Iowa Supreme Court Attorney Disciplinary Board v. Rebecca C. Sharpe ( 2024 )

In the Iowa Supreme Court
No. 24–0424
Submitted September 12, 2024—Filed October 4, 2024
Iowa Supreme Court Attorney Disciplinary Board,
Complainant,
vs.
Rebecca C. Sharpe,
Respondent.
On review of the report of the Iowa Supreme Court Grievance Commission.
In an attorney disciplinary action, the grievance commission recommends
revocation of the attorney’s law license based on violations of our attorney ethics
rules. License Revoked.
Christensen, C.J., delivered the opinion of the court, in which all
participating justices joined. Waterman, J., took no part in the consideration or
decision of the case.
Tara van Brederode, Alexis Grove, and Robert A. Howard, Des Moines, for
complainant.
Rebecca C. Sharpe, Bettendorf, pro se, and Joshua J. McIntyre (until
withdrawal) of Lane & Waterman LLP, Davenport, for respondent.
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Christensen, Chief Justice.
The Iowa Supreme Court Attorney Disciplinary Board (the Board) charged
an Iowa attorney with violations of the Iowa Rules of Professional Conduct and
Iowa Court Rules after she mishandled two client matters and her client trust
account. The Iowa Supreme Court Grievance Commission (the commission)
determined that the attorney committed various violations of our ethics rules
and recommended revocation of her license. Upon a de novo review of the record,
we revoke the attorney’s license.
I. Background Facts and Proceedings.
Rebecca Sharpe was admitted to practice law in Iowa in 2009. Although
she does not have a history of ethical violations, this court suspended Sharpe’s
license because of a physical disability that prevented her from discharging her
professional responsibilities associated with the practice of law on March 22,
2023. Her license remains suspended. This case arises from Sharpe’s
representation of various clients and the mismanagement of her client trust
account in the following matters prior to that suspension.
A. Haack Matter. The first client matter concerns Sharpe’s designation as
the attorney to the estate of Evelyn Haack, who passed away on January 16,
2018. Sharpe was designated as the estate’s attorney on February 23 by the
estate’s executor and Haack’s niece, Carolyn McConnell. Several issues arose
during Sharpe’s designation as the estate’s attorney.
First, Haack’s last will and testament devised 5% of her estate to the
St. Paul Lutheran Church Endowment Fund (the Church), where Haack had
been a member for 55 years. The intended gift was approximately $100,000, but
the Church never received notice of the probate proceeding or its intended
bequest. The Church only learned of the possibility of an intended bequest about
three years after the estate was opened when a friend of the decedent inquired
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about it to the Church. Ultimately, the Church never received any money from
the estate. A resolution concerning the intended bequest was reached between
the Church and Sharpe on October 23, 2023.
Prior to the resolution, Sharpe took several steps to hide the bequest from
the Church. A $100,000 check from the client trust account was written for the
Church but never delivered. Additionally, when McConnell checked on
distributions in July 2019, Sharpe claimed there were not enough funds for the
$100,000 devise to the Church, which was not true. Sharpe also hid the bequest
from the probate court. The first and final report by the executor was filed on
August 26 and did not list the Church as a beneficiary or include a waiver from
the Church. The Church was included, however, in the amended report and
inventory filed with the probate court on the same day and was included in the
report and inventory sent to other beneficiaries. Lastly, in January 2021, a
certified public accountant (CPA) enlisted by Sharpe to help with the estate again
inquired about the Church’s gift and Sharpe did not respond.
