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In re Disciplinary Proceedings Against Rostollan

Supreme Court of Wisconsin

April 18, 2018

In the Matter of Disciplinary Proceedings Against Daniel J. Rostollan, Attorney at Law:
v.
Daniel J. Rostollan, Respondent. Office of Lawyer Regulation, Complainant,

          DISCIPLINARY PROCEEDINGS AGAINST ROSTOLLAN

         ATTORNEY disciplinary proceeding. Attorney's license suspended.

          PER CURIAM

         ¶1 We review Referee Jonathan V. Goodman's amended report recommending that this court suspend Attorney Daniel J. Rostollan's license to practice law in Wisconsin for a period of two years and direct him to pay restitution as well as the costs of this proceeding.

         ¶2 No appeal has been filed so we review the referee's report pursuant to Supreme Court Rule (SCR) 22.17(2) . After conducting an independent review of the matter, we agree that Attorney Rostollan should be deemed to have defaulted, we accept and adopt the referee's findings of fact and conclusions of law, which are based on the allegations of the complaint filed by the Office of Lawyer Regulation (OLR). We agree that Attorney Rostollan's law license should be suspended for two years and that he should be directed to pay restitution. We impose the full costs of this proceeding on Attorney Rostollan, which are $2, 663.71 as of January 30, 2018.

         ¶3 Attorney Rostollan was admitted to practice law in Wisconsin in 1983. He has not previously been disciplined. However, while this matter was pending, this court granted the OLR's request and temporarily suspended Attorney Rostollan's license to practice law for failure to cooperate in a new and separate disciplinary investigation. As of the date of this order, his license is suspended. See Office of Lawyer Regulation v. Daniel J. Rostollan, No. 2018XX173-D, unpublished order ( S.Ct. April 9, 2018) .

         ¶4 On September 30, 2016, the OLR filed a complaint against Attorney Rostollan alleging 21 counts of professional misconduct.

         ¶5 Attorney Rostollan filed an answer and asserted, inter alia, that his practice was adversely affected by depression and family issues. He also stated that he had reimbursed former client, R.W. Thereafter, however, he failed to respond to discovery requests and on June 5, 2017, the OLR moved for a default judgment. On July 11, 2017, the referee advised Attorney Rostollan that he had seven days to respond to the default motion. Attorney Rostollan did not respond.

         ¶6 On July 31, 2017, the referee issued an initial report and recommendation, recommending the court deem Attorney Rostollan to have defaulted, finding the facts as alleged in the OLR's complaint as true, and concluding that Attorney Rostollan had committed the alleged misconduct. The referee recommended we suspend Attorney Rostollan's license to practice law for two years and recommended that Attorney Rostollan be ordered to pay restitution to R.W.

         ¶7 The court identified some factual and procedural issues with the report and, on November 13, 2017, remanded the matter to the referee for additional information, with directions to file a supplemental report.

         ¶8 On remand, Attorney Rostollan indicated he wanted to participate in this proceeding. The referee conducted a hearing on December 5, 2017, at which Attorney Rostollan appeared. The referee afforded him an opportunity to respond to discovery, but Attorney Rostollan then failed to respond.

         ¶9 Accordingly, the referee filed a supplemental report on January 10, 2018, including additional information requested by this court and confirming the previous recommendation. Neither party has appealed so we consider the amended report pursuant to SCR 22.17(2).

         ¶10 We review a referee's findings of fact subject to the clearly erroneous standard. See In re Disciplinary Proceedings Against Eisenberg, 2004 WI 14, ¶5, 269 Wis.2d 43, 675 N.W.2d 747. We review the referee's conclusions of law de novo. Id. We determine the appropriate level of discipline independent of the referee's recommendation. See In re Disciplinary Proceedings Against Widule, 2003 WI 34, ¶44, 261 Wis.2d 45, 660 N.W.2d 686.

         ¶11 First, in light of Attorney Rostollan's failure to consistently appear or participate in this case, we accept the referee's finding that Attorney Rostollan's conduct was egregious such that his answer should be stricken and he should be deemed to have defaulted.

         ¶12 The referee's findings of fact are based on the allegations in the complaint. They have not been shown to be clearly erroneous, and we adopt them. We also accept the conclusions of law that flow from those findings.

