Disciplinary Counsel v. Large , 122 Ohio St. 3d 35 ( 2009 )


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  • [Cite as Disciplinary Counsel v. Large, 
    122 Ohio St.3d 35
    , 
    2009-Ohio-2022
    .]
    DISCIPLINARY COUNSEL v. LARGE.
    [Cite as Disciplinary Counsel v. Large, 
    122 Ohio St.3d 35
    , 
    2009-Ohio-2022
    .]
    Attorneys at law — Misconduct — Failure to pay income taxes and report
    employee wages — One-year suspension.
    (No. 2009-0041 — Submitted February 18, 2009 — Decided May 6, 2009.)
    ON CERTIFIED REPORT by the Board of Commissioners on Grievances and
    Discipline of the Supreme Court, No. 08-038.
    __________________
    Per Curiam.
    {¶ 1} Respondent, John Harold Large of Warren, Ohio, Attorney
    
    Registration No. 0068732,
     was admitted to the practice of law in Ohio in 1997.
    The Board of Commissioners on Grievances and Discipline recommends that we
    suspend respondent’s license to practice for one year, conditionally staying the
    last six months. The board based the recommendation on findings that respondent
    failed to file returns for personal income taxes for the tax years 2000 through
    2004 and also failed to report employee wages he paid during the same period.
    We agree that respondent violated the Disciplinary Rules of the Code of
    Professional Responsibility as found by the board; however, we conclude that a
    one-year suspension, none stayed, is the appropriate sanction.
    {¶ 2} Relator,       Disciplinary     Counsel,      charged     respondent   with
    professional misconduct, including violations of DR 1-102(A)(4) (prohibiting
    conduct involving dishonesty, fraud, deceit, or misrepresentation) and 1-
    102(A)(6) (prohibiting conduct that adversely reflects on the lawyer’s fitness to
    practice law). Respondent answered the complaint, admitting most of the factual
    allegations but not the charged misconduct. A panel of the board heard the case
    in mid-November 2008, found violations of DR 1-102(A)(4) and (6), and
    SUPREME COURT OF OHIO
    recommended the one-year suspension and six-month stay. The board adopted
    the panel’s findings of misconduct and recommendation.
    {¶ 3} The parties have not objected to the board’s report.
    Misconduct
    Respondent Failed to File Personal Income Tax Returns for the
    Tax Years 2000, 2001, 2002, 2003, and 2004
    {¶ 4} After working for a small law firm for nearly two years,
    respondent opened a solo practice in October 1999. For that tax year, respondent
    had a certified public accountant prepare and file his federal income tax return.
    For the next five years, however, respondent did not pay personal income taxes to
    either the federal government or the state.
    {¶ 5} When respondent initially consulted the accountant about filing his
    taxes for 2000, the accountant estimated that he would owe in excess of $10,000.
    The accountant still needed more information to complete the return, however,
    and he obtained extensions for respondent to supply it in the months that
    followed. Respondent did not provide the information and did not file a timely
    return for 2000, claiming an inability to pay.
    {¶ 6} Not until 2002 did respondent provide his accountant the
    information necessary for the 2000 federal return. The accountant then prepared
    the return, which declared a tax liability of $11,099, and had it ready for
    respondent’s signature by June 18, 2002. By October 3, 2002, the accountant had
    also completed a return for the tax year 2001, for which respondent owed
    $24,096. Respondent did not file either return, still claiming insufficient funds.
    {¶ 7} Also in 2002, respondent received approximately $72,000 as his
    fee for settling a personal-injury claim for a client. However, at about the time he
    received this fee, he purchased a used Jaguar automobile and a used Chris Craft
    motor boat rather than paying the taxes he owed.
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    January Term, 2009
    {¶ 8} In succeeding years, respondent also failed to timely file his
    personal income tax returns for 2002, 2003, and 2004, again claiming that he did
    not have the money. Respondent testified that due to his embarrassment, he kept
    the default a secret and did not seek professional advice. He also ignored IRS
    delinquency notices and letters inquiring about his failure to file tax returns.
    {¶ 9} In 2004, respondent and a partner formed a limited-liability
    company and then a legal professional association. The partner, who decided to
    leave the firm in 2006, suspected that respondent had tax delinquencies. At the
    partner’s urging, respondent finally went back to his accountant in early 2006. As
    of March 7, 2006, the accountant had completed respondent’s federal tax returns
    for the tax years 2002, 2003, and 2004, respectively listing $44,862, $22,923, and
    $5,221 in taxes due. Respondent provided those returns and his returns for 2000