An issue also arose with the estate taxes. On April 5, 2018, Sharpe
contacted Haack’s accountant, Randy Linn, to file the necessary returns. She
informed Linn that she would presume he was handling Haack’s personal taxes
and the estate taxes unless he responded otherwise. Sharpe also stated that once
the estate was closed, she would reach out with final documents for filing a
United States estate tax return (Form 706) and Iowa inheritance tax return (Form
IA 706). Linn did not respond to Sharpe’s message. Sharpe contacted Linn once
more on January 17, 2019, stating that she would continue to drop off
documents for the estate taxes and documents for the final tax returns once the
estate closed. Despite these statements to Linn, on March 14, Sharpe filed an
application with the probate court that stated, “A United States Estate Tax
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Return (Form 706) and the Iowa Inheritance/Estate Tax Return (Form IA 706)
are not required to be filed.”
The estate was closed on August 27 without any estate taxes being filed.
Sharpe once again contacted Linn on September 1 and did not receive a
response. Linn passed away on February 7, 2020, without having filed any taxes
for the Haack estate.
In early 2021, Sharpe hired a CPA to file the estate taxes. The delay in
filing resulted in the Iowa Department of Revenue assessing approximately
$51,000 in penalties and interest on the estate.1 In total, the estate owed
$244,187.70 in taxes. In February, Sharpe paid $224,983.54 to the State of Iowa
Treasurer out of the client trust account, and McConnell personally paid the
remaining $19,204.16 without reimbursement from Sharpe. On August 12,
2022, the Iowa Department of Revenue certified that the Iowa inheritance tax
was paid in full—almost three years after the estate closed.
The final issue concerns Sharpe’s attorney fees as the designated attorney
for the estate. On March 14, 2019, the probate court granted Sharpe’s request
for partial attorney fees in the amount of $19,073.27. Sharpe withdrew this
amount from the client trust account on or about March 20. On August 26,
Sharpe requested additional extraordinary fees in the amount of $89,709.29.
The court again granted this request, allowing Sharpe to claim a total of
$108,782.56 in attorney fees. From August 2019 to April 2021, Sharpe
transferred money out of the estate labeled as “Trust Funds Probate Attorney
Fees” and “Operating Account” in the client ledger. Sharpe made a total of twenty
transfers to her firm ranging from $1,000 to $15,000. In total, the amount
1A 10% penalty was assessed on the estate—a total of $19,318.65—and the estate owed
$31,682.58 in interest.
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transferred from the estate was $65,290.71 more than the awarded attorney fees.
Sharpe used these funds for personal expenses.
As Sharpe transferred excess funds to herself, she concealed her actions
from McConnell. On March 1, 2021, Sharpe informed McConnell that there was
no money left in the estate, so McConnell could not be reimbursed for an
expense. Sharpe further claimed, “I have not been paid my entire fee because I
was worried there wouldn’t be enough money for taxes.” At the time of that
message, Sharpe had already overpaid herself by $54,290.71. When McConnell
went to collect the estate’s file on August 31, Sharpe produced two client ledgers
that omitted all attorney fees claimed by Sharpe between August 28, 2019, and
January 9, 2020, which totaled $91,500. Ultimately, when the estate taxes were
finally paid, the Haack account had a negative balance because of Sharpe’s
excessive withdrawals.
B. Client Trust Account Matters. Sharpe was a partner and partial owner
of Aitken, Aitken & Sharpe, P.C. She was a signatory on the firm’s client trust
account and was primarily responsible for the firm’s bookkeeping. In late 2020,
the Client Security Commission (CSC) undertook an audit of Sharpe’s client trust
account that concluded in April 2022. The audit disclosed Sharpe’s failure to
prepare monthly triple reconciliations, failure to provide clients written notice at
or prior to a withdrawal from the client trust account, two stale client accounts,
a negative balance of $46,379.91 in the Haack client account in April 2021 that
was not remedied until March 2022, two other negative client subaccount
balances, and commingled funds. Sharpe also overdrew the client trust account
twice, causing an overall negative balance of $3,475.55 in April 2021, and
$660.92 in August 2021.
