918 N.W.2d 158
Iowa2018Background
- Todd W. Kowalke, admitted 1994, served as counsel to the coexecutors of Violet Brokken’s estate and agreed to fee under Iowa Code §633.197.
- Executors deposited estate funds into Kowalke’s firm trust account (notably $132,707.89 in 2011 and $38,809.06 in 2015); Kowalke repeatedly missed deadlines and neglected duties to close the estate.
- Kowalke withdrew funds from the trust account without court authorization: $3,692.18 (2011), $2,500 (Dec. 2015), $10,000+ (Jan. 2016) for personal use, and additional amounts to pay other clients; ledger later showed $35,470.06 should have remained in trust.
- Kowalke failed to obtain timely court approval for fees, failed to restore funds when ordered, and told the court he did not have the money to restore the trust balance.
- The Grievance Commission found multiple violations of the Iowa Rules of Professional Conduct (including conversion and dishonesty) and recommended revocation; the Supreme Court, on de novo review, found conversion of client funds and revoked Kowalke’s license.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Kowalke converted client funds | Board: Kowalke withdrew and used trust funds for personal and other-client expenses without colorable claim | Kowalke: asserted some withdrawals were fees or errors; claimed efforts to restore funds | Court: Found conversion of client funds in violation of criminal theft statutes and RPCs; conversion established |
| Whether Kowalke violated trust-account and fee rules | Board: Violations of rules on safekeeping, withdrawal of unearned fees, accounting, and court-rule compliance | Kowalke: offered no mitigating circumstances or colorable defenses | Court: Violations of multiple RPCs (including 32:1.15, 32:1.5, 32:8.4) established |
| Whether false statements to tribunal occurred | Board: Kowalke made false statements in reports and to court | Kowalke: disputed specifics but admitted some inaccuracies and failures to verify orders | Court: Found knowingly false or misleading statements to tribunal (rule 32:3.3) |
| Appropriate sanction for conversion and related misconduct | Board/Commission: Recommended revocation given conversion, pattern, and harm | Kowalke: sought leniency; no significant mitigation presented | Court: Revocation of license imposed; costs assessed |
Key Cases Cited
- Iowa Supreme Ct. Att’y Disciplinary Bd. v. Cross, 861 N.W.2d 211 (Iowa 2015) (standard of de novo review in disciplinary matters)
- Iowa Supreme Ct. Att’y Disciplinary Bd. v. Van Ginkel, 809 N.W.2d 96 (Iowa 2012) (burden of proof and sanction review principles)
- Iowa Supreme Ct. Att’y Disciplinary Bd. v. Thomas, 844 N.W.2d 111 (Iowa 2014) (conversion of client funds warrants revocation)
- Iowa Supreme Ct. Att’y Disciplinary Bd. v. McCarthy, 814 N.W.2d 596 (Iowa 2012) (defining convincing preponderance standard)
- Iowa Supreme Ct. Att’y Disciplinary Bd. v. Gailey, 790 N.W.2d 801 (Iowa 2010) (stipulations binding on parties but not on court for violations/sanctions)
- Iowa Supreme Ct. Att’y Disciplinary Bd. v. Carter, 847 N.W.2d 228 (Iowa 2014) (conversion dispositive of sanction analysis)
- Iowa Supreme Ct. Att’y Disciplinary Bd. v. Guthrie, 901 N.W.2d 493 (Iowa 2017) (revocation appropriate in nearly every case of conversion absent a colorable claim)
- Comm. on Prof’l Ethics & Conduct v. Ottesen, 525 N.W.2d 865 (Iowa 1994) (strong precedent for revocation when attorneys convert entrusted funds)