ORDER ON APPLICATION FOR REINSTATEMENT AND REFERRAL TO THE DISTRICT COURT FOR ADDITIONAL DISCIPLINARY ACTION

ROBERT SUMMERHAYS, Bankruptcy Judge.

The present matter before the court is an Application For Reinstatement filed by David Patrick Keating. The court previously suspended Mr. Keating from practice before the U.S. Bankruptcy Court for the Western District of Louisiana for conduct that occurred in In re New Century Fabricators, Inc., No. 14-50652 (filed May 2014). The court took the application under advisement and now rules as follows.

BACKGROUND

In September 2014, the court held a hearing in the New Century case on an order to show cause why Mr. Keating should not be subject to sanctions and disciplinary action on account of false and misleading statements made in that case. The court ultimately concluded that Mr. Keating made material misrepresentations in pleadings filed on behalf of New Century, and that he repeated these misstatements during oral arguments on those pleadings. The court concluded that this conduct violated Rule 9011 of the Federal Rules of Civil Procedure as well as counsel's duty of candor under Rule 3.3 of the Louisiana Rules of Professional Conduct. The court imposed monetary sanctions of $15,000.00 against Mr. Keating, ordered Mr. Keating to complete 12 hours of continuing legal education certified as ethics or professionalism, and suspended Mr. Keating from practice before the Bankruptcy Court of the Western District of Louisiana for a period of 90 days. The court ordered that the $15,000 be paid to First Capital — the largest secured creditor in the New Century case — as partial compensation for the fees incurred by First Capital to address the misrepresentations made on behalf of New Century. The events leading up to this disciplinary action, and the court's findings with respect to its disciplinary action, is set fort in the April 1, 2015 order, a copy of which is included as Attachment 1 to this ruling.

After entry of the April 1st suspension order, Mr. Keating represented clients at an official meeting of creditors conducted under 11 U.S.C. § 341 based on his belief that the April 1st order only prohibited his appearance at court hearings. To avoid any dispute or confusion over the discipline imposed on Mr. Keating, the court issued an order dated April 7, 2015, stating that Mr. Keating's suspension includes "any practice before the bankruptcy court," including section 341 meetings. A copy of this April 7th order is included as Attachment 2 to this ruling. On April 9, 2015, the court entered an additional order informing Mr. Keating's clients of his suspension and directing the clerk's office to file the notice of suspension in every open case in which Mr. Keating represented a debtor or other party. The order explained that Mr. Keating's suspension precluded him from performing any work on behalf of clients. This April 9th order is included as Attachment 3.

On May 22, 2015, the court entered an order denying Mr. Keating's motion for reconsideration of the sanctions and suspension. In this order, the court also assessed additional sanctions on Mr. Keating for failing to disclose fees that he obtained from New Century. Specifically, the court ordered disgorgement of $15,000.00 in fees that were not disclosed, and ordered Mr. Keating to earn an additional 3 hours of ethics or professionalism CLE. The court ordered Mr. Keating to pay these disgorged fees to First Capital as additional compensation for the fees incurred by First Capital to address the misrepresentations that were the basis of the April 1st suspension order. A copy of this May 22nd order is included as Attachment 4.

Following his suspension, Mr. Keating transitioned his cases to other counsel. However, schedules filed in several cases indicated that Mr. Keating may have continued to perform work on behalf of clients in violation of the court's suspension order. On June 19, 2015, the court entered an order to show cause and set a hearing to determine whether the court's prior orders suspending Mr. Keating had been violated. That order was entered in In re Kevin Paul Brown, case number 15-50497. A copy of this June 19th order to show cause is included as Attachment 5. In that order, the court also ordered the debtor, Kevin Brown, to submit a sworn affidavit identifying the dates of each meeting he had with Mr. Keating. Mr. Brown complied with the order and submitted an affidavit. Mr. Brown's new counsel, Mr. Simmons Sandoz, also submitted an affidavit. Mr. Brown's affidavit states that he met with Mr. Keating twice. The first meeting occurred on April 8, 2015, a week after the court entered the original April 1st suspension order, and the day after the second order was entered. Mr. Keating met with Mr. Brown again on April 21, 2015. A copy of Mr. Brown's affidavit is included as Attachment 6. Mr. Sandoz's affidavit states that he received a file containing approximately 20 documents pertaining to Mr. Brown's case from Mr. Keating. This file included schedules signed by the debtor as well as a signed Chapter 13 Plan. Mr. Keating also forwarded attorneys' fees received from Mr. Brown. A copy of Mr. Sandoz's affidavit is included as Attachment 7.

