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In re Disciplinary Proceedings Against Marchan

Supreme Court of Wisconsin

April 10, 2018

In the Matter of Disciplinary Proceedings Against Karene S. Marchan, Attorney at Law:
Karene S. Marchan, Respondent. Office of Lawyer Regulation, Complainant,


          PER CURIAM.

         ATTORNEY disciplinary proceeding. Attorney's license suspended.

         ¶1 We review a report and recommendation of Referee James J. Winiarski approving a stipulation filed by the Office of Lawyer Regulation (OLR) and Attorney Karene S. Marchan. In the stipulation, Attorney Marchan stipulated to the facts underlying the eight counts of misconduct alleged in the OLR's complaint and joined the OLR in jointly recommending a six-month suspension of her Wisconsin law license. The referee agreed that a six-month suspension was appropriate.

         ¶2 Upon careful review of the matter, we uphold the referee's findings of fact and conclusions of law and agree that a six-month suspension is an appropriate sanction for Attorney Marchan's misconduct. We also find it appropriate to impose the full costs of this proceeding, which are $6, 953.07 as of January 19, 2018, on Attorney Marchan. Since Attorney Marchan has already made restitution to her client, the OLR does not seek restitution and we do not impose it.

         ¶3 Attorney Marchan was admitted to practice law in Wisconsin in 1996. The most recent address furnished by Attorney Marchan to the State Bar of Wisconsin is in Oak Creek, Wisconsin. Attorney Marchan has no prior disciplinary history.

         ¶4 Attorney Marchan's law license was suspended, effective March 7, 2016, due to her willful failure to cooperate in the OLR's grievance investigation that formed the basis for this disciplinary proceeding. Her license has also been administratively suspended since October 2016 for failure to pay State Bar dues and failure to file an OLR trust account certificate.

         ¶5 On December 13, 2016, the OLR filed a complaint against Attorney Marchan alleging eight counts of misconduct. Attorney Marchan did not file an answer to the complaint, and the OLR moved for default judgment. The referee was appointed on March 22, 2017. Attorney Marchan did appear at a telephonic scheduling conference in April 2017, and she subsequently filed a response and affirmative defenses in May 2017.

         ¶6 On August 24, 2017, the parties filed a stipulation whereby Attorney Marchan withdrew her response and affirmative defenses and pled no contest to all eight counts of misconduct set forth in the OLR's complaint. Attorney Marchan agreed that the referee could use the allegations of the complaint as an adequate factual basis in the record for a determination of misconduct as to each of the eight counts.

         ¶7 In its complaint, the OLR had sought a nine-month suspension of Attorney Marchan's law license and had also sought an order requiring her to pay restitution to her client in the amount of $76, 730.56. The stipulation noted that since the filing of the OLR's complaint, Attorney Marchan had voluntarily made full restitution to the client. The OLR deemed Attorney Marchan's voluntary payment of the full amount as a substantial mitigating factor in assessing the appropriate level of discipline. Accordingly, the OLR director modified his sanction recommendation and sought an order suspending Attorney Marchan's law license for six months.

         ¶8 The stipulation averred that it was not the result of plea bargaining. Attorney Marchan verified that she fully understood the misconduct allegations to which she stipulated; fully understood her right to contest the matter; fully understood the ramifications of her entry into the stipulation; fully understood that she had the right to consult counsel; and stated that her entry into the stipulation was made knowingly and voluntarily. The referee agreed that a six-month suspension was an appropriate sanction for Attorney Marchan's misconduct.

         ¶9 The misconduct alleged in the OLR's complaint arose out of Attorney Marchan's representation of S.C. S.C. was acquainted socially with Attorney Marchan. S.C. hired Attorney Marchan in July 2014 to substitute as her counsel in a divorce pending in Milwaukee County circuit court. The divorce was contentious with allegations of marital waste on both sides, and it had been pending for two years. Attorney Demetra Christopoulos represented S.C.'s husband from May 2013 through the conclusion of the case. The Honorable Marshall B. Murray was the assigned judge.

