Windsor attorney disbarred

Published 12:00 am Wednesday, February 21, 2007

RALEIGH – A veteran Bertie County attorney has been disbarred.

According to information supplied by the North Carolina State Bar, Windsor based attorney Teresa L. Smallwood was disbarred following a January 11-13 meeting by the State Bar’s Hearing Committee of the Disciplinary Hearing Commission.

The official action becomes effective 30 days after the disbarment order is served on Smallwood. To date, that order has yet to be served, according to Dottie Miani, a clerk with the State Bar’s Disciplinary Hearing Commission.

At the January hearing, which Smallwood was present, the committee, based upon findings of fact, ruled Smallwood’s misconduct was aggravated by dishonest or selfish motive; a pattern of misconduct; multiple offenses; refusal to acknowledge wrongful nature of conduct; vulnerability of victims; substantial experience in the practice of law; and indifference to making restitution.

The committee also came to the conclusion that Smallwood’s misconduct significantly harmed the legal profession to the point where the victims of the misconduct had expressed a sense of distrust of the legal profession.

Additionally, Smallwood’s misconduct resulted in significant harm to her clients and to others. That portion of the misconduct judgment including findings of fact regarding theft of funds from a trust account that Smallwood, as well as all attorneys, must establish. Those thefts involved her co-partner in law practice, Windsor attorney Tonza Ruffin, as well as clients using Smallwood’s services for a personal injury case and an estate. In the personal injury case, the client wound-up receiving only one-third of the $100,000 received in a settlement and was then left with an outstanding claim totaling $29,000 involving Medicaid.

In another instance, Smallwood failed to reschedule the depositions of a client, ultimately causing a dismissal of that particular case.

She was also ruled to have made false statements to the Grievance Committee of the North Carolina State Bar, thus interfering with the State Bar’s ability to regulate attorneys and undermined the privilege of lawyers in the state to remain self-regulating.

The committee’s “findings of fact” centered several instances of misconduct against Smallwood.

At some point before late July 2002, Ruffin obtained a new home mortgage loan commitment from St. Luke Credit Union in the amount of $150,000 to refinance her existing mortgage loan from CitiFinancial Mortgage. Ruffin asked Smallwood to conduct the closing transaction for her new mortgage from St. Luke.

In the process, Smallwood allegedly deposited $122,241.25 (the amount needed to satisfy CitiFinancial’s existing mortgage) from the trust account into a bank account she maintained at First Citizens Bank. That account was not denominated or maintained as an attorney trust account. Instead, it was in the name of the &uot;Law Offices of Teresa L Smallwood” with a Durham address.

Meanwhile, Smallwood did not inform Ruffin, CitiFinancial or St. Luke that she had withdrawn all of the proceeds from Ruffin’s mortgage loan transaction from the trust account and deposited the funds into her First Citizens Bank non-trust account.

Further findings of fact revealed that after depositing the $122,241.25 into the First Citizen’s account, Smallwood used the funds to pay off a mortgage loan on which defendant’s aunt was obligated, for investments for herself, for expenses of the law partnership and for her own personal expenses.

Smallwood did not have any authorization from Ruffin or from St. Luke to use the $122,241.25 for her personal benefit or the benefit of others.

In the second instance, beginning before October 1, 2002, Smallwood represented Dorothy Harris in a personal injury case. In that case, Harris agreed to an attorney’s fee of one-third of any money recovered. Harris wound-up with a $100,000 settlement.

Over the next 60 days, Smallwood issued herself checks from the Harris trust account in the total amount of $39,335. The Smallwood Law Firm received $22,335 while Ruffin, as Smallwood’s law partner, received $5,000. Harris’ share amounted to $33,335.

Of the two checks that Smallwood wrote to herself from the Harris trust, one, in the amount of $29,335, was to be held to satisfy a Medicaid reimbursement for Harris. Smallwood was to use those funds to pay-off Medicaid and refund the difference to Harris.

Apparently, according to the findings of fact, she did neither.

Traced to bank records, Smallwood allegedly used that money to purchase a cashier’s check in the amount of $18,184.19 payable to &uot;USDA&uot; with which to pay the outstanding balance on a loan owed by Smallwood’s aunt to the United States Department of Agriculture; purchased another cashier’s check in the amount of $2,900 payable to &uot;Taft&uot; for office furniture delivered to Smallwood’s office; and obtained a third cashier’s check in the amount of $2,100 payable to &uot;Tim Phelps&uot; with which Smallwood paid Phelps for services provided in removing debris from a lot Smallwood inherited from her mother. The remaining $6,150.81 was received in cash by Smallwood.

Meanwhile, Medicaid subrogation claim went unpaid and later became Harris’ liability.

In and around September, 2002, Smallwood represented the Estate of Clotee Gilliam, holding funds in an estate trust account.

From those funds, a check in the amount of $2,454.67 was written to Smallwood. The memo line on that check read &uot;Escrow Funds to Open Estate Acct – Clotee Gilliam [sic].&uot; Upon filing the final accounting of the estate with the Clerk of Superior Court, that $2,454.67 check was listed as a &uot;funeral bill.&uot; Smallwood cashed the check and did not apply its proceeds to pay a funeral bill nor did she apply the proceeds of the check for the benefit of the estate.

Thusly, the committee ruled that Smallwood knowingly and willfully misapplied and converted the $2,454.67 held in the firm trust account by her as a fiduciary.

As part of its ruling, the State Bar committee ordered Smallwood to pay the costs of the proceeding as assessed by the Secretary of the N.C. State Bar. She must pay the costs within 90 days of service upon her of the statement of costs by the Secretary.

Prior to her impending disbarment, Smallwood had been a member of the North Carolina State Bar since 1986.