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ATTORNEY disciplinary
proceeding. Attorney's license
suspended.
¶1 PER CURIAM. The Office of Lawyer
Regulation (OLR) appeals the referee's
report recommending a one-year suspension of
Attorney Harvey J. Goldstein's license to
practice law in Wisconsin. The OLR filed a
24-count disciplinary complaint against
Attorney Goldstein. John F. Fiorenza was
appointed referee.
¶2 Referee Fiorenza found misconduct
with respect to Counts 1 through 20, which
charged violations stemming from trust
account violations and conversion of nearly
$70,000 from three probate estates. The
parties stipulated the funds have been
repaid and that Attorney Goldstein owes
interest to two estates totaling $3,066,
which he has agreed to pay as restitution.
¶3 Counts 21 through 24 charged
violations arising from Attorney Goldstein's
communications with and failure to pay a
process server. Referee Fiorenza concluded
Attorney Goldstein committed misconduct
alleged in Count 24; however, he recommended
dismissal of Counts 21, 22, and 23 for lack
of proof. As discipline, the referee
recommended a one-year license suspension
and that Attorney Goldstein pay restitution
of $3,066 and the costs of this
proceeding.
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¶4 The OLR raises two arguments on
appeal. First, the OLR contends the referee
erroneously concluded Attorney Goldstein did
not commit misconduct as charged in Count
23. Second, the OLR argues Attorney
Goldstein's license to practice law in
Wisconsin should be revoked.
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¶5 We conclude the record supports the
referee's findings and conclusions with
respect to Attorney Goldstein's misconduct.
We conclude the referee's finding, that the
record fails to demonstrate misconduct
charged in Count 23, is not clearly
erroneous. We uphold the referee's
determination that Attorney Goldstein
committed misconduct charged in Counts 1
through 20 and 24. We conclude the
appropriate sanction for Attorney
Goldstein's misconduct is a two-year
suspension of his license to practice law in
Wisconsin. We order Attorney Goldstein to
pay $3,066 restitution, together with the
cost of this proceeding.
¶6 Attorney Goldstein was admitted to
practice law in Wisconsin in 1977. He has
practiced law in Milwaukee. He has not been
subject to previous discipline.
¶7 The facts admitted by Attorney
Goldstein reveal a scheme by which he used
funds belonging to one probate estate to
cover the trust account deficits of another,
caused by Attorney Goldstein withdrawing
funds for his personal and business
expenses, including a business venture in
Arizona. The matter was complicated by
Attorney Goldstein's inability to produce
trust account records. Attorney Goldstein
claimed, and the referee found, that
Attorney Goldstein's records were
unintentionally lost in moving and
subsequently destroyed due to a computer
failure.
¶8 The scheme was uncovered by an OLR
investigator assigned to investigate a
grievance filed by a process server. The
process server, R.R., complained Attorney
Goldstein had not paid approximately $19,000
billed over a number of years for work
serving process in numerous collection
matters. While investigating this
grievance, the OLR reviewed Attorney
Goldstein's bank records, which disclosed
numerous trust account violations and the
misappropriation of probate estate funds.
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¶9 Based on Attorney Goldstein's
admissions and the evidence admitted at the
disciplinary hearing, the referee determined
the OLR met its burden to prove the
following violations. The first six counts
involved conversion of probate funds from
three estates while Attorney Goldstein was
acting as a special administrator and, in
one case, a personal representative.
• COUNT 1: By converting at least
$19,685.55 from the C.V. Estate while acting
as special administrator, Attorney Goldstein
violated SCR 20:8.4(b).
• COUNT 2: By converting at least
$17,204.20 from the H.G. Estate while acting
as personal representative, Attorney
Goldstein violated SCR 20:8.4(b).
• COUNT 3: By converting $32,561.71
from the S.C. Estate while acting as special
administrator, Attorney Goldstein violated
SCR 20:8.4(b).
• COUNT 4: By converting at least
$19,685.55 from the C.V. Estate while acting
as special administrator, Attorney Goldstein
violated SCR 20:8.4(c).
• COUNT 5: By converting at least
$17,204.20 from the H.G. Estate while acting
as special administrator, Attorney Goldstein
violated SCR 20:8.4(c).
• COUNT 6: By converting $32,561.71
from the S.C. Estate while acting as special
administrator, Attorney Goldstein violated
SCR 20:8.4(c).
