Iowa Supreme Court Attorney Disciplinary Board v. Michael J. Cross
2015 Iowa Sup. LEXIS 31
| Iowa | 2015Background
- Michael J. Cross, solo practitioner admitted 1973, was audited in 2012 after concerns about his health and financial management.
- Audit and reconstruction of records showed pervasive trust-account failures from 2009–2012: no monthly reconciliations, missing client ledgers/check register, commingling of client and personal/business funds, withdrawals of fees before earned, multiple overdraws, and depositing client advances into a non-trust business account (MJC).
- Audit documented specific harms: multiple client subaccounts negative (totaling ~$11,700 as of Nov. 2009), 102 electronic transfers from trust to pay personal credit cards, and use of trust funds for personal/business bills; an $8,500 transfer from MJC to trust in 2011 to make balances reconcile.
- Cross admitted many factual allegations but disputed the claim that certain flat fees were unearned; he did not produce requested documents to the Board and was sanctioned procedurally (limited evidence at hearing, certain facts deemed admitted).
- Cross certified compliance on annual client-security questionnaires for 2009–2012 despite the audit findings.
- The Grievance Commission found multiple rule violations and recommended a one-year suspension; the Supreme Court reviewed de novo and imposed a one-year suspension, conditioning reinstatement on tax repayment arrangements.
Issues
| Issue | Plaintiff's Argument (Board) | Defendant's Argument (Cross) | Held |
|---|---|---|---|
| Trust-account management and recordkeeping violations (rules 32:1.15, ch.45) | Cross failed to keep client funds separate, failed monthly reconciliations, failed to maintain records, deposited advances into non-trust account, withdrew unearned fees. | Cross blamed financial, personnel, and software problems and contended flat fees in some dissolution matters were earned by the client’s second meeting. | Court found violations: commingling, failure to deposit advances into trust, premature withdrawals, inadequate records, and failure to provide contemporaneous accountings. |
| Dishonesty by false certifications on client-security questionnaires (rule 32:8.4(c)) | Cross knowingly certified compliance while he lacked ledgers, reconciliations, and separate-account practices. | Cross did not present evidence contesting intent to mislead on questionnaires. | Court found Cross violated rule 32:8.4(c) — certifications were misleading and intended to deceive. |
| Tax misconduct and cooperation with disciplinary authority (rules 32:8.4(b),(c),(d), 32:8.1(b)) | Cross failed to file/pay payroll withholding and income tax returns (2009–2011), reflecting adversely on fitness; and he failed to produce tax documents to the Board. | Cross offered no showing of willful fraud in tax filings; sought more time but never provided documents. | Court found violation of 32:8.4(b) (reflects adversely on fitness) and 32:8.1(b) (knowingly failed to respond). Did not find sufficient evidence of misrepresentation (32:8.4(c)) or conduct prejudicial to administration of justice (32:8.4(d)). |
| Practicing under trade name (rule 32:7.5(e) (pre-2013)) | Board alleged Cross used MJC Services, Inc., as a trade name in practice. | Cross had MJC corporation and used its account, but did not hold himself out to clients/public under that name. | Court declined to find a violation because Board did not show Cross actually used MJC as a trade name in his legal practice. |
Key Cases Cited
- Conroy v. Iowa Supreme Ct. Att’y Disciplinary Bd., 845 N.W.2d 59 (Iowa 2014) (de novo review and standard for disciplinary proceedings)
- Ricklefs v. Iowa Supreme Ct. Att’y Disciplinary Bd., 844 N.W.2d 689 (Iowa 2014) (trust-account commingling, false questionnaire certifications, and sanctions guidance)
- Morris v. Iowa Supreme Ct. Att’y Disciplinary Bd., 847 N.W.2d 428 (Iowa 2014) (sustained, pervasive trust-account mismanagement; suspension length considerations)
- Lustgraaf v. Iowa Supreme Ct. Att’y Disciplinary Bd., 792 N.W.2d 295 (Iowa 2010) (failure to file tax returns; mental state distinction between negligence and willfulness in misrepresentation claims)
- Iverson v. Iowa Supreme Ct. Att’y Disciplinary Bd., 723 N.W.2d 806 (Iowa 2006) (one-year suspension for long-term failure to file taxes and criminal convictions)
- Kersenbrock v. Iowa Supreme Ct. Att’y Disciplinary Bd., 821 N.W.2d 415 (Iowa 2012) (systematic recordkeeping failures and false questionnaire certification warranted suspension)
- Boles v. Iowa Supreme Ct. Att’y Disciplinary Bd., 808 N.W.2d 431 (Iowa 2012) (multiyear trust-account disregard and thirty-day suspension)