Prior to the hearing on the court's order to show cause in the Brown case, Mr. Keating's counsel requested a conference with the court. Mr. Keating's counsel informed the court that Mr. Keating was closing his bankruptcy practice and was seeking non-legal employment in Texas. The inference to the court was that it was unlikely that Mr. Keating would resume his law practice in the near future. The court was also informed of a pending Louisiana state disciplinary proceeding against Mr. Keating. Mr. Keating's counsel also indicated that he would attempt to resolve any outstanding disputes with First Capital, including the attorneys' fee sanctions imposed by the court. Based on the court's conference with counsel and that representations made concerning the closure of Mr. Keating's bankruptcy practice, the court withdrew and vacated the June 19th order to show cause on August 13, 2015.

On December 11, 2015, Mr. Keating filed an application for reinstatement, seeking his full reinstatement to practice before the Bankruptcy Court of the Western District of Louisiana. In that application, Mr. Keating represented that he had satisfied the monetary and non-monetary sanctions imposed by the court. With respect to the monetary sanctions, Mr. Keating represented that he had entered into an agreement with First Capital to pay $15,000 of the $30,000 of sanctions awarded. A continuing legal education transcript shows that he earned his required CLE between October 30, 2015 and November 5, 2015. Mr. Keating's motion for reinstatement, however, is silent on the court's show cause order in the Kevin Brown case and the question raised in that order as to whether the work performed by Mr. Keating in the Brown case violated the court's order suspending him from practice. Accordingly, the court set his application for reinstatement for hearing on January 6, 2016.

DISCUSSION

Mr. Keating does not dispute that he met with Mr. Brown on two occasions after the court issued its two suspension-related orders on April 1st and April 7th. Rather, he contends that he had an ethical obligation to protect his clients' interests and assist them in the orderly transition of their cases to other lawyers. Mr. Keating contends that Mr. Brown faced a foreclosure proceeding near the end of April or beginning of May, which required immediate attention to ensure that Mr. Brown's interests were not prejudiced. According to Mr. Keating, his meetings with Mr. Brown were merely to ensure the orderly transition of Mr. Brown's case to another lawyer. Mr. Keating also contends that the April 1st and April 7th orders did not clearly set forth the limitations on his practice, and that it was not until he received the general April 9th order entered in each of his cases that he understood that he was precluded from performing work on behalf of clients.

Mr. Keating's arguments are without merit. Mr. Keating's work in the Kevin Brown case goes far beyond merely offering his services to aid in the transition of the case to new counsel. Mr. Keating met with Mr. Brown for the first time after the suspension orders were entered precluding him from practice before the bankruptcy court. Instead of informing Mr. Brown that he could not represent him and directing Mr. Brown to Mr. Sandoz, who had taken over many of Mr. Keating's cases, Mr. Keating met with Mr. Brown twice, the second time weeks after the suspension. The fact that a foreclosure proceeding was scheduled for three to four weeks later was not a justification for Mr. Keating to perform the work he did on behalf of Mr. Brown instead of merely directing Mr. Brown to Mr. Sandoz. In many cases, bankruptcy counsel have to prepare and file a bankruptcy case on an expedited basis when clients appear at their offices on the eve of a foreclosure proceeding. Even more importantly, Mr. Keating misrepresented the extent of the work he performed on behalf of Mr. Brown. During the evidentiary hearing on his application, Mr. Keating provided the following account under oath:

Contrary to Mr. Keating's sworn testimony, Mr. Sandoz's affidavit states that he received numerous pleadings and schedules signed by Mr. Brown, including a signed Chapter 13 Plan. According to Mr. Sandoz's affidavit, he received:

Mr. Sandoz's affidavit also indicates that Mr. Keating forwarded attorneys fees to Mr. Sandoz, so Mr. Keating also collected attorneys fees from Mr. Brown. This affidavit refutes Mr. Keating's sworn testimony to this court that he did little more than start pleadings by entering names, addresses, and "basic information." Indeed, a Chapter 13 Plan signed by the debtor is typically the culmination of the pre-filing work that a lawyer must perform on behalf of a client as the plan is based upon the information entered in the schedules.

The court also finds Mr. Keating's argument that he was confused by the court's April 1st and April 7th orders to be without merit. The April 1st order provided that Mr. Keating was suspended "from filing new bankruptcy cases, filing pleadings in any existing cases and from appearing in United States Bankruptcy Court for the Western District of Louisiana for a period of ninety (90) days from the date of this order." If the contours of his suspension were unclear, the April 7th order specifically provides that Mr. Keating was suspending from "any practice before the U. S. Bankruptcy Court." For Mr. Keating to now contend that the terms of his suspension were ambiguous when he met with Mr. Brown on April 8th is disingenuous at best. Suspension from "any practice before the U. S. Bankruptcy Court" clearly applies to the work that Mr. Keating performed for Mr. Brown.

Finally, Mr. Keating contends that his suspension from practice has been far longer than the original 90 days imposed by the court. Again, Mr. Keating's argument is disingenuous at best. This argument does not take into account that Mr. Keating informed the court that he was closing his practice in an effort to resolve the court's June 19th order to show cause. Moreover, Mr. Keating did not even begin to address the CLE requirements in the suspension order until October 30, 2015, less than 2 months before filing his Application for Reinstatement.

