In the Matter of Diana Y. McDonald

319 Ga. 197

Opinion

319 Ga. 197 FINAL COPY

S23Y1195. IN THE MATTER OF DIANA Y. MCDONALD.

PER CURIAM.

This disciplinary matter is before the Court on the Report and

Recommendation of the State Disciplinary Review Board, which

recommends that we adopt the Report and Recommendation of

Special Master Delia T. Crouch. The Special Master recommended

disbarring Respondent Diana Y. McDonald (State Bar No. 489710)

for violations of Rules 1.5 (a); 1.8 (e); 1.15 (I) (a), (c), and (d); 1.15 (II)

(a) and (b); 4.1 (a); 7.1 (a); 7.5 (a) and (d); and 8.4 (a) (4) of the Georgia

Rules of Professional Conduct (“GRPC”), see Bar Rule 4-102 (d).1

McDonald filed general exceptions to the Review Board’s Report and

Recommendation, arguing that disbarment is not the appropriate

discipline. She also filed a document styled as a “Petition for

1 The maximum penalty for a single violation of Rules 1.5 (a); 1.8 (e); and

7.5 (a) and (d) is a public reprimand, while the maximum penalty for a single violation of Rules 1.15 (I) (a), (c), and (d); 1.15 (II) (a) and (b); 4.1 (a); and 7.1 (a) and 8.4 (a) (4) is disbarment. Voluntary Retirement,” in which she requests that she be

“transferred to retired status” in lieu of being disbarred. The Bar

responded to both filings. After consideration of the entire record in

this matter, we dismiss McDonald’s petition for voluntary discipline

and order that she be disbarred for her violations of the Georgia

Rules of Professional Conduct.

Factual Summary

Although the record in this case is large and comprehensive,

the general facts are that McDonald, a solo practitioner who joined

the State Bar of Georgia in 1985, did business both as the McDonald

Law Group, LLC, and Law Offices of Diana McDonald, LLC.2 She

maintained IOLTA accounts at Wells Fargo Bank in the names of

both businesses.

In the course of her practice, McDonald provided legal advice

to a client who purported to conduct deals wherein the client was to

2 McDonald admitted that she identified her firm as a “law group,” even

though she was a solo practitioner. She testified that, at one point, another attorney had practiced with her, but that attorney left the firm in 2018. She continued practicing as a “law group” through the events leading to this disciplinary matter, which occurred in 2019.

2 provide goods or services to third parties in exchange for payment.

As early as 2017, McDonald agreed to act and did act as an escrow

agent for several of those deals. Despite the facts that none of the

client’s deals seemed to close smoothly and that the third parties in

most, if not all, of those deals complained to McDonald about not

receiving the promised goods or services, McDonald again agreed in

early 2019 to act as the escrow agent in a deal wherein her client

and his associate promised to sell 1,000 Bitcoin to a third party

through intermediary companies.3

On January 3, 2019, the third party in this deal transferred

$4,000,000 into one of McDonald’s IOLTA accounts with the

understanding that it would be held in escrow and not released until

the promised Bitcoin was confirmed to be in the third party’s “digital

wallet” — an event which all parties expected to occur quickly, but

which all parties now agree never happened. Several days later,

after no Bitcoin was delivered, the third party, through its attorney,

3 The agreement appeared to contemplate the exchange of up to 1,500

Bitcoin in several tranches, with the first tranche of 1,000 Bitcoin to be delivered on January 4, 2019.

3 reached out via e-mail to McDonald, demanding return of its funds.

In responding to the third party over the next several days,

McDonald first encouraged it to provide her client with additional

time to deliver the Bitcoin, assuring the third party that her past

experiences with her client gave her faith that her client would

deliver, but that, if he did not do so, she would commence the process

of transferring the third party’s escrowed funds back to it on

January 8, 2019.

Then, on January 9, 2019, after the third party again

demanded return of its $4,000,000, McDonald informed the third

party that she had received confirmation from her client that the

Bitcoin would be delivered “before the end of business today”;

represented that, “[a]s a gesture of good faith and recognition for the

delay,” she had negotiated with her client to deliver 2,000 Bitcoin,

instead of the 1,000 for which the third party had paid; and assured

the third party that its funds were “safe and protected.” In mid-

January, the State Bar became involved at the third party’s request

in trying to obtain assurances from McDonald that she still had the

4 $4,000,000 in her IOLTA account. McDonald advised the Bar that

her client represented to her that he had sent the Bitcoin, and that

he needed time to investigate why the Bitcoin had not shown up in

the third party’s digital wallet. She assured the Bar that the matter

would be resolved by the end of the business day on January 15 and

that “the funds [we]re safe.” The Bar responded to McDonald

informing her that it was relieved to hear that “the money was still

safely in [her] trust account,” and reminding her of her fiduciary

duties under Rule 1.15 (I).4

On January 18, 2019, the third party filed a formal grievance

against McDonald with the Bar, and the Bar forwarded it to her by

e-mail, asking directly whether the $4,000,000 was still in her

IOLTA account.5 McDonald did not respond to the Bar’s e-mail, but,

4 McDonald took no steps to correct the Bar’s mistaken belief that the

funds were still in her trust account. She later admitted that she did not do so because she did not want to lie to the Bar and knew that if she told the truth, things would “kind of blow up.” 5 That grievance led to the issuance of a Formal Complaint, see Bar Rule