         ¶13 The first nine counts of the complaint pertain to Attorney Rostollan's representation of R.W. In 2012, R.W. retained Attorney Rostollan to file a Chapter 13 bankruptcy petition on his behalf and to represent him in certain adversary claims.

         ¶14 There were a number of problems with Attorney Rostollan's representation of R.W. These included no written fee agreement or disclosures, mishandling of the bankruptcy proceeding, mishandling of trust funds, and various misrepresentations that Attorney Rostollan made to his client, the court, and the OLR.

         ¶15 On July 23, 2013, Attorney Rostollan filed the requested Chapter 13 bankruptcy petition in the Eastern District of Wisconsin. The bankruptcy court dismissed this petition, so Attorney Rostollan filed a second petition, with documents required for two related adversary proceedings. He then filed inaccurate bankruptcy schedules, and electronically affixed R.W.'s signature to these filings, potentially exposing R.W. to charges of perjury and endangering the bankruptcy matter.

         ¶16 Attorney Rostollan also informed the bankruptcy court that he had charged R.W. $4, 000 for the bankruptcy action but later acknowledged that he had charged R.W. an additional $4, 690 for related adversary actions without disclosing these additional fees to the bankruptcy court.

         ¶17 The bankruptcy court has established a presumptively reasonable fee of $4, 000 for Chapter 13 cases. If attorney fees will exceed the presumptively reasonable amount, the attorney must disclose the additional fees to the bankruptcy court. 11 U.S. Code § 329, Rule 2016(b). Additionally, it is the bankruptcy court's policy that fees in addition to a presumptively reasonable fee must be approved by the court under local Rule 20.16.

         ¶18 Meanwhile, R.W. gave Attorney Rostollan a $36, 000 check, representing life insurance proceeds that Attorney Rostollan was to hold in trust for R.W. On April 9, 2013, Attorney Rostollan deposited these funds into his trust account, yielding a balance of $36, 020.

         ¶19 Over several months, Attorney Rostollan transferred money in and out of various accounts. On April 10, 2013, Attorney Rostollan disbursed $4, 281 from his trust account to his business account, leaving $31, 719 in trust. On June 12, 2013, Attorney Rostollan disbursed $5, 000 to R.W. Between April and mid-August 2013, Attorney Rostollan transferred almost all of the remaining funds from his trust account into his business account. By May 30, 2014, Attorney Rostollan's trust account balance was $10.

         ¶20 In July 2014, Attorney Rostollan sent R.W. an accounting stating that only $1, 500 remained from the insurance proceeds and that some $36, 000 had been expended on debts, adversary claims, and legal fees. R.W. questioned this accounting.

         ¶21 In August 2014, Attorney Rostollan sent R.W. a second accounting, this time stating that $14, 784 remained in trust. Meanwhile, on August 15, 2014, Attorney Rostollan deposited $29, 407.53 belonging to another client, M.Z., into his trust account. The next day, Attorney Rostollan wrote a check to R.W. in the amount of $14, 784.24 with a memo line stating "balance from trust account." At most, $10 of those funds actually belonged to R.W. Attorney Rostollan failed to disclose his conversion of R.W.'s funds.

         ¶22 The OLR received notice of an overdraft in Attorney Rostollan's trust account and commenced an investigation. Attorney Rostollan sent the OLR fabricated and misleading trust account ledgers that omitted deposit information, internet transfers, and included non-existent disbursements, and transactions. Attorney Rostollan also made misrepresentations to the OLR orally and in writing regarding the source and use of funds in his trust account. On March 3, 2015, the OLR requested additional information from Attorney Rostollan. Attorney Rostollan failed to fully and timely respond. Eventually, this court issued an order directing Attorney Rostollan to show cause why his license should not be suspended for non-cooperation. This prompted Attorney Rostollan to respond, so the OLR withdrew its motion.

         ¶23 Based on the allegations in the complaint, the referee concluded that:

• By failing to communicate in writing to R.W. the rate and basis for all of the fees he intended to charge related to the representation, and also by failing to state in writing the purpose and effect of any advanced fee payment, Attorney Rostollan violated SCR 20:1.5(b)(1)[1] and (2)[2](Count 1);
• By failing to safeguard and hold in trust client funds, Attorney Rostollan violated SCR 20:1.15(b)(1)[3] (Count 2);
• By converting client funds to his own use or for the use of other clients, Attorney Rostollan violated SCR ...

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