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ATTORNEY disciplinary proceeding.
Attorney's license revoked.
¶1 PER CURIAM. Pending before the
court is a report and recommendation filed
by Referee Richard M. Esenberg. The report
recommends that we accept Attorney Thomas D.
Vaitys' petition for consensual license
revocation, order him to pay restitution,
and revoke his license to practice law in
Wisconsin. Attorney Vaitys is the subject
of an Office of Lawyer Regulation (OLR)
disciplinary complaint alleging that he
committed 19 counts of professional
misconduct in several client matters. He is
also the subject of two pending grievances
that have not yet been fully investigated by
the OLR.
¶2 We agree that both revocation and
restitution are appropriate, and we agree
that Attorney Vaitys shall pay the costs of
this proceeding, which are $4,703.85 as of
July 10, 2019.
¶3 Attorney Vaitys was admitted to the
practice of law in Wisconsin in 2004. He
currently resides in Sonora, California. He
has not previously been subject to
professional discipline. His law license
has been suspended, however, for failure to
pay State Bar dues, failure to provide a
required trust account certification, and
for failure to comply with CLE reporting
requirements.
¶4 On June 28, 2017, the OLR filed a
disciplinary complaint charging Attorney
Vaitys with 19 counts of professional
misconduct. Referee Esenberg was appointed
on July 24, 2017. On September 18, 2018,
Attorney Vaitys filed a petition for
consensual license revocation pursuant to
Supreme Court Rule (SCR) 22.19.
¶5 Attorney Vaitys states that he
cannot successfully defend himself against
the professional misconduct alleged in the
complaint or the pending investigations, and
states he will make appropriate restitution.
On September 18, 2018, the OLR filed a
recommendation, supporting Attorney Vaitys'
petition.
¶6 The referee issued a report on
January 8, 2019, recommending revocation and
restitution. No appeal has been filed in
this matter, so our review proceeds pursuant
to SCR 22.17(2). We revoke Attorney Vaitys'
Wisconsin law license effective the date of
this order.
¶7 The first 12 counts of the OLR's
disciplinary complaint arise from Attorney
Vaitys' representation of T.A. T.A. is an
individual with a "wide range of cognitive
and comprehension difficulties, including
difficulty reading and/or understanding
written information." In February 2012,
T.A. hired Attorney Vaitys and Attorney
Thomas Napierala, a lawyer with another
firm, to set aside a mediation agreement and
settlement that T.A. had entered in a
Milwaukee County Circuit Court case
involving the estate of T.J. If they
succeeded in setting aside the settlement,
the two lawyers would then commence
litigation to establish that T.A. was
entitled to inherit the T.J. estate. If
not, they intended to appeal and, perhaps,
seek review in this court. The legal work
was to be paid from settlement funds that
T.A. had received from the T.J. estate (the
Probate Award). Work commenced in February
of 2012, but no written fee agreement was
signed until November 2012.
¶8 The fee agreement limited what the
lawyers could charge for appellate work. It
established a $25,000 "Appellate Fund" trust
account. Fees and costs related to this
appellate work were only to be paid from the
Appellate Fund, not from the remainder of
the Probate Award. The balance of the
Probate Award was to be held in Attorney
Vaitys' IOLTA trust account. It was agreed
there would be an accounting of any other
work previously performed for T.A. Other
than the anticipated appeals, the fee
agreement covered no other matters or any
subsequent work on the T.J. estate matter.
With respect to non-appellate work, the fee
agreement provided that one-third of all
fees would be paid to Attorney Vaitys, and
two-thirds would be paid to Attorney
Napierala. Work performed by Attorney
Napierala was to be billed to and the
charges approved by Attorney Vaitys.
¶9 On November 26, 2012, Attorney
Vaitys received a check for $161,269.23
representing the settlement funds from the
T.J. estate. Attorney Vaitys deposited the
funds in his general IOLTA trust account.
He then transferred $25,000 to the Appellate
Fund trust account.
¶10 Thereafter, Attorney Vaitys failed
to keep proper records of disbursements,
commingled funds, improperly withdrew funds
from both the Probate Award in his general
IOLTA trust account and from the Appellate
Fund trust account, misrepresented account
balances, converted funds, improperly
billed, made then-prohibited internet
banking transactions, failed to make a
proper accounting, and failed to file a
timely reply brief. Essentially, Attorney
Vaitys improperly took a substantial portion
of T.A.'s funds and kept T.A. in the dark
about the balance of funds held by Attorney
Vaitys and the charges against them.