4-211, which was properly served on McDonald and timely answered by her. After a lengthy discovery period, the Bar moved for summary judgment, which was granted as to the violations still at issue in this matter. A hearing on

5 on January 18, she wired $2,000,000 to the third party. The rest of

the money, however, would not be transferred because, as it turns

out, McDonald had begun transferring the third party’s money out

of her IOLTA account to different recipients on the same day she

received it. By January 7, when she assured the third party that its

funds were “safe and protected,” she had already disbursed

approximately $2,000,000 of the third party’s funds out of her

IOLTA account to herself and others unaffiliated with this

transaction. In fact, although the third party never authorized the

transfer or disbursement of any of its funds except upon conclusion

of the deal, and although McDonald never notified the third party of

her intention to transfer any of its money out of her account, on

January 3 and 4, McDonald transferred $415,000 to other accounts

controlled by her; $25,000 to her sister; and $450,000 to parties

involved in her client’s earlier deals. In addition, she attempted to

wire $1,200,000 to a Chinese bank, but those wires were not

aggravating and mitigating factors was held, after which the Special Master entered the Report and Recommendation addressed herein.

6 accepted. On January 7, the same day she assured the third party’s

attorney that the money was “safe and protected,” she wired

$800,000 to a corporation her client allegedly told her was its U.S.

Bitcoin trader. McDonald asserted, during the underlying Bar

proceedings, that each of these disbursements of the third party’s

money to herself and other individuals and companies was

authorized by her client. On February 1, 2019, less than a month

after it received the $2,000,000 back from McDonald, the third party

demanded an accounting of its remaining funds being held in

escrow, but she never provided that accounting.

Unsatisfied with the return of only half of its money, the third

party filed a federal lawsuit against McDonald, her business

entities, and various other parties on March 1, 2019, seeking an

immediate temporary restraining order, injunctive and equitable

relief, and compensatory and punitive damages. In connection with

this lawsuit, McDonald provided sworn testimony in which she

admitted that $440,000 of the third party’s money had already been

transferred to her operating accounts and to her personal accounts

7 (and that of her sister), and explained her position that, even though

her client never provided, and the third party never received, any

Bitcoin, she was entitled to those funds and more, as fees for her

services to her client. She also took the position that she did not need

the third party’s permission to distribute its funds to herself or any

other entity, because she was doing so at her client’s direction and

for his benefit. Further, McDonald told the federal court that she

intended to keep the fees if the court allowed her to do so.

But when the federal court determined that McDonald still had

$310,000 left in two of her Wells Fargo IOLTA accounts, the court

directed her to transfer that amount back to the third party (which

she did), and the court issued an order restraining any future

transfer or spending of any money that was part of the third party’s

$4,000,000. Later, it became clear that McDonald was continuing to

use the third party’s money to operate her business, so the federal

court ordered McDonald to deposit all monies in any of her accounts

that could be traced back to the third party’s $4,000,000 into the

registry of the court. As a result, $104,200 was put into the court’s

8 registry and eventually returned to the third party. So, in the end,

the third party only recovered $2,414,200 of its $4,000,000 from

McDonald, with the remaining $1,585,800 having been retained by

McDonald and her family ($335,800) or paid out to various third

parties seemingly unrelated to this Bitcoin transaction ($1,250,000).

It appears that more than $400,000 of the third party’s money was

used to repay amounts McDonald owed to individuals or entities

who had previously deposited money into her IOLTA account to be

held in escrow in connection with her client’s earlier “deals,” but

whose funds had been distributed from her escrow account (in

violation of escrow agreements) despite the fact that the earlier

“deals” had never closed.

From the third party’s funds that she retained, McDonald

admitted that she repaid money owed to friends and family, made

loans to other friends, contributed to charity, paid bills, and

purchased goods and services for herself and her businesses. Some

of these payments were made after the third party demanded return

of its money. In one notable instance, on January 7, 2019, McDonald

9 paid $5,644 to a bankruptcy trustee on behalf of an individual who

was McDonald’s client in a bankruptcy matter. McDonald explained

that she did so because that bankruptcy client did not have the

money needed to make her Chapter 13 bankruptcy payment; that

she considered the payment a loan to a friend; and that she made an

additional $3,000 loan to that client on January 16, 2019, because

“she [was] a personal friend . . . and a client.”

In addition, McDonald admitted that she paid approximately

$11,650 to the trustee of the Chapter 13 proceeding of her husband.

And, on March 6, 2019, McDonald used $90,000 of the third party’s

money to pay a retainer to an attorney, who initially represented her

in the third party’s federal lawsuit against her.6 McDonald admitted

that virtually all of the money she transferred to herself, her family

members, and her friends during January and February 2019 could

6 After it became clear that the third party’s money was the source of

that attorney’s retainer, the attorney alerted the parties to the federal suit and those parties reached an agreement on March 25, 2019, pursuant to which the attorney would return $60,000 of the retainer to the third party and keep the remaining $30,000 to cover his defense of McDonald in the federal case to that point. The attorney withdrew as McDonald’s attorney in April 2019.