C. This Proceeding. The Board filed a three-count complaint on May 1,
2023, and an amended complaint on September 20, alleging Sharpe violated
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several Iowa Rules of Professional Conduct and Iowa Court Rules. Count I
concerns the Haack Matter and alleges Sharpe violated Iowa Rules of
Professional Conduct 32:1.3; 32:1.15(a), (d), (f); 32:3.3(a)(1); and 32:8.4(b), (c).
Count II concerns an adoption proceeding and alleges Sharpe violated Iowa
Rules of Professional Conduct 32:1.3; 32:1.4(a)(3), (b); and 32:1.5(b). Count III
concerns client trust account matters and alleges Sharpe violated Iowa Rule of
Professional Conduct 32:1.15(a), (c), (f), and Iowa Court Rules 45.1; 45.2(2),
(3)(a)(4), (3)(a)(9); and 45.7(3), (4). Sharpe filed an answer to the original
complaint denying all alleged violations.
Sharpe was generally unresponsive throughout the proceedings. After
discovery was served on Sharpe, she was granted an extension, but the Board
still had to file motions to compel discovery and for sanctions when Sharpe did
not cooperate. Sharpe also requested that her hearing be continued twice, both
of which were granted. She stated that health complications were the reason for
the first requested continuance. After the continuance was granted, the Board
found contradictory evidence to her health-related claims, which resulted in
Sharpe’s attorney withdrawing from the matter. Sharpe’s second request for a
continuance was to grant her time to retain a new attorney and again for health-
related reasons. Eventually, the parties filed a partial stipulation of facts on
December 5 and waived a formal hearing. Only the Board filed a poststipulation
brief, and neither party appealed the decision of the commission.
In the Haack Matter, the commission determined that Sharpe violated
each rule the Board alleged in its complaint. First, the commission concluded
Sharpe violated rule 32:1.3, which requires a lawyer to act with reasonable
diligence and promptness when representing a client, by failing to promptly file
the Haack estate’s tax returns, resulting in large financial consequences for the
estate. Second, the commission determined that Sharpe violated
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rule 32:3.3(a)(1), which prohibits a lawyer from knowingly making a false
statement to a tribunal, by stating to the probate court that tax returns were not
required to be filed for the Haack estate when she knew the opposite was true.
The commission then concluded that Sharpe violated rule 32:1.15(a), which
requires that client funds be kept in a separate account and not commingled
with the lawyer’s property, by taking $65,290.71 from the Haack estate that she
was not entitled to.
The commission also concluded that Sharpe violated rule 32:1.15(d),
which requires a lawyer to give a client or third-party prompt notice upon
receiving funds that belong to them and promptly delivering the property, by not
notifying the Church of their bequest and not delivering the bequest.
Rule 32:1.15(f) was addressed later by the commission in relation to the client
trust account matter. Finally, the commission concluded that Sharpe violated
rule 32:8.4(b), which makes it a violation to commit a criminal act that reflects
adversely on the lawyer’s honesty or fitness, and rule 32:8.4(c), which prohibits
a lawyer from engaging in conduct that involves dishonesty. Sharpe violated
these rules by converting the Haack funds and trying to conceal her conduct.
In connection with the client trust account matters, the commission
concluded that Sharpe violated eight of the Iowa Rules of Professional Conduct
and Iowa Court Rules alleged in the Board’s complaint. Based on the CSC audit,
the commission concluded that Sharpe violated rule 32:1.15(a) and rules 45.1 (a
lawyer may not commingle client funds with the lawyer’s own funds),
45.2(3)(a)(4) (a lawyer must maintain current financial records showing
disbursements of funds to the lawyer or on the lawyer’s behalf), 45.2(3)(a)(9) (a
lawyer must maintain current financial records showing monthly client ledger
balances and reconciliation of client trust accounts), and 45.7(4) (a lawyer must
notify the client in writing of any fee withdrawal, no later than the date of the
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withdrawal). The commission also determined Sharpe violated rule 32:1.15(c)
(legal fees paid in advance must be deposited into the client trust account and
may only be withdrawn as the fee is earned) and rule 45.7(3) (a lawyer must
deposit advance fees and expenses into the client trust account and may not
withdraw the fee unless it is earned or the expense is incurred) by withdrawing
fees from the Haack client trust account without authorization from the probate
court. By violating the Iowa Court Rules, Sharpe also violated Iowa Rule of
Professional Conduct 32:1.15(f), which states that client trust accounts are
governed by the Iowa Court Rules. Lastly, the Board in its complaint alleged that
Sharpe violated rule 45.2(2), which requires a lawyer to promptly deliver any
funds in the lawyer’s possession that a client or third party is entitled to and
render a full accounting; however, the Board did not discuss the rule violation
in its brief and the commission did not issue a ruling on the violation.
