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STATE BAR OF CALIFORNIA OFFICE OF THE CHIEF TRIAL COUNSEL JAMES E. TOWERY, No. 74058 CHIEF TRIAL COUNSEL RUSSELL G. WEINER, No. 94504 DEPUTY CHIEF TRIAL COUNSEL DJINNA M. GOCHIS, No. 108360 ASSISTANT CHIEF TRIAL COUNSEL DANE C. DAUPHINE, NO. 121606 SUPERVISING TRIAL COUNSEL 1149 South Hill Street Los Angeles, California 90015-2299 Telephone: (213) 765-1293
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FILED
DEC 205
5~ATE BAR COURT CLERKS OFFICE LOS ANGELES

STATE BAR COURT HEARING DEPARTMENT - LOS ANGELES

12 In the Matter of: 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A Member of the State Bar JON A. DIVENS, No. 145549,

Case No. 09-0-12921 NOTICE OF DISCIPLINARY CHARGES

NOTICE - FAILURE TO RESPOND! IF YOU FAIL TO FILE AN ANSWER TO THIS NOTICE WITHIN THE TIME ALLOWED BY STATE BAR RULES, INCLUDING EXTENSIONS,OR IF YOU FAIL TO APPEAR AT THE STATE BAR COURT TRIAL, (1) YOUR DEFAULT SHALL BE ENTERED, (2) YOU SHALL BE ENROLLED AS AN INACTIVE MEMBER OF THE STATE BAR AND WILL NOT BE PERMITTED TO PRACTICE LAW UNLESSTHE DEFAULT IS SET ASIDE ON MOTION TIMELY MADE UNDERTHE RULES OF PROCEDURE OF THE STATE BAR, (3) YOU SHALLOT N BE PERMITTED TO PARTICIPATE FURTHER IN THESE PROCEEDINGS UNLESS YOUR DEFAULT IS SET ASIDE, AND (4) YOU SHALL BE SUBJECT TO ADDITIONAL DISCIPLINE. STATE BAR RULES REQUIRE YOU TO FILE YOUR WRITTEN RESPONSE TO THIS NOTICE WITHIN TWENTY DAYS AFTER SERVICE. IF YOUR DEFAULT IS ENTERED AND THE DISCIPLINE IMPOSED .BY THE SUPREME COURT IN THIS PROCEEDING INCLUDES A PERIOD OF ACTUAL SUSPENSION, YOU WILL REMAIN SUSPENDED FROM THE PRACTICE OF LAW FOR AT LEAST THE PERIOD OF TIME SPECIFIED BY THE SUPREME COURT. IN ADDITION, THE ACTUAL SUSPENSION WILL CONTINUE UNTIL YOU HAVE REQUESTED, AND THE STATE BAR COURT HAS GRANTED, A MOTION FOR -1-

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TERMINATION OF THE ACTUAL SUSPENSION. AS A CONDITION FOR TERMINATING THE ACTUAL SUSPENSION, THE STATE BAR COURT MAY PLACE YOU ON PROBATION AND REQUIRE YOU TO COMPLY WITH SUCH CONDITIONS OF PROBATION AS THE STATE BAR COURT DEEMS APPROPRIATE. SEE RULE 205, RULES OF PROCEDURE FOR STATE BAR COURT PROCEEDINGS. The State Bar of California alleges: JURISDICTION 1. Jon A. Divens ("Respondent") was admitted to the practice of law in the State of California on January 9, 1990, was a member at all times pertinent to these charges, and is currently a member of the State Bar of California. COUNT ONE Case No. 09-0-12921 Business and Professions Code, section 6106 [Moral Turpitude - Breach of Fiduciary Duty] 2. Respondent willfully violated Business and Professions Code, section 6106, by