10 be traced back to the third party’s $4,000,000, but she asserted that

she was entitled to use that money because she was owed fees from

her client.7

During the disciplinary matter, McDonald finally admitted

that, in hindsight, the third party was the owner of the $4,000,000;

that she had received the money into her escrow account in a

“fiduciary capacity”; that the third party’s money was in her

“protective care”; that she owed a fiduciary duty to the third party

with regard to the funds on deposit with her; and that she “probably”

knew as early as January 5, 2019, that the third party expected or

understood that she was supposed to hold the money until the

Bitcoin had been delivered. She further agreed that the third party’s

control of the money never terminated because performance of the

agreed-upon conditions never happened; that all of the money

should have gone back to the third party as the deal never closed;

that she performed essentially no legal services beyond holding the

7 Even in 2020, McDonald was still claiming that she was entitled to

retain more than $200,000 of the third party’s money as fees for her services.

11 funds in her IOLTA account; that she was not authorized by the

third party to collect any fees or make any disbursements from its

funds, at least until the deal was consummated; and that she did not

advise anyone affiliated with the third party entity (or ask anyone

there for permission) before she distributed its money.

McDonald further admitted that she did not keep or maintain

a ledger or record of her IOLTA accounts, and that, unbeknownst to

her at the time, her role with regard to her client had been to loan

out her trust account to the perpetrators of what she now

acknowledges to have been a scam. When asked to explain her

assertions (made to the third party and to the Bar) that the third

party’s funds were “safe and protected” when much of the money had

already been spent, McDonald said that she saw no issue with

making those statements because she “didn’t have any reason to

believe that [the funds] weren’t going to be returned if there was a

problem,” and that she honestly believed that her client would

deliver the Bitcoin to the third party’s digital wallet. She now admits

that, in hindsight, her assurance to the third party that the third

12 party’s funds were “safe and protected” was a false statement of

material fact.

The Special Master found as fact that, at the time the third

party wired the $4,000,000 into McDonald’s IOLTA account,

McDonald (1) “at minimum had reason to suspect that the deal

would fail to close merely based on its association with [her client],

whose numerous prior deals had failed to close”; (2) was trying to

collect enough money to pay back other parties “from whom she

ha[d] already received money into her trust account and disbursed”

inappropriately at her client’s direction; and (3) was trying to protect

herself insofar as she had already told her client that an individual

whose corporation was involved in one of the client’s earlier deals

had threatened to report her to the Bar if she failed to return his

corporation’s money. The Special Master further found that, prior to

the federal lawsuit, McDonald took no steps to pay any of the money

she appropriated back to the third party; that the third party settled

its suit against McDonald on terms that provide only modest

13 recompense to it; and that it is uncertain if the third party has been

made whole by other defendants in the federal lawsuit.

Rule Violations

Rule 8.4 (a) (4) — False Statements

Based on the foregoing facts, the Special Master found that

McDonald violated Rule 8.4 (a) (4), which prohibits a lawyer from

engaging “in professional conduct involving dishonesty, fraud, deceit

or misrepresentation,” when she misled the third party and its

attorneys regarding the status of the $4,000,000 that it deposited in

her IOLTA account. The Special Master concluded that McDonald’s

assertions — to the effect that she did not perceive herself to be an

“independent escrow agent”; that she did not understand her

obligation to provide the third party with complete and truthful

information about the delivery of the Bitcoin and the status of its

funds; and that she did not participate in any conduct “with the

intent” to mislead the third party — not only strained credulity, but

were irrelevant to the question because she intentionally made

multiple statements and promises to the third party and its agents

14 about the status of the transaction and their funds; those statements

were, at best, a deceitful artifice meant to string the third party

along or, at worst, demonstrably and objectively false when she

made them; and her statements were likely to, and did, mislead the

third party and its agents. See In the Matter of Woodham, 296 Ga.

618, 625 (769 SE2d 353) (2015) (Rule 8.4 (a) (4) is meant to reach

“conduct that is intended or likely to mislead another”); see also In

the Matter of Tuggle, 317 Ga. 255, 272 (892 SE2d 761) (2023).

Noting that facts can be established through circumstantial

evidence, the Special Master pointed to McDonald’s “absurd [and]

ultimately false” promise on January 9, 2019 — that she would send

the third party 2,000 Bitcoin (i.e., $8 million worth) instead of 1,000

for the same $4,000,000 the third party had already paid — as

evidence of her intent to mislead the third party into backing off its

demand that she return the $4,000,000, much of which she no longer

had in her possession. The Special Master also highlighted

McDonald’s interaction with the Bar and specifically her failure to

correct the Bar’s misunderstanding that “the funds were safely in

15 her trust account” as additional circumstantial evidence of her

duplicity. The Special Master concluded that the most telling

evidence on the issue of McDonald’s duplicity and intent, however,

was found in her admission, during a deposition, that she had sent

an e-mail to her client on January 27, 2019, in which she pleaded

with them to make things right and stated, “I have lied to these

people [i.e., the third party and the intermediary] so much in an

effort to buy myself some time. I do not like to lie and at some point

it will catch up with me.”