    and 2001 to the IRS in the spring of 2006, but by that time, he was already the
    target of an investigation.
    {¶ 10} On June 14, 2007, respondent pleaded guilty to four counts of
    violating Section 7203, Title 26, U.S.Code (willfully failing to file personal
    income tax returns), misdemeanor offenses, for the years 2001, 2002, 2003, and
    2004. He was sentenced to four years of probation. Respondent served the first
    six months of probation in a community confinement center and then served six
    months of electronically monitored home confinement, continuing his legal
    practice in accordance with the conditions for his confinement.
    {¶ 11} In addition to his probation, respondent has been ordered to pay
    $88,077 in restitution to the IRS. As of the panel hearing, he had paid less than
    $1,500. He has since offered $7,500 in compromise of the debt.
    {¶ 12} Adopting the panel’s report, the board found respondent in
    violation of DR 1-102(A)(4) and (6) by reason of his four convictions. For his
    failure to timely file Ohio personal income tax returns for the tax years 2000
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    SUPREME COURT OF OHIO
    through 2004, the board found another violation of DR 1-102(A)(6). We also
    accept these findings of misconduct.
    Respondent Failed to Report Employee Wages During the
    Tax Years 2000 through 2004
    {¶ 13} Throughout his time as a solo practitioner, respondent paid wages
    to various employees by check without withholding any amounts for their income
    taxes and Social Security contributions.      Respondent also did not report his
    employees’ wages to the IRS. Respondent explained that he and his employees
    had agreed that he would not take out withholding.
    {¶ 14} When he filed his tax returns for 2000, 2001, 2002, 2003, and
    2004, respondent did not claim business-expense deductions for the wages he had
    paid to his employees. At the request of the IRS, respondent amended his federal
    tax returns for the years 2000, 2001, 2002, 2003, and 2004.          The claimed
    business-expense deductions in the amended returns reduced his tax liability from
    $108,201 to $76,739.
    {¶ 15} Respondent also violated DR 1-102(A)(6) by failing to timely
    report to the IRS the amount of wages paid to his employees for the tax years
    2000 through 2004.
    Sanction
    {¶ 16} When imposing sanctions for attorney misconduct, we consider
    relevant factors, including the duties the lawyer violated and sanctions imposed in
    similar cases. Stark Cty. Bar Assn. v. Buttacavoli, 
    96 Ohio St.3d 424
    , 2002-Ohio-
    4743, 
    775 N.E.2d 818
    , ¶ 16. In making a final determination, we also weigh
    evidence of the aggravating and mitigating factors listed in Section 10 of the
    Rules and Regulations Governing Procedure on Complaints and Hearings Before
    the Board of Commissioners on Grievances and Discipline (“BCGD Proc.Reg.”).
    Disciplinary Counsel v. Broeren, 
    115 Ohio St.3d 473
    , 
    2007-Ohio-5251
    , 
    875 N.E.2d 935
    , ¶ 21. Because each disciplinary case is unique, we are not limited to
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    January Term, 2009
    the factors specified in the rule but may take into account “all relevant factors” in
    determining what sanction to impose. BCGD Proc.Reg. 10(B).
    {¶ 17} In mitigation, the board found that respondent has no prior
    disciplinary record, has established that he is a person of good character and
    reputation, has pleaded guilty to federal criminal charges, acknowledging the
    wrongful nature of his misconduct and showing contrition, has served the
    sanctions imposed by the federal court with the exception of making restitution,
    has reported his conviction to Disciplinary Counsel, has fully cooperated in the
    disciplinary proceedings, and has not lied to a client or to a court in committing
    his misconduct. In aggravation, the board found that respondent engaged in a
    pattern of misconduct over a period of approximately five years, made a
    conscious decision not to file his taxes and not to withhold taxes from his
    employees’ wages, was motivated by a selfish desire to delay collection of his
    taxes, and notwithstanding his criminal sentence, failed to diligently attempt to
    make restitution. The board noted that respondent has paid less than $1,500 of the
    court-ordered restitution of $88,077 and now proposes to settle with the IRS for
    $7,500. Further, the board found that when respondent received the $72,000 fee
    from settling the personal-injury claim, he bypassed an opportunity to rectify his
    misconduct. We accept the board’s findings regarding mitigating and aggravating
    factors.
    {¶ 18} “[T]he responsibility for properly filing one’s tax returns is a
    responsibility that should never be taken lightly by any citizen, especially one
    who is licensed as an officer of the court.” Toledo Bar Assn. v. Stichter (1985),
    
