Charles Behm has been a lawyer in this state since 1999. He is currently suspended from the practice of law as a result of professional misconduct in another Bar discipline case. 1 The referee in this case recommends that Behm be found guilty of professional misconduct related to trust account violations and failure to file income tax returns since the time he became a lawyer. 2
As a lawyer admitted to the practice of law by this Court, Behm earned money from the practice of law. Behm asserts, however, that he is not required to pay federal income taxes because “his time was his life capital and, in practicing law, he was trading his life capital for an hourly fee, both of equal value.” This argument is devoid of merit and lacks any basis in established law.
With regard to Behm’s failure to file income tax returns from 1999 to the present, our recent admonition in another bar discipline case resounds here: “No doubt there are millions of Americans who would prefer not to have to deal with filing and paying their federal income taxes each April, but have no choice under the law. As guardians of the law, lawyers have a special obligation to honor the law themselves, including the tax laws.”
Fla. Bar v. Del Pino,
We approve the referee’s recommendations of guilt but disapprove the recommendation of a six-month suspension because it is far too lenient. Behm’s continuing disregard for the laws requiring the filing of federal income tax returns, his refusal to pay federal income taxes on money he has earned in his law practice since 1999, and his avowed
FACTS
In April 2007, the Florida Bar filed a two-count complaint with the Court, alleging that Behm engaged in unethical conduct. The first count of the complaint alleged that Behm failed to prepare and maintain certain required trust account records. The second count alleged that Behm failed to file federal income tax returns and to pay federal income taxes from 1999 to 2006, despite having taxable income exceeding the threshold amount triggering the legal obligation to file. Following a lengthy procedural course, the referee submitted the amended report in March 2009, which is currently under consideration. 3 In the amended report, the referee found that the following facts had been proven by clear and convincing evidence.
As to Count I (trust account records), the Bar served Behm with a subpoena duces tecum on August 24, 2004, for the production of any and all trust account records, including but not limited to: deposit slips, checkbooks, canceled checks, check stubs, ledger cards, journals, closing statements, bank statements and reconciliations, monthly comparisons, fee agreements, and documentary evidence supporting all trust disbursements for the period October 1, 2001, to April 30, 2003. Following an audit of Behm’s trust account records, the Bar’s Chief Auditor, Clark Pearson, concluded that Behm’s records were not in substantial compliance with the rules regulating trust accounts.
The records that were missing included: (1) separate cash receipts and disbursements journals, bank reconciliations, and monthly comparisons; (2) a number of client ledger cards detailing each deposit and disbursement, as well as the payee and check number for the checks and the reason for which all trust funds were received, disbursed, or transferred; and (3) duplicate bank deposit slips for his trust account. Further, Behm’s trust account was not properly identified as a “trust account.” 4 However, there was no evidence that Behm misappropriated client funds.
With regard to Behm’s proven trust account conduct, the referee recommends
As to Count II (taxes), the referee found that Behm failed to file personal or business income tax returns or to pay taxes on earned income from 1999 to 2006. Although Behm has not been charged with or convicted of a crime, his failure to file and pay taxes was unlawful.
Behm became a member of the Bar in 1999 and went to work for the State Attorney’s Office. Prior to becoming a member of The Florida Bar in 1999, Behm was an officer in the United States Navy and regularly filed and paid federal income taxes.
Behm opened his own law office in or around 2000. From that time to the present, he has run his law office as a sole proprietorship, never as a professional corporation or limited liability company. From 1999 to the present, Behm received at least $400 per year in legal tender or in-kind remuneration for his legal services.
The Bar’s expert witness, Clark Pearson, testified that any self-employed person who earned at least $400 annually was legally obligated to file a federal income tax return pursuant to the Internal Revenue Code. See also I.R.C. § 1402(b)(2) (2006). He further testified concerning the amount of money deposited into Behm’s operating account during several of those years (from July 81, 2004, to July 31, 2007, Behm deposited $426,926.28 into his business operating account, a monthly average of $11,538.55) and that the amounts would have been enough to legally obligate Behm to pay taxes in those years.