REFERRAL AND RECOMMENDATION

In sum, the court finds that Mr. Keating's work on behalf of Mr. Brown exceeded the work required to facilitate an orderly transition of Mr. Brown's case to another lawyer, and thus violated this court's order suspending him from practice. According to Mr. Brown's affidavit, his first meeting with Mr. Keating occurred on April 8th. On April 8th or thereafter, Mr. Keating obtained a signed client representation agreement from Mr. Brown as well as attorney fees. Mr. Keating also prepared multiple schedules including a signed Chapter 13 Plan. Mr. Keating's contention that he merely started to prepare schedules for Mr. Brown is yet again a lapse in candor to this court. The court concludes that Mr. Keating violated the April 1st and April 7th orders suspending him from practice before the bankruptcy court.

The local rules for the United States District Court for the Western District of Louisiana provide a disciplinary procedure for lawyers who practice before the district court and the bankruptcy court. See LR 83.2.10. These procedures allow for individual judges to impose a suspension of up to 90 days. In the present case, however, in light of Mr. Keating's prior conduct, his violation of this court's prior suspension order, and his continuing lack of candor with respect to the work he performed on behalf of Kevin Brown, this court concludes that Mr. Keating should be subject to suspension for a period longer 90 days. Accordingly, the court will refer this matter to the Chief District Judge of the Western District of Louisiana pursuant to LR 83.2.10. The court recommends an additional suspension of at least one year. Although Mr. Keating's original suspension lapsed in July 2015, the court recommends that this additional suspension not take into account the period of time after July 2015, when Mr. Keating did not practice. The only reason that the court did not address the breaches committed in the Kevin Brown case during this time is the representation by Mr. Keating that he was closing his practice. Moreover, Mr. Keating did not begin addressing the non-monetary aspects of his sanction — the CLE requirements — until late October 2015.

The court, therefore, DENIES the Application For Reinstatement in its entirety. The court further REFERS this matter to the Chief District Judge for the Western District of Louisiana for additional disciplinary action pursuant to LR 83.2.10.

SO ORDERED.

ORDER ON MOTION FOR SANCTIONS AND ORDER TO SHOW CAUSE

The present matter before the court involves allegations that debtor's counsel, D. Patrick Keating, made misrepresentations in pleadings and during oral argument with respect to a motion to appoint a Chapter 11 trustee (the "Motion to Appoint"). Mr. Keating had filed this motion in response to a motion to convert this case from Chapter 11 to a case under Chapter 7 (the "Motion to Convert") filed by the debtor's largest creditor, FCC, LLC d/b/a First Capital. First Capital filed the present Motion for Sanctions seeking sanctions for the alleged misrepresentations made by Mr. Keating. The court also entered an order to show cause as to why Mr. Keating should not be subject to sanctions and/or disciplinary action. The court took the matters under advisement following a lengthy evidentiary hearing. After considering the record, the arguments of counsel, and the relevant authorities, the court withdraws and vacates the Order to Show Cause with respect to James Castille. With respect to Mr. Keating, the court rules as follows.

BACKGROUND

New Century Fabricators, Inc. (the "Debtor") filed for relief under Chapter 11 on May 30, 2014. The Debtor's path to bankruptcy took a different route than many of the Chapter 11 cases that are filed in this court. Prior to the bankruptcy filing, First Capital had filed a Petition for Appointment of a Receiver in the 15th Judicial District Court. The 15th Judicial District Court granted ex parte appointment of a temporary receiver for the Debtor. The court's order included injunctive relief precluding the Debtor's management from interfering with the receiver and undertaking certain actions. Nevertheless, on May 30, 2014, Mr. Keating filed a bankruptcy petition seeking relief under Chapter 11 of the Bankruptcy Code on behalf of the Debtor. Mr. Keating filed a corporate resolution signed by James Castille, president of New Century, authorizing the bankruptcy filing.

The Debtor's state court receiver and First Capital then filed motions to dismiss the bankruptcy case on the grounds that New Century's management and owners lacked authority to file a bankruptcy case in light of the state court receivership order. Mr. Keating, purportedly on behalf of New Century, opposed the motion on the grounds that the receivership order did not bar a bankruptcy filing and did not displace management or otherwise prohibit the Debtor's management from filing for relief under the Bankruptcy Code. During the hearing on the motion to dismiss, one of the Debtor's largest unsecured creditors opposed the motion to dismiss on the grounds that a federal bankruptcy forum would provide more protection for creditors than a state court receivership proceeding commenced by a single secured creditor. The court denied the motion to dismiss but suspended the operation of 11 U.S.C. § 543 to allow the state court receiver to remain in control of the Debtor under the terms of the state court receivership order. The state court receiver and First Capital then moved to convert the Chapter 11 case to a case under Chapter 7 of the Bankruptcy Code and set that hearing for June 25, 2014. On the morning of June 25th, Mr. Keating filed the Motion to Appoint and requested the appointment of a Chapter 11 trustee in lieu of conversion. The representations made in this motion and during the June 25th hearing are the basis for First Capital's Motion for Sanctions and this court's order to show cause.