    17 Ohio St.3d 248
    , 249, 17 OBR 484, 
    478 N.E.2d 1322
    . For that reason, we
    consider the failure to file income tax returns a serious offense and one that
    typically warrants a one-year suspension from practice. See, e.g., Bar Assn. of
    Greater Cleveland v. Litt (1983), 
    5 Ohio St.3d 98
    , 5 OBR 178, 
    449 N.E.2d 429
    ;
    5
    SUPREME COURT OF OHIO
    Ohio State Bar Assn. v. Loha (1983), 
    4 Ohio St.3d 190
    , 4 OBR 467, 
    447 N.E.2d 1306
    .
    {¶ 19} Here, respondent has demonstrated a pattern of misconduct
    motivated by his selfish desire to delay the payment of his tax obligation, and
    notwithstanding the requirements of his criminal sentence and the commencement
    of attorney-discipline proceedings, as of the hearing date, he has failed to
    diligently attempt to make restitution. Despite the assistance of an accountant,
    respondent consciously chose not to file his taxes, even after receiving
    delinquency notices from the IRS. Although he has suggested that he failed to
    pay his taxes because he lacked sufficient funds, at about the time he received his
    $72,000 fee, respondent purchased a used Jaguar and a used boat. Further, the
    misconduct in this case spanned almost five years, and his failure to report the
    wages of his employees has affected them and caused them harm, further
    aggravating the conduct at issue.     We therefore conclude that respondent’s
    misconduct warrants a suspension from the practice of law for a period of one
    year, none stayed.
    {¶ 20} We are not unmindful of our recent decision in Toledo Bar Assn. v.
    Abood, 
    104 Ohio St.3d 655
    , 
    2004-Ohio-7015
    , 
    821 N.E.2d 560
    , in which we
    imposed a one-year suspension, staying six months on conditions. Abood pleaded
    guilty to two misdemeanor counts of failure to pay income taxes and received a
    sentence of two consecutive terms of eight months. Id. at ¶ 5. Unlike respondent,
    who received four years of probation, six months of which he served at a
    community confinement center, with another six months on electrically monitored
    home confinement, and who continued his law practice during his periods of
    confinement, Abood was incarcerated from October 2002 to November 2003. Id.
    Also, there is no indication that Abood’s misconduct affected any third parties,
    while respondent’s failure to report the wages of his employees has affected them.
    Finally, following his incarceration and the commencement of disciplinary
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    January Term, 2009
    proceedings, but before we issued our decision in his case, Abood paid more than
    $118,000 in taxes, penalties, and interest for prior tax years. Respondent, on the
    other hand, has paid less than $1,500.
    {¶ 21} Accordingly, respondent is hereby suspended from the practice of
    law in Ohio for a period of one year. Costs are taxed to respondent.
    Judgment accordingly.
    MOYER,     C.J.,   and    PFEIFER,      LUNDBERG   STRATTON,    O’CONNOR,
    O’DONNELL, LANZINGER, and CUPP, JJ., concur.
    __________________
    Jonathan E. Coughlan, Disciplinary Counsel, and Robert R. Berger,
    Assistant Disciplinary Counsel, for relator.
    Charles L. Richards, for respondent.
    ______________________
    7
    

Document Info

Docket Number: 2009-0041

Citation Numbers: 2009 Ohio 2022, 122 Ohio St. 3d 35

Judges: Cupp, Lanzinger, Lundberg, Moyer, O'Connor, O'Donnell, Pfeifer, Stratton

Filed Date: 5/6/2009

Precedential Status: Precedential

Modified Date: 8/31/2023