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ATTORNEY disciplinary proceeding.
Attorney's license suspended.
¶1 PER CURIAM. We review a
stipulation filed by the Office of Lawyer
Regulation (OLR) and Attorney James S.
Schoenecker pursuant to SCR 22.12. In the
stipulation, Attorney Schoenecker agrees
that he committed multiple acts of
professional misconduct. Although the
stipulation lists seven counts, there are
actually more than seven violations of the
Rules of Professional Conduct for Attorneys
because a number of the counts contain
multiple violations of a single rule. The
stipulation requests that the court impose a
three-year suspension as discipline for
Attorney Schoenecker's professional
misconduct. There is no request in this
matter for a restitution award nor is there
a request in the stipulation for the
imposition of costs against Attorney
Schoenecker.
¶2 After fully reviewing the matter, we
approve the stipulation and impose the
requested three-year suspension. The
professional misconduct committed by
Attorney Schoenecker is quite disturbing and
calls for a substantial suspension. We also
note that this suspension will require
Attorney Schoenecker to undergo the formal
reinstatement procedure in SCRs 22.29-22.33,
in which he will be required to demonstrate,
among other things, that he has a proper
understanding of and attitude toward the
standards that are imposed upon members of
the bar in this state and that he will act
in conformity with those standards. See
SCR
22.29(4)(f).
¶3 Attorney Schoenecker was admitted to
the practice of law in Wisconsin in
September 2004. He has not previously been
the subject of professional discipline.
¶4 Much of Attorney Schoenecker's
misconduct relates to his relationship (both
personal and professional) with M.F. In
2007 Attorney Schoenecker and M.F. were
engaged to be married. In December of that
year they opened a joint checking account.
M.F. also obtained a $100,000 home equity
line of credit and then made a loan of
$48,500 to Attorney Schoenecker. In
exchange for the loan, Attorney Schoenecker
executed a promissory note, in which he
promised to repay the loan with interest.
¶5 Two days after making the loan to
Attorney Schoenecker, M.F. learned that
Attorney Schoenecker had made cash
withdrawals from her checking account at a
casino. Those withdrawals had resulted in a
$1,500 negative balance in the account.
This discovery apparently caused M.F. to
close the joint checking account and to end
her engagement to Attorney Schoenecker.
¶6 Attorney Schoenecker repaid only
$26,500 of the loan balance. With interest,
he still owed M.F. approximately $23,000.
At some point in 2009 M.F. filed a
collection action against Attorney
Schoenecker. The parties ultimately reached
a settlement, pursuant to which Attorney
Schoenecker paid the total sum of $32,106.36
to M.F. as part of a full resolution of the
financial issues between the individuals.
¶7 In March 2008, between the end of
the parties' engagement and M.F.'s filing of
the collection lawsuit, Attorney Schoenecker
became an associate at the Clair Law Offices
(Clair law firm) in Lake Geneva. It appears
from the stipulation that prior to this time
Attorney Schoenecker had been representing
M.F. in a dispute with a contractor who had
performed some work on a property owned by
M.F. Attorney Schoenecker informed the law
firm that he was representing M.F. and sent
her a Legal Representation and Fee Agreement
letter on behalf of the Clair law firm.
M.F. was then considered a client of the
firm. Ultimately, after the contractor
filed a lawsuit against M.F. in small claims
court, Attorney Schoenecker withdrew as
M.F.'s attorney.
¶8 Attorney Schoenecker provided legal
representation to M.F. at the same time as
he was a debtor to her pursuant to the
December 2007 loan and promissory note.
Attorney Schoenecker did not obtain M.F.'s
written consent to waive any actual or
potential conflict of interest in the legal
representation caused by the creditor/debtor
relationship.
¶9 The policy of the Clair law firm was
that senior attorneys of the firm had to
approve bills before they were sent to
clients. Attorney Schoenecker, however,
sent out two invoices to M.F. in September
and October 2008 without obtaining the
necessary approval. The total amount shown
on the bills was $13,523, but a substantial
number of the entries on those invoices were
fraudulent. The OLR's memorandum in support
of the stipulation alleges that Attorney
Schoenecker's submission of these inflated
invoices to M.F. was an attempt to offset
the remaining amount that he owed M.F. from
the December 2007 loan.
