Attorney Richard Foster, former USA Water Polo head, facing state bar ethics charges

Attorney Richard Foster, a former USA Water Polo president and U.S Olympic Committee board member, is facing disciplinary charges in State Bar Court for potential ethics violations stemming from his representation of Olympic swimming hopeful Dagny Knutson, according to a filing obtained by the Southern California News Group.

Foster, a longtime power broker in international aquatic sports, is facing seven charges ranging from violations of the rules for professional conduct for conflicts of interest from relationships with a party or witness, with an interested person or entity, representation to a former client, communication with a represented party, violation of client confidences, and moral turpitude—concealment.

Foster was notified that if the State Bar Court finds that his “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.”

The State Bar Court’s notice of disciplinary charges follow a California appeals court ruling last month that reinstated a verdict and judgment for Knutson in her 2016 fraud case against Foster.

An Orange County Superior Court jury in June 2016 found that Foster, a former U.S Water Polo president and U.S. Olympic Committee board member, committed a breach of fiduciary duty and fraud by willful concealment while advising her to accept a financial settlement with USA Swimming, the sport’s national governing body, in a dispute over a promise of financial support by former U.S. national team director Mark Schubert without revealing his longtime relationships with Schubert and other USA Swimming officials. Orange County Superior Judge Theodore R. Howard, however, granted a new trial.

A three judge panel for the California Court of Appeals 4th Appellate District ruled that Howard’s decision to grant Foster a new trial was based on “erroneous legal theories.”

“The State Bar complaint was expected due to the Court of Appeals reinstating the verdict,” Foster wrote in an email to SCNG.  “The State Bar has an obligation to file a complaint when there is a verdict against an attorney.  The complaint was fueled by the Court of Appeals decision. As you may know, we have filed a Petition for Review with the California Supreme Court because we believe strongly that the Court of Appeals decision is flat out wrong.  There have already been some articles in legal journals agreeing that the opinion is wrong.  We will be asking the State Bar Judge to abate the charges pending a decision by the Supreme Court.  The State Bar complaint contains charges, not findings of fact.  We believe that the charges are overstated and that I have legitimate defenses to them.  My attorneys and I will work hard to defend myself on these charges and to clear my name.”

Knutson was one of American swimming’s top prospects in the spring of 2010 when Schubert, then the U.S. national team director, convinced her to give up a scholarship to Auburn, and her NCAA eligibility, and relocate from her native North Dakota to join USA Swimming’s Center of Excellence program based at Fullerton Aquatics Swim Team.

Under the agreement, USA Swimming would provide rent and living expenses, tuition to a nearby college, expenses for competition trips and an agent. She would train with Hutchison, a U.S. Olympic and World championships coach. The deal would run through the 2016 Olympics.

Knutson arrived in Orange County in August 2010. But within two months Schubert was forced out as U.S. national team director. Hutchinson resigned two months after that in the wake of allegations that he was romantically involved with world record-holder Ariana Kukors. Hutchison is currently under criminal investigation by the U.S. Department of Homeland Security and being investigated by the U.S. Center for Safe Sport for sexual misconduct.

RELATED: Did Mark Schubert do enough to protect USA Swimming athletes?

Knutson and another top prospect, Kate Ziegler, were told by USA Swimming officials after Schubert and Hutchison’s departures that only part of the agreements would be honored. In April 2011, Knutson, encouraged by her attorney Foster, accepted a financial agreement with USA Swimming that was worth less than her original deal with the sport’s national governing body, she said.

But Knutson experienced financial problems following the settlement, battled severe depression and an eating disorder and eventually faded from the sport.

Knutson eventually sued Foster, her attorneys describing the deal negotiated by Foster as “one-sided settlement agreement” and he had failed to reveal “‘severe’ conflicts of interests” because of his relationships with USA Swimming and Schubert while convincing Knutson to accept the financial settlement.

Knutson and her attorneys allege Foster failed to disclose that as U.S. Aquatics Sports president he represented USA Swimming before FINA, the international aquatics sport governing body; was a former USOC board member; was chairman of the 2004 U.S. Olympic Swimming Trials; was distributor for a pool company that was a “professional provider” for USA Swimming; and had longtime professional and personal relationships with both the federation’s outside legal counsel and USA Swimming chief executive Chuck Wielgus.

Emails revealed the access Foster had to Wielgus and other major players in swimming as well the unique relationship between the attorney and the U.S. sport’s top executive.

“I would appreciate your help resolving a situation involving Dagny Knutson and Kate Ziegler,” Foster began a Nov. 10, 2010 email to Wielgus.

“Let’s not let this escalate,” Wielgus responded in an email a little over an hour later.

“The reason I sent you the email is that I don’t want this to escalate either. Be happy that I am Evan’s counsel and not some other attorney,” Foster replied a day later, referring to Evan Morgenstein, the agent for Knutson and several Olympic medalists.

Emails showed that Wielgus bounced ideas and concerns about the Knutson and Ziegler situation off the attorney and strategy regarding settlement issues with Foster.

“STRICTLY CONFIDENTIAL – PLEASE JUST KEEP THIS BETWEEN YOU AND ME,” Wielgus began a Nov. 16, 2010 email to Foster.

Despite Wielgus’ request, Foster shared the email that day with Morgenstein.

“Keep this confidential so that I stay in confidence with Chuck,” Foster wrote in an email to the agent. “Will send the response to Chuck in a few minutes.”

In his email response to Wielgus, Foster wrote, “As you know, I represent a lot athletes, including a fairly large group of swimmers. It is rare that an issue arises between my clients and USA Swimming. If an issue comes up, I will discuss it with you in hopes of resolving the issue. I won’t, however, get involved with litigation against USA Swimming. I have too many friends in your organization, including you.”

The State Bar Court charges that Foster violated the rules of professional conduct by failing to provide Knutson with written disclosure of personal and/or professional relationships with USA Swimming officials, in particular Wielgus, and Schubert.

The court also charges that Foster violated client confidences by sharing confidential information with attorney Richard Young, counsel for USA Swimming, in a Feb. 24, 2011 email in which Foster wrote Knutson was “out of money” and a March 1, 2011 email to Young in which Foster told Young Knutson was “absolutely broke.” The court also charges that Foster forwarded a confidential March 16, 2011 email to him from Knutson to Young without her permission. Knutson’s email was about a pending settlement offer from USA Swimming.

Foster is also charged with intentionally omitting copies of communications between Foster and Wielgus requested by Knutson’s attorney in the fraud case. The communications, the court wrote, “demonstrated (Foster’s) conflicts of interest, thereby committing an act involving moral turpitude, dishonesty or corruption in willful violation of Business and Professional Code section 6106.”