The Bar also introduced evidence that in a deposition taken on August 23, 2003, in a North Carolina personal injury case in which Behm was the plaintiff, 5 Behm stated that the records prepared by his legal assistant indicated net earnings in his law practice of $22,400 in 2000; $37,000 in 2001; and $9,700 in 2002. Behm also received $15,000 in settlement funds in his personal injury case.
The referee also considered the trial court’s order of November 9, 2005, entered in the personal injury case, that dismissed Behm’s complaint with prejudice for failing to obey orders compelling discovery. In that order, the trial court found that Behm stated “that he had been gainfully employed and earned taxable income during the period from 1998 through 2004 and that he had (1) not filed any tax returns with any state or federal agency and (2)
In the Bar disciplinary proceedings, Behm testified that he had not filed federal income tax returns since 1999. Thus, Behm did not file either personal or business federal income tax returns from 1999 through 2006. Furthermore, Behm did not pay federal income taxes for that same period, either personal or business.
The referee found: “In mitigation, [Behm] argued that he has a good faith belief that he is not obligated to file federal tax returns or pay taxes.” The referee further found that although Behm has been personally compensated for his legal services, Behm argued that he has not received income as defined by the United States Supreme Court’s current definition of income. Behm claimed the federal tax system is mandatory for some people, but not for others. Behm maintained that the Bar expects him to testify against himself in a quasi-administrative arena (the disciplinary proceedings) about issues that could reasonably result in criminal prosecution. The referee expressly found the Bar’s expert’s testimony credible and accepted his opinions that Behm was legally obligated to file federal income tax returns and to pay federal income taxes for the years at issue.
With regard to Behm’s proven tax conduct, the referee recommended that Behm be found guilty of violating rules 3-4.3 (committing any act that is unlawful or contrary to honesty and justice) and 4-8.4(c) (engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation).
The referee found three aggravating factors applicable in this case: (1) a prior disciplinary offense; 6 (2) a refusal to acknowledge the wrongful nature of his conduct (Behm maintains that the current form of federal taxation in the United States is unconstitutional despite established law to the contrary); and (3) substantial experience in the practice of law. The referee found three mitigating factors: (1) the absence of a dishonest motive (the referee noted his belief that Behm is an honest person who made some bad choices); (2) personal or emotional problems (based on the fact that multiple members of Behm’s family were killed in a traffic accident in which Behm was also involved); and (3) physical or mental disability or impairment (based on the fact that Behm sustained multiple injuries in a traffic accident in late 2001).
The referee recommended that Behm be suspended for ninety days for his trust account violations and ninety-one days, followed by two years of probation (to run consecutively) for his tax misconduct and ordered Behm to pay the Bar’s costs. Behm petitioned for review.
ANALYSIS
Initially, we note that all of Behm’s arguments on review address the tax conduct. We approve the referee’s findings of fact and recommendations of guilt as to the trust account violations without further discussion.
The North Carolina Trial Court Order
The Court reviews a referee’s actions regarding admissibility of evidence in Bar discipline cases for an abuse of discretion.
Fla. Bar v. Tobkin,
The referee properly admitted the order into evidence and considered it in making his findings. “Because Bar disciplinary proceedings are quasi-judicial rather than civil or criminal, the referee is not bound by technical rules of evidence.” Id. Thus, “a referee has wide latitude to admit or exclude evidence, and may consider any relevant evidence, including hearsay and the trial transcript or judgment in a civil proceeding.” Id. (citations omitted).
Behm objected to the fact that the order referred to his earnings as “income.” However, the order was not the only evidence that Behm had earnings that constituted “income.” Pearson’s expert testimony, Behm’s financial records, and Behm’s own testimony established that Behm earned money during the relevant period above the threshold amount that triggered a duty to file income tax returns. Thus, even if the order had been excluded, there would have been competent, substantial evidence that Behm earned enough money during the relevant time period to require him to file returns and pay taxes.