¶10 In addition to attempting to defraud
M.F. through the invoices, Attorney
Schoenecker also engaged in a pattern of
attempted and completed thefts from her bank
accounts. In December 2008 he obtained some
of M.F.'s personal information without her
consent and began attempting to withdraw
money from a business account that she
maintained.
¶11 Attorney Schoenecker used M.F.'s
personal information to enter her business
account without her permission and set up an
online bill paying account. He changed the
e-mail address on the account so that M.F.
would not receive notice of any checks he
intended to draw on her account.
¶12 Attorney Schoenecker first generated
two checks in December 2008 that he made
payable to himself in the amounts of $950
and $450. He was able to cash the $950
check, but his attempt to cash the $450
check was apparently unsuccessful. Attorney
Schoenecker tried to cash a third check in
the amount of $1,750 in January 2009, but
the check did not clear due to insufficient
funds in the account. Attorney Schoenecker
did not have M.F.'s consent to generate or
cash any of these checks.
¶13 Attorney Schoenecker was charged in
two separate criminal proceedings arising
out his actions concerning M.F. In a
Walworth County proceeding, State v.
Schoenecker, Case No. 2009CF250, the state
charged Attorney Schoenecker with two counts
of felony identity theft for the purpose of
obtaining money for his attempts to withdraw
money from M.F.'s business account. On
January 27, 2010, pursuant to a plea
agreement, Attorney Schoenecker pled guilty
to one felony count of identity theft.
See
Wis. Stat. § 943.201(2)(a). The second
count of identity theft was dismissed and
read in for sentencing purposes. The
Walworth County circuit court imposed two
years of probation and ordered Attorney
Schoenecker to pay restitution and court
costs.
¶14 In a Waukesha County proceeding,
State v. Schoenecker, Case No.
2009CF732,
Attorney Schoenecker was charged with one
count of felony forgery for creating the
$1,750 check that he unsuccessfully
attempted to cash in January 2009. On March
12, 2010, Attorney Schoenecker pled guilty
to a reduced misdemeanor charge of Theft-
Moveable Property (less than $2,500). The
Waukesha County circuit court imposed and
stayed a sentence of four months in jail and
placed Attorney Schoenecker on probation for
a period of one year. The circuit court
also ordered Attorney Schoenecker to pay
restitution to M.F., as well as court costs.
¶15 Attorney Schoenecker did not provide
written notification of either of his
convictions to the OLR or this court within
five days. He has, however, paid all
restitution amounts and court costs, except
for $283.25 in costs in the Walworth County
action, which amount is not due until
January 2012.
¶16 In addition to his misconduct
involving M.F., Attorney Schoenecker also
set up his own separate law firm on the side
while working as an associate attorney for
the Clair law firm. He did not inform the
Clair law firm of this fact. He did set up
a client trust account for his separate
practice, but he did not disclose the
existence of this separate trust account in
his Fiscal 2010 State Bar of Wisconsin
Membership Dues and Supreme Court
Assessments Statement.
¶17 The final part of Attorney
Schoenecker's professional misconduct
involves his own personal bankruptcy
proceeding. On July 22, 2009, while M.F.'s
collection action against him was pending
and a few weeks after the two state criminal
actions had been filed against him, Attorney
Schoenecker filed a Chapter 7 bankruptcy
petition. In his bankruptcy schedules
Attorney Schoenecker claimed that he had
become unemployed on June 30, 2009. He
failed to disclose, however, that he had
also been operating a separate solo law
practice apart from his prior employment
with the Clair law firm. He disclosed only
the income he had earned from the Clair law
firm. He did not disclose any of the income
he had received from his "side" practice.