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¶10 The next six counts involved trust
account and other violations, including the
comingling of trust account funds with funds
received from Attorney Goldstein's wife and
his personal business venture, as follows:
• COUNT 7: By failing to hold in
trust at least $19,685.55 belonging to the
C.V. Estate while acting as special
administrator, Attorney Goldstein violated
SCR 20:1.15(a) and SCR 20:1.15(b)(1).
• COUNT 8: By failing to hold in
trust at least $17,204.20 belonging to the
H.G. Estate while acting as personal
representative, Attorney Goldstein violated
SCR 20:1.15(a) (effective through June 30,
2004) and SCR 20:1.15(b)(1) (effective as of
July 1, 2004).
• COUNT 9: By failing to hold in
trust $32,561.71 belonging to the S.C.
Estate while acting as special
administrator, Attorney Goldstein violated
SCR 20:1.15(a) (effective through June 30,
2004) and SCR 20:1.15(b)(1) (effective as of
July 1, 2004).
• COUNT 10: By depositing and holding
in his trust account at least $66,407.19 in
earned fees or cost reimbursements, $5,700
in loans from his wife, and approximately
$64,499.88 of the $288,452.57 deposited in
connection with a personal business venture,
Attorney Goldstein violated SCR 20:1.15(a)
(effective through June 30, 2004) and SCR
20:1.15(b)(3).
• COUNT 11: By failing to hold
$39,399.46 in fiduciary property belonging
to the S.C. Estate in a separate account,
Attorney Goldstein violated SCR 20:1.15(j)
(1).
• COUNT 12: By making a $2,696 cash
withdrawal from the checking account of the
S.C. Estate on June 12, 2006, Attorney
Goldstein violated SCR 20:1.15(j)(3)a.
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¶11 The next eight counts involved
violations of recordkeeping regulations and
Attorney Goldstein's personal use of trust
account funds:
• COUNT 13: By failing to file an
overdraft notification agreement with OLR
regarding the checking account for the S.C.
Estate or to have the account independently
audited on an annual basis or to require the
approving signature of a co-administrator on
all disbursements from that account,
Attorney Goldstein failed to comply with the
requirements of SCR 20:1.15(j)(9).
• COUNT 14: By making 28 telephone
transfers to and from his trust account
between July 2004 and December 2005,
totaling $51,640, Attorney Goldstein
violated SCR 20:1.15(e)(4)b.
• COUNT 15: By authorizing his
personal creditors to make 30 electronic
withdrawals, totaling $21,871.19, from his
trust account between October 2004 and
December 2005, Attorney Goldstein violated
SCR 20:1.15(e)(4)d.
• COUNT 16: By failing to maintain a
check register or transaction register,
client ledgers, and reconciliation reports
for his trust account, Attorney Goldstein
violated SCR 20:1.15(e) and SCR 20:1.15(e)
(6).
• COUNT 17: By maintaining his IOLTA
trust account records on a computer and
failing to print a copy of the transaction
register, the subsidiary ledger, and the
reconciliation report every 30 days and
retain a printed copy of those records for
at least 6 years, as required under sub. (e)
(6), Attorney Goldstein violated SCR 20:1.15
(f)(4)b.
• COUNT 18: By failing to produce
trust account records requested by OLR,
Attorney Goldstein violated SCR 20:1.15(e)
(7).
• COUNT 19: By failing to identify on
trust account deposit slips the client or
matter associated with each deposit item,
Attorney Goldstein violated SCR 20:1.15(f)(1)
d.
• COUNT 20: By failing to identify
the account for the S.C. Estate on his
fiscal 2006 trust account certification, and
by further certifying that he had a trust
account overdraft agreement on file with OLR
for each demand-type trust account into
which he deposits client or third party
funds, including funds held in a fiduciary
capacity, when he had not filed an overdraft
agreement with OLR relating to the S.C.
Estate, Attorney Goldstein violated SCR
20:1.15(i)(4).
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¶12 Because the facts underlying Counts
1 through 20 were largely undisputed, the
disciplinary hearing focused on Attorney
Goldstein's dealings with R.R., charged in
Counts 21 through 24. The referee
recommended dismissal of Counts 21, 22, and
23 for failure of proof. These counts
alleged:
• COUNT 21: By failing to pay process
service fees that were owed to R.R., when
Attorney Goldstein had received funds from
clients to pay at least some of those
expenses and had deposited those funds into
his trust account, Attorney Goldstein
violated SCR 20:8.4(c).
• COUNT 22: By failing to promptly
disburse to R.R. funds that Attorney
Goldstein had received from clients, in
which R.R.'s company had an interest
identified by a contract, Attorney Goldstein
violated SCR 20:l.15(d)(1).
