¶3 In conducting our review, we will affirm the referee's findings of fact unless they are clearly erroneous. See In re Disciplinary Proceedings Against Sosnay, 209 Wis. 2d 241, 243, 562 N.W.2d 137 (1997). We review the referee's conclusions of law, however, on a de novo basis. See In re Disciplinary Proceedings Against Carroll, 2001 WI 130, ¶29, 248 Wis. 2d 662, 636 N.W.2d 718. After establishing the number and nature of any violations of the Rules of Professional Conduct, we determine the level of discipline that is appropriate under the particular circumstances, regardless of the referee's sanction recommendation. See In re Disciplinary Proceedings Against Widule, 2003 WI 34, ¶44, 261 Wis. 2d 45, 660 N.W.2d 686.

¶5 Before turning to the referee's findings of fact in the present case, we summarize the facts and the result of the prior disciplinary proceeding. In re Disciplinary Proceedings Against Phillips, 2006 WI 43, 290 Wis. 2d 87, 713 N.W.2d 629 (Phillips I). They provide important context for the facts and analysis of this proceeding.

¶6 Phillips I stemmed from two grievances. The first grievance was lodged by a former client and friend, R.M. That grievance arose from two loans that Attorney Phillips convinced R.M. to make to him, from Attorney Phillips' handling of the estate of R.M.'s father, and from Attorney Phillips' failure to return R.M.'s files to him in a timely manner.

¶7 With respect to the R.M. grievance, this court affirmed the referee's findings that Attorney Phillips had violated SCR 20:1.8(a) on two separate occasions because he had obtained two loans from a client that were not fair and reasonable, because Attorney Phillips had not provided the terms of the loan in an understandable writing, because he had not given R.M. a reasonable opportunity to seek outside legal advice, and because he had not obtained R.M.'s written consent to the loans. The court also found that Attorney Phillips had used his knowledge of R.M.'s father's estate gained during his representation of the estate to his client's disadvantage in connection with one of the loans, in violation of SCR 20:1.8 (b). The court further found that Attorney Phillips had violated SCR 20:8.4(c) by concealing and misrepresenting the dire state of his finances in order to persuade R.M. to make the loans. The court also concluded that Attorney Phillips had not acted with reasonable diligence in closing R.M.'s father's estate, contrary to SCR 20:1.3, and had failed to return R.M.'s files promptly, in violation of SCR 20:1.16 (d).

¶8 The second grievance at issue in Phillips I was filed by the Wisconsin Department of Revenue (DOR) concerning Attorney Phillips' failure to file state income tax returns or to pay the taxes due. Based on Attorney Phillips' admission, this court adopted the referee's finding that Attorney Phillips had failed to file state income tax returns for the years 1998-2001 and had failed to make payments on his tax deficiencies since 1995, contrary to In re Disciplinary Proceedings Against Owens, 172 Wis. 2d 54, 492 N.W.2d 157 (1992), and SCR 20:8.4 (f).

¶13 Attorney Phillips filed an answer in which he admitted his criminal conviction for tax evasion. His answer asserted, however, that he had been convicted only for failing to pay the entire amount of federal income tax due and that he had not been found guilty of filing fraudulent tax returns. He denied that his failure to pay income taxes reflected adversely on his honesty, trustworthiness, or fitness as a lawyer in other respects, contrary to SCR 20:8.4(b). He also asserted that his loans from R.M. were already being addressed in Phillips I.

¶14 In our opinion in Phillips I, which was issued on May 12, 2006, we acknowledged Attorney Phillips' criminal conviction, the summary suspension and the OLR's complaint. We specifically stated, however, that "[a]lthough the facts underlying the criminal conviction appear to have some connection with one of the loans at issue in this proceeding, we do not address at this time whether discipline should be imposed for that conduct." Phillips I, 290 Wis. 2d 87, ¶35.

¶17 A hearing on the competing motions was held on September 19, 2006. At that hearing, Attorney Phillips withdrew his summary judgment motion and its double jeopardy and other constitutional claims. He argued, nonetheless, that because the misconduct alleged in the current complaint was part of a "continuing enterprise of borrowing the money and not paying my taxes," there should be little additional discipline imposed because that conduct was already considered by the court in Phillips I.

¶18 Also at the September 19, 2006 hearing, certified copies of the plea agreement and judgment of conviction in the federal criminal case were received into evidence without objection. The referee then established a briefing schedule for the parties to address whether the criminal conviction constituted a violation of SCR 20:8.4(b) and what the appropriate sanction should be.