14 committing an act involving moral turpitude, dishonesty or corruption, as follows: 15 16 17 18 19 20 21 22 23 3. In or about July 2008, Amedraa LLC ("Amedraa") purchased a Collateralized Mortgage Obligaton ("CMO") issued by the Federal National Mortgage Association and identified as FNMA Series 2003-W19, Class 1-IO-1 0.33048% 11/25/2043 GTD Remic Pass Thru CTF Whole Loan, CUSIP 31393UA86, with a face value of $305,000,000 (the "FNMA Series CMO"). Amedraa paid $2 million for the FNMA Series CMO. After the purchase, Amedraa held the FNMA Series CMO as a book entry with Pension Securities Transworld Financial in Dallas, Texas. 4. The FNMA Series CMO is an interest-only CMO which entitles the owner of the CMO to a portion of the interest payments on the mortgages owned by the CMO. The interest is

24 paid on a monthly basis. 25 26 27 28 5. In or about December 2008, Amedraa entered into a joint venture agreement with LNJ Enterprise LLC ("LNJ"). The joint venture agreement authorized LNJ and its Vice President, James Savor ("Savor"), to act as Amedraas agent for purpose of placing the FNMA Series CMO with a broker for investment purposes.
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6. On or about December 8, 2008, LNJ entered into a written Financial Consulting and Asset Management Agreement with Wiseguys Investments LLC ("WGI"). The Asset Management Agreement was signed by Steve Woods ("Woods") of WGI and Linda Starr, the President of LNJ. The Asset Management Agreement provided that LNJ would deliver the 5 6 7 8 9 10 11 12 13 FNMA Series CMO (along with two other CMOs controlled by LNJ) to WGI. WGI would mak~ an advance payment of 1% of the face value of the CMOs to LNJ within 5 business days of LNJs delivery of the CMOs to WGI. WGI would then "identify and manage the entry of [the CMOs] into one or more investment opportunities." The plan was to use the FNMA Series CMO in a managed buy-sell program whereby WGI would use the value of the CMO along with other assets to buy bank debt at a wholesale rate, for example 60 cents on the dollar, and then resell the debt to a third party for a higher rate, for example 65 cents on the dollar. WGI and LNJ would share the profit. 7. WGI suggested that LNJ transfer the FNMA Series COM to an escrow account held

14 in the name of Respondents law office, Jon Divens& Associates LLC. On or about December 15 16 31, 2008, LNJ, WGI and Respondents law office entered into an Escrow Agreement which referred to LNJ as the "client." The Escrow Agreement provided that, as escrow agent,

17 Respondent would receive certain CMOs from LNJ and hold them in his escrow account until 18 19 the advance payment was received from WGI, and then he would wire the payment to LNJ and release the CMOs to WGI. The Escrow Agreement also provided that the escrow agent would

20 return the CMOs to LNJ if the advance payment was not deposited by WGI. 21 22 23 8. On or about January 5, 2009, the FNMA Series CMO was transferred to a Morgan

Stanley securities account held in the name of Respondents law office. Thereafter, WGI did not make the advance payment. In or about the third week ,of January 2009, Savor spoke to

24 Respondent by phone, and Respondent agreed to return the FNMA Series CMO to LNJ. 25 26 27 28 Respondent did not do so. Instead, Respondent joined with Frank Wilde ("Wilde") in seeking to sell, encumber or trade the FNMA Series CMO. 9. On or about February 16, 2009, LNJs counsel, Bethel Harris, emailed Respondent and Woods requesting that the FNMA Series CMO be returned to LMH. On that same day,
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Savor sent Respondent and Wilde an email reminding them that they had no authority to trade or encumber the FNMA Series CMO. Respondent did not return FNMA Series CMO to LNJ. 10... On or about February 23, 2009, Evelyn Aardema, the principle of Amedraa, sent Respondent and Wilde a letter stating that Amedra was the owner of the FNMA Series CMO and demanded it be returned. Respondent did not return the FNMA Series CMO to LNJ or Amedraa. 11. In or about February 2009, Wilde proposed to LNJ that it enter into a trade agreement with Wilde and Respondent. Wilde represented that the FNMA Series CMO had been placed in a trading program. Onor about March 12, 2009, LNJ entered into an agreement with Respondents law office and Matrix Holdings LLC ("Matrix"), a company managed by Wilde, for the FNMA Series CMO to be entered into an investment program with the profits to be divided 50% to LNJ and 50% to Respondents law office and Matrix. The trade agreement provided that the FNMA Series CMO would remain the property of LNJ and would be returned to LNJ by March 31, 2010. The trade agreement also provided that Respondents law office and Matrix would pay $1 million to LNJ within two weeks of the execution of the agreement. 12. LNJ entered into this agreement with the consent of Amedraa since they had been unable to obtain the return of the FNMA Series CMO and hoped to obtain some control over it through the trade agreement. Respondent and Wilde did not make the $1 million payment to LNJ despite repeated promises to do so. On or about April 14, 2009, Starr sent Respondent and Wilde a formal notice of default of the trade agreement and demanded that the FNMA Series CMO be returned within five business days. Neither Respondent nor Wilde responded, and the FNMA Series CMO was not returned to LNJ. 13. Between January 2009 and September 2009, Respondent moved the FNMA Series CMO to at least six different financial institutions so that LNJ could not locate it. In or about