• COUNT 23: By communicating with
R.R., a party represented by counsel,
through an employee of R.R. and through one
of Attorney Goldstein's own employees, after
R.R.'s counsel had informed Attorney
Goldstein in writing that all communications
were to go through counsel, Attorney
Goldstein violated SCR 20:4.2 through the
acts of another, contrary to SCR 20:8.4(a).
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¶13 Although the referee determined the
record failed to support Counts 21 through
23, the referee concluded the record
supported Count 24:
• COUNT 24: By representing to OLR
that Attorney Goldstein was unable to pay
R.R.'s invoices because he had not received
payment from a client, when he had received
and deposited to his trust account over
$29,000 in payments from the client, and
when the trust account records subpoenaed by
OLR revealed that he was using trust account
funds for personal purposes, including real
estate ventures, Attorney Goldstein violated
SCR 22.03(6), enforceable via SCR 20:8.4
(f).
¶14 On appeal, the OLR first challenges
the dismissal of Count 23. According to the
disciplinary complaint, R.R.'s attorney
directed Attorney Goldstein to deal with the
attorney rather than R.R. The complaint
alleges that on September 6, 2005, Attorney
Goldstein spoke with one of R.R.'s
employees, telling him to inform R.R.
Attorney Goldstein soon expected to have the
money to pay the bill in full.
¶15 The OLR relies on the pleadings,
claiming that Attorney Goldstein's answer
did not dispute certain paragraphs in the
complaint containing allegations in support
of Count 23. The OLR also relies on the
testimony of Mary Hoeft Smith, the
administrator of the OLR's trust account
program, who stated that Attorney Goldstein
violated SCR 20:4.2 (Count 23) because
another lawyer may not communicate directly
with someone represented by counsel, absent
that counsel's permission. Over Attorney
Goldstein's objection, the referee permitted
this testimony as foundation. A lengthy
discussion ensued between the referee and
counsel regarding the admissibility of Ms.
Hoeft Smith's testimony.
¶16 In his report recommending dismissal
of Count 23, the referee found, "The only
testimony elicited at the hearing was from
Attorney Goldstein who indicated that he
told an employee to thank [R.R.] for
continuing to work with Goldstein." The
referee explained:
[Counsel for OLR] stated that OLR
maintains
that Goldstein talked to an employee of
[R.R.]'s and therefore this was a
communication to [R.R.]. Goldstein was
allowed to explain this situation and he
testified that he was still doing business
with [R.R.] while he was being sued by
[R.R.]. One of [R.R.]'s process servers came
to pick up some pleadings to be served and
he said to this employee, "tell [R.R.] I
said thanks for still doing business with
me."
¶17 The referee noted that R.R. had
continued to do business with Attorney
Goldstein, despite not being paid. The
referee concluded the "communication to
[R.R.]'s employee under [their] working
arrangement does not rise to a communication
with a party who was represented by an
attorney. There was no discussion about the
pending case in which the attorney was
representing [R.R.]." Based on these
findings, the referee concluded that Count
23 was not proved.
¶18 A referee's findings of fact will
not be overturned unless clearly erroneous.
See In re Disciplinary Proceedings
Against
Carroll, 2001 WI 130, ¶29, 248 Wis. 2d
662,
636 N.W.2d 718. We independently review the
referee's legal conclusions. Id.
¶19 We are satisfied the hearing
transcript supports the referee's finding
that Count 23 was not proved. Ms. Hoeft
Smith testified regarding her conclusions as
to Count 23, but no direct testimony of
Attorney Goldstein's conversation with
R.R.'s employee was presented. The OLR's
arguments imply the referee was bound by the
pleadings. We are not persuaded, absent a
motion from the OLR, the referee was
required to accept the pleadings as proof of
Count 23. The record does not clearly
demonstrate the OLR requested the referee to
accept the pleadings, briefs, or exhibits to
prove Count 23. Because an evidentiary
hearing was held with respect to disputed
counts, which included Count 23, it was
reasonable for the referee to rely on the
testimony presented at the hearing and find
Ms. Hoeft Smith's testimony to be
insufficient proof.
¶20 We approve and adopt the referee's
findings and conclusions with respect to
Attorney Goldstein's misconduct. The record
supports the violations charged in Counts 1
through 20 and Count 24. We accept the
referee's recommendation that Counts 21, 22,
and 23 be dismissed.
