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In re Kane

Supreme Court of Vermont

May 24, 2017

In re Assistant Judge Paul Kane

         ORIGINAL JURISDICTION from: Judicial Conduct Board DOCKET NO. 16.004

          ENTRY ORDER

         In the above-entitled cause, the Clerk will enter:

         ¶ 1. Pursuant to Rule 10(3) of the Rules of Supreme Court for Disciplinary Control of Judges, we hereby order that respondent be immediately and permanently suspended from judicial office and prohibited from holding judicial office in Vermont in the future. Upon review of the Judicial Conduct Board's decision, the Court orders review on its own motion, adopts the Judicial Conduct Board's decision in its entirety as a final order of this Court, waives briefing and oral argument, and orders that the decision be published in the Vermont Reports.


         Pursuant to Rule 10 of the Rules of Supreme Court for Disciplinary Control of Judges, the Judicial Conduct Board (the Board or JCB) issues the following disposition report.


         "The primary purpose of judicial discipline is to 'protect the public, ensure the evenhanded administration of justice, and preserve and enhance public confidence in the integrity and fairness of the justice system.'" In re Balivet, 2014 VT 41, ¶ 39, 196 Vt. 425 (quoting In re O'Dea, 159 Vt. 590 (1993)). Pursuant to that purpose, the Board must remove from the Bench those individuals found to be unfit for judicial service. Fitness for service requires not only a knowledge of the law, but also the utmost in integrity. To maintain public confidence in the Judiciary, a judge must demonstrate honesty, candor, and the commitment to ethical principles both on and off the bench.

         This matter was initiated based on media reports of allegations that former assistant judge Paul Kane[1] may have engaged in improper conduct regarding the assets of his uncle's wife, Katherine "Kay" Tolaro. On February 22, 2016, the Board initiated an investigation into these allegations. On February 25, 2016, Mr. Kane agreed to step down from his position during the pendency of the investigation. After the Board's initial inquiry pursuant to the Rules of Supreme Court for Disciplinary Control of Judges (hereinafter R.S.C.D.C.J.) 7(1), Attorney Ian P. Carleton was appointed to serve as Special Counsel to investigate the matter further. Attorney Carleton filed a formal complaint on June 27, 2016, alleging that Mr. Kane violated several Canons of the Vermont Code of Judicial Conduct. Mr. Kane retained Attorney Melvin Fink as his counsel and filed his answer on July 26, 2016. The Board held an evidentiary hearing on March 20-22, 2017.

         Canons Alleged to have been Violated

         The complaint asserts that Mr. Kane violated Canons 1, 2A, 4A(2), and 5B(2) based on the following allegations:

         He did not uphold the integrity of the Judiciary and participate in maintaining high standards of conduct as evidenced by:

1. His collecting and depositing into his personal bank account certain payments on loans that were made with Ms. Tolaro's money, as well as his continued management of the loans, including negotiating the forgiveness of the remainder of the loans, even though he did not have legal authority to do so;
2. His failure to provide entirely truthful testimony at a court hearing when he indicated that at least one of the loans was made with his money, even though it was actually Ms. Tolaro's money he used for the loans;
3. His filing of a facially implausible claim against Ms. Tolaro's estate;
4. His continued use of Ms. Tolaro's funds after her death to pay for the expenses of her Pleasant Street property, which he stood to inherit, until the estate administrator was compelled to seek an order by the Probate Division to turn over the funds and management because Mr. Kane did not do so after prior request.

(Canon 1)

         He did not avoid impropriety in all of his activities and did not act at all times in a manner that promotes public confidence in the integrity of the Judiciary based upon the same factual allegations as the Canon 1 charge. (Canon 2).

         He did not conduct his extra-judicial activities in such a way to avoid demeaning his judicial office based upon the same factual allegations as the Canon 1 charge. (Canon 4A(2)).

          He did not maintain the dignity appropriate to a holder of judicial office and act in a manner consistent with the integrity of the Judiciary based upon the same factual allegations as the Canon 1 charge. (Canon 5B(2)).