The gravamen of Mr. Keating's argument against conversion to Chapter 7 was that conversion would scuttle a proposed sale of the Debtor to a third-party purchaser, Rusty Lamb. Mr. Keating made the following representations in this regard:

According to First Capital, each of these representations are false, and were designed to create the false impression to the court that a Letter of Intent had been finalized with Mr. Lamb, that conversion of the case to Chapter 7 would scuttle that deal, and that conversion would significantly diminish any recovery to creditors. First, counsel for First Capital pointed out during the June 25th hearing that, contrary to the representations in paragraph 11 of Mr. Keating's Motion to Appoint, the Master Service Agreements contain no termination clauses that are specifically triggered by conversion of the case to Chapter 7. Moreover, the attorney for Mr. Lamb (the potential purchaser) appeared at the June 25th hearing and contradicted the representations in Mr. Keating's motion about Mr. Lamb's position on conversion and the effect of conversion on the Master Service Agreements. Specifically, John Mouton testified that, while Mr. Lamb was interested in purchasing New Century as long as the Master Service Agreements were part of the deal:

(June 25th Hearing Transcript at 18). With these disclosures, the court expressed concern that the linchpin of Mr. Keating's position on conversion — that conversion would undermine a deal with Lamb — was false. The court ultimately denied Mr. Keating's motion and ordered that the case be converted to a case under Chapter 7.

After this June 25th hearing and ruling, additional disclosures reveal that many of the representations made in Mr. Keating's motion — including some representations repeated by Mr. Keating on the record during the June 25th hearing — were false or misleading. On July 22nd, Mr. Mouton filed an affidavit addressing these misrepresentations. Mr. Mouton stated that he submitted the affidavit because Mr. Keating's motion "contains numerous inaccuracies." (Affidavit of John Mouton at 15 [Dkt. No. 156]). Mr. Mouton's affidavit states:

Mr. Mouton also testified during the sanctions hearing and affirmed the statements made in his affidavit. (Sept. 8, 2014 Hearing Transcript at 19-28). Mr. Mouton testified that he did not draft the "final" letter of intent referenced in and attached to Mr. Keating's Motion to Appoint, nor did he send a copy of any letter of intent to Mr. Keating. According to Mr. Mouton:

(Sept. 8th Hearing Transcript at 21-22) Mr. Mouton testified that, contrary to the impression created by Mr. Keating's motion, the discussions between New Century and Lamb had only started by the time of the June 25th hearing. Mr. Mouton testified that:

(Sept. 8th Hearing Transcript at 16). With respect to the purchase price stated in the "final" letter of intent attached to Mr. Keating's motion, Mr. Mouton testified that this price was not based on any discussion between the parties:

(Sept. 8th Hearing Transcript at 23). As far as the presence of Mr. Lamb's name at the top of the letter of intent, Mr. Mouton observed that it "was obviously drafted to appear to be coming from Mr. Lamb." (Id. at 24).

Stanley Blackstone also testified during the sanctions hearing. Mr. Blackstone is a lawyer, but was acting as a business broker on behalf of Mr. Castille and had signed an exclusive engagement agreement with the Debtor. (Id. at 41). Mr. Blackstone acknowledged that he had drafted the letter of intent because neither Mr. Mouton nor Mr. Lamb had experience with letters of intent. However, Mr. Blackstone testified that he never represented or acted on behalf of Mr. Lamb:

(Id. at 51).

DISCUSSION

Rule 9011(b) provides:

Rule 9011(b) places an affirmative duty on attorneys to make a reasonable investigation under the circumstances of the facts and the law before signing and submitting any paper to the court. In other words, counsel is to "think first and file later." Stewart v. RCA Corp., 790 F.2d 624 (7th Cir. 1986). This rule is intended "to protect the integrity of legal proceedings" and to protect against pleadings filed for improper purposes or that are not grounded in fact or law or a reasonable extension of the law. In re Commonwealth Securities Corp., 2007 WL 309942 at * 6 (Bankr. N.D. Tex. 2007). Counsel's duty of candor to the court is also governed by state rules of professional conduct governing attorneys. Rule 3.3 of the Louisiana Rules of Professional Conduct provide that:

Based on its consideration of the record as a whole, the court concludes that Mr. Keating's Motion to Appoint contains material misrepresentations in at least the following respects:

During the June 25th hearing on his motion, Mr. Keating continued to stand by these misrepresentations and made no attempt to correct the record when the representations were called into question. There is no real dispute that the statements in Mr. Keating's motion about the contents of the Master Service Agreements and the origin of the letter of intent are untrue. Mr. Keating, however, takes the position that these misstatements were inadvertently made, and that the error arose from incorrect information provided by his client—Mr. Castille—and a misunderstanding of Mr. Blackstone's role in the transaction.