¶11 Based on the forgoing, the OLR
alleged that Attorney Vaitys' handling of
the T.A. matter violated a number of the
rules of professional conduct, as follows:
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Count One: By failing, prior to
November 12, 2012, to communicate in writing
to T.A. the scope of the representation and
the rate and basis of Attorney Vaitys' fees
and expenses, Attorney Vaitys violated SCR
20:1.5(b)(1).
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Count Two: By failing to clearly
and
accurately communicate with T.A. about the
specific amounts Attorney Vaitys disbursed
from T.A.'s funds, the total amount of fees
Attorney Vaitys believed were due and owing,
and the total amount of T.A.'s funds remaining
in the trust accounts, so as to provide T.A.
with an accurate understanding of Attorney
Vaitys' handling of his funds and the total
amount of such funds in Attorney Vaitys'
possession, Attorney Vaitys violated SCR
20:1.4(a)(3) and SCR 20:1.4(a)(4).
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Count Three: By converting T.A.'s
funds to his own use or benefit, Attorney
Vaitys violated SCR 20:8.4(c).
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Count Four: By charging T.A. $275
per hour for services that were not reasonably
billable to T.A., Attorney Vaitys violated SCR
20:1.5(a).
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Count Five: By using T.A.'s funds
to pay obligations to other clients or third
parties, thereby failing to safeguard and hold
those funds in trust, Attorney Vaitys violated
SCR 20:1.15(b)(1).
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Count Six: By failing to take
reasonable steps to ensure that Attorney
Napierala's billing statements were accurate
before paying the same from T.A.'s funds,
thereby failing to safeguard and hold those
funds in trust, Attorney Vaitys violated SCR
20:1.15(b)(l).
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Count Seven: By failing to provide
T.A. with accurate, written accountings upon
request, Attorney Vaitys violated former SCR
20:1.15(d)(2).
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Count Eight: By making multiple
internet banking transactions related to
either T.A.'s appellate trust account or his
IOLTA trust account, at a time when such
transactions were prohibited, Attorney Vaitys
violated former SCR 20:1.15(e)(4)c.
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Count Nine: By failing to timely
file T.A.'s reply brief or to timely file for
an extension of time in which to file the
reply brief, Attorney Vaitys violated SCR
20:1.3.
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Count Ten: By holding himself out
as trustee of T.A.'s special needs trust, when
no such trust existed and Attorney Vaitys was
not trustee of any trust related to T.A.,
Attorney Vaitys violated SCR 20:8.4(c).
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Count Eleven: By failing to
cooperate in the OLR's investigation of the
grievance, including making misrepresentations
to the OLR during the investigation and by
willfully failing to fully and fairly disclose
all facts and circumstances pertaining to his
alleged misconduct after having been notified
by the OLR of the matter, Attorney Vaitys
violated SCR 22.03(2) and SCR 22.03(6),
enforceable via SCR 20:8.4(h).
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Count Twelve: By making
misrepresentations to the OLR during the
OLR's initial evaluation of these
grievances, Attorney Vaitys violated SCR
20:8.4(c).
¶12 The remaining seven allegations in
the complaint relate to misconduct that the
OLR identified in the course of
investigating the T.A. grievance. These
include accounting anomalies affecting other
clients, and misrepresentations that
Attorney Vaitys made to the OLR in an effort
to hide his misconduct. The OLR audited
Attorney Vaitys' banking records during the
period he represented T.A. and identified at
least seven occasions between February 6,
2013 and February 12, 2014 when Attorney
Vaitys made other internet banking transfers
from the Appellate Fund trust account or
general IOLTA trust account to his business
account. These transactions were prohibited
at the time.
¶13 During the investigation, Attorney
Vaitys represented to the OLR that billing
statements were supported by
contemporaneously created ledgers that he
claimed to have gone over with T.A. on a
monthly basis. Attorney Vaitys later
admitted that these statements and ledgers
were fabricated to conceal his misuse of
T.A.'s funds.
¶14 Attorney Vaitys also misrepresented
the terms of the fee agreement, falsely
stating that it provided for up to $43,000
in fees and costs for appellate work, and
falsely claiming that he obtained T.A.'s
authorization for every disbursement when he
had not.
¶15 In addition, during the
investigation, Attorney Vaitys procured an
affidavit from Attorney Napierala stating
that certain funds were not converted
because he and Attorney Vaitys had an
agreement by which Attorney Vaitys was
authorized to offset these amounts against
amounts owed to him by Attorney Napierala.
However, Attorney Napierala later told the
OLR that while there was such an agreement,
it did not exist between November 2012 and
May 2014 when the funds at issue were
converted.