The Special Master found that this admission showed that

McDonald’s statements to the third party were not an error in

judgment based on a misunderstanding of what it meant to be an

independent escrow agent, but were part of a series of deliberate

misrepresentations and deceits about the status of the third party’s

funds, intended by her to “buy herself some time” within which

maybe her client would save her, perhaps with another “deal.” Thus,

the Special Master concluded that McDonald knowingly and

deliberately sought to delude and delay the third party for as long

16 as she could; that she was not innocent or confused; and that she

understood what she was doing.

Rule 8.4 (a) (4) — Conversion of Third Party’s Funds

The Special Master additionally concluded that McDonald

violated Rule 8.4 (a) (4) by stealing or converting the third party’s

funds to her own use. McDonald asserted that her use of the third

party’s funds was reasonable because her client authorized it, and

because she was entitled to claim a portion of the funds as her fees.

But the Special Master rejected that assertion, pointing out that

McDonald had admitted to knowing that the $4,000,000 still

belonged to the third party because the promised Bitcoin had not

been delivered, and knowing that the third party had not authorized

the disbursement of any of its funds.

The Special Master also discounted McDonald’s belief that her

client had authorized her to disburse the third party’s money, noting

that the record was devoid of evidence that anyone other than the

third party had the right of ownership over any of the money it

entrusted to her. In rejecting McDonald’s argument that she did not

17 act with the requisite mental culpability since she claimed to have

no intent to deceive or defraud, the Special Master noted that the

transfers in this case did not happen as the result of negligence or

accident; instead, McDonald intentionally caused the third party’s

money to be transferred to the various recipients she intended to

receive it, and she did so without the third party’s permission and

in hostility to its rights to the money.

Further, the Special Master found absurd McDonald’s claim

that her intent should be judged according to her allegedly “honest

belief” that she was entitled to take the third party’s money for

herself without the third party’s permission or authority. The

Special Master noted that, whatever McDonald said that she hoped

would ultimately happen with the Bitcoin transaction, she actually

intended to, and did, convert $1,585,800 of the third party’s funds to

her own purposes. Of the $1,585,800 that was never returned,

McDonald claimed $440,000 as a “fee” and the remaining sum was

disposed of for various other reasons. The Special Master also found

that McDonald’s belief that her client would make good on the

18 transaction did not deprive her of the capacity to intend the

consequences of her conversion of the third party’s funds.

For these reasons, the Special Master concluded that

McDonald violated Rule 8.4 (a) (4) and engaged in “professional

conduct involving dishonesty” when she knowingly, intentionally,

and wrongfully converted the third party’s funds. See In the Matter

of West, 301 Ga. 901, 904 (804 SE2d 340) (2017) (noting that “[t]he

Bar concurs with [the lawyer-defendant’s] assertion that the

‘dishonesty, fraud, deceit or misrepresentation’ standard from Rule

8.4 (a) (4) contains an implicit intent element”); but see In the Matter

of Roberts, 284 Ga. 445, 446 (668 SE2d 256) (2008) (“[A] negligent

misrepresentation is sufficient for the imposition of discipline under

Rule 8.4 (a) (4).”).

Rule 4.1 (a) — False or Misleading Statements to a Third Party

Rule 4.1 (a) provides that a lawyer shall not, “[i]n the course of

representing a client . . . knowingly [ ] make a false statement of

material fact or law to a third person.” The Special Master relied on

the same evidence she recited as to McDonald’s Rule 8.4 (a) (4)

19 violations to support her conclusion that McDonald knew her

statement related to the third party’s funds, specifically that those

funds were “safe and protected,” was objectively false at the time she

made it, notwithstanding her hope that her client might fulfill his

promise to the third party or give her enough money to pay the third

party back its entire $4,000,000. Thus, the Special Master found

that McDonald knowingly violated Rule 4.1 (a) by misleading the

third party regarding the status of its $4,000,000.

Rule 1.5 (a) — Unreasonable Fee

With regard to the alleged violation of Rule 1.5 (lawyer shall

not make an agreement for or collect an unreasonable fee), the

Special Master first noted that an excessively large fee can be per se

“unreasonable” where little or no work was performed in exchange

for the fee. See In the Matter of Hardy, 316 Ga. 845, 850 (890 SE2d

770) (2023) (Rule 1.5 (a) violation when attorney “collected and

retained $1,500 from the client without performing any services at

all”); In the Matter of Lain, 311 Ga. 427, 437 (857 SE2d 668) (2021);

In the Matter of Majette, 295 Ga. 4, 8 (757 SE2d 114) (2014). The

20 Special Master concluded that the approximately $440,000 fee

McDonald claimed in this case was unreasonable because it was

excessively large; not based on any work performed for the third

party, the payor of the fee; and was not immediately returned as

unearned after the deal was revealed as fraudulent.

The Special Master rejected McDonald’s defenses — which

were that her retention of the money was reasonable because it was

expressly agreed to by her client, and that the fee she retained was

reasonable because it was collected as compensation for services she

provided to her client both in the transaction with the third party

and in the months leading up to that transaction — noting again

that McDonald had admitted to knowing that the $4,000,000 still

belonged to the third party, and that the third party had not

authorized disbursement of any of the funds. Further, McDonald did

not specify how the services she actually rendered reasonably

equated to the $440,000 of value that she claimed to have provided.

