In re Complaint as to the Conduct of JEFFREY F. RENSHAW, Accused.
OSB 10-08; SC S059839
Supreme Court of Oregon
March 28, 2013
298 P.3d 1216 | 353 Or. 411
Argued and submitted January 10, accused disbarred, effective 60 days from date of decision March 28, 2013
Stacy J. Hankin, Assistant Disciplinary Counsel, Tigard, argued the cause and filed the briefs for the Oregon State Bar.
PER CURIAM
PER CURIAM
In this lawyer discipline proceeding, the Bar alleged that the accused violated Rule of Professional Conduct (RPC) 8.4(a)(2), which prohibits criminal conduct that reflects adversely on a lawyer‘s honesty and trustworthiness, and RPC 8.4(a)(3), which prohibits conduct involving dishonesty and misrepresentation that reflects adversely on a lawyer‘s fitness to practice law. The trial panel found that the accused had violated both rules, suspended him for one year, and imposed certain conditions on his reinstatement. On review, the Bar asks us to affirm the trial panel‘s findings regarding the rule violations but contends that we should disbar the accused. The accused, for his part, acknowledges that he violated RPC 8.4(a)(3), contends that he did not violate RPC 8.4(a)(2), and submits that the sanction that the trial panel imposed was appropriate. On de novo review, we find that the accused violated both rules and conclude that disbarment is the appropriate sanction.
We find the following facts by clear and convincing evidence. The accused was admitted to practice in Oregon in 1993. In 2003, the accused and two other lawyers formed a law firm, Johnson, Renshaw & Lechman-Su, P.C. (the firm). They organized the firm as a professional corporation under Oregon law and as an S corporation under the Internal Revenue Code. Each lawyer was an equal shareholder in the firm. After the firm was formed, each shareholder assumed different management roles. Johnson handled marketing and accounts receivables. Lechman-Su handled “big picture financial items.” The accused handled day-to-day operations, including paying the firm‘s bills, processing funds received from clients, and addressing personnel matters.
During the relevant time period, the firm had a general checking account and a line of credit through which each shareholder was issued a firm credit card. All accounts were to be used only for business purposes. Each month, the expenses charged to each shareholder‘s credit card were reviewed and entered into QuickBooks, a program that the firm used to record financial transactions. The firm‘s part-time bookkeeper reviewed and recorded Johnson‘s and Lechman-Su‘s credit card statements. The accused reviewed and recorded his own statements.1
Johnson, Lechman-Su, and the accused were compensated in two ways. Each received a regular paycheck, and, when firm revenue allowed, each also received periodic shareholder distributions. The accused was responsible for determining whether there was sufficient revenue at any given time to make a distribution. Generally, when a distribution was made, each of the three shareholders received the same amount.
In 2006, the accused made three shareholder distributions to himself without making distributions to Johnson and Lechman-Su. Those three distributions totaled $3,250. Each time that the accused made a distribution only to himself, he told Johnson and Lechman-Su that the firm lacked sufficient funds to make a shareholder distribution. When the firm‘s accountant was preparing the shareholders’ 2006 corporate tax returns, she discovered that disparity and brought it to the accused‘s attention because he was the managing shareholder. The accused, however, did not bring the disparity to the attention of Johnson and Lechman-Su.
The accused responded directly to the accountant, promising to repay the debt by the end of June 2008. He then sent an e-mail to Johnson and Lechman-Su, the subject line of which was “mea culpa.” The e-mail stated,
“I am physically ill about this right now, so I need to cleanse my soul to you two.
“*****
“[T]his is simply an accumulation of three years and my dealing with several things as a result of going through and losing the lawsuit against the title company. I am already in the midst of plans to get this cleared. It amounts to this—I owe the firm and it will be repaid.
“God I feel horrible right now. I am so sorry.”
Shortly after receiving the accused‘s e-mail, Johnson, Lechman-Su, and the accused met to discuss the accused‘s actions. The accused denied experiencing personal problems and attributed the debt to the financial consequences of an unsuccessful lawsuit and also to promises that he had made to his wife to remodel their home. At the meeting, the accused did not tell Johnson or Lechman-Su that he had taken any sums other than the ones that the accountant had discovered.
The following month, while the accused was on vacation in Hawaii, Johnson and the firm‘s part-time bookkeeper discovered records of the accused‘s transactions in which he had used the firm‘s line of credit to pay personal expenses. For example, in February 2008, the accused had used the firm credit card to pay a personal Visa bill in the amount of $3,541.72. Also in February, the accused had made two transfers of $1,000 each from the firm‘s account into two nonfirm checking accounts, one of which was held by the accused‘s wife.