First, with respect to the Master Service Agreements, Mr. Keating contends that Mr. Castille provided the erroneous information that was included in the motion. The record does not support this contention. Mr. Castille testified that he wanted to keep New Century in Chapter 11, but recalls no conversations with Mr. Keating about specific provisions in the Master Service Agreements that are tied to whether the bankruptcy case is converted to Chapter 7. Mr. Castille's testimony in this regard is supported by the record. The record includes e-mail correspondence between Mr. Castille and Mr. Keating, including an e-mail sent by Mr. Castille the morning of the June 25th hearing. (Keating Exhibit No. 11). None of this correspondence includes any mention by Mr. Castille of the specific termination provisions cited in Mr. Keating's motion. The court concludes that this misrepresentation in Mr. Keating's Motion to Appoint violates Rule 9011(b). Putting aside the question of whether the record supports a finding of intentional misconduct, at a minimum Mr. Keating failed to perform "an inquiry reasonable under the circumstances" to ascertain the truthfulness of the representations about the Master Service Agreements. If Mr. Keating did not have access to these agreements, he should have, at a minimum, qualified his representations and revealed the extent of his knowledge to the court. Instead, Mr. Keating made very specific, unqualified representations about the contents of the Master Service Agreements that were, in fact, untrue. These representations were material to the arguments advanced by Mr. Keating to support his motion.

Second, Mr. Keating contends that he was confused about Mr. Blackstone's role in the transaction and believed that Mr. Blackstone was representing Mr. Lamb in the transaction. According to Mr. Keating, this confusion explains why he thought that he was receiving the letter of intent from Mr. Lamb's attorney when he received the letter from Mr. Blackstone. The record, however, reflects that Mr. Blackstone was hired by Castille and entered into an exclusive engagement agreement with New Century, not Mr. Lamb. Moreover, Mr. Blackstone testified that he participated in a conference call with Mr. Keating about Mr. Lamb's interest in the company, and the context of the meeting makes clear that Mr. Lamb was represented by another attorney and not Mr. Blackstone:

(Sept. 8 Hearing Transcript at 63-64). Moreover, during the June 25th hearing on Mr. Keating's motion and the Motion to Convert, Mr. Keating specifically referred to Mr. Mouton as Mr. Lamb's attorney.1 Finally, the record includes a June 24th letter from John Mouton to Mr. Keating. This letter not only clearly identifies John Mouton as Mr. Lamb's attorney, it establishes that, on the eve of the June 25th hearing, the discussions between the parties were still preliminary. There is no discussion of or reference to any letter of intent. (FCC Exhibit No. 14).2 In light of this evidence in the record, it strains credulity to argue that Mr. Keating actually believed that Mr. Blackstone represented Mr. Lamb in the transaction. In this regard, the court concludes that Mr. Keating made a knowing misrepresentation about his belief that Mr. Blackstone was serving as Mr. Lamb's attorney.

In sum, the court concludes that Mr. Keating's conduct in filing a motion with material misrepresentations and his continued reliance on those misstatements at the June 25th hearing constitutes a violation of Rule 9011. His conduct is an extreme departure from counsel's duties under that rule. The court also concludes that this conduct violates Mr. Keating's duty of candor under Rule 3.3 of the Louisiana Rules of Professional Conduct. Even if the record does not establish that Mr. Keating acted knowingly or intentionally at the time the misrepresentations were made, that rule provides that it is a violation to "fail to correct a false statement of material fact...previously made to the tribunal by the lawyer." Here, Mr. Keating had knowledge that his representations pertaining to the Master Service Agreements were untrue no later than the June 25th hearing. Moreover, during that hearing, Mr. Mouton revealed that neither he nor Mr. Lamb had reviewed the agreements nor were they aware of any specific termination clauses that would be triggered by conversion. Nevertheless, Mr. Keating made no effort to try to correct the record. Instead, the truth only came to light when Mr. Mouton filed his affidavit on July 22nd — almost a month after the original hearing. As stated before, this affidavit reveals that the "final" letter of intent attached to Mr. Keating's motion was never agreed to or sent by Mr. Lamb, and that Mr. Lamb never conditioned his interest in purchasing the Debtor on the case remaining under Chapter 11. (June 25th Hearing Transcript at 18).

RELIEF

The question of sanctions and discipline is especially difficult when it involves a lawyer with the experience, reputation, and stature within the bar of Mr. Keating. Nevertheless, the court cannot abide the serious lapses in this case. Allowing this type of conduct undermines the integrity of the court and prejudices the administration of justice. Accordingly, the court imposes sanctions and discipline as follows.