The Special Master concluded that, under those circumstances, it

was not reasonable for McDonald to use the third party’s money,

21 without its agreement and while the funds were being held in trust,

to pay fees owed by her client before the funds actually belonged to

McDonald or her client. The Special Master also found telling the

fact that, although McDonald now admits “in hindsight” that she

was involved in her client’s illegal “scam,” she had taken no steps to

fully return the unearned fee to the third party, which would be her

responsibility. Thus, the Special Master determined that McDonald

knowingly violated Rule 1.5 (a) by charging, collecting, and

retaining the third party’s funds as a fee without its authorization.8

Rule 1.8 (e) — Advancing Money to a Client

In considering the alleged violation of Rule 1.8 (e) (lawyer shall

not provide financial assistance to a client in connection with

pending or contemplated litigation with certain exceptions for costs

and expenses), the Special Master noted that McDonald admitted

she provided financial assistance to a bankruptcy client when she

paid $5,644 to that client’s bankruptcy trustee, and when she lent

8 For reasons noted in our conclusion, we do not rely on this violation for

purposes of the discipline imposed.

22 that client an additional $3,000. Pointing out that these advances

did not fall within the exceptions set out in Rule 1.8 (e) for advancing

or paying court costs and expenses of litigation for certain clients

unable to afford those costs, the Special Master concluded that the

payments provided financial assistance to her client in connection

with pending litigation, and held that McDonald thus violated Rule

1.8 (e) “no matter how benevolent [her] motives” may have been.

Rule 1.15 (I) (a), (c), and (d) — Safekeeping Property — General

Turning her focus to McDonald’s trust account, the Special

Master first recited that Rule 1.15 (I) (a) requires a lawyer to hold

funds of clients or third persons that are in her possession in

connection with a representation separate from her own funds or

other property; appropriately safeguard those funds; and keep

complete records of them. Rule 1.15 (I) (d) provides that, when a

dispute arises over various parties’ interests in money or property

being held by the lawyer, the lawyer shall promptly distribute all

undisputed portions of the funds or property and keep separate the

23 portion in dispute until the dispute is resolved, or, if a resolution

cannot be reached, to interplead such disputed funds or property.

The Special Master noted that, here, McDonald knew that

entitlement to the entire $4,000,000 was being claimed by the third

party, but she did not voluntarily return any of the money until after

the third party filed its grievance and federal lawsuit (and the

federal court ordered her to pay the money into the court’s registry).

And even then, she only paid into the court a small fraction of the

amount she had received. The Special Master also noted her

admissions that she was the escrow agent for the deal; that the

funds belonged to the third party, as no Bitcoin was ever transferred

to its digital wallet; that the third party had not given her any

authority to disburse any of its money; that she nevertheless

disbursed more than $440,000 of the third party’s money to herself,

her family, and her friends; and that more than a year after the third

party filed its grievance against her she was still claiming more than

$200,000 of the third party’s money as lawful fees from her clients.

24 Given those admissions, the Special Master concluded that,

regardless of McDonald’s position that she was acting on behalf of

her “clients” with regard to the third party’s money rather than as

an “independent escrow agent,” McDonald violated the duties Rule

1.15 (I) (a) and (d) impose upon her as a lawyer, because she never

held the third party’s money apart from her own and instead

commingled its money with her own funds when she disbursed it to

various parties rather than returning it to its rightful owner when

the transaction failed to close. See In the Matter of Doeve, 303 Ga.

672 (814 SE2d 330) (2018); In the Matter of Axam, 297 Ga. 786, 786-

787 (778 SE2d 222) (2015); In the Matter of Anderson, 286 Ga. 137,

140 (685 SE2d 711) (2009) (lawyer who received funds in escrow

from a depositor for a real estate transaction involving lawyer’s

client and who “paid himself $30,000 from the escrowed funds

without [depositor’s] knowledge or consent . . . [when he] was not

entitled to any of the escrowed funds as fees and it was his duty to

safeguard those funds for [depositor],” violated Rules 1.15 (I) and

1.15 (II)).

25 In addressing Rule 1.15 (I) (c), the Special Master recited that

the Rule commands that “[u]pon receiving funds or other property

in which a . . . third person has an interest, a lawyer shall promptly

notify the . . . third person” and “shall promptly deliver to the . . .

third person any funds or other property that the . . . third person is

entitled to receive and, upon request by the . . . third person, shall

promptly render a full accounting regarding such property.” Noting

McDonald’s admissions that she received the third party’s money in

a fiduciary capacity; that she owed a fiduciary duty to the third party

at least with regard to funds on deposit with her; that she knew she

received the funds to facilitate the Bitcoin transaction, which never

closed; that she knew her client would not be entitled to the money

unless it delivered the Bitcoin; that she nevertheless disbursed a

large portion of the third party’s funds to entities other than the

third party before the deal closed without notifying the third party

or obtaining its consent or authorization; and that she failed to

account for the funds despite the third party’s repeated requests

that she do so (forcing it to file a lawsuit and engage in discovery to

26 determine what happened to its money), the Special Master

concluded that McDonald violated Rule 1.15 (I) (c).