¶16 As noted, T.A. was not the only
client affected by Attorney Vaitys'
misconduct. The OLR found irregularities in
legal matters related to former clients
A.H., C.S.M., Y.E., and M.B. On numerous
occasions, Attorney Vaitys received funds in
which clients or a third party had an
interest and failed to notify them; failed
to promptly deliver to clients or third
parties the funds to which they were
entitled; or improperly transferred funds
from his trust account into his business
account, recorded the transaction as
something else, and then never disbursed the
funds to the owner. He also deposited funds
belonging to clients and third parties into
his business account rather than his IOLTA
trust account or failed to hold client funds
in his trust accounts. For example, in
regards to A.H., Attorney Vaitys deposited
client funds to his business account to
avoid overdrafts of his business account,
thereby converting A.H.'s funds.
¶17 The C.S.M. matter involved efforts
to collect on a $1,417,204.38 judgment
involving the receipt of multiple
garnishment checks, of which 66.7 percent
would belong to C.S.M., 16.65 percent would
belong to Attorney Napierala, and 16.65
percent to Attorney Vaitys. Attorney Vaitys
repeatedly failed to promptly deliver
received funds to C.S.M. and Attorney
Napierala. Sometimes, he deposited the
money in his business account and used all
of the money for other purposes and never
paid it to the rightful owner. On other
occasions, he deposited funds belonging to
C.S.M. and Attorney Napierala in his trust
account but did not keep it there,
transferring it to his business account or
reserve line. The referee observed that
amounts were not large——generally in the low
to mid-hundred dollar range——but the
occasions were frequent.
¶18 These allegations gave rise to seven
additional counts of misconduct:
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Count Thirteen: By converting client
and third party funds to his own use or for
the use of other clients or third parties,
Attorney Vaitys violated SCR 20:8.4(c).
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Count Fourteen: By depositing client
and third party funds into his Business
Account, thereby failing to safeguard and hold
client and third party funds in trust,
Attorney Vaitys violated SCR 20:1.15(b)
(1).
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Count Fifteen: By depositing
personal funds into his IOLTA trust account,
Attorney Vaitys violated SCR 20:1.15(b)
(l).
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Count Sixteen: By causing Attorney
Napierala to sign an affidavit containing
false information, Attorney Vaitys violated
SCR 20:8.4(c).
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Count Seventeen: By failing to
provide clients and third parties with written
notice of his receipt of funds in which they
have an interest and by failing to promptly
deliver to clients and third parties the funds
that they were entitled to receive, Attorney
Vaitys violated former SCR 20:1.15(d)(1).
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Count Eighteen: By making multiple
internet banking transactions related to the
IOLTA trust account at a time when such
transactions were prohibited, Attorney Vaitys
violated former SCR 20:1.15(e)(4)c.
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Count Nineteen: By making
misrepresentations to the OLR during the
course of its investigation of OLR Matter
No. 2016MA1162, including by presenting an
affidavit to the OLR that contained a false
assertion, Attorney Vaitys violated SCR
22.03(2) and SCR 22.03(6), both enforceable
under the Rules of Professional Conduct via
SCR 20:8.4(h).
¶19 In addition to the allegations in
the OLR complaint, when Attorney Vaitys
filed his petition, the OLR was
investigating two additional grievances
filed by clients W.A. and M.B. The W.A.
grievance involved neglect of a client
matter. The OLR seeks restitution in this
matter. The M.B. grievance also involved
allegations of carelessness and neglect, but
the OLR did not seek restitution for M.B.
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¶20 When reviewing a report and
recommendation in an attorney disciplinary
proceeding, we affirm a referee's findings
of fact unless they are found to be clearly
erroneous. In re Disciplinary Proceedings
Against Inglimo, 2007 WI 126, ¶5, 305 Wis.
2d 71, 740 N.W.2d 125. We review the
referee's conclusions of law on a de novo
basis. Id. We determine the
appropriate
level of discipline given the particular
facts of each case, independent of the
referee's recommendation, but benefitting
from it. In re Disciplinary Proceedings
Against Widule, 2003 WI 34, ¶44, 261 Wis.
2d
45, 660 N.W.2d 686.
¶21 Attorney Vaitys admits that he
cannot defend against the allegations of the
complaint or the pending grievances,
explains that he is represented by counsel
and understands the rights he is giving up,
and agrees that his law license should be
revoked and that he should be ordered to
make restitution to T.A., to Attorney
Napierala, and to W.A. The OLR supports
Attorney Vaitys' petition. The referee
determined, based on Attorney Vaitys'
petition and the OLR's response, by clear,
satisfactory, and convincing evidence, that
Attorney Vaitys has engaged in serious
misconduct, and he recommends that we accept
the petition, order restitution, and revoke
Attorney Vaitys' license to practice law.