1. Monetary Sanctions

Violations of Rule 9011 are appropriately addressed through monetary and non-monetary sanctions. The appropriate amount of monetary sanctions is "limited to what is sufficient to deter repetition of such conduct or comparable conduct by others similarly situated." Fed. R. Bankr. P. 9011(c)(2). Factors that should be considered in awarding sanctions include:

Featherson v. Goldman (In re D.C. Sullivan Co.), 843 F.2d 596,598 (1st Cir. 1988). Sanctions can include the reimbursement of attorney fees by a party who brings a sanctions motion. Here, First Capital seeks the recovery of fees as follows:

These fees and expenses total approximately $94,033. However, with the exception of the Gordon, Arata fee statement, much of these fees and expenses were incurred prior to or in connection to the June 25th hearing. Although this hearing was impacted by Mr. Keating's misstatements, the extent to which these misstatements increased the fees and expenses First Capital incurred is unclear from the record. Considering the record and the factors relevant in assessing the deterrence effect of sanctions, the court assesses monetary sanctions of $15,000 against Mr. Keating to be paid to First Capital in reimbursement of a portion of its fees. The record does not reflect any approved fee applications or disclosures of compensation required by Section 329. Within ten (10) days, counsel for Mr. Keating is to file a statement in the record stating whether Mr. Keating received money or anything of value from James Castille or New Century in connection with any legal services provided prior to filing bankruptcy or during the pendency of this case. Upon the filing of this statement, the court may enter additional relief including, but not limited to disgorgement of fees.

2. Non-Monetary Sanctions

The court further orders Mr. Keating to complete twelve (12) hours of continuing legal education certified as ethics or professionalism credits in addition to the hours normally required annually of all attorneys by the Louisiana State Bar.

3. Discipline

Local Rule 83.2.10(B) of the Western District of Louisiana District Court authorizes individual judges of the district court, including bankruptcy judges, to impose fines and suspend attorneys for up to ninety (90) days. The court, therefore, orders that Mr. Keating be suspended from filing new bankruptcy cases, filing pleadings in any existing cases and from appearing in United States Bankruptcy Court for the Western District of Louisiana for a period of ninety (90) days from the date of this order. The Clerk of the Bankruptcy Court is directed to immediately suspend Mr. Keating's access to CM/ECF for the term of the suspension. Following the expiration of the 90-day suspension, Mr. Keating may resume his practice in bankruptcy court upon certification that (1) he has completed the 12 hours of continuing legal education required in this order, and (2) has paid the monetary sanctions imposed herein. Finally, because the court's findings implicate the Louisiana Rules of Professional Conduct, the court is required to notify the appropriate disciplinary authorities in Louisiana. See Canon 3(B)(3) of the Code of Conduct for United States Judges; see also In re Thomas, 337 B.R. 879 (Bankr. S.D. Tex. 2006) (Steen, J.). Accordingly, the Clerk's Office is hereby directed to send a copy of this order, and copies of the hearing transcripts from the hearings on June 25, 2014 and September 8, 2014, to the Louisiana Attorney Disciplinary Board.

As a final matter, the court withdraws and vacates the Order to Show Cause with respect to James Castille.

SO ORDERED.

SUPPLEMENTAL ORDER ON MOTION FOR SANCTIONS AND ORDER TO SHOW CAUSE

In an order dated April 1, 2015, the court ordered that Mr. D. Patrick Keating be "suspended from filing new bankruptcy cases, filing pleadings in any existing cases and from appearing in United States Bankruptcy Court for the Western District of Louisiana for a period of ninety (90) days from the date of this order." The court understands that Mr. Keating may have made appearances at Section 341 meetings in Lafayette on April 2,2015 and that there may be confusion about the scope of his suspension and whether it applies Section 341 meetings. This suspension applies to any practice before the U.S. Bankruptcy Court, including Section 341 meetings. To the extent that the April 1st order is ambiguous on this point, it is so clarified to include any practice before the bankruptcy court. Moreover, the suspension applies immediately. Any violation of the suspension order will be deemed contempt of the court's order and will be addressed with a referral to the U.S. District Court for additional sanctions.

IT IS SO ORDERED.

SO ORDERED.

ORDER REGARDING SUSPENSION OF DAVID PATRICK KEATING

On April 1, 2015, the court entered an order suspending David Patrick Keating for a period of 90 days. A review of the court records reflects that Mr. Keating represents parties in many pending cases. In order to provide some direction to the parties represented by Mr. Keating as well as other parties involved in those cases, it is hereby ordered that:

SO ORDERED.