The Board also charged Sharpe with various violations in relation to an
adoption proceeding. Pursuant to the stipulated facts, the Board dismissed the
charges concerning rules 32:1.3, 32:1.4(a)(3), and 32:1.4(b). The Board still
alleged that Sharpe violated rule 32:1.5(b), which requires the basis or rate of an
attorney’s fee to be communicated to the client within a reasonable time after
representation begins. The commission determined that Sharpe violated this rule
by communicating her fee arrangement to the client after most of the work had
already been completed on the adoption matter and threatening to postpone the
termination hearing when the client questioned Sharpe’s fees.2 We do not
2During an emergency adoption proceeding, Sharpe neglected to timely send an invoice
to her client detailing the attorney fees for which the client would be responsible. Roughly two
weeks after Sharpe promised to send an invoice, and one day before a parental termination
hearing, she sent the client a bill for approximately $10,000. On the day of the hearing, Sharpe
threatened to postpone after the client questioned her fees. The commission determined this
conduct violated rule 32:1.5(b).
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analyze the commission’s decision as it is not pertinent to the sanction we
impose for Sharpe’s actions regarding client funds.
The commission recommended that Sharpe’s license be revoked. When
making its decision, the commission concluded that this court regularly revokes
attorney licenses for conversion of client funds and that mitigating and
aggravating factors do not need to be considered when funds are converted. See
Iowa Sup. Ct. Att’y Disciplinary Bd. v. Guthrie, 901 N.W.2d 493, 500 (Iowa 2017).
Still, the commission noted a potential mitigating factor of Sharpe’s ongoing
health issues but recognized that the issues did not overlap with her conduct.
Aggravating factors were also noted as Sharpe’s conduct resulted in client harm,
multiple rule violations, misrepresentations to a court, and a failure to cooperate
with the Board.
II. Standard of Review.
We review attorney disciplinary proceedings de novo. Iowa Sup. Ct. Att’y
Disciplinary Bd. v. Johnson, 884 N.W.2d 772, 776 (Iowa 2016). “The Board must
prove attorney misconduct by a convincing preponderance of the evidence,”
which is “more demanding than proof by preponderance of the evidence, but less
demanding than proof beyond a reasonable doubt.” Iowa Sup. Ct. Att’y
Disciplinary Bd. v. Ouderkirk, 845 N.W.2d 31, 33 (Iowa 2014). Parties are bound
by factual stipulations, “which we interpret with reference to their subject matter
and in light of the surrounding circumstances and the whole record.” Johnson,
884 N.W.2d at 777. We may “impose a greater or lesser sanction than what the
commission has recommended upon proof of an ethical violation.” Iowa Sup. Ct.
Att’y Disciplinary Bd. v. Janssen, 981 N.W.2d 1, 6 (Iowa 2022) (quoting Iowa Sup.
Ct. Att’y Disciplinary Bd. v. Noel, 923 N.W.2d 575, 582 (Iowa 2019)).
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III. Analysis.
