IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD, Complainant, v. Thomas E. LUSTGRAAF, Respondent.
No. 10-0425.
Supreme Court of Iowa.
Dec. 17, 2010.
The rights of parolees we recognize under our state constitution result from an analysis not far removed from the analysis of those rights identified by the United States Supreme Court. Yet, we must follow an analysis that allows the real interests at stake to be balanced, which permits the constitutional requirement of reasonableness to be maintained both by the state and the individual.
Thomas E. Lustgraaf of Lustgraaf Law Office, Council Bluffs, pro se.
TERNUS, Chief Justice.
This matter comes before us on the report of a division of the Grievance Commission of the Supreme Court of Iowa. See
I. Standard of Review.
The supreme court reviews attorney disciplinary proceedings de novo. Iowa Supreme Ct. Att‘y Disciplinary Bd. v. Wagner, 768 N.W.2d 279, 281 (Iowa 2009). The commission‘s findings and recommendations are given respectful consideration, but we are not bound by them. Iowa Supreme Ct. Att‘y Disciplinary Bd. v. Casey, 761 N.W.2d 53, 55 (Iowa 2009). The board has the burden of proving attorney misconduct by a convincing preponderance of the evidence. Iowa Supreme Ct. Att‘y Disciplinary Bd. v. Conrad, 723 N.W.2d 791, 792 (Iowa 2006). As frequently stated, “This burden is less than proof beyond a reasonable doubt, but more than the preponderance standard required in the usual civil case.” Id. (quoting Iowa Supreme Ct. Bd. of Prof‘l Ethics & Conduct v. Lett, 674 N.W.2d 139, 142 (Iowa 2004)). Upon proof of misconduct, we may impose a lesser or greater sanction than that recommended by the commission. Id.
II. Factual Findings.
Lustgraaf was admitted to practice law in April of 2004. Thereafter, he practiced primarily criminal law in Council Bluffs. On September 3, 2009, the board filed a disciplinary complaint against Lustgraaf alleging he had failed to file income tax returns for the years 2002 through 2007. The board alleged that Lustgraaf‘s failure to file the returns violated Iowa Rules of Professional Conduct
The board contends Lustgraaf‘s failure to file tax returns violated
At the disciplinary hearing, Lustgraaf testified he had innocently and mistakenly believed that he had insufficient income to require the filing of the returns. He testified he was unaware of the requirement to file a return when self-employment income exceeds $400.3
Lustgraaf also presented the testimony of a certified public accountant from whom he had sought tax advice since 1996. This witness testified that he prepared tax returns for Lustgraaf in the years preceding Lustgraaf‘s law school years, but did not prepare any returns while Lustgraaf attended law school because Lustgraaf did not have any income during that time. The witness testified that, in each year subsequent to Lustgraaf‘s graduation from law school, Lustgraaf came to the witness‘s office to talk about Lustgraaf‘s income tax situation. On these occasions, the accountant would ask Lustgraaf whether Lustgraaf was “going to have a tax liability.” Lustgraaf always responded that he “put out more money than [he] took in,” and the accountant “never got into specifics on those years.” The accountant testified that, if he had thought Lustgraaf was required to file income tax returns in the years in question, he would have told Lustgraaf to file.
By the time of the hearing, Lustgraaf had filed all tax returns and paid all required taxes. These returns showed that, in 2004, Lustgraaf‘s adjusted gross income was negative $6757. Although he owed no income taxes, he owed the federal government $2 in self-employment tax. Lustgraaf received a refund from the state of $16 in tax year 2004. In 2005, Lustgraaf‘s adjusted gross income was negative $23,833. He owed the federal government $93 in self-employment taxes and received a refund of $12 from the state. In 2006, Lustgraaf‘s federal adjusted gross income was negative $21,571. He owed no income
Lustgraaf was not charged with any criminal conduct by any governmental entity. He has no prior record of discipline, and two local attorneys testified that Lustgraaf had a good reputation in the legal community of Council Bluffs. Lustgraaf also presented evidence of significant pro bono work. It appears he fully cooperated with the disciplinary authorities and did not attempt to shift the blame for his conduct to anyone else.
The commission found that Lustgraaf had not intended to defraud the government when he failed to file tax returns and that he “incorrectly assumed that he did not need to file income tax returns for the years 2004 through 2007.” Upon our review of the record and giving particular weight to the commission‘s assessments of the witnesses’ credibility, we agree. See Iowa Supreme Ct. Att‘y Disciplinary Bd. v. Marzen, 779 N.W.2d 757, 759 (Iowa 2010) (noting court gives particular weight to the commission‘s credibility findings although court is not bound by them). While it is true one is presumed to know the law, as a factual matter, Lustgraaf mistakenly believed he had no obligation to file tax returns during the years in question. Lustgraaf‘s conduct was certainly careless, but we conclude it was not fraudulent.