In addition to filing these inaccurate
schedules, Attorney Schoenecker also falsely
testified under oath at a meeting of
creditors on August 31, 2009, that his
bankruptcy filing was true and correct and
did not need to be amended, except to
correct the names of some creditors.
¶18 On January 12, 2010, the bankruptcy
court granted Attorney Schoenecker a
discharge in bankruptcy. After the U.S.
Trustee learned of Attorney Schoenecker's
practice of law on his own apart from the
Clair law firm, the Trustee moved to revoke
Attorney Schoenecker's discharge in
bankruptcy on the ground that the bankruptcy
had been gained through fraud. Attorney
Schoenecker agreed to a stipulation to
revoke his bankruptcy discharge in May
2010. In the stipulation, he acknowledged
that he had testified falsely at the August
2009 meeting of creditors and in a
subsequent deposition taken on October 20,
2009. He also admitted that his bankruptcy
schedules had not been true because he had
failed to disclose that he had received
income from his private law practice during
the six-month period prior to filing his
bankruptcy petition. On the basis of the
stipulation, the bankruptcy court did
ultimately revoke Attorney Schoenecker's
discharge in bankruptcy.
¶19 Although there is no indication in
the stipulation filed in this court that he
was ever criminally charged for violations
of federal bankruptcy law, Attorney
Schoenecker agrees that his conduct in the
bankruptcy proceeding was a violation of 11
U.S.C. § 727(a)(4)(A), which, in turn,
constituted a bankruptcy crime under 18
U.S.C. § 152 for making a false oath or
account in a bankruptcy proceeding.
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¶20 On the basis of these facts, the
parties' stipulation sets forth seven counts
of professional misconduct. The first two
counts relate specifically to Attorney
Schoenecker's interactions with and
representation of M.F. Count One alleges
that by agreeing to represent M.F. while
maintaining a creditor/debtor relationship
with her without obtaining her informed
consent, Attorney Schoenecker violated SCR
20:1.7(a). Count Two alleges that Attorney
Schoenecker violated SCR 20:1.5(a) by
sending invoices to M.F. for services that
he did not perform and charging her fees she
did not incur.
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¶21 Counts Three and Four involve
aspects of the separate law practice that
Attorney Schoenecker established while
working as an associate for the Clair law
firm. Count Three states that Attorney
Schoenecker's 2010 dues statement failed to
identify the client trust account that he
had set up for his separate private law
practice, in violation of SCR 20:1.15(i).
Count Four asserts that Attorney
Schoenecker's establishment of a clandestine
law practice while working as an associate
attorney for the Clair law firm and his
failure to disclose and to account for the
fees he earned in the separate law practice
constituted a breach of his fiduciary duty
to the Clair law firm and a breach of his
duty of honesty in his professional dealings
with the firm, in violation of SCR 20:8.4(f).
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¶22 Count Five alleges that Attorney
Schoenecker committed a host of criminal
acts that violated SCR 20:8.4(b): (1)
misappropriating the personal information of
M.F. and using that information to generate
two checks payable to him from her business
bank account; (2) hacking into M.F.'s
business bank account; (3) generating a
third check for $1,750 and attempting to
cash it; (4) making false statements under
oath in his bankruptcy petition and other
bankruptcy documents; and (5) giving false
testimony under oath in the bankruptcy
proceeding.
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¶23 Count Six similarly lists a number
of statements made or actions taken by
Attorney Schoenecker that involved
dishonesty, fraud, deceit or
misrepresentation, in violation of SCR 20:8.4
(c): (1) sending fraudulent billing
statements to M.F.; (2) using
misappropriated personal information of M.F.
in attempts to withdraw money from her bank
account; (3) fraudulently entering M.F.'s
bank account to withdraw money from the
account; (4) establishing a solo private law
practice while employed by the Clair law
firm without disclosing such practice to his
employer or providing an accounting of the
legal fees earned in that solo practice; (5)
failing to disclose the separate solo law
practice or fees earned in that practice on
his bankruptcy schedules; (6) failing to
disclose the client trust account for the
separate solo law practice on his bankruptcy
schedules; (7) giving false testimony under
oath at the meeting of creditors; and (8)
giving false testimony under oath at a
bankruptcy deposition that he had not opened
a client trust account.