24 November 2009, the FNMA Series CMO was in an account with Chase Investment Services 25 Corp. ("CISC") when CISC froze the account. In or about December 2009, CISC filed an

26 interpleader action in the U.S. District Court. Thereafter, Amedraa also filed a civil action 27 against Respondent and others in the same court. 28 ///
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14. In or about September 2009, the FNMA Series CMO was transferred back to LNJ pursuant to a stipulation and order in the federal action. 15. By not returning the FNMA Series CMO to LNJ when WGI failed to make the advance payment and at the request of LNJ in breach of his fiduciary duty under the Escrow Agreement and in order to obtain some personal profit from the FNMA Series CMO, Respondent committed an act involving moral turpitude, dishonesty or corruption. COUNT TWO Case No. 09-O-12921 Business and Professions Code, section 6106 [Moral Turpitude - Misappropriation] 16. Respondent willfully violated Business and Professions Code, section 6106, by committing an act involving moral turpitude, dishonesty or corruption, as follows: 17. The allegations of Count One are incorporated by reference. 18. The FNMA Series CMO continued to earn interest income in each account where it was transferred while in Respondents control. On or about March 25, 2010, Savor sent email to Respondent informing Respondent that he owed LNJ the interest payments on the FNMA Series CMO, and Respondent responded to Savor by email that the interest would be paid to LNJ within a matter of days. Thereafter, Respondent did not pay any of the interest earned from the FNMA Series CMO to LNJ. 19. During the months from January 2009 through October 2009, the FNMA Series CMC

20 earned interest totaling approximately $157,444.40. Respondent withdrew the interest from each 21 account where the FNMA Series CMO was held and transferred the payments to his business

22 account where he used the funds for his personal needs. 23 24 25 26 27 28 20. After CISC froze the account where Respondent had transferred the FNMA Series CMO, the interest earned from November 2009 to March 2010 accumulated in the account. In March 2010, the FNMA Series CMO was returned to LNJ. In or about October 2010, the court in civil action filed by Amedraa against Respondent determined that 3 I% of the funds in that account was attributable to the interest earned on the FNMA Series CMO and ordered that that amount be distributed to Amedraa.
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21. By misappropriating approximately $157,444 of the interest payments earned on the FNMA Series CMO belonging to LNJ and Amedraa, Respondent committed an act involving moral turpitude, dishonesty or corruption. NOTICE - INACTIVE ENROLLMENT! YOU ARE HEREBY FURTHER NOTIFIED THAT IF THE STATE BAR COURT FINDS, PURSUANT TO BUSINESS AND PROFESSIONS CODE SECTION 6007(c), THAT YOUR CONDUCT POSES A SUBSTANTIAL THREAT OF HARM TO THE INTERESTS OF YOUR CLIENTS OR TO THE PUBLIC, YOU MAY BE INVOLUNTARILY ENROLLED AS AN INACTIVE MEMBER OF THE STATE BAR. YOUR INACTIVE ENROLLMENT WOULD BE IN ADDITION TO ANY DISCIPLINE RECOMMENDED BY THE COURT. SEE RULE 101(c), RULES OF PROCEDURE OF THE STATE BAR OF CALIFORNIA. NOTICE COST ASSESSMENT! IN THE EVENT THESE PROCEDURES RESULT IN PUBLIC DISCIPLINE, YOU MAY BE SUBJECT TO THE PAYMENT OF COSTS INCURRED BY THE STATE BAR IN THE INVESTIGATION, HEARING AND REVIEW OF THIS MATTER PURSUANT TO BUSINESS AND PROFESSIONS CODE SECTION 6086.10. SEE RULE 280, RULES OF PROCEDURE OF THE STATE BAR OF CALIFORNIA. Rest~ectfullv submitted. THE STATE BAR OF CALIFORNIA OFFICE OF THE CHIEF TRIAL COUNSEL