Pearson’s Expert Testimony
Behm contends that the referee should not have relied on the Bar’s expert’s testimony because the expert witness, Clark Pearson, admitted he was unfamiliar with certain United States Supreme Court cases that allegedly support Behm’s position. This argument is mer-itless. Pearson was not offered as a legal expert. As the Bar’s Chief Auditor, his expertise is in accounting, and his testimony was limited to his review of Behm’s records from which he was able to express an opinion as to the amount of income Behm received as a lawyer and whether the amounts were sufficient to trigger an obligation to file federal income tax returns. In any event, Behm waived any objection to the referee’s acceptance of Pearson as an expert by failing to object to his designation as such or to any of his testimony.
Behm’s Taxable Income
There is competent, substantial record evidence that Behm was required to file federal income tax returns and that he had taxable income for the tax years 1999 to 2006. The referee’s findings are, first of all, supported by Behm’s own admissions. Prior to trial, Behm stipulated, on the record, that he had not filed federal
Behm’s dispute is not with whether he received money from the practice of law but whether the money constituted “income” for purposes of filing federal income tax returns. According to Behm, he derived no net gain from the practice of law because his time was his life capital and, in practicing law, he was trading his life capital for an hourly fee, both of equal value. Thus, he realized no profit or net income from these transactions.
Critically, Behm cites no case or other authoritative source that supports, even tangentially, his primary proposition — that his earnings did not constitute taxable income because the earnings he received in exchange for billable hours resulted in no gain. He ignores numerous United States Supreme Court opinions, more recent than the cases on which he purportedly relies, that address what constitutes “income.”
The money Behm earned from the practice of law clearly falls within the definition of “income.” For example, in
Commissioner v. Glenshaw Glass Co.,
The money derived by Behm from his practice of law clearly satisfies this definition of “gross income.” Further, the current-day Internal Revenue Code provision defining “gross income” defines it to include “all income from whatever source derived,” including, but not limited to, “(1) [c]ompensation for services, including fees, commissions, fringe benefits, and similar items;” and “(2) [gjross income derived from business.” I.R.C. § 61 (2006). Clearly, he, like every lawyer in this state who enjoys the privilege of practicing law, earns income when he provides legal services to clients and receives compensation
Behm’s “Good Faith” Belief
Behm asserts that the referee found that he held a “good faith” belief that he was not required to pay income tax or file a federal income tax return. We begin by noting what the referee in fact found: “In mitigation, [Behm] argued that he has a good faith belief that he is not obligated to file federal tax returns or pay taxes.” This is not the same as a finding that Behm actually had a good faith belief, as argued by Behm. Rather, it is a finding that Behm made this argument before the referee.
As to Behm’s good faith belief that he is not required to pay income taxes, he argues in his initial brief that “time has value and time expended is capital that is not recoverable.” There is no support for this time-as-life-capital argument. None of the cases he cites make any statements to this
In fact, Behm’s arguments have been expressly rejected and labeled “frivolous” by the federal courts. In
Hyslep v. United States,
One of the cases cited by the Eleventh Circuit Court of Appeals in
Hyslep
is
Lonsdale v. Commissioner,
Appellants’ contentions are stale ones, long settled against them. As such they are frivolous. Bending over backwards, in indulgence of appellants’ pro se status, we today forbear the sanction of Rule 38, Fed.RApp.P. We publish this opinion as notice to future litigants that the continued advancing of these long-defunct arguments invites such sanctions, however.
Id.
(emphasis added);
see also Lonsdale v. United States,
Hyslep and Lonsdale were both decided well before Behm stopped filing returns and paying income taxes. As a member of the Bar trained in legal research, Behm could have and should have researched the law in this area rather than adopting unsupported and discredited theories.
Behm’s argument that he may “refuse to comply with an obligation imposed by law upon a good faith belief that no valid obligation exists” without violating rule 4-8.4 has its limits. Where the claim asserted has been decisively rejected by the courts, the attorney can no longer maintain that his assertion of the claim is made in good faith and is not frivolous. In
Florida Bar v. Committe,
Neither the Bar nor this Court wishes to stifle innovative claims by attorneys. Nevertheless, under the rules of professional conduct, the pursuit of imaginative claims is not without limit. The standard embodied in rule 4-3.1, requiring a good-faith argument for the extension, modification, or reversal of existing law, is broad enough to encompass thosecases where the claims are the result of innovative theories rather than, as here, an obsessive attempt to relitigate an issue that has failed decisively numerous times. The federal court in this case specifically found this claim to be frivolous and malicious.
Id.
at 747 (quoting
Fla. Bar v. Richardson,
Finally, the Internal Revenue Code contains provisions that allow a taxpayer who disputes his legal obligation to file or pay taxes to do so through alternate means. See, e.g., I.R.C. §§ 6401-6404, 7422 (2006 & Supp.2007). To the extent Behm truly believed that the money he earned through the practice of law was not income, he could have used these alternate procedures to obtain a definitive ruling.
Accordingly, we reject Behm’s argument that he cannot be found guilty of violating the Rules Regulating the Florida Bar because he has or had a good faith belief that he was not obligated to file federal tax returns or pay federal income taxes.
The Recommendations of Guilt
In this case, the referee recommends that Behm be found guilty of violating rules 3-4.3 and 4-8.4(c). Rule 3-4.3 provides, in pertinent part, that the “commission by a lawyer of any act that is unlawful or contrary to honesty and justice, whether the act is committed in the course of the attorney’s relations as an attorney or otherwise, whether committed within or outside the state of Florida, and whether or not the act is a felony or misdemeanor, may constitute a cause for discipline.” (Emphasis added.) Rule 4-8.4(c) prohibits an attorney from “engaging] in conduct involving dishonesty, fraud, deceit, or misrepresentation.” (Emphasis added.)
The recommendations of guilt are adequately supported by the referee’s findings in this case. The referee expressly found that Behm’s failure to file either personal or business federal income tax returns from 1999 through 2006 was unlawful and that his failure to pay federal income taxes, either personal or business, was unlawful. The referee noted that Behm “has not been charged with any crime relating to his failure to pay income taxes or to file income tax returns,” but that his failures to file and pay were nevertheless “unlawful.” The fact that Behm was not charged or prosecuted for his conduct is not inconsistent with the referee’s finding that Behm’s conduct was unlawful and his recommendations that Behm be found guilty of violating rules 3-4.3 and 4-8.4(c).
We reject Behm’s argument that he cannot be prosecuted by The Florida Bar for violations of the Rules Regulating the Florida Bar because he has not been prosecuted criminally for tax fraud or evasion. Rule 3^4.4 expressly allows the Bar to initiate disciplinary action “regardless of whether the respondent has been tried, acquitted, or convicted in a court for the alleged criminal offense.” This language makes it clear that a disciplinary violation premised on a violation of law is separate from the initiation or outcome of criminal proceedings based on the same conduct.
Behm’s argument that he cannot be found to have violated the rules at issue without an express finding of intent is also without merit. While this Court has held that “in order to sustain a violation of rule 4-8.4(c), the Bar must prove intent,” this Court has also stated that the intent ele
There is no question that Behm deliberately and knowingly decided not to file income tax returns or to pay income taxes during the years in question. This is sufficient to satisfy the intent element of these rules.
The Sanction
Neither Behm nor the Bar petitioned for review of the referee’s recommended sanction.
10
However, in reviewing a referee’s recommended discipline, this Court’s scope of review is broader than that afforded to the referee’s findings of fact because ultimately it is this Court’s responsibility to order the appropriate sanction.
See Fla. Bar v. Anderson,
After reviewing the record in this case, the referee’s report, and the briefs before this Court, the Court determined that the recommended sanction of what would amount to a six-month suspension appeared too lenient and, accordingly, requested responses from both Behm and the Bar as to whether the sanction imposed against Behm should be significantly increased up to and including disbarment. Because of the seriousness of the misconduct, the Court scheduled oral argument, specifically directing Behm to appear. The Court issued a second order to show cause after oral argument, directing the Bar and Behm to show cause as to why Behm should not be permanently disbarred. In deciding the appropriate sanction in this case, we have considered all responses filed by the Bar and Behm.
“[A]s a starting point, we look to the Florida Standards for Imposing Lawyer Sanctions.... This Court must also review existing case law to determine whether there is a basis for the recommended discipline.”
Brown,
We have also reviewed our prior cases involving failure to file income tax returns. In
Florida Bar v. Del Pino,
the most recent case with a somewhat similar fact pattern, we imposed a three-year suspension on a respondent who was convicted of two felonies.
Here, Behm has engaged in a lengthy course of conduct to impede and obstruct the collection of income taxes on his own income, for his own personal gain. In this instance, however, our prior cases sanctioning lawyers for failing to file income tax returns or to pay income taxes provide only limited guidance because we are, for the first time, presented with a lawyer who declared at oral argument before this Court that he fully intends to maintain his current course of conduct, i.e., he will continue to not file federal income tax returns and to not pay federal income taxes on money he earns in his law practice, apparently until someone shows him a more definitive law or United States Supreme Court opinion that disabuses him of his faulty beliefs. 11 Such a stance is anathema to an attorney’s ethical obligation to respect and obey the law.
In fact, in his response to the Court’s order for additional briefing on the appropriate sanction for the misconduct, Behm stated:
Lawyers are sworn to protect the Constitution and to uphold the law. Any ethical lawyer is obligated to question that which appears to be a transgression of the law, the misapplication of a law,or the lack of liability for a duty presumed imposed under a law. A lawyer has an ethical obligation to assist in improving the legal system. Thus, a lawyer has not only a right, but a duty to advocate and advance arguments of law that are unique or unconventional so long as there is a reasonable basis for the argument. Behm has done just this. He has cited to specific sections of the Internal Revenue Code and to United States Supreme Court cases that have never been overturned or modified to show that Behm’s position has both a reasonable and a very sound basis in the law.
However, the state of the law in this area could not, in our opinion, be any clearer. It is completely unacceptable for a member of The Florida Bar to continue to assert legal theories that have been repeatedly rejected and discredited and to use them as an excuse for engaging in unlawful conduct. 12
While a lawyer, on behalf of a client or even on his own behalf, may raise any legal argument that he deems supported by law, he may not use his own unsupported interpretation of the laws to place himself above the law. We view Behm’s actions to be a violation of his basic ethical obligation as a lawyer and his intentional actions to be flagrant violations of the Rules Regulating the Florida Bar.
We have considered whether there is any mitigation that would alter our decision as to a sanction. The referee found that Behm had “personal or emotional problems” based on the fact that multiple members of Behm’s family were killed in a traffic accident in which Behm was also involved. The referee also found “physical disability or impairment” based on the fact that Behm sustained multiple injuries in this traffic accident. In reviewing the basis for these findings in the record, we note that Behm included a transcript in his appendix to one of his briefs from the personal injury case in which he mentions that he had to bury his family. He introduced the letter/affidavit of a physician stating that he was treating Behm for depression. There was no testimony by Behm correlating his losses from this traffic accident to his tax behavior. We do not consider this mitigation evidence (which Behm does not even argue on review) sufficient to alter our assessment of the severity of the misconduct in this case.
Furthermore, in determining a proper sanction, the Court also takes the three purposes of lawyer discipline into consideration.
First, the judgment must be fair to society, both in terms of protecting the public from unethical conduct and at the same time not denying the public the services of a qualified lawyer as a result of undue harshness in imposing penalty. Second, the judgment must be fair to the respondent, being sufficient to punish a breach of ethics and at the same time encourage reformation and rehabilitation. Third, the judgment must be severe enough to deter others who might be prone or tempted to become involved in like violations.
Fla. Bar v. Barrett,
Behm began his practice as a lawyer as an Assistant State Attorney and from that
In the case currently under consideration, he has openly declared his intention at oral argument to persist in refusing to file income tax returns “[u]nless the law changes or unless someone can show me a law that makes me clearly liable for income tax, for federal income tax.” See supra note 11. By his own voluntary actions, Behm has forfeited his privilege to practice law.