¶21 Next, we address the OLR's challenge
to the referee's recommended one-year
license suspension. Both the OLR and
Attorney Goldstein agree that Count 23 has
little bearing on the level of discipline.
The OLR argues that Attorney Goldstein's
misconduct, which reveals a dishonest scheme
to convert the funds belonging to three
probate estates, put his clients at a risk
of harm. The OLR argues, "As admitted by
[Attorney] Goldstein, if he had not sold the
Arizona property, he may still owe the
converted funds to the estates." The OLR
contends actual harm is not necessary for
revocation, and the fact Attorney Goldstein
repaid the funds does not excuse his
misconduct. The OLR claims that given the
aggravated nature of his misconduct,
Attorney Goldstein's license should be
revoked.
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¶22 The OLR contends Attorney
Goldstein's misconduct is aggravated because
it reveals: (1) dishonest and selfish
motives of paying personal and business
expenses and financing real estate
investments; (2) patterns of theft from 2003
through 2005; (3) multiple offenses; (4)
deceptive practices when Attorney Goldstein
represented to the OLR he was unable to pay
process serving fees because one of his
clients was not paying him when, in fact,
the client in question had paid him over
$29,000; and (5) refusal to acknowledge the
wrongful nature of his misconduct by failing
to pay over $3,000 in interest to the C.V.
and H.G. Estates, failing to recognize the
seriousness of his misconduct, not believing
his conduct caused harm, and expressing
little remorse.
¶23 The OLR relies on a number of
disciplinary cases that ordered revocation.
See In re Disciplinary Proceedings
Against
O'Byrne, 2002 WI 123, ¶20, 257 Wis. 2d 8,
653 N.W.2d 111 (conversion of approximately
$34,000); In re Disciplinary Proceedings
Against Lieuallen, 2001 WI 50, ¶¶7-10, 243
Wis. 2d 478, 626 N.W.2d 802 (conversion of
$60,843.29 and other misconduct); In re
Disciplinary Proceedings Against Martinez,
225 Wis. 2d 433, 434-36, 591 N.W.2d 866
(1999) (conversion of approximately $158,000
held in trust and other misconduct); In re
Disciplinary Proceedings Against Rudolph,
187 Wis. 2d 324, 326-27, 522 N.W.2d 219
(1994) (misappropriation of more than
$11,000); In re Disciplinary Proceedings
Against Wright, 180 Wis. 2d 492, 493, 509
N.W.2d 290 (1994) (conversion of nearly
$11,000 from an estate).
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¶24 Attorney Goldstein responds that the
referee's recommendation of a one-year
suspension should be given weight. See
In
re Disciplinary Proceedings Against
Krezminski, 2007 WI 21, ¶16, 299 Wis. 2d
152, 727 N.W.2d 492 ("Although this court
takes into account the referee's
recommendation as to appropriate discipline,
we do not accord the referee's
recommendation any conclusive or great
weight."). The referee noted Attorney
Goldstein had practiced law for 31 years
without previous discipline. The referee
discussed at length the testimony of
Attorney Goldstein's witnesses attesting to
his good reputation. The referee emphasized
that Attorney Goldstein recognized his use
of the money entrusted to him was improper
and, on his own initiative, repaid the funds
before the OLR investigation was initiated.
Also, the referee said, Attorney Goldstein
acknowledged his obligation to pay his
clients interest.
¶25 Attorney Goldstein contends his
repayment of the funds and the mitigating
factors noted by the referee justify license
suspension, rather than a revocation. He
points out the referee found that no client
lost any principal. He notes that several
cases support a license suspension. For
example, he relies on Krezminski, 299
Wis.
2d 152 (a two-year suspension for misconduct
including conversion); In re Disciplinary
Proceedings Against Schuster, 2006 WI 21,
289 Wis. 2d 23, 710 N.W.2d 458 (nine-month
suspension, via stipulation, for trust
account violations, falsified records, and
personal use of trust account funds); and
In
Re Disciplinary Proceedings Against
Nelson,
225 Wis. 2d 240, 592 N.W.2d 194 (1999) (a
two-year suspension for converting client
funds, repaid before any client incurred any
loss).
¶26 Attorney Goldstein also relies on
In
re Disciplinary Proceedings Against Bult,
142 Wis. 2d 885, 419 N.W.2d 245 (1988).
Attorney Bult was suspended after
misappropriating and commingling client
funds and having withdrawn over $74,000 from
his trust account for personal use.