¶19 The OLR filed a brief arguing that engaging in federal tax evasion did reflect adversely on Attorney Phillips' honesty, trustworthiness and fitness as a lawyer, and thereby violated SCR 20:8.4(b). The OLR requested a three-year suspension to be served consecutively to the one-year suspension imposed in Phillips I, with a credit of 112 days due to the period of summary suspension.

¶23 The referee found that Attorney Phillips' guilty plea and conviction established his violation of SCR 20:8.4 (b). Specifically, the federal plea agreement, which Attorney Phillips signed and did not contest in this case, established that Attorney Phillips had used the March 1999 loan proceeds to purchase 18 cashier's checks, which he had then negotiated over a period of time by using his client trust account and a separate bank account maintained by his wife. By these maneuvers, Attorney Phillips had been able to prevent the IRS from discovering and obtaining those funds so that he could use them to pay ongoing personal expenses. The referee concluded that, regardless of the propriety of the underlying loan, a criminal conviction for such a willful attempt to evade the payment of taxes clearly violated SCR 20:8.4(b).

¶25 Ultimately, the referee agreed with the OLR's recommendation for a three-year suspension. The referee stated that Attorney Phillips' 25 years of practice without being subject to discipline prior to the series of wrongful responses to financial distress that resulted in Phillips I and the present proceeding led him to conclude that revocation was not required. On the other hand, the referee stated that a lengthy suspension was necessary. He pointed out that Attorney Phillips' continuing claim that all he did was to borrow money from a friend and fail to use the loan proceeds to pay his income taxes demonstrated that Attorney Phillips had not fully grasped the criminal nature of his conduct. Moreover, the referee noted that Attorney Phillips had not offered any mitigating evidence and had given the impression that the current proceeding was simply a bother to him.

¶27 Attorney Phillips' liability in the present case for violating SCR 20:8.4(b) stems not from obtaining the loan, but from what he did after obtaining the loan to hide the loan proceeds from the IRS. The factual predicate for that violation was conclusively established not by the decision in Phillips I, which expressly disavowed rendering any judgment on this matter, but by the certified record of Attorney Phillips' criminal conviction in federal district court. See SCR 22.20(5). With Attorney Phillips' undisputed hiding of loan proceeds in order to avoid attachment by the IRS as a factual basis, we certainly concur with the referee's legal conclusion that Attorney Phillips' criminal acts reflect adversely on his honesty, trustworthiness, or fitness as a lawyer in other respects, and therefore constitute a violation of SCR 20:8.4(b).

¶28 With respect to the appropriate level of discipline, we conclude that a three-year suspension is a proper sanction in the present case and that it should be served after the expiration of the existing one-year suspension. The presence of the prior disciplinary action calls for a stronger sanction here. Moreover, as the referee noted, Attorney Phillips has not exhibited remorse for his actions. He has consistently attempted to explain away his conduct as merely obtaining a loan from a friend and failing to pay taxes, failing to demonstrate an understanding of the criminal nature of his acts. In addition, when the referee took extra steps to ensure that Attorney Phillips received notice of the proceedings in this matter and an opportunity to present his case, he responded by characterizing the referee's efforts as "little more than harassment."

¶29 We agree with the referee's recommendation that, in light of the consecutive nature of the suspension we impose today and the timing of the prior suspension, Attorney Phillips should be given credit for the 112 days that passed between the summary suspension on January 20, 2006, and May 12, 2006, the effective date of the one-year suspension imposed in Phillips I. Moreover, given that Attorney Phillips did not object to the statement of costs filed by the OLR, we determine that he should be required to pay the full costs of this proceeding.

¶30 IT IS ORDERED that the license of Attorney Mark A. Phillips to practice law in Wisconsin is suspended for a period of three years, effective upon the expiration of the one-year suspension imposed in In re Disciplinary Proceedings Against Phillips, 2006 WI 43, 290 Wis. 2d 87, 713 N.W.2d 629 (No. 2004AP1914-D)(Phillips I), with 112 days of credit to be applied toward the three-year period of suspension.

¶31 IT IS FURTHER ORDERED that within 60 days of the date of this order, Attorney Phillips shall pay to the Office of Lawyer Regulation the costs of this proceeding. If the costs are not paid within the time specified and absent a showing to this court of his inability to pay those costs within that time, the license of Attorney Phillips to practice law in Wisconsin shall remain suspended until further order of this court.