A. Violations.
1. Misappropriation. Rule 32:8.4(b) prohibits an attorney from
“commit[ting] a criminal act that reflects adversely on the lawyer’s honesty,
trustworthiness, or fitness as a lawyer in other respects.” Iowa R. of Prof’l
Conduct 32:8.4(b). This court considers the following factors when determining
if rule 32:8.4(b) has been violated: “the lawyer’s mental state; the extent to which
the act demonstrates disrespect for the law or law enforcement; the presence or
absence of a victim; the extent of actual or potential injury to a victim; and the
presence or absence of a pattern of criminal conduct.” Iowa Sup. Ct. Att’y
Disciplinary Bd. v. Aeilts, 974 N.W.2d 119, 125 (Iowa 2022) (quoting Iowa Sup.
Ct. Att’y Disciplinary Bd. v. Schmidt, 796 N.W.2d 33, 40 (Iowa 2011)). An attorney
does not have to be criminally convicted to violate this rule. Iowa Sup. Ct. Att’y
Disciplinary Bd. v. Fischer, 973 N.W.2d 267, 273 (Iowa 2022) (citing Iowa Sup.
Ct. Att’y Disciplinary Bd. v. Kozlik, 943 N.W.2d 589, 595 (Iowa 2020)). We have
repeatedly held “[a] lawyer who commits a theft of funds engages in conduct
involving moral turpitude, dishonesty, and conduct that adversely reflects on the
lawyer’s fitness to practice law.” Id. (quoting Kozlik, 943 N.W.2d at 595).
Additionally, rule 32:8.4(c) prohibits an attorney from “engag[ing] in
conduct involving dishonesty, fraud, deceit, or misrepresentation.” Iowa R. of
Prof’l Conduct 32:8.4(c). An attorney must have “acted with ‘some level of
scienter’ rather than mere negligence” to violate this rule. Aeilts, 974 N.W.2d at
126 (quoting Iowa Sup. Ct. Att’y Disciplinary Bd. v. Beauvais, 948 N.W.2d 505,
515 (Iowa 2020)). When considering if rule 32:8.4(c) has been violated, “[t]he key
question we must answer is whether the effect of the lawyer’s conduct is to
mislead rather than to inform.” Iowa Sup. Ct. Att’y Disciplinary Bd. v. Marzen,
949 N.W.2d 229, 239 (Iowa 2020) (quoting Iowa Sup. Ct. Att’y Disciplinary Bd. v.
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Barry, 908 N.W.2d 217, 226 (Iowa 2018)). “An attorney’s ‘casual, reckless
disregard for the truth’ also establishes sufficient scienter to support a violation
of the rule.” Id. (quoting Iowa Sup. Ct. Att’y Disciplinary Bd. v. Muhammad, 935
N.W.2d 24, 38 (Iowa 2019)).
Sharpe committed a theft from the Haack client trust account by
intentionally converting client property to her own use in violation of
rule 32:8.4(b) and (c). Under Iowa law, a theft is committed when a person:
Misappropriates property which the person has in trust, or property
of another which the person has in the person’s possession or
control . . . by using or disposing of it in a manner which is
inconsistent with or a denial of the trust or of the owner’s rights in
such property, . . . or appropriates such property to the person’s
own use, when the owner of such property is known to the person.
Iowa Code § 714.1(2) (2019). Sharpe’s actions violated Iowa law by converting
over $65,000 she was entrusted with from the Haack estate without court
authorization and with no showing of a colorable future claim. See id.; see also
id. § 714.2(1) (“The theft of property exceeding ten thousand dollars in
value . . . is theft in the first degree.”).
Further, Sharpe concealed her actions showing she intended to convert
the funds and, in the process, caused client harm. Once Sharpe began
converting funds, she took steps to hide her theft by taking the money in small
increments during an almost two-year timeframe and providing the executor of
the estate with ledgers that omitted the withdrawals. Sharpe also misrepresented
the withdrawals to the auditor of her client trust account and avoided a direct
question about the funds from the CPA hired to complete the estate’s taxes.