III. Ethical Violations.
A. Rule 32:8.4(b): Criminal Conduct. Rule
B. Rule 32:8.4(c): Misrepresentation. We have stated that a lawyer makes a misrepresentation in violation of our ethical rules when his income exceeds the sums requiring the filing of a tax return and he fails to file a return. Id. at 795; Iowa Supreme Ct. Att‘y Disciplinary Bd. v. Iversen, 723 N.W.2d 806, 810 (Iowa 2006). In the cases in which we have found the existence of a misrepresentation,
In the instant action, however, the board did not allege or present any evidence that Lustgraaf‘s failure to file the returns was willful, done with an intent to defraud, or otherwise deceitful. Nor did the board present evidence that Lustgraaf made any false statements in connection with his failure to file tax returns. Lustgraaf mistakenly believed he was not required to file returns, making his failure to file negligent. We hold this evidence does not support a finding that Lustgraaf engaged in misrepresentation, and therefore, the board failed to prove that Lustgraaf violated rule
C. Rule 32:8.4(d): Conduct Prejudicial to the Administration of Justice. We hold that Lustgraaf‘s mistaken belief that he was not required to file tax returns does not constitute conduct prejudicial to the administration of justice. “Whether conduct is prejudicial to the administration of justice is not subject to a precise test.” Iowa Supreme Ct. Att‘y Disciplinary Bd. v. Monroe, 784 N.W.2d 784, 788 (Iowa 2010) (quoting Iowa Supreme Ct. Att‘y Disciplinary Bd. v. Buchanan, 757 N.W.2d 251, 255 (Iowa 2008)). “Generally, acts that have been deemed prejudicial to the administration of justice have ‘hampered the efficient and proper operation of the courts or of ancillary systems upon which the courts rely.‘” Iowa Supreme Ct. Att‘y Disciplinary Bd. v. Borth, 728 N.W.2d 205, 211 (Iowa 2007) (quoting Iowa Supreme Ct. Bd. of Prof‘l Ethics & Conduct v. Steffes, 588 N.W.2d 121, 123 (Iowa 1999)); accord Monroe, 784 N.W.2d at 788. “Examples of conduct prejudicial to the administration of justice include paying an adverse expert witness for information regarding an opponent‘s case preparation, demanding a release in a civil action as a condition of dismissing criminal charges, and knowingly making false or reckless charges against a judicial officer.” Iowa Supreme Ct. Att‘y Disciplinary Bd. v. Templeton, 784 N.W.2d 761, 768 (Iowa 2010). The mere commission of a criminal act will not constitute a violation of rule
The record does not establish that Lustgraaf‘s failure to file his personal income tax returns prejudiced the administration of justice. There was no evidence Lustgraaf‘s actions affected any particular court proceeding or any ancillary system supportive of any court proceeding. Consequently, Lustgraaf‘s behavior, even if criminal, is not the sort of conduct that prejudices the administration of justice within the meaning of rule
IV. Sanctions.
“There is no standard sanction for a particular type of misconduct,
“we consider the nature of the violations, the attorney‘s fitness to continue in the practice of law, the protection of society from those unfit to practice law, the need to uphold public confidence in the justice system, deterrence, maintenance of the reputation of the bar as a whole, and any aggravating or mitigating circumstances.”
Casey, 761 N.W.2d at 61 (quoting Iowa Supreme Ct. Att‘y Disciplinary Bd. v. Ireland, 748 N.W.2d 498, 502 (Iowa 2008)); accord Wagner, 768 N.W.2d at 287.
In prior reported disciplinary cases involving failure to file tax returns, we have imposed suspensions ranging from sixty days to three years.4 Iversen, 723 N.W.2d at 810; Iowa Supreme Ct. Bd. of Prof‘l Ethics & Conduct v. Doughty, 588 N.W.2d 119, 120 (Iowa 1999) (citing cases); Comm. on Prof‘l Ethics & Conduct v. Crawford, 351 N.W.2d 530, 531-32 (Iowa 1984) (citing cases). In our prior cases imposing a suspension for failing to file tax returns, the attorney engaged in a willful failure to file, a fraudulent practice, or other more serious misconduct involving issues of dishonesty. See, e.g., Iversen, 723 N.W.2d at 809 (noting attorney had pled guilty to crime of fraudulent practice in the second degree); Iowa Supreme Ct. Bd. of Prof‘l Ethics & Conduct v. O‘Brien, 690 N.W.2d 57, 57 (Iowa 2004) (stating respondent had been convicted of fraudulent practices in the third degree); Humphreys, 524 N.W.2d at 397 (noting respondent had been convicted of willful tax evasion); Clauss, 445 N.W.2d at 760 (stating attorney had falsely stated on client security questionnaires that he had filed his tax returns); Crawford, 351 N.W.2d at 532 (rejecting commission‘s finding that respondent‘s failure to file was negligent, holding instead that attorney‘s conduct was willful). An element of dishonesty is lacking in the instant action in which the board proved only Lustgraaf‘s negligence. Lustgraaf‘s less culpable state of mind in failing to comply with the requirement to file income tax returns is a significant distinguishing fact from our prior cases.
In addition to the fact that Lustgraaf‘s conduct did not involve an element of dishonesty, other mitigating factors are present. Lustgraaf has a good reputation in the legal community of Council Bluffs and has performed pro bono work. See Monroe, 784 N.W.2d at 791 (viewing pro bono work as a mitigating factor); Iversen, 723 N.W.2d at 811 (considering as mitigating factor that respondent was well respected in legal community). He has no prior record of discipline. See Monroe, 784 N.W.2d at 791 (noting respondent‘s prior ethical practice in determining appropriate sanction); Iversen, 723 N.W.2d at 811 (noting absence of prior ethical infractions as a mitigating circumstance).
Because Lustgraaf‘s misconduct is qualitatively less severe than the misconduct of the attorneys in our prior cases dealing with a failure to file tax returns, we conclude that the imposition of a suspension is not warranted here. See generally Iversen, 723 N.W.2d at 810 (noting sanctions are adapted “to the unique facts of each case“). Nevertheless, discipline is necessary to deter lawyers from similar misconduct. Therefore, we concur in the commission‘s recommendation that a public reprimand be issued.
V. Disposition.
We publicly reprimand Thomas E. Lustgraaf for his ethical violations and tax the costs of this proceeding against him.
ATTORNEY REPRIMANDED.