ORDER ON MOTION FOR RECONSIDERATION

The present matter before the court is a motion for reconsideration filed by Mr. D. Patrick Keating. The court previously entered orders sanctioning Mr. Keating and suspending him from practice before the bankruptcy court for ninety (90) days. The court also ordered Mr. Keating to disclose his compensation and, when Mr. Keating's response revealed previously undisclosed compensation, ordered Mr. Keating to address his failure to timely disclose that compensation within ten (10) days of the order. To date, Mr. Keating has not filed anything addressing this disclosure issue. Creditor First Capital filed an opposition to Mr. Keating's motion to reconsider. After considering Keating's motion, the record in its entirety, the opposition of First Capital, and the relevant authorities, the court DENIES the Motion to Reconsider, and ORDERS additional relief based on Mr. Keating's failure to disclose compensation.

I. Motion For Reconsideration

The factual background of this case is set forth in the court's prior orders. Mr. Keating contends that this court's findings and imposition of sanctions "is not supported by competent evidence" and further that the sanction is "far too harsh." Mr. Keating's motion also quotes extensively from the hearing transcript in an effort to support his position that he was confused about Stanley Blackstone's role in the proposed sale of the debtor to Rusty Lamb. At the show cause hearing, Mr. Keating testified that he thought that Blackstone was acting as Lamb's attorney. Now, Keating argues — in a supplemental pleading — that he believed that Blackstone acted as a dual mandatary in the transaction under Louisiana law. Keating's effort to re-frame his testimony and argument does not support reconsideration of the court's rulings.

First, the extensive quotes from the hearing transcript pertaining to Blackstone's role in the transaction are merely an attempt to re-litigate Keating's position on the merits of the sanctions motion. The court carefully reviewed all of the testimony presented at the hearing and considered all of that testimony in context, including the excerpts cited by Mr. Keating. The motion to reconsider offers nothing to cause this court to reconsider or modify its ruling based on the evidence presented at the sanctions hearing. For example, many portions of the testimony cited by Mr. Keating merely establish that Mr. Blackstone could not remember certain details of his conversations with Mr. Keating involving his role in the proposed sale to Lamb. However, as explained in this court's ruling on the sanctions motion, other testimony supports the court's conclusion that Keating knew that Mr. Mouton, not Mr. Blackstone represented Lamb, and that Blackstone represented New Century. Indeed, Keating cites several instances where Mr. Blackstone specifically testified that he told Mr. Keating that he would speak to Mr. Lamb's attorney. (September 8, 2014 Hearing Transcript, pp 63-64, lines 22-13; pp 68-69, lines 20-8). Another quoted excerpt involving Blackstone's role as New Century's agent for service of process was refuted by other evidence introduced during the September 8th hearing. In the testimony cited by Keating, Blackstone was asked whether he sent Keating a copy of the receivership pleadings. He responded "No." However, this testimony was undercut by Keating's own testimony:

(September 8, 2015 hearing, pg. 122, lines 21-24.) The court notes that the case was filed on May 30, 2014, so at the time of the June 25th hearing on the conversion motion, the case had been pending only 26 days. Moreover, First Capital's Exhibit 37 reflects that Mr. Blackstone, acting as agent for service of process for New Century, transmitted pleadings to Mr. Keating on June 6, 2014, only 19 days prior to that hearing.

Second, Mr. Keating's argument that he believed Blackstone was acting as a "dual mandatary" for both parties and not specifically an attorney for Mr. Lamb strains his credibility even further. In prior pleadings and arguments to the court, Mr. Keating repeatedly argued that he believed that Mr. Blackstone was acting as Mr. Lamb's attorney, and that he had been referring to Mr. Blackstone whenever he referred to receiving the "final" letter of intent from Mr. Lamb's "attorney." Now, Keating is arguing that he believed that Blackstone was a broker for both sides, and not Lamb's attorney? As the court pointed out in its sanctions ruling, the record simply does not support Keating's claim that he was confused about Blackstone's role in the proposed sale.

Third, and even more concerning to the court, Keating characterizes his role as a mere "conduit" between his client and the court. Lawyers are officers of the court, not mere conduits. This "conduit" argument ignores Rule 11 of the Federal Rules of Civil Procedure and Rule 7011 of the Federal Rules of Bankruptcy Procedure, both of which place duties on lawyers as officers of the court that extend beyond merely acting as a conduit. It also ignores state rules of professional conduct that impose affirmative duties on lawyers. Lawyers have a responsibility to the court and the legal system to make accurate representations and, if a misrepresentation is unwittingly made to the court, to correct that misrepresentation. This case does not involve merely an isolated mistake made in the course of zealously representing a client. This case involves a pattern of multiple misrepresentations made in pleadings and oral arguments to the court that, taken as a whole, could have altered the course of this case to the detriment of creditors. The court recognizes that lawyers have a duty to zealously represent their client's interests. However, the duty of candor to the court is paramount, and cannot yield to expediency or half truths made in pursuit of a client's goals.

