Failure to Remit Payroll Taxes (Count 2)

Trust Account Violations (Counts 3-6)

¶15 This practice led to an impossibly jumbled trust account. In 2009, while converting the firm from a paper to an electronic accounting system, firm employees discovered that a substantial amount of money had been held in trust for longer than the six-year statute of limitations that Attorney Curtis believed governed them. The firm began an effort to identify and locate clients to whom these funds belonged——a task that proved difficult and, in some instances, unworkable. Some of the clients had moved. Others could not be found. Others had died, sometimes requiring that an estate be opened or reopened. There were some funds held in trust for which the client could not be identified. As a result, a substantial amount of money remained unpaid to its owners. As of April 2014, the firm trust account held a total of $1,059,218.09. Of that amount, at least $105,235.59 related to cases that had been closed prior to April 2008; some funds had been held since as far back as 1978. The firm has made some progress in disbursing these funds; by April 2015, the firm disbursed $42,865.41 of the $105,235.59 related to cases that had been closed prior to April 2008. As of January 2015, there remained $23,487.94 held in trust with respect to which the owners could not be identified.

¶16 Based on these facts and on Attorney Curtis' admissions (see n.1), the referee determined that Attorney Curtis failed to ensure the prompt notice and delivery of funds to clients and third parties, in violation of SCR 20:1.15(b), in effect between October 1, 2000 and June 30, 2004, and former SCR 20:1.15(d)(l), effective as of July 1, 2004 (Count 3).

401(k) Issues (Count 7)

¶21 The referee recommended the dismissal of this misconduct charge, again citing a paucity of evidence in the record. The referee maintained that the record did not show why amounts withheld from employee checks were not promptly paid to the 401(k) plan; whether Attorney Curtis was involved in the nonpayment of employee funds to the 401(k) plan; what representations Attorney Curtis made to employees regarding the 401(k) plan; how any such representations related to the status of the 401(k) plan at the time they were made; and whether the firm was current on its own contributions to the plan. The only established facts regarding the 401(k) plan, according to the referee, were that: (1) while delayed, all amounts that the firm withheld from employee paychecks were eventually paid into the 401(k) plan; and (2) Attorney Curtis pled the Fifth Amendment in response to allegations and questions about the 401(k) plan. The referee reasoned that neither of these facts, viewed together or in isolation, constituted sufficient proof of dishonesty, fraud, deceit, or misrepresentation to warrant a determination of an SCR 20:8.4(c) violation. Although an attorney's invocation of the Fifth Amendment in a disciplinary proceeding permits an inference to be drawn on issues involving grounds for discipline, State v. Postorino, 53 Wis. 2d 412, 416–17, 193 N.W.2d 1 (1972), the referee wrote that the OLR was "asking the possibility of a negative inference do too much work" in this case.

¶22 As for the amount of discipline required to address the above-described misconduct, the referee noted various mitigating and aggravating factors. On the mitigating side of the ledger, the referee noted that Attorney Curtis did not attempt to conceal his tax obligations; rather, he filed yearly tax returns informing the government what he owed, though he did not pay the amount owed. Attorney Curtis served time in prison, without practicing law, for his failure to pay income taxes. The referee also noted that the trust account violations did not benefit Attorney Curtis, were not intentional, and did not involve misrepresentation or dishonesty. Attorney Curtis also tried to locate the clients to whom money was owed. The referee further noted that Attorney Curtis had practiced law for 55 years without prior discipline, and is now 81 years old.

¶24 Given all of the above considerations, the referee proposed that a 120-day license suspension was in order. The referee also recommended that, as a condition of Attorney Curtis' practice of law following his suspension, he must disburse the funds held in trust to the proper recipients, and he must certify to the OLR that he has a system in place that: (1) provides periodic reports to clients regarding amounts held in trust; (2) flags amounts that have remained in trust for more than a specified period since receipt of the funds and since the last review by an attorney; and (3) requires an attorney in the firm to review these funds on an annual basis to determine whether they should be disbursed.

¶26 This is a difficult case. The referee's task was undoubtedly complicated by the polar opposite positions taken by the parties before him: the OLR demanded the revocation of Attorney Curtis' license, and Attorney Curtis insisted that no discipline was warranted whatsoever. In a lengthy report, the referee resisted any temptation to make a middle-ground recommendation, instead proposing a 120-day suspension——a result from which neither party appealed, leaving us to decide this matter without the benefit of automatically ordered briefing.

¶28 We start by addressing the easiest issue to dispose of: whether Attorney Curtis' willful failure to pay income taxes reflected adversely on his fitness as a lawyer, in violation of SCR 20:8.4(b) (Count 1). The answer is a clear yes.

