State High Court Refuses to Disbar Newport Lawyer

The California Supreme Court refused Thursday to disbar a Newport Beach lawyer for pocketing nearly $6,000 from a settlement rather than using it to pay his client’s taxes. The court instead ordered him suspended for a year.

The court unanimously rejected a recommendation from the review department of the State Bar Court to disbar W. Mike McCray.

The vote was 6 to 1 to suspend McCray for a year, put him on probation for five years and require him to repay his client. Justice Malcolm Lucas dissented, saying more proof was needed that McCray had taken the money.

The court said McCray negotiated an $89,000 settlement in December, 1978, in a suit by William Daniel, president of Uneedus Corp., against a competitor, California Shopper, for unlawful business practices.

Besides McCray’s fee of $39,000, he was sent a check for $5,943 to pay to the Internal Revenue Service as his client’s taxes on the rest of the settlement. The court said McCray failed to pay the IRS, and Daniel, who had been assured by McCray that the money had been paid, finally paid the IRS himself to avoid placement of a lien on his property.

McCray said he had told someone in the office to pay the IRS and assumed it had been done. But the court said McCray had endorsed the check and that it contained markings “remarkably similar” to those on the check for his fee that he had deposited.

There was “convincing proof” that McCray had misappropriated the money, the court majority said in an unsigned opinion endorsed by six justices. Lucas, in dissent, said the State Bar had not provided documentary proof that McCray had failed to pay the IRS, and that a new hearing was needed.