Rule 1.15 (II) (a) and (b) — Safekeeping Property — Trust Accounts

The Special Master first recited that Rule 1.15 (II) (a) requires

that “all funds held by a lawyer in any [ ] fiduciary capacity shall be

deposited in and administered from a trust account.” Rule 1.15 (II)

(b) requires both that records of such accounts be maintained so as

to “reflect at all times the exact balance held for each client or third

person” and that “[n]o funds shall be withdrawn from such trust

accounts for the personal use of the lawyer maintaining the account

except earned lawyer’s fees debited against the account of a specific

client and recorded as such.” The Special Master noted that, here,

McDonald was acting in her capacity as a lawyer in connection with

the Bitcoin transaction; that, as a result, the third party deposited

funds into her IOLTA account to be held in escrow; that she received

those funds in a fiduciary capacity; that she improperly disbursed

those funds; and that she did not keep and maintain records of her

27 trust account. Thus, the Special Master concluded that McDonald

violated Rule 1.15 (II) (a) and (b).

Rules 7.1 and 7.5 (a) and (d)

Pointing to McDonald’s admission that she identified her firm

as “McDonald Law Group, LLC” while she was in fact a solo

practitioner, see n.2, supra, the Special Master determined that

McDonald had violated Rules 7.1 (lawyer shall not, in relevant part,

make a false or misleading communication about herself or her

services) and 7.5 (a) and (d) (lawyer may not falsely state or imply

through letterhead, firm or trade name, or other professional

designation that she practices in a partnership or other

organization). The Special Master rejected McDonald’s assertion

that this violation was not “materially misleading,” citing State Bar

of Georgia, Formal Advisory Opinion 16-3 (June 14, 2016), which

established “the principle that any name implying that a firm is

larger than it truly is [including use of the word ‘Group’ in the firm

name of a solo practitioner] will be considered false, fraudulent,

28 deceptive, or misleading and, therefore, a violation of Rules 7.1 and

7.5.”

Application of ABA’s Theoretical Framework

The Special Master then recognized that this Court relies on

the ABA Standards for Imposing Lawyer Sanctions (1992) (“ABA

Standards”) for guidance in determining punishments in

disciplinary cases, and that those Standards require consideration

of: (a) the duty violated; (b) the lawyer’s mental state; (c) the

potential or actual injury caused by the misconduct; and (d) the

existence of aggravating or mitigating factors. See ABA Standard

3.0; In the Matter of Morse, 266 Ga. 652, 653 (470 SE2d 232) (1996).

Duties Violated; Mental State; and Injury/Potential Injury

The Special Master determined, in relevant part, that

McDonald’s Rules violations implicated the duties identified in ABA

Standards 4.1 (failure to preserve property of a client or third party),

4.3 (failure to avoid conflicts of interest), 5.1 (failure to maintain

personal integrity), and 7.0 (violations of other duties as a

professional). The Special Master found that McDonald did not

29 claim to suffer from any impairment that would have impacted her

ability to understand her duties in this matter and concluded that

McDonald’s belief that her client would do the right thing in the end

did not alter the conclusion that her violations, for the most part,

were intentional and knowing.9 Finally, the Special Master noted

the fact that McDonald’s actions resulted in actual and significant

financial injury to the third party. Thus, the Special Master

concluded that disbarment was the presumptive discipline based on

McDonald’s violations, taken together.

Aggravating and Mitigating Factors

The Special Master found that several factors worked to

aggravate the degree of discipline that should be imposed on

McDonald. As an initial matter, she has a prior disciplinary

history.10 Moreover, she acted with a dishonest and selfish motive,

9 The only exception to that determination was the Special Master’s conclusion that McDonald’s violations of Rules 7.1 and 7.5 (a) and (d) likely arose out of her negligent failure to change her firm’s name after the other attorney left the firm. See n.2, supra. 10 Specifically, McDonald received an Investigative Panel reprimand on

March 30, 2012, in a case involving violations of Rules 1.4 (failure to

30 see ABA Standard 9.22 (b); her actions represented the continuation

of a pattern of misconduct going back to her client’s earlier deals,

which were also never consummated, see ABA Standard 9.22 (c); she

was guilty of multiple violations of the Rules, see ABA Standard 9.22

(d); she was deceptive during the initial phases of the disciplinary

process when she made materially misleading statements to the

Bar, see ABA Standard 9.22 (f); although now remorseful, she

repeatedly blamed others for the third party’s injury, refusing to

acknowledge that but for her failure to abide by the Bar Rules, no

injury would have come to the third party, see ABA Standard 9.22

(g); and she had substantial experience in the practice of law, having

been admitted in 1985, see ABA Standard 9.22 (i).

In addition, the Special Master noted that, although McDonald

eventually returned half of the funds the third party entrusted to

her, she has shown an indifference to making restitution for the

communicate), 1.16 (d) (failure to return unearned fee at conclusion of representation), and 8.4 (deception and conversion), which was not dissimilar to the instant case given that, here, she disbursed to herself a fee that she eventually admitted she had not earned. See ABA Standard 9.22 (a)

31 remaining damages it suffered, forcing it to sue her to obtain relief,

and using the third party’s money to hire counsel to defend herself

in that suit, see ABA Standard 9.22 (j). Finally, the Special Master

noted that, even though McDonald has, to date, avoided criminal

sanctions, she seems to have participated in an illegal scheme,

which involved enticing others to wire money into her trust account

under the guise of being a fiduciary, see ABA Standard 9.22 (k).