¶29 Attorney Curtis' position before the referee seemed to be that his tax woes didn't amount to professional misconduct given that he filed accurate tax returns——he simply didn't pay the taxes owed, which was a purely personal failing that didn't abuse his professional status as a lawyer, or violate any professional norms, or harm any clients, or (he claimed) tarnish his reputation in the legal community. We disagree, as did the referee. Given his federal conviction, upheld on appeal, Attorney Curtis cannot meaningfully dispute that he intentionally failed to pay any of the taxes he owed for the years 2007 through 2009 despite having adjusted gross income of more than $1.4 million over those years, and despite having spent significant sums on extravagances——$17,730 on wine, for example. See Curtis, 781 F.3d at 911. As Attorney Curtis himself told the district court during his sentencing allocution, "my whole system was wrong. . . . I had the concept that it was my money and it isn't my money. Unfortunately I never really thought about it." This sort of blinkered thinking raises a red flag as to Attorney Curtis' fitness as lawyer——one that he, in this proceeding, seems unable or unwilling to acknowledge: during his disciplinary hearing, he blithely compared the jury's verdict that he willfully failed to pay his taxes to "historical verdicts that the world was flat. I got beat." On these facts, we have no difficulty concluding that Attorney Curtis' criminal act reflects adversely on his fitness as a lawyer.

¶31 We accept the referee's recommendation to dismiss Count 2. Neither party has challenged any of the referee's findings of fact or legal conclusions underlying the referee's recommended dismissal of this count. Our own review of the matter leads us to accept the referee's findings of fact——in particular his credibility determination that Attorney Curtis was unclear as to whether funds seized by the IRS were being applied toward payroll taxes. See In re Disciplinary Proceedings Against Nunnery, 2009 WI 89, ¶40, 320 Wis. 2d 422, 769 N.W.2d 858 ("The referee is best situated to judge the credibility of witnesses.") We also note, as did the referee, the absence from the record of certain documentary evidence that would have been helpful in analyzing this misconduct count; e.g., the firm's payroll tax returns, payroll accounting records, employee payroll stubs, etc. Based on the referee's unchallenged factual findings of fact and on the state of the record, we agree with the referee's conclusion that the OLR failed to establish that Attorney Curtis engaged in dishonesty, fraud, deceit, or misrepresentation sufficient to warrant a misconduct determination on Count 2.

¶33 We also agree with the referee's recommendation to dismiss Count 5, which alleged that Attorney Curtis failed to maintain and retain complete records of trust account funds. According to the referee, the record is unclear as to whether Attorney Curtis' trust account problems were the result of a failure to keep the records required by SCR 20:1.15, or a failure to properly reconcile the records he kept. The referee therefore concluded that the OLR had failed to prove trust account misconduct independent of that charged in Counts 3, 4, and 6. Neither party has appealed from this determination. We conclude that the referee's findings of fact are not clearly erroneous, and thus we uphold the referee's conclusion of law that Attorney Curtis' conduct did not violate former and current SCR 20:1.15(e)(6).

¶34 We move next to Count 7, which alleged that Attorney Curtis engaged in dishonesty, fraud, deceit, or misrepresentation in violation of SCR 20:8.4(c) by virtue of his failure to deposit in the firm's 401(k) plan the amount of funds that his firm withheld from employee paychecks and the amount of funds that his firm had committed to pay into the fund. As mentioned above, Attorney Curtis pled the Fifth Amendment with respect to any allegations regarding this count during the discovery, pleadings, and disciplinary hearing stages of this matter. We have previously held that although a respondent- lawyer's invocation of the Fifth Amendment "is not in itself a ground for disbarment," we may draw a negative inference from that invocation. Postorino, 53 Wis. 2d at 417. The referee concluded that this negative inference constituted the entirety of the OLR's case in support of Count 7——not enough to support a misconduct charge, and thus the referee recommended its dismissal.

¶40 We turn next to the issue of the appropriate discipline for Attorney Curtis. The referee recommended a 120-day suspension of Attorney Curtis' law license, along with a variety of trust account related reinstatement conditions. We agree that a four-month suspension is sufficient, as it is well within the wide range of discipline this court has imposed for arguably similar misconduct. See In re Disciplinary Proceedings Against Washington, 2007 WI 65, 301 Wis. 2d 47, 732 N.W.2d 24 (18-month suspension for conduct resulting in federal conviction for one count of tax evasion); In re Disciplinary Proceedings Against McKinley, 2014 WI 48, 354 Wis. 2d 717, 848 N.W.2d 295 (60–day suspension for conduct resulting in two state misdemeanor convictions for filing a false tax return); In re Disciplinary Proceedings Against Usow, 214 Wis. 2d 596, 571 N.W.2d 162 (1997) (six-month suspension for misrepresentation and trust account violations that were found to be committed without intent and due to a failure to properly supervise office staff).

¶42 We turn next to the issue of costs. Citing his view that the OLR failed to prove the misconduct alleged in three of the seven alleged counts (Counts 2, 5, and 7), the referee recommended that Attorney Curtis be ordered to pay three-quarters of the cost of this proceeding, which will result in Attorney Curtis being required to pay costs of $12,665.15. Neither Attorney Curtis nor the OLR challenges this recommendation. We agree with the referee and the parties that a one-quarter reduction in costs is warranted. Our determination is not the result of the application of a precise mathematical formula, but is based on our thorough consideration of the record, the manner in which this case developed, and the factors set forth in SCR 22.24(1m).

¶50 IT IS FURTHER ORDERED that compliance with all conditions of this order is required for reinstatement. See SCR 22.28(2).