Finally, Mr. Keating asserts that the 90-day suspension imposed by the court is too severe. The court fully understands the implication of a 90-day suspension to a lawyer whose practice is centered on representing clients in bankruptcy court. The court also understands that this suspension will have significant monetary repercussions on Mr. Keating's practice.1 Such a suspension can be more severe than a 1-year suspension imposed on a lawyer who appears in bankruptcy court infrequently. The court reluctantly arrived at its decision only after careful consideration of the entire record. However, actions have consequences. Violations of federal rules and state rules of professional conduct have consequences. The severity of those consequences is directly related to the severity of the violation. In this court's view, the violations at issue here strike at the integrity of the judicial process and the role of a lawyer as an officer of the court. In this context, a 90-day suspension may even be too lenient. Nevertheless, the court declines to reconsider the 90-day suspension.

II. Undisclosed Fees

Keating never filed a disclosure of compensation prior to the court issuing its sanctions orders. Rule 2016 of the Federal Rules of Bankruptcy Procedure provides that:

11 U.S.C. § 329 provides:

Here, Keating filed this bankruptcy case on behalf of New Century, the debtor in possession. He was acting as counsel for the debtor and was obligated under Rule 2016 and section 329 to disclose any pre-petition fees he received. Because no such disclosure was filed in this case, the court ordered Mr. Keating to disclose any pre-petition fees he received. On April 10, 2015, Keating filed a statement disclosing that he received compensation of $15,000 from James Castille to represent New Century in the bankruptcy case. The fact that Keating later narrowed the scope of his representation to overcome claims that he had a conflict of interest with the debtor does not obviate the fact that, at the outset of this case, Keating was acting on behalf of the debtor and thus had an obligation under Rule 2016 and section 329 to disclose his compensation. The sanction imposed by courts for failing to comply with Rule 2016 and section 329 is typically disgorgement of fees. See, e.g., In re Ball, 2011 WL 7748356 at *2 (Bankr. S.D. Tex. 2011). In determining the appropriate sanction, the court notes that this is not the first time that Mr. Keating has not complied with Rule 2016 and section 329. In the case of In re Carlitta Hinkle, Case Number 09-50640, Mr. Keating was ordered to disgorge fees that were not disclosed and that, according to his client, had not been authorized.

Accordingly, the court orders that Mr. Keating disgorge $15,000. The court orders that the funds be paid to First Capital to compensate it for costs incurred in addressing Mr. Keating's conduct. This payment is in addition to the prior sanction awarded by the court. Further, because this is the second instance of counsel failing to comply with Rule 2016's disclosure requirements, the court orders that Mr. Keating be required to take an additional 3 hours of ethics or professionalism CLE. The court previously ordered Keating to take 12 hours of ethics or professionalism CLE. Thus, Keating must complete these 15 hours of CLE prior to being reinstated to practice before the bankruptcy court. These hours are in addition to the annual requirements imposed by the state bar association.

IT IS SO ORDERED.

SO ORDERED.

ORDER

On April 1, 2015, the court entered an Order suspending David Patrick Keating from the practice of bankruptcy law for a period of 90 days. While this case was filed by W. Simmons Sandoz, the Statement of Financial Affairs and Disclosure of Compensation indicate that the Debtor was initially meeting with and planned to hire Mr. Keating. This occurred in numerous cases and Mr. Keating and Mr. Sandoz reached an agreement whereby Mr. Sandoz would represent clients and the attorneys would agree on an appropriate division of fees based upon Mr. Keating's work performed prior to the suspension. In the instant case, the information included in the Statement of Financial Affairs and Disclosure of Compensation appear to indicate that Mr. Keating performed services on behalf of the Debtor after April 1, which would be in violation of the court's order. In order to determine whether any violation occurred, the court needs a statement from both the Debtor and Mr. Keating. Accordingly,

IT IS ORDERED THAT within 10 days, Debtor, Kevin Paul Brown, through his attorney, shall submit a sworn affidavit indicating the dates of each meeting he had with Mr. Keating, to the best of his recollection;

IT IS FURTHER ORDERED THAT within 10 days, Mr. Keating shall submit a sworn affidavit stating whether he has performed any bankruptcy services for or had any meetings related to bankruptcy with this Debtor or any other client on or after April 1, 2015, and if so, detailing the dates and nature of those services and/or meetings; and

IT IS FURTHER ORDERED THAT upon receipt of these pleadings, the court will determine whether any further action is necessary.

AFFIDAVIT

BEFORE ME, Notary Public, duly commissioned and qualified in the Parish and State aforesaid, personally came and appeared:

W. SIMMONS SANDOZ, a resident of the lawful age of Lafayette Parish, Louisiana, who, after being duly sworn, did depose and say:

This statement is made in compliance with the Court's Order dated June 30, 2015.

Documents (electronic or paper) received from D. Patrick Keating: