Tuesday, April 8, 2008

Too Lenient

The Wisconsin Supreme Court held that the public reprimand recommended by a referee was unduly lenient and imposed a nine-month suspension. The court accepted the conclusion that the lawyer had not violated ethics rules by failing to turn over $230,000 in co-trustee fees to his law firm. However, he had failed to report the fees as income on state and federal tax returns. As to sanction, the court looks to prior cases and concludes:

"Attorney Elverman's failure to report the trustee fees on his income tax returns falls into two separate categories, the first encompassing tax years 1999 through 2001, and the second encompassing tax years 2002 and 2003.  For the earlier years, Attorney Elverman claims that he simply forgot to report the trustee fees as income.  If those three tax years were the only ones at issue, we would be more inclined to view this as a Lex or Young situation and impose a public reprimand.  For the tax years 2002 and 2003, however, Attorney Elverman freely admits that he knew he was supposed to report the trustee fees as income but chose not to do so because of other personal financial obligations.  In addition, we note that it was not until April of 2005, after the OLR had commenced its investigation, that Attorney Elverman took the affirmative step of filing amended income tax returns for all of the years in question.  It is Attorney Elverman's post-2001 conduct, whereby he consciously chose not to report the trustee fees as income even though he knew he was supposed to do so, that takes this case outside the realm of a Lex or Young situation and moves it on the continuum toward Washington and Phillips. 

Attorney Elverman's failure to report the trustee fees as income on his tax returns is a serious failing.  In light of the seriousness of his misconduct and particularly given the fact that he knowingly failed to report the fees as income until he was under investigation by the OLR, we believe that the public reprimand recommended by the referee is too lenient.  Instead, we conclude that a nine-month suspension of Attorney Elverman's license to practice law in this state is appropriate."

(Mike Frisch)

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