DATED: Sut~ervisin~ Trial Counsel

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DECLARATION OF SERVICE BY U. S. M A I L/U.S. CERTIFIED MAIL/OVERNIGHT DELIVERY FACSIMILE-ELECTRONIC TRANSMISSION CASE NUMBER(s): 09-0-12921 I, the undersigned, over the age of eighteen (18) years, whose business address and place of employment is the State Bar of California, 1149 South Hill Street, Los Angeles, California 90015, declare: D Service; ByU.S. Mail: [~ By U.S. Certified Mail: that I am not a party to the within action; - that I am readily familiar with the State Bar of Californias practice for collection and processing of correspondence for mailing with l~e United States Postal

that in the ordinary course of the State Bar of Californias practice, correspondence collected and precessed by the State Bar of California would be deposited with the United States Postal Service that same day; that I am aware that on motion of party served, service is presumed invalid if postal cancellation date or postage meter date on the envelope or package is more than one day after date of deposit for mailing contained in the affidavit; and that in accordance with the practice of the State Bar of California for collection and processing of mail, I deposited or placed for collection and mailing in the City and County of Los Angeles... D By Overnight Delivery: that I am readily familiar with the State Bar of Californias practice for collection and processing of correspondence for overnight delivery by the United Parcel Service (UPS); that in the ordinary course of the State Bar of Californias practice, correspondence collected and processed by the State Bar of California for overnight delivery is deposited, with delivery fees paid or provided for, with UPS that same day; and that in accordance with the practice of the State Bar of California for collection and processing of mail for overnight delivery by UPS, I deposited or placed for collectJen and overnight delivery by UPS... By Fax Transmission: Based on an agreement of the parties to accept service by fax transmission, I taxed the documents to the persons at the fax numbers listed herein below. No error was reported by the fax machine that I used. A copy of the record of the fax transmission, which I pdnted out, is attached. By Electronic Service: Based on a court order or an agreement of the parties to accept service by electronic transmission, I caused the documents to be sent to the persons at the electronic notification addresses listed herein below. I did not receive, within a reasonable time after the transmission, any electronic message or other indication that the transmission was unsuccessful. on the date shown below, a true copy of the within document deecdbed as follow~: ......................................................................................................................................................... NOTICE...OF .DISCIPLINARY.C~RGES ............................................................................................................................................ [] (mu.s. ~0 in a sealed envelope placed for collection and mailing at Los Angeles, addressed to: [] (~c,,~a~J0 in a sealed envelope placed for collection and mailing as certified mail, return receipt requested, Article No.: 7160 3901 9849 2214 4305 at Los Angeles, addressed to: [] (for o,,,,~ht~el~,.,~ together with a copy of this declaration, in an envelope, or package designated by UPS, Tracking No(s).: ..................................................................................................................... addressed to:

Business:Residentia!.Ad _dres~ ........................................................................................... FaX..Numbel[ ......................................................................... .................................................... person Serve_d ................................................................................ Law Offices of Zachary D. Wechsler Eloctronic Notification Addr~ ZACHARY D. WECHSLER, ESQ. 6060 Center Drive, Suite 825 Los Angeles, California 90045 [] in an inter-office mail facility regularly maintained by the State Bar of California addressed to: N/A I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed at Los Angeles, California, on the date shown below. DATED: December 13, 2010 SIGNED-~- ~~ . ~-~BERNARD PIMENTEL Declarant

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