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Barbara Beatty (WSBA No. 17968, admitted 1988), of Seattle, has been disbarred by order of the Supreme Court effective March 23, 2000, following a hearing. The discipline is based on her Alford plea to two counts of securities fraud involving two clients.
In 1992, Ms. Beatty began soliciting investment contracts to finance construction of six houses in Algona, Washington. She raised $229,000 from four investors. She did not invest any of her own funds in this project. Ms. Beatty misrepresented several material facts to the investors, including: 1) they would earn 30 to 50 percent return on their investments, with no reasonable basis in fact; 2) their investments would be fully secured, when Ms. Beatty’s equity in the property did not fully secure any of the investments; and 3) she would have a buyer for each house prior to it being built, although she built only two houses and did not have a buyer until after the houses were completed. After the project failed, Ms. Beatty failed to fully repay the investors.
Two of the investors were Ms. Beatty’s clients. One, a 69 year-old woman, told Ms. Beatty that she was in failing health and that she worried about having enough money to live on prior to making the investment. Ms. Beatty told the client this was a safe investment. Relying on Ms. Beatty’s statements, the client invested $25,000. More than a year elapsed between the time the project failed and when Ms. Beatty communicated this to her client. She gave the client a promissory note calling for $500 monthly payments.
The other client invested $42,000 in Ms. Beatty’s project. Shortly after making this investment, the client’s job situation changed, and she requested to withdraw her investment. Ms. Beatty returned $10,397.71, but convinced the client to leave the remainder. After several unanswered phone calls, the client retained counsel and filed a complaint against Ms. Beatty. Ms. Beatty sent the client $10,000, but never disclosed that she was no longer managing the project.
Ms. Beatty pled guilty to two counts of securities fraud. Between the time of the plea and sentencing, Ms. Beatty repaid both clients’ principal with interest. As a result, one count was dropped and Ms. Beatty was sentenced on the other. She received 60 days’ home detention, 30 days’ community service and 12 months’ probation.
Ms. Beatty’s conduct violated RLD 1.1(a), (i) and (p), stating that a lawyer may be subject to discipline for conduct evidencing a disregard for the rule of law; conduct reflecting adversely on the lawyer’s honesty, trustworthiness or fitness as a lawyer; and conduct demonstrating unfitness to practice law.
Linda Eide represented the Bar Association. Thomas Coe represented Ms. Beatty. The hearing officer was Lish Whitson.
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