A hearing board of the Illinois Attorney Registration and Disciplinary Commission (ARDC) has recommended an Oak Brook attorney be disbarred for misappropriating more than $2 million from a client.
The recommendation comes more than three months after the Illinois Supreme Court suspended Kathleen Niew’s law license on an interim basis for the alleged misappropriation.
The ARDC complaint accuses Niew of two counts of each of the following: conversion; failure to promptly pay or deliver funds to a client; conduct involving dishonesty, fraud, deceit or misrepresentation; and conduct that is prejudicial to the administration of justice and tends to brings the courts or the legal profession into disrepute.
The misconduct charges stem from Niew’s alleged mishandling of $2.3 million Jamal and Leda Khoury had transferred to her interest on lawyers trust account (IOLTA) for the use of purchasing properties.
The Khourys first hired Niew in 2010 to represent them in the purchase of a property. That attempted purchase, and a subsequent attempted purchase in 2011, fell through by no fault of the Khourys, the ARDC complaint states.
During the course of representing the Khourys on these two purchases, Niew learned they had about $2.5 million in savings at several banks. The Khourys told Niew they planned to use the money to purchase multi-unit rental properties.
Niew suggested that having that large amount of money in banks was unsafe, and offered the Khourys her services in estate planning and asset-protection, according to the complaint.
Between the months of October and November, the ARDC asserts in its complaint that the Khourys made five separate transfers totaling $2.3 million to Niew’s IOLTA.
The Khourys’ money in Niew’s trust account was to be used only in connection with the Khourys’ real estate purchases, the complaint states.
The ARDC, however, alleges in its complaint that Niew spent at least $2.2 million of the Khourys’ money on her business or for personal purposes between October 2011 and July 2012.
The Khourys continued to shop for properties during the same time period, and made offers to buy at least ten properties.
At least two of those offers were accepted by the respective seller, but Niew “advised the Khourys not to proceed with those transactions purportedly because she did not believe they were in the Khourys' best interests,” the complaint states.
In each instance, the Khourys followed Niew’s advice.
In July 2012, the Khourys made offers on three separate properties in Chicago Ridge, Schiller Park and Hartford. The three offers, which totaled $2.6 million, were accepted.
The Khourys paid $10,000 in earnest money for the Chicago Ridge property and $138,000 in earnest money for the Schiller Park and Hartford properties.
According to the complaint, Niew sent letters to the owners of the properties informing them that the Khourys had the money needed to cover the purchases even though she “knew or should have known that her statements in her letters to the sellers that the Khourys had sufficient funds in her account to purchase the properties were false.
Niew, the ARDC asserts, went on to tell the Khourys, their real estate agent, the sellers and their attorneys at the Aug. 29, 2012 closing for the three properties that she ordered the bank to wire the funds for the purchases.
The sales were finalized, and the Khourys were given the keys and tenants rent for all three properties. At that time, the complaint states, only $75,739.96 of the Khourys’ initial $2.3 million was left in Niew’s IOLTA.
The complaint alleges that Niew never transferred the funds to purchase the properties and the Khourys had to return the keys and the rent money in mid-September. They also lost the $138,000 they paid in earnest money for the Schiller Park properties.
Niew, who has co-written two books on financial management, previously had her law license suspended for nine months in 2001 for notarizing false signatures and a false affidavit, among other things.