Johnson and the bookkeeper also discovered records of the accused‘s transactions in which he had used his firm credit card to pay personal expenses and either had failed to denote in QuickBooks that they were personal expenses or had coded the expenses in QuickBooks as business expenses. Those transactions occurred in 2005, 2006, 2007, and early 2008. In 2005, for example, the accused had used his firm credit card to pay Companion Pet Clinic in the amount of $66.75 and Nordstrom in the amount of $965.00. In 2006, he used his firm credit card to purchase airline tickets for his family to go to Florida and also to pay various lodging expenses associated with that family vacation. The airline tickets were coded in QuickBooks as “Legal Library,” and the remaining expenses were coded as “Travel,” “Meals,” and “Professional Development.” In 2007, the accused used his firm credit card to pay a contractor to perform remodeling work on his home. He coded those expenses, which totaled $9,454.73, as “Reference Materials” and “Subcontractors.”
When the accused returned from vacation, Johnson and Lechman-Su asked the accused to resign, which he did. After the accused‘s resignation, Johnson and the bookkeeper continued to review the accused‘s financial records to better understand the extent of the accused‘s actions. After uncovering a number of additional transactions in which the accused had used firm funds to pay personal expenses, they estimated conservatively that the accused had misappropriated at
In March 2010, the Bar filed a formal complaint against the accused, alleging that he had violated
At a hearing before the trial panel, the accused acknowledged that he took shareholder distributions in excess of those authorized by Johnson and Lechman-Su, that he used firm resources to pay personal expenses, and that he had miscoded the expenses in the firm‘s financial records. He acknowledged that, when he miscoded his personal expenses as business expenses, he knew that doing so would make it more difficult for his partners to discover his actions. He acknowledged that his actions “involve[ed] dishonesty [and] misrepresentation” in violation of
According to the accused, under the American Bar Association‘s Standards for Imposing Lawyer Sanctions (1991) (amended 1992) (the ABA Standards) and this court‘s case law, his conduct warranted a sanction no greater than “18 months, with 12 months stayed during a three *** year term of probation on the conditions that [the accused‘s] practice and financial affairs be monitored by the State Lawyers Assistance Committee and that [he] actively participate in mental health counseling.” The trial panel issued an opinion finding that the accused had violated both
On review, the Bar asks this court to find, as the trial panel did, that the accused violated
“A person, who obtains property of another thereby, commits theft by deception
when, with intent to defraud, the person *** [c]reates or confirms another‘s false impression of law, value, intention or other state of mind that the actor does not believe to be true[.]”
The accused‘s response is limited. As noted, the accused does not dispute that he took substantial funds from the law firm. He does not dispute that his conduct “[c]reate[d] or confirm[ed] another‘s false impression *** or other state of mind that the [accused] d[id] not believe to be true.” And he does not dispute that he had the requisite intent to defraud. The accused argues only that his conduct did not constitute theft because he did not “obtai[n the] property of another.” See
In response to the Bar‘s argument that he took property that the firm—a professional corporation—owned, the accused argues that the firm did not observe any of the formalities required of a corporation. It follows, he reasons, that the firm forfeited its corporate status and operated as a partnership and that he and his partners jointly owned the firm‘s funds. Relying on State v. Durant, 122 Or. App. 380, 857 P.2d 891 (1993), the accused argues that, because he and his partners owned the firm‘s funds jointly and because no partner‘s interest in the funds was superior to another‘s, he could not and did not take the “property of another” within the meaning of the theft statutes.
We need not decide whether the firm lost its corporate status and should be viewed as a partnership, as the accused argues. Even if the accused were correct that the firm was operating as a partnership, the money that he took belonged to the partnership, not to the partners. See
The accused argues alternatively that he did not engage in theft because he “reasonably believed that [he] was entitled to the property[.]” See
As the trial panel concluded, the distinction between business and personal expenses may not always have been precise, and there may have been a few, relatively minor instances in which another partner in the firm failed to honor the distinction. However, those few instances provided no reasonable basis for the accused to believe that he was either entitled or authorized to take approximately $100,000 of the firm‘s funds to pay for remodeling his home, family vacations, and the like. Indeed, the fact that the accused intentionally misrepresented his reasons for charging his personal expenses to the firm is at odds with his claim that he reasonably believed that he was entitled to do so. The Bar proved by clear and convincing evidence that the accused committed “a criminal act [theft by deception] that reflects
Having found that the accused violated
In violating
The ABA Standards identify two situations in which disbarment is the appropriate sanction for a lawyer‘s breach of a duty owed to the public. Both apply here. Disbarment is appropriate when a lawyer engages in “serious criminal conduct, a necessary element of which includes *** misrepresentation *** or theft.” ABA Standard 5.11(a). In this case, the accused committed acts that constitute theft by deception. Because misrepresentation and theft are necessary elements of that crime, the criminal conduct in which the accused engaged comes within the terms of ABA Standard 5.11(a). We note, however, that not every criminal act that includes those elements will warrant disbarment. The criminal conduct must be “serious.” See id. In this case, it was. This was not an isolated instance of, for example, petty shoplifting. Rather, from 2005 to 2008, the accused repeatedly and systematically took money from his firm by misrepresenting either the firm‘s finances or his reasons for using the firm‘s money. Moreover, the accused does not dispute that he wrongfully took at least $100,000 from the firm. Both the duration of the accused‘s conduct and the magnitude of his theft make the accused‘s crime a serious one.
