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Joel Santos Manalang (WSBA No. 26675, admitted 1997), of Seattle, was disbarred, effective August 15, 2007, by order of the Washington State Supreme Court following a default hearing. This discipline resulted from conduct involving money laundering, perpetration of fraud, and conflicts of interest.
Mr. Manalang operated an escrow business in connection with his law practice, using his trust account for closing deposits and disbursements. In September 2003, in connection with an escrow transaction, Mr. Manalang accepted $176,600 in currency on behalf of a client for a down payment to purchase a residence. A mortgage broker, TL, made arrangements for the transaction and delivered the currency to Mr. Manalang in a shoe box. Mr. Manalang deposited the currency into his trust account and wrote a check for the down payment. Mr. Manalang knew the currency was proceeds from illegal drug transactions and he did not file a federal Form 8300, Report of Cash Payments Over $10,000, for the transaction. In May 2005, federal agents contacted Mr. Manalang and explained that the use of Form 8300 applies to law firms, escrow accounts, and real estate transactions. In late summer 2005, TL delivered several hundred thousand dollars in currency to Mr. Manalang in duffle bags in connection with another real estate purchase. Mr. Manalang did not create records regarding receipt of the currency nor deposit it into his trust account, instead storing it in his home for several weeks. Mr. Manalang knew the currency, estimated to be $600,000, was proceeds from illegal drug transactions and he did not file a federal Form 8300 regarding his receipt of the cash. Over time, Mr. Manalang returned all of the funds to TL, as no real estate transaction took place. In August 2006, Mr. Manalang pled guilty to one count of money laundering in violation of Title 18, USC §1956(a)(1)(b)(i) and (ii), which is a felony.
In late 2002, the home of Mr. and Mrs. K was in foreclosure proceedings. English was a second language for them, and their primary source of income was Social Security payments. Mr. and Mrs. K located mortgage broker TL and spoke with him about getting a loan to protect their home from foreclosure. Documents were represented to Mrs. K by TL as being loan documents, but were actually sale documents transferring their residence to TL and his wife (collectively TL) for a purported purchase price of $230,000. At the time, Mr. and Mrs. K owed approximately $147,000 in two mortgage loans to their bank. Mr. Manalang handled the closing escrow. At the request of TL, Mr. Manalang prepared two sets of closing settlement statements. The first set was given to TL’s lender and provided that Mr. and Mrs. K would receive $69,050.10 from TL as a purchase payment. Mr. Manalang signed a statement dated March 23, 2003, certifying: “The Settlement Statement which I have prepared is a true and accurate account of funds received and funds disbursed or to be disbursed in this transaction.” The second set showed a line item of “Seller Contribution to Closing” of $69,000 from Mr. and Mrs. K, in essence “giving” their equity in the property to TL, and showing an amount due from the “Seller” of $823.11. Mr. Manalang disbursed the funds in accordance with the second closing statement. Mr. and Mrs. K were unable to make their required payments to TL, which they understood were loan payments, but TL denominated as rent. After TL sued Mr. and Mrs. K for unlawful detainer, they brought suit against TL and the mortgage company where he was employed, claiming violations of the Consumer Protection Act, Mortgage Broker Practices Act, and other fraudulent acts. The matter was settled in February 2006 through TL’s payment to Mr. and Mrs. K of $70,000, plus attorney’s fees, and deeding the home back to Mr. and Mrs. K.
Mr. Manalang’s conduct violated RPC 1.2(d), prohibiting a lawyer from counseling a client to engage, or assisting a client, in conduct that the lawyer knows is criminal or fraudulent; RPC 1.7, prohibiting a lawyer from representing a client if the representation will be materially limited by the lawyer’s responsibilities to another client, a third person, or the lawyer’s own interests, unless the lawyer reasonably believes the representation will not adversely affect the relationship with the other client, and each client consents in writing after consultation and a full disclosure of the material facts; RPC 4.1(a), prohibiting a lawyer, in the course of representing a client, from knowingly making a false statement of material fact or law to a third person; RPC 8.4(b), prohibiting a lawyer from committing a criminal act that reflects adversely on the lawyer’s honesty, trustworthiness, or fitness as a lawyer in other respects; RPC 8.4(c), prohibiting a lawyer from engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation; RPC 8.4(d), prohibiting a lawyer from engaging in conduct that is prejudicial to the administration of justice; and RPC 8.4(i), prohibiting a lawyer from committing any act involving moral turpitude, or corruption, or any unjustified act of assault or other act which reflects disregard for the rule of law.
Nancy B. Miller represented the Bar Association. Mr. Manalang did not appear either in person or through counsel. Octavia Y. Hathaway was the hearing officer. |