The State Supreme Court has denied Seal Beach attorney Richard Fosters final request for appeal of a fraud judgment against him from former Olympic swimming hopeful Dagny Knutson.
The court denied Fosters request for a review of an appeals court decision earlier this year. That decision reinstated a verdict and judgment for Knutson in her 2016 case against Foster, a longtime power broker in U.S. and international aquatic sports.
While Supreme Court denial closes the case in Knutsons civil suit against Foster, a former U.S. Olympic Committee board member, is still facing the possibility of being disbarred for his conduct while representing Knutson.
Foster is facing disciplinary charges in State Bar Court for potential ethics violations in his representation of Knutson.
Foster 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, who has taught a “Sports Law and Ethics” class for Cal State Long Beachs sports management program, 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.”
A settlement hearing in the Bar Court case is set for December 17 with a trial likely in January.
A three judge panel for the California Court of Appeals 4th Appellate District ruled in August that Orange County Superior Judge Theodore R. Howards decision to grant Foster a new trial was based on “erroneous legal theories.”
The appeals court, citing the California Code of Judicial Ethics, also ordered their opinion forwarded to the California State Bar.
An Orange County Superior Court jury in June 2016 found that Foster, a former U.S Water Polo president, committed a breach of fiduciary duty and fraud by willful concealment while advising Knutson to accept a financial settlement with USA Swimming, the sports 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, USA Swimming executive director Chuck Wielgus and other USA Swimming officials.
The jury awarded Knutson $617,810 in damages. The appeals court reinstated the damages.
Knutson was one of American swimmings 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 Swimmings 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 Sean 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. He was banned from the sport for life earlier this year by the U.S. Center for Safe Sport.
Knutson and another top prospect, Kate Ziegler, were told by USA Swimming officials after Schubert and Hutchisons 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 sports national governing body, she said.
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.
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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 federations outside legal counsel and Wielgus.
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 that 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. Knutsons email was about a pending settlement offer from USA Swimming.
Foster is also charged with intentionally omitted copies of communications between Foster and Wielgus requested by Knutsons attorney in the fraud case. The communications, the court wrote, “demonstrated (Fosters) conflicts of interest, thereby committing an act involving moral turpitude, dishonesty or corruption in willful violation of Business and Professional Code section 6106.”
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