disciplinary handbook: volume v - Supreme Court - State of Ohio

Large, Disciplinary Counsel v.
122 Ohio St.3d 35, 2009-Ohio-2022. Decided 5/6/2009.
Case Summaries- 170
Respondent worked for a small law firm for nearly two years, then opened a solo practice in October 1999.
For the tax year 1999, a certified public accountant prepared and filed a federal income tax return for
respondent, but for the next five years, respondent did not pay state or federal personal income tax. In 2000
when respondent consulted the accountant about filing his taxes, the accountant estimated he would owe in
excess of $10,000. The accountant obtained extensions for respondent to supply additional information that
was needed, but respondent did not provide the information and did not file a timely return for 2000, claiming
an inability to pay. In 2002, respondent provided the accountant the information necessary for the 2000 federal
return. By June 18, 2002, the accountant prepared the return, showing a tax liability of $11,099 and had
it ready for respondent‘s signature. By October 3, 2002, the accountant had completed a return for the 2001
tax year, showing a tax liability of $24,096. Still claiming insufficient funds, respondent did not file either
return. In 2002, respondent received approximately $72,000 as his fee for settling a client‘s personal-injury
claim, but about the same time he purchased a used Jaguar automobile and a used Chris Craft motor boat,
rather than paying the taxes owed. For the tax years 2002, 2003, 2004, he failed to file his personal income
tax, again claiming he did not have money. Respondent testified that due to embarrassment, he kept the
default a secret and did not seek professional guidance. He ignored IRS delinquency notices and letters. In
2004, respondent and a partner formed a limited-liability company and then a legal professional association.
The partner decided to leave the firm in 2006. The partner suspected respondent had tax delinquencies. At the
partner‘s urging respondent went back to the accountant in early 2006. By March 7, 2006, the accountant
completed the federal tax returns for 2002 ($44,862 in taxes due), 2003 ($22,923 in taxes due), and 2004
($5,221 in taxes due). In the Spring of 2006, respondent provided those returns and his 2000 and 2001 returns
to the IRS, but by then he was already the target of an investigation. 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 offense, for the years 2001, 2002, 2003, and 2004. He was sentenced to four
years probation, serving the first six month in a community confinement center, then serving six months of
electronically monitored home confinement, continuing his legal practice in accordance with the conditions
of confinement. He was ordered to pay $88,077 in restitution to the IRS, but at the time of the panel
hearing had paid less than $1500. He has since offered $7500 in compromise of the debt. While a solo
practitioner, he paid wages to employees by check without withholding any amounts for their income taxes
and Social Security contributions. He did not report the employees‘ wages to the IRS. In addition, when he
filed tax returns for 200, 2001, 2002, 2003, and 2004, he did not claim business-expense deductions for the
wages he paid the employees, but at the IRS‘s request he amended his federal tax returns for those years
and reduced his tax liability from $108,201 to $76,739. Board adopted the panel‘s finding of violations of
DR 1-102(A)(4) and (A)(6) based on the four convictions for willingly failing to file personal income tax
returns for 1001, 2002, 2003, and 2004; a violation of DR 1-102(A)(6) for failure to timely file Ohio personal
income tax returns for the tax years 2000 through 2004; and a violation of DR 1-102(A)(6) by failing to
timely report to the IRS the wages paid to employees for tax years 2000-2004. In mitigation, respondent
has no prior disciplinary record, established good character and reputation, pleaded guilty, acknowledged
wrongful nature of misconduct and showed contrition, served that sanctions imposed by federal court with the
exception of making restitution, reported his conviction to Disciplinary Counsel, fully cooperated, did not lie
to a client or to a court. In aggravation, he engaged in a pattern over approximately five years, made a
conscious decision not to file taxes and not to withhold from employees‘ wages, was motivated by selfish
desire to delay collection of his taxes, and failed to diligently attempt to make restitution. Board adopted
panel‘s recommendation of a one year suspension with six months stayed. The Supreme Court of Ohio agreed
with the findings of violations, but disagreed with the recommended sanction. Citing Stichter (1985), Litt
(1983), Loha (1983), and distinguishing Abood (2004), the Supreme Court ordered a one year suspension.
Rules Violated: DR 1-102(A)(4), 1-102(A)(6)
Aggravation: (b), (c), (i)
Mitigation: (a), (d), (e), (f)
Prior Discipline: NO Procedure/ Process Issues: NO Criminal Conduct: YES
Public Official: NO Sanction: One-year suspension