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In re Disciplinary Proceedings Against Curtis

Supreme Court of Wisconsin

February 15, 2018

In the Matter of Disciplinary Proceedings Against George W. Curtis, Jr., Attorney at Law: Office of Lawyer Regulation, Complainant,
v.
George W. Curtis, Jr., Respondent.

         DISCIPLINARY PROCEEDINGS AGAINST CURTIS, JR.

         ATTORNEY disciplinary proceeding. Attorney's license suspended.

          PER CURIAM.

         ¶1 We review the report of the referee, Richard M. Esenberg, regarding the Office of Lawyer Regulation's (OLR) complaint in this matter against Attorney George W. Curtis, Jr. At all times relevant to this matter, Attorney Curtis operated the Curtis Law Office in Oshkosh, Wisconsin (hereafter, the "firm"), as a sole proprietorship. The referee recommended that Attorney Curtis be suspended for 120 days in connection with his willful failure to pay his personal income taxes for several years and for various trust account violations committed at his firm. The referee recommended the dismissal of three counts of misconduct: one related to his trust account record keeping, another related to his failure to remit employee and employer contributions to his law firm's 401(k) plan, and another related to his failure to remit payroll taxes for his firm's employees. The referee proposed that the court place certain conditions on Attorney Curtis' post-suspension practice of law, and that the court reduce the full costs of this proceeding ($16, 886.87 as of October 31, 2017) by one-quarter. The OLR did not seek the payment of restitution in these proceedings, and the referee did not recommend it.

         ¶2 Because no appeal has been filed, we review the referee's report pursuant to Supreme Court Rule (SCR) 22.17(2) . After conducting our independent review of the matter, we adopt the referee's findings of fact and conclusions of law. We agree with the referee that Attorney Curtis' license to practice law in Wisconsin should be suspended for a four-month period. We also agree with the referee that Attorney Curtis should be required to pay three-quarters of the costs of this proceeding, which will result in a cost assessment of $12, 665.15. We impose certain conditions upon the reinstatement of Attorney Curtis' license to practice law in Wisconsin. Finally, we decline to order restitution for reasons explained below.

         ¶3 Attorney Curtis was admitted to practice law in Wisconsin in 1962. His law license is currently in good standing. He has not been the subject of any previous disciplinary proceedings.

         ¶4 On August 3, 2015, the OLR filed the underlying complaint against Attorney Curtis, raising seven counts of misconduct. Count 1 concerned his willful failure to pay personal income taxes for 2007, 2008, and 2009, culminating in his federal conviction of three misdemeanor counts of failure to pay income taxes in violation of 26 U.S.C. § 7203. Count 2 concerned his failure to pay to the federal government employee payroll taxes withheld from his firm's employees' paychecks for the third and fourth quarters of 2013, and all four quarters of 2014. Counts 3 through 6 concerned various trust account problems. Count 7 concerned the administration of funds that were to have been paid into his firm's 401(k) plan.

         ¶5 Attorney Curtis answered the complaint and admitted three counts of misconduct (Counts 3, [1] 4, and 6), denied three counts of misconduct (Counts 1, 2, and 5), and pled the Fifth Amendment in response to Count 7 and its background allegations.

         ¶6 The referee held an evidentiary hearing on December 5 and 9, 2016. Both parties submitted post-hearing briefs.

         ¶7 On September 26, 2017, the referee submitted a report containing his findings of fact, conclusions of law, and a recommendation for discipline. The findings of fact and conclusions of law are summarized below.

         Willful Failure to Pay Income Tax (Count 1)

         ¶8 Count 1 concerns Attorney Curtis' willful failure to pay income taxes-a problem that was long in the making and that culminated in a conviction, following a federal district court jury trial in January 2014, on three misdemeanor counts of willfully failing to pay the taxes he owed for 2007, 2008, and 2009, in violation of 26 U.S.C. § 7203. See United States v. Curtis, 1:13-cr-00113-WCG (E.D. Wis.). The amount of unpaid tax, with interest and penalties, was $387, 233. The district court sentenced Attorney Curtis to six months in prison and one year of supervised release, both of which he has now completed. The court also ordered Attorney Curtis to pay the Internal Revenue Service (IRS) $5, 000 per month until the total tax liability for the three years was paid in full.

         ¶9 Attorney Curtis' tax difficulties began years before his conviction. In 1996 and 1997, he filed returns reporting significant tax obligations, but he made no payments toward those debts. Over the ensuing years, Attorney Curtis entered into installment payment plans with the IRS, but he did not fully comply with them; he made payments for a period of time, and then stopped. Attorney Curtis also continued to file yearly tax returns showing significant tax liabilities that he had paid nothing toward at the time of filing. Eventually the IRS ran out of patience and referred the matter for criminal investigation. His conviction followed, which Attorney Curtis appealed, unsuccessfully. See United States v. Curtis, 781 F.3d 904 (7th Cir. 2015) . The Seventh Circuit wrote that there was a "sea of . . . damning evidence demonstrating Curtis' intent" to not pay his taxes, such as the facts that:

. . . during the three charged years, Curtis had adjusted gross income of more than $1.4 million but paid none of it toward his corresponding tax liabilities of approximately $378, 000 for that same time period. Instead, he spent more than $1.1 million on personal expenses that included $142, 916 in life insurance premiums; $43, 266 for a new Lincoln Navigator luxury SUV; $17, 730 worth of wine; $32, 775 in donations and political contributions; $6, 945 on jewelry; and $10, 891 on his pets. Presented with these expenditures and a list that also included gifts, firearms, restaurants, department stores, and other purely discretionary spending, any jury would conclude that Curtis had the money to pay his taxes (at least in part) and simply chose not to.

