaware that Wright had a pecuniary interest in the transaction. Wright violated the rule by failing to explain “carefully, clearly and cogently why independent legal advice is required.” (quoting Iowa Supreme Ct.Att’y Disciplinary Bd. v. Wintroub, 745 N.W.2d 469, 474 (Iowa 2008).

The Iowa Supreme Court also found that Wright engaged in deceitful conduct, violating Rule 32:8.4(c), because Wright failed to disclose to two of his clients “(1) the substantial risks inherent in the loans to Madison in furtherance of the risky Nigerian transaction, (2) that he did not intent to protect the interests of Rynearson [his client] and Putz [his client] in the loan transactions, and (3) his contingent fee interest in Madison’s inheritance constituted deceit.” This appears to me to be the weakest of the holdings of the Iowa Supreme Court. This conduct is not deceit, but, rather gross negligence.

This is a sad tale where an attorney was disciplined because he was really, really dumb. The lawyer received nothing from the transaction, but he was suspended for a year because of stupidity. The danger for lawyers is that the next case may involve a more subtle scam, and the lawyer will not only face civil liability, but also professional discipline. I have personally reviewed scams that were much more subtle than this one. Thankfully, I was fortunate enough to turn down those matters. Its easy to see the scam in hindsight, but not so easy before it happens.

Edward X. Clinton, Jr.

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