         ¶10 Attorney Marchan did not have a law office, and she met with S.C. either at S.C.'s home or in parks. Attorney Marchan was apparently attorney of record in only one other matter pending in the Wisconsin court system at the time she represented S.C.

         ¶11 S.C. believed that she signed a fee agreement providing that Attorney Marchan would be paid at the conclusion of the divorce, but S.C. was unable to locate a copy of the agreement. Invoices prepared by Attorney Marchan charged her time at $200 per hour.

         ¶12 At the time Attorney Marchan substituted as counsel for S.C, S.C.'s prior attorney was holding over $162, 000 in trust from the sale of a farm owned by the parties. Each party had received half of the proceeds to be held in trust by their respective counsel until the conclusion of the divorce. S.C.'s prior attorney transferred the funds she was holding to Attorney Marchan on July 28, 2014. Attorney Marchan opened a trust account at PNC Bank and deposited S.C.'s funds into that account. No other client funds were deposited in the account after S.C.'s funds were placed there.

         ¶13 At a pretrial conference on July 23, 2014, Judge Murray issued an order setting a contested hearing date of December 1, 2014. The order also set dates for the completion of discovery. Judge Murray allowed each of the parties to remove $12, 000 from the funds being held in trust for living expenses and to pay attorney fees. On July 31, 2014, Attorney Marchan made two cash withdrawals from the trust account, one in the amount of $10, 000 and one in the amount of $2, 000. Attorney Marchan represented that the $10, 000 disbursement went to S.C. and that the $2, 000 disbursement went to Attorney Marchan for fees.

         ¶14 On August 5, 2014, Attorney Christopoulos served S.C, via Attorney Marchan, with interrogatories. Attorney Marchan failed to timely respond. On September 23, 2014, Attorney Christopoulos filed a motion for contempt based on S.C. and Attorney Marchan's failure to respond to the interrogatories and to otherwise comply with the scheduling order.

         ¶15 Judge Murray conducted a contempt hearing on October 29, 2014. Attorney Christopoulos informed Judge Murray she had received some of the requested information on October 4, 2014, and that Attorney Marchan had provided some additional materials the day before the contempt hearing. Attorney Marchan told the court she had been meeting with S.C. at S.C.'s home about three days of every week from late afternoon until as late as 11:00 p.m. in an effort to prepare the information requested by Attorney Christopoulos.

         ¶16 Judge Murray declined to find S.C. in contempt and encouraged the parties to resolve the matter. He warned S.C. and Attorney Marchan that if they were not prepared to proceed to trial on the scheduled date and if they did not comply with his orders, they may lose the opportunity to present evidence.

         ¶17 S.C. subsequently told the OLR that Attorney Marchan's visits to her home were not for the purpose of discussing the divorce but instead were unscheduled social visits initiated by Attorney Marchan. S.C. told the OLR she did not need Attorney Marchan to provide her emotional support and that Attorney Marchan talked about her own marital problems during these meetings.

         ¶18 In mid-November 2014, Attorney Marchan provided Attorney Christopoulos a written proposal to divide the marital assets. The parties and counsel later met to discuss a settlement but could not reach an agreement. On November 2 6, 2014, Attorney Marchan filed a petition to have a guardian ad litem appointed for S.C. She had not discussed the appointment of a guardian ad litem with S.C.

         ¶19 On December 1, 2014, Judge Murray conducted a contested divorce hearing. He denied Attorney Marchan's petition for the appointment of a guardian ad litem for S.C. Attorney Marchan then moved to withdraw as counsel, but Judge Murray denied that motion as well. The divorce hearing lasted a full day but the case was not concluded, and Judge Murray continued the matter to March 10, 2015.

         ¶20 Attorney Marchan requested that she be allowed to disburse an additional $10, 000 from the funds she was holding in trust for payment of her attorney fees. Judge Murray did not review Attorney Marchan's billing statement but granted the request and signed an order on December 5, 2014, allowing each party to withdraw $5, 000 from funds being held in their respective trust accounts for living expenses and an additional $10, 000 for payment of ...

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