         Burden of Proof

         It is Special Counsel's burden to proof that Mr. Kane violated the alleged Canons by clear and convincing evidence. R.S.C.D.C.J. 10(1); Balivet, 2014 VT 41, ¶ 20. "Clear and convincing evidence is a 'very demanding' standard, requiring somewhat less than evidence beyond a reasonable doubt, but more than a preponderance of the evidence. [It] does not require that evidence in support of a fact be uncontradicted, but does require that the fact's existence be 'highly probable.'" In re E.T., 2004 VT 111, ¶ 12, 177 Vt. 405 (citation omitted).

         Findings of Fact

         The following facts were established by clear and convincing evidence:

1. Katherine "Kay" Tolaro is the wife of Paul Kane's uncle. Mr. Kane knew Ms. Tolaro for approximately forty years before she died. Mr. Kane and his late-wife Marie would visit Ms. Tolaro frequently at her home on Pleasant Street in Bellows Falls.
2. In late 2009, Ms. Tolaro moved into Mr. Kane's home in Westminster. She was 82 years old at the time. There is conflicting evidence as to whether she was showing early signs of dementia at the time Ms. Tolaro moved in with the Kanes, or whether she was simply losing her hearing.
3. Initially, Ms. Tolaro did not move into the Kane residence full-time. She would sleep at their house and Mrs. Kane would return with Ms. Tolaro to the Pleasant Street home where Ms. Tolaro would attend to her personal needs such as cooking and bathing. It was unclear at that time how long Ms. Tolaro would be staying with the Kanes. According to Mr. Kane, Ms. Tolaro requested to sleep at his residence because she was afraid of being alone at night due to recent break-in attempts.
4. On October 11, 2009, Ms. Tolaro executed a "Limited Power of Attorney For Finances, " which granted Mr. Kane and his wife the ability to obtain financial information on her behalf. The document was signed at the office of Ms. Tolaro's longtime attorney, Mike Harty.
5. On December 3, 2009, Mr. Kane sent Attorney Harty an email requesting that Mrs. Kane be compensated for her time caring for Ms. Tolaro. He did not mention that he was also caring for Ms. Tolaro. He stated that Mrs. Kane had been providing services to Ms. Tolaro seven days a week for at least four hours a day.
6. On December 6, 2009, Mr. Kane sent Attorney Harty another email, saying "[Ms. Tolaro] has been with [the Kanes] for the past 3 days." Mr. Kane testified that this reference to the "past 3 days" indicated when Ms. Tolaro had moved in permanently with the Kanes. This testimony is in conflict with other emails, discussed herein, as well as Mr. Kane's Statement Of Claim filed with the Probate Court, discussed below, in which he asserted that he had personally been providing Ms. Tolaro with 24/7 care since October 2009.
7. On January 7, 2010, Mr. Kane emailed Attorney Harty requesting that he arrange to have Mrs. Kane be Ms. Tolaro's POA because she was "having issues in helping [Ms. Tolaro] with finances." Mr. Kane was vague as to what he was specifically requesting. The 2009 limited POA had given Mrs. Kane and himself the authority to obtain financial information. The email acknowledged that they knew her financial information, but added "[Ms. Tolaro] needs to have some things done that are beyond her at this point." However, in the December 3, 2009 email, Mr. Kane stated he wanted Attorney Harty "to set up a withdrawal and dep from [Ms. Tolaro] to [Mrs. Kane] for payment of work." It is clear from the circumstantial evidence that this was his reason for requesting a more expansive POA.
8. Both Special Counsel and Mr. Kane agree that as of January 2010, Ms. Tolaro's net worth was approximately $767, 500.
9. On February 5, 2010, Mr. Kane wrote a check for $60, 000 made payable to himself from Ms. Tolaro's bank account. Ms. Tolaro signed the check. Mr. Kane described the check as a "gift." Mr. Kane testified at the evidentiary hearing that Ms. Tolaro initially wrote him a check for $100, 000, but he refused to accept it because it was too much money. Mr. Kane testified that Ms. Tolaro tore up the check and wrote him a second check for $75, 000, which he again refused and she again tore up. He testified that it was only after tearing up the second check that she gave him permission to write a third check, which he made out for $60, 000. He claimed Mrs. Kane was the only other person present and that he did not report the $60, 000 on his taxes because he had understood that gifts were not taxable. Special Counsel presented copies of Ms. Tolaro's check receipts proving that there were no missing checks preceding the $60, 000 check. Moreover, there was only $45, 000 in the one other bank account in which Ms. Tolaro had the ability to write checks. The Board finds that Mr. Kane did not provide truthful testimony as to the circumstances surrounding this $60, 000 check.