The Special Master did not cite to any of the mitigating factors

specifically identified in ABA Standard 9.32, but acknowledged that

McDonald had been a longstanding member of the Bar, representing

clients in a wide variety of matters with only one prior complaint,

which did not include a trust account violation.11 The Special Master

rejected McDonald’s claim that her discipline should be mitigated by

evidence of her general character and reputation,12 noting that,

although she had provided credible and sincere character testimony

11 This discussion could arguably implicate the mitigating factor of remoteness of prior offenses, see ABA Standard 9.32 (m), although the Special Master did not categorize it as such. 12 See ABA Standard 9.32 (g).

32 establishing that she contributed to her church and her community

in meaningful ways to the benefit of society, that testimony provided

no mitigating evidence of significant weight as none of those

witnesses had any understanding of the significance of McDonald’s

misconduct and the injury to the public. See In the Matter of

Nicholson, 299 Ga. 737, 740-741 (791 SE2d 776) (2016) (finding “no

mitigating circumstance[s] of significant weight” where character

witnesses only testified to attorney’s reputation as an effective

advocate).

Similarly, the Special Master seemingly rejected McDonald’s

effort to rely on remorse13 as a mitigating factor, noting that while

she now appears to be remorseful and able to articulate the

significance of her misconduct, she was not persuasive in her effort

to demonstrate that she understood either her role in this scam or

the fact that she benefitted significantly from it. Finally, the Special

Master rejected McDonald’s effort to establish that she took steps to

13 See ABA Standard 9.32 (l).

33 rectify the consequences of her misconduct,14 noting that, although

she entered into a settlement agreement in the federal lawsuit with

the third party, her capitulation came only after she forced the third

party to sue her to extricate its remaining money from her trust and

operating accounts; that she did not voluntarily return the funds

remaining in her accounts until forced to do so by the federal court;

and that, even after the third party served her with its lawsuit, she

used its funds to pay an attorney to represent her in that suit (even

though the attorney later disgorged some of those funds).

Ultimately, the Special Master determined that McDonald’s conduct

in this incident militates against mitigation.

Recommendation for Discipline

The Special Master concluded that McDonald violated Rules

1.5 (a); 1.8 (e); 1.15 (I) (a), (c) and (d); 1.15 (II) (a) and (b); 4.1 (a); 7.1

(a); 7.5 (a) and (d); and 8.4 (a) (4) and that the severity of the

infractions and the significance of the injury justified imposition of

14 See ABA Standard 9.32 (d).

34 the highest level of discipline. Therefore, the Special Master

recommended that McDonald be disbarred.

McDonald’s Exceptions

McDonald sought review from the Review Board, taking

exception to the following points: (1) the Special Master’s

conclusions that McDonald was knowingly involved in her client’s

scam, that she pocketed exorbitant sums from her involvement, and

that she used the third party’s money to pay her defense counsel in

the federal suit; (2) the Special Master’s refusal to give more weight

to the testimony of McDonald’s character witnesses and to

McDonald’s own explanation that she acted in good faith based on

the limited knowledge she had of the Bitcoin industry, which was

then a relatively new enterprise; (3) the Special Master’s conclusions

as to the applicability of the various factors in aggravation of

discipline; (4) the Special Master’s decision to use McDonald’s prior

discipline as an aggravating factor, when it was more than ten years

old and involved dissimilar facts; and (5) the Special Master’s refusal

to find that any of the factors in mitigation applied in this case.

35 McDonald asserted that disbarment was not warranted because the

proceedings painted a picture of unconscious bias, and the grievance

involved a nefarious client under a very specific set of circumstances.

She contended that she should be given some lesser discipline or be

allowed to retire from the practice of law.

The Bar’s Response to McDonald’s Exceptions

The Bar responded to each of McDonald’s exceptions, asserting

generally that the Special Master was in the best position to

determine the witnesses’ credibility, that the Special Master’s

factual findings were amply supported by the record, and that her

conclusions of law were appropriate. The Bar further responded that

McDonald had provided no evidence to support her assertions of

unconscious bias and that none existed. The Bar argued that the

GRPC exist to protect the public from unethical lawyers, regardless

of whether their clients are engaged in shadowy conduct of their

own. Finally, the Bar concluded that, because McDonald could have

(and likely would have) gone on to defraud another member of the

public, hoping to get back the funds she needed to re-pay the third

36 party in this deal, McDonald is exactly the kind of lawyer from

whom the GRPC exist to protect the public.

The Review Board’s Report and Recommendation

The Review Board issued a fairly brief Report and

Recommendation, reciting that it had engaged in a “careful review

of the record and evidence,” and concluding that the Special Master’s

factual findings were supported by the record and that McDonald

had not shown that those findings were clearly erroneous or

manifestly in error. Similarly, the Review Board considered the

Special Master’s analysis of the issues presented and concluded that

her conclusions of law were correct. Therefore, the Review Board

adopted and incorporated the Special Master’s findings of fact and

conclusions of law in full.

Further, the Review Board agreed with the Special Master’s

analysis of the duties violated, McDonald’s mental state, the

potential or actual injuries caused by McDonald’s misconduct, and

the aggravating and mitigating factors to be applied to this matter.