The ABA Standards also provide that disbarment is appropriate when a lawyer engages in “any other intentional conduct involving dishonesty, fraud, deceit, or misrepresentation that seriously adversely reflects on the lawyer‘s fitness to practice.” Standard 5.11(b). For the reasons discussed above, we find that the accused intentionally engaged in dishonesty and misrepresentation when he told the other two shareholders that the firm lacked sufficient funds to make shareholder distributions and when he coded personal expenses as firm expenses. Because the accused acknowledges that his conduct violated
“It is also urged that the accused has taken no funds of any client. He did not disclose taking his partner‘s funds until called to account. The long practice of taking and secreting funds not his own reflects directly on his right to be placed in a position to handle other people‘s property. If these were the funds of a client there would be no hesitancy in imposing the most severe sanction; particularly when we consider the intent evidenced by the long course of conduct. The same violation of the fiduciary duty to partnership funds is no less abhorrent.”
Id. Following Pennington, we conclude that the duration and effect of the accused‘s intentional misrepresentations and dishonesty are such that they seriously adversely reflect on his fitness to practice law.
Applying the ABA Standards, we determine preliminarily that disbarment is the appropriate sanction. We now consider whether there are any mitigating factors or aggravating factors that lead to a different conclusion. We find four aggravating factors, two of which we have already considered in determining the seriousness of the accused‘s criminal conduct under ABA Standard 5.11(a). First, as we have already explained, the accused committed a crime. See ABA Standard 9.22(k). Second, the record establishes that the accused engaged in a pattern of repeated thefts from 2005 to early 2008. See ABA Standard 9.22(c). Third, the accused was admitted to practice in Oregon in 1993 and has substantial experience in the practice of law. See ABA Standard 9.22(i). Fourth, the accused acted with a selfish motive. See ABA Standard 9.22(b).
We also find four mitigating factors. First, the accused has no prior disciplinary record. See ABA Standard 9.32(a). Second, he displayed a cooperative attitude toward the disciplinary proceedings and during the trial panel hearing. See ABA Standard 9.32(e). Third, the accused had a good reputation as a competent family law attorney. See ABA Standard 9.32(g). Fourth, the accused demonstrated remorse for his actions. See ABA Standard 9.32(l).
We note that the trial panel found, as a mitigating factor, that the accused acted without a “self motive.” Specifically, the panel stated that the accused “offered credible evidence that he misappropriated the Firm‘s resources out of desperation to provide for his family, not to fund any self need or desire[.]” At oral argument, counsel for the accused stated that, while the accused acknowledged that his conduct was selfish, the fact that it was not a “self motive“—that is, that the money was not “for himself“—identifies an important distinction in “trying to gauge the moral quality of his misconduct.” It is difficult to describe taking at least $100,000 of someone else‘s money to pay for your family‘s vacations, pet care, and home remodeling as either selfless or morally neutral acts. Far from being a mitigating factor, the reasons that the accused took the firm‘s funds constitute an aggravating factor. See ABA Standard 9.22(b) (providing that acting for selfish reasons is an aggravating factor).
The accused also urges us to consider, as a mitigating factor, his “personal or emotional problems.” See ABA Standard 9.32(c). On that point, however, the accused offered no expert testimony before the trial panel to demonstrate that he suffered from any psychological or other condition that would explain his actions or mitigate his culpability. He offered no evidence that, before the hearing, he had seen a mental health professional to help him deal with any personal or emotional problems that might have caused his behavior. The only evidence of his personal or emotional problems came from the accused, who testified that he
Two cases are virtually identical to this one. See In re Murdock, 328 Or. 18, 968 P.2d 1270 (1998); Pennington, 220 Or. at 349. In each case, the lawyer took money from his firm by intentionally withholding part or all of the fees that the lawyer collected. Over eight years, Pennington “secreted” approximately $50,000. 220 Or. at 345. Over two years, Murdock withheld from his firm slightly less than $10,000. 328 Or. at 21.8 In both cases, this court observed that a lawyer who “embezzles” funds from the lawyer‘s firm is no different from a lawyer who takes his or her client‘s funds and held that “disbarment generally will follow” from that conduct. Murdock, 328 Or. at 36; Pennington, 220 Or. at 349.