¶22 The referee observes that what is
disturbing about this matter is not simply
the exceedingly careless trust accounting,
but the "way in which Attorney Vaitys seemed
to regard a vulnerable client as a 'cash
cow'——someone whose settlement funds could
be used for legal fees without regard to
whether the legal services were worth it."
The referee cites several cases in support
of his conclusion that revocation is
appropriate here, despite Attorney Vaitys'
lack of prior professional discipline.
See,
e.g., In re Disciplinary Proceedings
Against
Mularski, 2010 WI 113, 329 Wis. 2d 273,
787
N.W.2d 834.
¶23 Conversion of client funds may
warrant revocation even where, as here, the
attorney does not have a prior history of
discipline. See, e.g., In re
Disciplinary
Proceedings Against Wynn, 2014 WI 17, 353
Wis. 2d 132, 845 N.W.2d 663 (granting
petition for consensual license revocation
filed by an attorney who admitted he used
his law practice to misappropriate over
three-quarters of a million dollars from
dozens of clients); Mularski, 329 Wis.
2d
273.
¶24 Like Attorney Vaitys, Attorney
Mularski had not been subject to prior
discipline, but he used client money for his
own purposes, commingled funds, made
misrepresentations, fabricated documents in
an effort to exonerate himself, and his
trust account was in utter disarray. He was
charged with 13 counts of misconduct in
three client matters and was subject to
eight pending grievance investigations. We
granted his petition for consensual license
revocation and revoked his law license.
¶25 The seriousness of Attorney Vaitys'
misconduct demonstrates the need to revoke
his law license to protect the public, the
courts, and the legal system from the
repetition of misconduct, to impress upon
Attorney Vaitys the seriousness of his
misconduct, and to deter other 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. We have also specifically observed
that "clients that are vulnerable especially
require protection from those who abuse
their professional position to enrich
themselves." In re Disciplinary
Proceedings
Against Krombach, 2005 WI 170, ¶39, 286
Wis.
2d 589, 707 N.W.2d 146 (citing In re
Disciplinary Proceedings Against Gilbert,
227 Wis. 2d 444, 474, 595 N.W.2d 715
(1999)).
¶26 We grant Attorney Vaitys' petition
for revocation by consent. See SCR
22.19.
We also accept the referee's recommendation
regarding restitution, as modified by his
supplemental report filed June 24, 2019.
Attorney Vaitys is ordered to pay $69,867.46
to T.A. This amount of restitution is
consistent with the terms of Attorney
Vaitys' petition for revocation by consent,
and the OLR's restitution statement filed
January 10, 2019. Attorney Vaitys is also
ordered to pay $2,130.05 to Attorney Thomas
Napierala, and $100 to W.A.
¶27 Finally, we direct Attorney Vaitys
to pay the costs of this proceeding which
are $4,703.85 as of July 10, 2019. Attorney
Vaitys has provided no reason for this court
to deviate from its usual practice of
imposing full costs. SCR 22.24(1m).
¶28 IT IS ORDERED that the petition for
revocation by consent is granted and the
license of Thomas D. Vaitys to practice law
in Wisconsin is revoked, effective the date
of this order.
¶29 IT IS FURTHER ORDERED that to the
extent he has not already done so, Thomas D.
Vaitys shall comply with the provisions of
SCR 22.26 concerning the duties of a person
whose license to practice law in Wisconsin
has been revoked.
¶30 IT IS FURTHER ORDERED that Thomas D.
Vaitys is ordered to pay $69,867.46 to T.A.,
$2,130.05 to Attorney Thomas Napierala, and
$100 to W.A. Thomas D. Vaitys shall
reimburse his former clients T.A. and W.A.
before satisfying his restitution obligation
to Attorney Napierala.
¶31 IT IS FURTHER ORDERED that as a
condition of any future petition for
reinstatement of his license to practice law
in Wisconsin, Thomas D. Vaitys will be
required to prove that he has made
restitution to or settled all claims of all
persons injured or harmed by his misconduct,
including reimbursement to the State Bar of
Wisconsin Lawyers' Fund for Client
Protection for all payments made by that
fund, or, if restitution has not been made,
Thomas D. Vaitys will need to explain his
failure or inability to do so. See SCR
22.29(4m).
¶32 IT IS FURTHER ORDERED that within 60
days of the date of this order, Thomas D.
Vaitys shall pay the Office of Lawyer
Regulation the costs of this proceeding,
which are $4,703.85 as of July 10, 2019.
¶33 IT IS FURTHER ORDERED that the
restitution specified above is to be
completed prior to paying costs to the
Office of Lawyer Regulation.
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