10. On April 6, 2010, Ms. Tolaro executed a new Power of Attorney, naming Mr. and Mrs. Kane as her agents. However, this POA did not contain a provision that would allow the Kanes to authorize gifts to themselves.
11. That same day, April 6, 2010, Ms. Tolaro executed a new will. The will bequeathed the Pleasant Street property to the Kanes. It also indicated that certain money was to be given to four charities, with the remainder of the estate to be distributed to Mr. Kane, Ms. Tolaro's nephew, and two of Ms. Tolaro's friends. Mr. Kane testified that he brought Ms. Tolaro to Attorney Harty's office, but that he was not physically present for the execution of the will.
12. On August 18, 2010, Mr. Kane used his POA to purchase an annuity through People's United Bank from Jackson Annuity Co. (Jackson annuity) worth approximately $123, 000. Mr. Kane named himself and Mrs. Kane as sole beneficiaries. Mr. Kane purchased the annuity after having two 60-90 minute meetings with Lynda Walker, a People's United employee.[2] Mr. Kane said he believed that by listing himself as beneficiary, it would enable him to withdraw funds from the annuity to pay for Ms. Tolaro's care while she was alive. He also claimed to be unaware, at the time, that it was his POA that would allow him to make the withdrawals, not his designation as the beneficiary. He testified that he always understood that although he and his wife were listed as the beneficiaries, that the money was Ms. Tolaro's and would go to her estate after she died. Yet, despite this testimony Mr. Kane did not turn over the assets from the annuity when requested by the estate administrator until ordered to do so by the Probate Court.[3]
13. On October 19, 2010, Mr. Kane wrote a letter to Attorney Harty. In the letter, Mr. Kane said that Mrs. Kane had been taking care of Ms. Tolaro "for the past 6 months." He stated that Mrs. Kane chose to take care of Ms. Tolaro, seven days a week, "out of family commitment and love." He wrote that Mrs. Kane was caring for Ms. Tolaro and did not mention that he was also providing care. In recognition of the amount of work this entailed, Mr. Kane asked that his wife be compensated going forward at a rate of $15 per hour. He also specified that he was not requesting that Mrs. Kane be compensated for "time spent with us and/or family time. We are talking about the feeding daily, cleaning, managing the house needs, concerns of the [apartment] dwellers, finances, etc." There was no evidence presented regarding Attorney Harty's response or any formal arrangement reached by Mrs. Kane and Attorney Harty, and Mr. Kane made no mention of himself as providing care.
14. In 2011, Mr. Kane entered into a verbal agreement to loan Mark Olbrych money to renovate a building which contained a bar. In 2005, Mr. Kane had sold the building to Mr. Olbrych, although he retained a mortgage on the building, which Mr. Olbrych continued to make monthly payments on at the time of the second loan. As to the 2011 loan, Mr. Kane represented to Mr. Olbrych that he would loan Mr. Olbrych his own money. However, on May 3, 2011, Mr. Kane used his POA to withdraw $30, 000 from Ms. Tolaro's account, which he then signed over to Mr. Olbrych. Mr. Olbrych made out all his loan repayment checks to "Paul Kane Real Estate" or "Paul Kane." No paperwork accompanied the loan.
15. On May 11, 2011, Mr. Kane entered into a written agreement with David Carrier to loan Mr. Carrier money to purchase a mobile home. The two men knew each other through working for a mutual employer. The agreement stated that Mr. Kane was personally financing the loan, that Mr. Carrier would pay Mr. Kane a monthly repayment amount, and that Mr. Kane would hold the deed until the loan was repaid. However, that same day, Mr. Kane used his POA to withdraw $24, 000 from Ms. Tolaro's account, which he transferred to Mr. Carrier.
16. On July 1, 2011, Mr. Kane withdrew another approximately $19, 000 from one of Ms. Tolaro's bank accounts and transferred the money to Mr. Olbrych.
17. Mr. Kane testified that he had informed Ms. Tolaro of these loans and obtained her permission to loan Mr. Olbrych and Mr. Carrier this money as he believed it would give her a better rate of return than investing the money in other ways. The Board does not find this claim to be credible because he consistently ...

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