Id. at 911.

         ¶10 The referee concluded that Attorney Curtis' longstanding failure to pay his taxes reflected adversely on his fitness as a lawyer in violation of SCR 20: 8.4(b), [2] in that it showed a disregard for his legal obligations and reflected adversely on his legal judgment and expertise.

         Failure to Remit Payroll Taxes (Count 2)

         ¶11 Count 2 concerns the undisputed fact that Attorney Curtis' firm failed to remit to the federal government the payroll taxes for his law firm's employees for the third and fourth quarters of 2013 and all of 2014. The OLR alleged that this conduct was a form of dishonesty, fraud, deceit, or misrepresentation in violation of SCR 20:8.4(c).[3]

         ¶12 The referee recommended the dismissal of this charge, citing an overall "paucity of evidence." On the one hand, the referee found that Attorney Curtis became aware, at some point, that his firm had not remitted the payroll taxes that it had withheld from its employees during part of 2013 and all of 2014. But the referee credited Attorney Curtis' testimony at the disciplinary hearing that the firm fell behind on remitting payroll taxes because the IRS's garnishment of firm accounts left him unclear as to whether the seized funds were being applied toward payroll taxes. In the referee's view, the record was too unclear to permit him to conclude that Attorney Curtis engaged in dishonesty, fraud, deceit, or misrepresentation in violation of SCR 20:8.4(c). As such, the referee recommended the dismissal of Count 2.

         Trust Account Violations (Counts 3-6)

         ¶13 These misconduct charges concern the disarrayed state of the firm's trust account. Since 1999, Attorney Curtis has been the sole partner in the firm; for many years before that, he practiced in partnership with one or more lawyers. Since 1999, Attorney Curtis was the attorney primarily responsible for supervising and managing the firm's trust account, as well as for supervising the trust account-related work of the firm's office manager, bookkeepers, and other staff.

         ¶14 As a firm largely engaged in the representation of plaintiffs, the firm would receive settlement and judgment payments and deposit these funds in a trust account, pending a determination of how the funds should be disbursed. It was Attorney Curtis' practice (and apparently that of the lawyers who oversaw the firm's trust account before Attorney Curtis began doing so) to hold in the trust account any potentially disputed portions of settlement and judgment payments (e.g., funds that could be subject to subrogation claims) pending resolution of the claims or the expiration of any applicable statute of limitations, which Attorney Curtis understood to span six years from the firm's receipt of the funds. If the claimant was not currently pursuing the claim, Attorney Curtis would advise his client to simply wait and not "wake up" the claimant by attempting to resolve the matter; that way, Attorney Curtis believed, his client might ultimately collect more money than they would have otherwise received had the claim been resolved. Because many clients followed his advice, more money was held in trust than would have been the case had these claims been resolved soon after receipt of the funds. And because the firm failed to periodically review the trust account to ensure that releasable funds were, in fact, released, the funds languished in the firm's trust account for many years.

         ¶15 This practice led to an impossibly jumbled trust account. In 2009, while converting the firm from a paper to an electronic accounting system, firm employees discovered that a substantial amount of money had been held in trust for longer than the six-year statute of limitations that Attorney Curtis believed governed them. The firm began an effort to identify and locate clients to whom these funds belonged-a task that proved difficult and, in some instances, unworkable. Some of the clients had moved. Others could not be found. Others had died, sometimes requiring that an estate be opened or reopened. There were some funds held in trust for which the client could not be identified. As a result, a substantial amount of money remained unpaid to its owners. As of April 2014, the firm trust account held a total of $1, 059, 218.09. Of that amount, at least $105, 235.59 related to cases that had been closed prior to April 2008; some funds had been held since as far back as 1978. The firm has made some progress in disbursing these funds; by April 2015, the firm disbursed $42, 865.41 of the $105, 235.59 related to cases that had been closed prior to April 2008. As of January 2015, there remained $23, 487.94 held in trust with respect to which the owners could not be identified.

         ¶16 Based on these facts and on Attorney Curtis' admissions (see n.l), the referee determined that Attorney Curtis failed to ensure the prompt notice and delivery of funds to clients and third parties, in violation of SCR 20:1.15(b), in effect between October 1, 2000 and June 30, 2004, and former SCR 20:1.15(d) (1), effective as of July 1, 2004 (Count 3).[4]

         ¶17 Based on the above facts and on Attorney Curtis' admissions in his answer, the referee determined that Attorney Curtis failed to regularly reconcile his trust account in violation of SCR 20:1.15(f)(1)g (Count 4), [5] and failed to adequately supervise his staff's management of the trust account in violation of SCR 20:5.3(a) and (b), in effect between October 1, 2000 and December 31, 2009, and SCR 20:5.3 (a) and (b), in effect as of January 1, 2010 (Count 6).[6]

         ¶18 The referee determined, however, that the OLR had not proven that Attorney Curtis failed to maintain and retain complete records of trust account funds in violation of SCR 20: 1.15(e), in effect between October 1, 2000 and June 30, 2004 and SCR 20:1.15(e) (6), in effect since July 1, 2004 (Count 5) .[7] According to the referee, the record was unclear as to whether Attorney Curtis' trust account problems were the result of a failure to keep the records required by SCR 20:1.15, or a failure to properly reconcile the records he ...


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