The only appropriate sanction under these circumstances — cumulative misconduct and a persistent course of unrepentant misconduct — is permanent disbarment from the practice of law.
CONCLUSION
We approve the referee’s findings of fact and recommendations of guilt. We disapprove the recommendations of sanction and, instead, permanently disbar Charles Behm from the practice of law in Florida. As Behm is currently suspended from the practice of law in Florida, the permanent disbarment will be effective from the date of this opinion.
Judgment is entered for The Florida Bar, 651 East Jefferson Street, Tallahassee, Florida 32399-2300, for recovery of costs from Charles Behm in the amount of $21,086.74, for which sum let execution issue. 13
It is so ordered.
Notes
. In
Florida Bar v. Behm,
. We have jurisdiction under article V, section 15, of the Florida Constitution, which provides that the "supreme court shall have exclusive jurisdiction to regulate the admission of persons to the practice of law and the discipline of persons admitted.”
. The Court rejected a stipulated consent judgment calling for a ninety-day suspension and remanded to the referee for further proceedings. After the referee filed the amended report, the Court issued an order scheduling oral argument and directing the Bar and Behm to brief the issue of the Court's authority to impose a sanction in excess of the sanction recommended by the referee, up to and including disbarment. Oral argument was held on February 11, 2010.
Subsequent to oral argument, the Court issued a second order to show cause, which directed the Bar and Behm to show cause as to why Behm should not be permanently disbarred. The Bar and Behm filed responses, which we have considered in our decision as to the sanction to be imposed.
. Behm's checks were labeled "Charles Behm, Attorney at Law, I.O.T.A.” The I.O.T.A. designation was insufficient to satisfy the requirement of rule 5-1.2(b)(1) that a lawyer maintain a separate account or accounts in the name of the lawyer or law firm and clearly labeled and designated as a "trust account.”
. The proceeding was Case No. 05-CVS-721 in the General Court of Justice, Superior Court Division, Cabarrus County, North Carolina, and was filed against the Estate of Calvin E. Hutson and Connie M. Hutson and the Estate of Kelli Norwood and Diann Elizabeth Norwood.
. Behm was publicly reprimanded in
Florida Bar
v.
Behm,
. Eisner is one of the cases relied on by Behm.
. Behm relies on
Doyle v. Mitchell Brothers Co.,
The other case Behm greatly relies upon,
Eisner v. Macomber,
Behm cites to
United States v. Merriam,
The other cases cited by Behm are also unsupportive of his argument. The case of
United States v. Calamaro,
. This is essentially the same as Behm's time-as-life-capital argument.
. Behm did not directly address the recommendations of discipline. Rather, Behm implicitly argued that the Bar failed to prove its case and, therefore, no sanction should be imposed.
. On rebuttal, the Court asked Behm to stand and tell the Court whether he intended to file income tax returns or to persist in not doing so. Behm stood and the following colloquy occurred:
Behm: Your Honor, your Honors, I intend to follow the law as it applies to me. I would like somebody to show me where there is a law that makes me liable to pay a federal income tax. I would like somebody to show me where there is a law that makes me file an income tax absent—
The Court: So you are, basically, sir, are you representing to this Court that based on your interpretation of the Internal Revenue Code, you will not be paying income taxes? Behm: No, ma’am. Based upon my, based upon the interpretation of the U.S. Supreme Court and U.S. Supreme Court cases, and the Internal Revenue Code—
The Court: That you will not be paying income taxes—
Behm: — Unless the law changes or unless someone can show me a law that makes me clearly liable for income tax, for federal income tax, then I am going to pursue the course of action I have up 'til now.
. We hereby direct the Clerk of this Court to provide a copy of our opinion to the United States Attorney’s Office in the appropriate district.
. This includes the amount recommended by the referee and an additional $328.26 that was incurred by Bar counsel to participate in oral argument.