Nov 9, 2007
 
Concord, NH - A former Concord city councilor who has been an outspoken critic of the judiciary could be disbarred for taking $49,000 from a divorce client and then misrepresenting the money's location, according to court records. Attorney Caroline Douglas  is currently suspended from practicing law for similar misconduct in 1996 involving another divorce case.

In the current case, Douglas justified taking the money because she was in a "cash crunch," while her client was living with a "multimillionaire boyfriend," according to court records. "She truly . . . was in no want," Douglas said of her client.

Douglas, who is representing herself and could not be reached for comment, has already told the state Supreme Court that she has no plans to attend her own hearing next week because it's too far for her to travel. It is unclear where Douglas now lives; even opposing counsel in the case has no reliable contact information for her.

Douglas hasn't always preferred a low profile.

She made repeated headlines in the mid-1990s when she and her then-husband, former state Supreme Court justice Chuck Douglas, divorced. The two had met while writing a book on New Hampshire marital law and went on to have an acrimonious and public split. At one point, Caroline Douglas hired private investigators to collect her estranged husband's trash so she could use it as evidence in their divorce. Chuck Douglas then tried to have her disbarred.

Douglas, then a Ward 10 city councilor, complained at the time that she could not get a fair divorce because of her estranged husband's connections to the state's "old boys network." It turns out the divorce wasn't Douglas's only problem during those months. According to court records, it was then that Douglas twice took clients' money without permission.

In the first case, Douglas took about $17,000 from Walter Foster, a man she was representing in a divorce in Cheshire County.

According to court records, Douglas withdrew the money from Foster's escrow fund in February 1996 without the permission of Foster, his ex-wife or the court overseeing the case. She did so despite a court ruling issued a month earlier dividing the escrow money between Foster and his ex-wife.

Foster's new lawyer, the lawyer for his ex-wife and Cheshire County Superior Court referred the matter to the state's Professional Conduct Committee, which oversees lawyers. That committee held a hearing in the spring of 1998, after which a judicial referee hired to recommend punishment concluded that Douglas should be suspended from practicing law for six months.

Neither the Professional Conduct Committee nor Douglas was satisfied with that recommendation and appealed. The committee wanted a two-year suspension; Douglas wanted the matter dropped because, she said, her former husband and law partner, Chuck Douglas, had told her to withdraw the money.

In April 2002, the state Supreme Court suspended Douglas's law license for six months and forbade her from reapplying for it until she completed an ethics course and a professional responsibility exam.

Douglas reapplied for her license following the six-month suspension. But in the meantime, she had been charged a second time with misconduct. So she asked the state Supreme Court to hold off on a decision about her application until after it had decided the second, pending case.

The facts in the current case read similarly, although they are more complicated.

In that matter, Douglas is charged with taking $49,000 from an escrow account belonging to Marjorie VanderKruik, a friend she represented in a divorce. According to court records, VanderKruik hired Douglas in 1994 and granted her power of attorney, giving Douglas broad authority over her legal matters.

Douglas persuaded VanderKruik to have the $49,000 owed her from the sale of her marital home put in a trust account operated by Douglas, according to court records. Douglas was in the process of divorcing Chuck Douglas and told VanderKruik that a trust account was the only way to project the money from Chuck Douglas while the two dissolved their marriage and joint law practice.

The money didn't stay in escrow long.

The day Caroline Douglas was to appear in court for her own divorce, she instead went to the bank and converted VanderKruik's $49,000 into traveler's checks, which she then put in a safe deposit box. Douglas said she did so to protect the money from her estranged husband. Douglas also said she needed the money more than VanderKruik because VanderKruik was being taken care of by her wealthy boyfriend, according to court records.

When Douglas converted the cash to traveler's checks, she already knew she was being investigated for similar conduct in the other divorce case. Still, she used part of the money - $22,000 - to cover her business payroll and other operating expenses and to pay attorneys who were taking over her clients, according to court records.

Meanwhile, Douglas allowed VanderKruik to believe the money was safely sitting in an escrow account, the court records say. Eventually, VanderKruik became concerned that Douglas was padding her legal bills, and she confronted Douglas several times.

It is unclear from court records when VanderKruik learned the money had been withdrawn from the account. The two eventually settled the matter, and VanderKruik contacted legal authorities about Douglas's handling of the case.

The Professional Conduct Committee investigated and in July 2003 asked the state Supreme Court to disbar Douglas. A judicial referee, however, recommended instead that Douglas be suspended for five years.

Douglas has previously suggested she would argue that she suffers from "legal abuse syndrome," a form of post-traumatic stress disorder that is said to arise when someone feels mistreated and abused by the legal system. Douglas had told the court she intended to call Dr. Karin Huffer of Florida, who is considered an expert in this area.

Douglas has since dropped that argument and has asked the court to decide her case without a hearing. The high court scheduled an oral argument for Tuesday afternoon anyway. A lawyer for the Professional Conduct Committee will be there ready to make an argument alone if necessary.