The S.C. Supreme Court has suspended a Charleston attorney from practicing law for 18 months for professional misconduct related to aiding and abetting a financier charged with fraud in 2013.
John Kern must pay the costs of his disciplinary proceedings within 30 days and attend an ethics program before being reinstated.
Kern was charged by the Securities and Exchange Commission in 2013 for his role in a fraudulent investment scheme with Craig Berkman, who used funds from his investment companies to pay bankruptcy debts.
Kern, who helped form two of Berkman’s companies and served as general counsel for them, settled with the SEC, which ordered him to repay his fees, totaling $234,577, as well as a fine of $100,000. Kern was barred from being employed by investment companies and may not practice law before the SEC.
According to the opinion (.pdf) by the S.C. Supreme Court, Kern committed professional misconduct “by recklessly providing false information to the investors and to Berkman’s bankruptcy attorney.” Kern told the investors and the attorney that all of the investment funds were being used properly, despite an obligation as general counsel to exercise due diligence and make sure that was true, the order said.
The court also found that Kern has made no effort to repay any of the funds as ordered by the SEC.
The Commission on Lawyer Conduct recommended that Kern be suspended from practicing law for three years because of his suspension with the SEC, but the Supreme Court ruled that it could not impose a penalty on the grounds that the SEC is a similar jurisdiction.
Kern has a history of misconduct in South Carolina: In 2012, he was suspended for 90 days for commingling trust account funds with personal funds and for failing to cooperate with the Office of Disciplinary Counsel.
Last month, Kern was also placed on interim suspension for an unrelated matter. The rule cited in that order indicated that the court had been notified of “an indictment, information or complaint charging the lawyer with a serious crime.”