The Review Board thus recommended that this Court adopt the

37 Special Master’s findings related to the appropriate level of

discipline and disbar McDonald.

McDonald’s Exceptions to the Review Board’s Report15

In her exceptions to the Review Board’s Report and

Recommendation, McDonald complains that the Board has not fully

indicated the scope of its review, and contends that it should have

done its own analysis to support the Special Master’s conclusion that

the Bar had met its burden of proving by clear and convincing

evidence each element of the alleged violations at the time they

purportedly occurred. She contends that a thorough and fair

15 In addition to filing exceptions to the Review Board’s Report and Recommendation, McDonald also filed directly in this Court a petition — allegedly pursuant to Bar Rule 1-202 (f) (1) and (3) — asking to be transferred to retirement status rather than face disbarment. It is unclear whether McDonald is seeking review of the Office of the General Counsel’s (“OGC”) denial of the request that she made there, or whether she intends to petition this Court for such relief in the first instance, but Bar Rule 1-202 does not contemplate making a request directly to this Court, and instead clearly directs that any request to be transferred to retirement status be made to the Bar, and that a member “with a pending disciplinary matter” may only transfer to retired status if she obtains the consent of the OGC. See Bar Rule 1-202 (f) (1) and (3). In addition, Bar Rule 1-202 includes no provision for appealing the OGC’s denial of such a ruling. Accordingly, her “petition” is dismissed.

38 examination of the record in this case will support her position that

disbarment is not the appropriate discipline.

The Bar’s Response to McDonald’s Exceptions

In response, the Bar notes that the Bar Rules give the Review

Board the power and duty “to review reports of Special Masters” and

to recommend discipline to this Court, see Bar Rule 4-215 (a); the

power to “reverse” the Special Master’s findings of fact if the Review

Board finds them to be “clearly erroneous or manifestly in error,” see

Bar Rule 4-216 (a); and the power to review de novo the Special

Master’s “conclusions of law” and “determinations of appropriate

sanctions.” Id. The Bar argues that the Review Board’s Report and

Recommendation shows that it undertook such a review and

concluded that the discipline recommended by the Special Master

was appropriate. The Bar states that the burden is on McDonald to

show specifically where and how the Review Board and/or the

Special Master were biased during the proceedings and that she has

not even tried to meet that burden, instead simply asserting that a

new examination of the record by this Court would not support

39 disbarment. The Bar states that it welcomes such a fresh review,

confident that a new examination would support the same discipline

recommended by the Special Master and Review Board.

Conclusions

Although McDonald filed exceptions to the Report of the

Review Board, she does not challenge the Special Master’s

conclusions that she violated Rules 1.5 (a);16 1.8 (e); 1.15 (I) (a), (c),

and (d); 1.15 (II) (a) and (b); 4.1 (a); 7.1 (a); 7.5 (a) and (d); and 8.4

(a) (4) of the GRPC, and, after considering the entire record

presented to this Court, we agree with the Special Master’s

conclusions in that regard. Further, although McDonald’s

exceptions essentially ask this Court to reconsider the discipline

recommended by the Review Board and the Special Master, she fails

16 As noted above in our discussion of the Special Master’s findings, we

do not rely on the Special Master’s finding that McDonald committed a Rule 1.5 (a) violation in determining the discipline in this case. Indeed, we pretermit whether McDonald committed a Rule 1.5 (a) violation, because determining whether she did violate Rule 1.5 (a) would require an analysis of whether the funds that McDonald was found to have converted (i.e., taken without authorization) could be claimed as a legal fee. Because answering that question is not necessary to the disposition of this case, we do not address the alleged Rule 1.5 (a) violation further.

40 to show how the recommended discipline is inappropriate, and our

own review indicates that it is not. Indeed, McDonald’s admitted lies

(or misrepresentations) to the Bar and to the third party about the

status of the third party’s funds in her trust account together with

her conversion of a large portion of those funds (i.e., the violations of

Rules 8.4 and 4.1) alone support disbarment. Moreover, when those

actions are combined with McDonald’s continuing refusal to see or

acknowledge the pivotal role she played in the misdeeds apparently

being perpetrated by her client and the fact that she has not made

the third party whole, we cannot fathom a punishment less than

disbarment. On top of those violations, McDonald also blatantly

violated Rules 1.15 (I) and (II) in her handling of the money that was

entrusted to her and deposited into her IOLTA account. McDonald’s

complete disregard for her role as a fiduciary in this transaction (and

apparently other transactions) is staggering and would support

disbarment on its own as well.

We also agree that the other factors cited by the Special Master

in aggravation of punishment apply to this case and that, on the

41 record now before us, no factors in mitigation apply. Therefore, we

agree that disbarment is the appropriate sanction in this case, and

it is hereby ordered that the name of Diana Y. McDonald be removed

from the rolls of persons authorized to practice law in the State of

Georgia. McDonald is reminded of her duties pursuant to Bar Rule

4-219 (b).

Disbarred. All the Justices concur.

Decided June 11, 2024.

Disbarment.

Paula J. Frederick, General Counsel State Bar, William D.

NeSmith III, Deputy General Counsel State Bar, Jenny K.

Mittelman, James S. Lewis, Assistant General Counsel State Bar, for

State Bar of Georgia.