Attorney Bult repaid the money when the
circuit court ordered him to account for an
insurance settlement and pay the proceeds to
the court. In suspending Attorney Bult's
license for two years, the court stated, "[L]
icense revocation ought not be imposed
indiscriminately in every case of
misappropriation or conversion of client
funds" because no two cases present
precisely the same circumstances and other
factors may be considered. Id. at 890-91.
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¶27 The gravity of Attorney Goldstein's
misconduct presents the question whether the
revocation of his license to practice law in
Wisconsin is necessary to achieve the
objectives of attorney discipline. It is
our independent responsibility to determine
appropriate discipline. See In re
Disciplinary Proceedings Against Reitz,
2005
WI 39, ¶74, 279 Wis. 2d 550, 694 N.W.2d
894. We are not bound by the referee's
recommendation as to discipline. Id.
We
must consider the seriousness of the
misconduct, as well as the need to protect
the public, courts, and legal system from
repetition of misconduct and to deter
attorneys from engaging in similar
misconduct. See In re Disciplinary
Proceedings Against Arthur, 2005 WI 40,
¶78,
279 Wis. 2d 583, 694 N.W.2d 910.
¶28 We agree with the OLR that Attorney
Goldstein's professional misconduct warrants
significant discipline, not only as an
appropriate response to the gravity of the
violations, but also as a deterrent to other
attorneys. See In re Disciplinary
Proceedings Against Horth, 148 Wis. 2d
562,
563-64, 435 N.W.2d 732 (1989). The
misappropriation of client funds is a grave
breach of trust. "The foundation of an
attorney's relationship with clients and the
legal system is trust." Id. An
attorney
who violates that trust by misappropriating
funds demonstrates a lack of fitness to be
entrusted with the responsibilities of the
profession. See id. This court does
not
hesitate to impose revocation when needed
and many cases involving conversion of funds
have warranted revocation.
¶29 Each case must turn on its
individual facts. Balancing the
circumstances presented, we conclude the
recommended one-year license suspension
minimizes the seriousness of Attorney
Goldstein's misconduct. The gravity of
Attorney Goldstein's violations, the
repetitive nature of his misconduct, and his
pattern of deception are aggravating
factors. His misconduct is no less serious
in the light of accolades of his
colleagues. Despite the gravity of his
misconduct, however, we conclude revocation
is not warranted here. Weighing heavily in
Attorney Goldstein's favor is his lack of
prior discipline. Also, Attorney
Goldstein's acknowledgement of his
wrongdoing by entering no contest pleas to
the majority of the counts is a significant
mitigating factor. While repayment of the
funds does not eliminate his culpability, it
shows concern for his clients' well-being,
also mitigating his misconduct. In
consideration of these competing factors, we
conclude a two-year license suspension will
protect the public and achieve the goal of
deterrence.
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¶30 We adopt the referee's
recommendation as to costs. Under SCR 22.24
(1m), the court's general policy is to
impose costs on the respondent, Attorney
Goldstein. To award less than full costs,
the court must find "extraordinary
circumstances." Id. Attorney Goldstein
has
not objected to costs and has not claimed
extraordinary circumstances to justify the
imposition of less than full costs.
Accordingly, Attorney Goldstein shall bear
the entire costs of the proceedings. We
approve and adopt the referee's
recommendation based upon the parties'
stipulation that Attorney Goldstein pay
interest of $1,900 to the C.V. Estate and
$1,166 to the H.G. Estate.
¶31 IT IS ORDERED that the license of
Harvey J. Goldstein to practice law in
Wisconsin is suspended for a period of two
years, effective May 24, 2010.
¶32 IT IS FURTHER ORDERED that Harvey J.
Goldstein pay restitution in the total sum
of $3,066. If the restitution is not paid
within 60 days of this order, Harvey J.
Goldstein's license to practice law in
Wisconsin shall remain suspended until
further order of the court.
¶33 IT IS FURTHER ORDERED that within 90
days of the date of this order Harvey J.
Goldstein pay to the Office of Lawyer
Regulation the costs of this proceeding. If
costs are not paid within the time specified
and absent a showing of his inability to
pay, Harvey J. Goldstein's license to
practice law in Wisconsin shall remain
suspended until further order of the court.
¶34 IT IS FURTHER ORDERED that the
restitution is to be paid in full prior to
paying costs to the Office of Lawyer
Regulation.
¶35 IT IS FURTHER ORDERED that Harvey J.
Goldstein shall comply with SCR 22.26
regarding the duties of a person whose
license to practice law in Wisconsin has
been suspended.
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