In Murdock, the lawyer had argued that a lesser sanction was appropriate because his actions were the result of a “long-term addiction to alcohol and illegal drugs.” 328 Or. at 29. The court reasoned that, even if Murdock were “affected” by a chemical dependency, that dependency did not “cause” him to take the firm‘s funds. Id. at 30. In Pennington, the only explanation that the lawyer offered for his conduct was that he had produced more of the firm‘s income than his partner, a fact that, in his view, permitted him to withhold payments that belonged to the partnership. 220 Or. at 345. Pennington also offered evidence from witnesses of “high standing” that he was an able lawyer, that those witnesses had no reason to doubt his integrity, that they had no reason to believe that he had ever cheated a client, and that they believed that he “would not transgress again.” Id. at 346.
Despite that mitigating evidence, this court ruled in both cases that the magnitude of the lawyers’ ethical violations warranted disbarment. Murdock, 328 Or. at 36; Pennington, 220 Or. at 349. That conclusion follows equally here. The accused does not suffer from the sort of addictive behavior that Murdock did and, as explained above, offered no expert evidence to establish a psychological or emotional condition that might explain his actions or mitigate his culpability. Although the accused offered character evidence on his behalf, we see no material difference between that evidence and the character evidence that Pennington offered. For more than 50 years, this court has held that the sort of conduct that the accused engaged in here warrants disbarment.9
The accused, however, relies on five cases that, in his view, have resulted in lesser sanctions for comparable conduct. The accused relies primarily on In re Leisure, 338 Or. 508, 113 P.3d 412 (2005). In that case, the Bar alleged that Leisure had engaged in criminal conduct in violation of former DR 1-102(A)(2) “by writing numerous checks that, when she wrote them, her checking account could not cover.” Id. at 510.10
In setting out the facts in Leisure, the court described one of several matters (the Combs matter) that had resulted in Leisure‘s writing multiple bad checks. See id. at 512-14.11 It may be that some of the acts that Leisure took in the Combs matter would permit an inference that she intended to commit the crime of theft rather than the crime of negotiating bad checks. The Bar, however, did not allege that Leisure had committed the crime of theft, and this court did not find by clear and convincing evidence that she had intended to deprive anyone permanently of their money. In this case, by contrast, we find that the accused intended to deprive his firm and his partners permanently of a substantial sum of money and, in carrying out that intent, committed acts that constitute theft. The fact that Leisure was suspended for writing bad checks does not suggest that a lawyer who commits theft from his or her firm is not subject to disbarment.
The accused also relies on In re Carstens, 297 Or. 155, 683 P.2d 992 (1984). That case, however, provides less support for the accused than Leisure. In that case, Carstens and his wife jointly owned a truck, a boat, and a trailer. Id. at 157. After they had filed a petition for dissolution but during a period of reconciliation, Carstens signed his wife‘s name to certificates of title for the boat and the trailer, transferring them to his professional corporation for tax purposes. Id. at 158. After the reconciliation failed, Carstens sold the truck for more than it had been valued and signed his wife‘s name to the certificate of title for the truck. Id. Before doing so, however, Carstens called his lawyer in the dissolution proceeding, who advised him to go ahead with the sale. Id. Carstens deposited the proceeds from the sale in a separate account and promptly advised his wife of the sale. Id. at 158-59.
On learning of the sale, Carstens’ wife initiated criminal charges against her husband, claiming that he had forged her name on the titles for the truck, boat, and trailer and that, as a result, he had stolen her interest in them. Id. at 159. In the criminal proceeding, a trial court convicted Carstens of one count of forgery and one count of theft, both of which counts arose from the sale of the truck; however, the court dismissed the counts arising from the transfer of the titles to the boat and the trailer. Id. at 160. The Bar then brought a disciplinary proceeding against Carstens, based on those two convictions and additionally on the ground that forging his wife‘s name on the titles for the boat and trailer violated former DR 1-102(A)(3) and (4). Id. at 160-61.
In reviewing the Bar‘s charges, this court explained that it was bound by the criminal convictions and could not look behind them. Id. at 163. Regarding the other claims based on Carstens’ forging his wife‘s name on the titles for the boat and trailer, the court found that no forgery had
Carstens provides no basis for distinguishing Pennington and Murdock, nor do the other three cases on which the accused relies.12 Having found no basis to depart from the ABA Standards or our case law, we conclude that, to protect the public and the administration of justice, the accused should be disbarred.
The accused is disbarred, effective 60 days from the date of this decision.