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¶24 Finally, in Count Seven, Attorney
Schoenecker agrees that his failure to
notify the OLR and the clerk of this court
of his convictions in the Walworth County
and Waukesha County criminal actions
constituted violations of SCR 21.15(5),
which is enforced via SCR 20:8.4(f).
¶25 The stipulation states that Attorney
Schoenecker fully understands the nature of
the misconduct allegations against him and
his right to contest those allegations. It
also states that Attorney Schoenecker
understands his right to the assistance of
counsel and notes that Attorney Schoenecker
has been represented by counsel during the
disciplinary process. The parties further
assert that the stipulation is not the
product of plea-bargaining. Finally,
Attorney Schoenecker represents that he is
entering the stipulation knowingly and
voluntarily.
¶26 The stipulation requests that the
court impose the three-year suspension
sought by the OLR as discipline for Attorney
Schoenecker's professional misconduct. As
support for a substantial suspension in this
case, the OLR's memorandum in support of the
stipulation cites a number of prior
disciplinary decisions. See, e.g., In
re
Disciplinary Proceedings Against George,
2008 WI 21, 308 Wis. 2d 50, 746 N.W.2d 236
(suspension of four years and three months
for criminal conduct involving, among other
things, conspiracy to commit offenses
involving federal program funds); In re
Disciplinary Proceedings Against Gral,
2007
WI 22, 299 Wis. 2d 160, 727 N.W.2d 495
(three-year suspension for criminal conduct
involving federal mail fraud); In re
Disciplinary Proceedings Against Webster,
217 Wis. 2d 371, 577 N.W.2d 21 (1998) (two-
year suspension for criminal conduct
involving aiding and abetting the fraudulent
concealment of his clients' property in a
bankruptcy proceeding).
¶27 After reviewing the matter, we
approve the stipulation and adopt the
stipulated facts and legal conclusions of
professional misconduct. Although the cases
cited by the OLR are not precisely on point
because of factual differences, we agree
that a three-year suspension of Attorney
Schoenecker's license to practice law in
Wisconsin is an appropriate level of
discipline in this case in light of his
serious misconduct. Attorney Schoenecker
engaged in a disturbing series of illegal
and dishonest actions, which were designed
to benefit him financially to the injury of
his client, his law firm employer, and his
creditors. As we noted at the beginning of
this opinion, before he will be allowed to
practice law again in this state, Attorney
Schoenecker will need to demonstrate that,
among other things, he has a proper
understanding of and attitude toward the
standards that are imposed upon members of
the bar in this state and that he will act
in conformity with those standards. See
SCR
22.29(4)(f). We do not impose restitution,
as the OLR did not make any such request.
Finally, because Attorney Schoenecker
entered into a comprehensive stipulation
under SCR 22.12, thereby obviating the need
for the appointment of a referee and a full
disciplinary proceeding, we do not impose
costs in this matter.
¶28 IT IS ORDERED that the license of
James M. Schoenecker to practice law in
Wisconsin is suspended for a period of three
years, effective August 15, 2011.
¶29 IT IS FURTHER ORDERED that James M.
Schoenecker shall comply with the provisions
of SCR 22.26 concerning the duties of a
person whose license to practice law in
Wisconsin has been suspended.
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¶30 ANN WALSH BRADLEY, J.
(dissenting). I believe the seriousness of
Attorney Schoenecker's admitted conduct
warrants rejection of the stipulation of the
parties. Although a three-year suspension
is a severe sanction, I think that Attorney
Schoenecker's conduct may merit a greater
sanction.
¶31 Because I would reject the
stipulation, appoint a referee to preside
over this case, and allow the complaint to
proceed through the disciplinary process, I
respectfully dissent.
¶32 I am authorized to state that Chief
Justice SHIRLEY S. ABRAHAMSON joins this
dissent.
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