Sharpe’s conduct demonstrates a calculated scheme to withhold the Church’s
bequest so that she could convert the funds in the Haack account to her own
personal use. We hold that Sharpe violated Iowa Rule of Professional
Conduct 32:8.4(b) and (c).
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2. Client funds. Rule 32:1.15(a) requires that “[a] lawyer shall hold property
of clients or third persons that is in a lawyer’s possession in connection with a
representation separate from the lawyer’s own property. Funds shall be kept in
a separate account.” Iowa R. of Prof’l Conduct 32:1.15(a). An attorney violates
this rule by misappropriating client funds that the attorney has no legitimate
claim to. Iowa Sup. Ct. Att’y Disciplinary Bd. v. Earley, 933 N.W.2d 206, 213
(Iowa 2019). The Iowa Court Rules reiterate the need to keep client funds in a
separate trust account. Iowa Court Rule 45.1 requires:
Funds a lawyer receives from clients or third persons for matters
arising out of the practice of law in Iowa must be deposited in one
or more identifiable interest-bearing trust accounts at a financial
institution with a branch geographically located in Iowa. Other
property of clients or third persons must be identified as such and
appropriately safeguarded.
Sharpe misappropriated funds she was not entitled to and consequently
commingled client funds with her own. Sharpe was entitled to only $108,782.56
in attorney fees and has shown no evidence that she had a colorable future claim
to any other fees. See Iowa Sup. Ct. Att’y Disciplinary Bd. v. Parrish, 925 N.W.2d
163, 171 (Iowa 2019) (“While the Board has the burden of showing that a
misappropriation of funds occurred, the attorney has the burden of providing
evidence of a colorable future claim to the funds.”). Over the course of two years,
Sharpe took a total of $174,073.27 from the estate—$65,290.71 more than what
she was granted by the probate court and commingled these funds with her own
property. Additionally, the audit revealed that Sharpe kept large amounts of firm
funds in the client trust account. We conclude that Sharpe violated Iowa Rule of
Professional Conduct 32:1.15(a) and Iowa Court Rule 45.1.
Rule 32:1.15(d) states:
Upon receiving funds or other property in which a client or third
person has an interest, a lawyer shall promptly notify the client or
third person. Except as stated in this rule or otherwise permitted by
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law or by agreement with the client, a lawyer shall promptly deliver
to the client or third person any funds or other property that the
client or third person is entitled to receive and, upon request by the
client or third person, shall promptly render a full accounting
regarding such property.
Iowa R. of Prof’l Conduct 32:1.15(d). An attorney must promptly deliver any
funds their client is entitled to receive, so “[a] delay of ‘several months’ violates
this rule.” Iowa Sup. Ct. Att’y Disciplinary Bd. v. Boles, 808 N.W.2d 431, 439
(Iowa 2012) (quoting Iowa Sup. Ct. Att’y Disciplinary Bd. v. Plumb, 766 N.W.2d
626, 632 (Iowa 2009)). Further, an attorney’s misappropriation of client funds
for personal reasons will violate this rule. See Iowa Sup. Ct. Att’y Disciplinary
Bd. v. Earley, 774 N.W.2d 301, 308 (Iowa 2009). Iowa Court Rule 45.2(2) also
requires an attorney to deliver to the client any funds the client is entitled to
receive and render a full accounting of the delivery.
Sharpe violated rule 32:1.15(d) and rule 45.2(2) by withholding the
approximately $100,000 bequest from Haack’s will to the Church. Haack passed
away in 2018 and the Church did not receive notice of the bequest until January
2021 when a friend of Haack’s inquired about the gift. The Church never directly
received notice from Sharpe and never received the gift from the estate. Sharpe
instead had to settle the matter with the Church in 2023.
Further, Sharpe actively took steps to conceal her actions by writing a
check to the church that she never delivered, listing the Church in the amended
report and inventory that was filed with the probate court, and ignoring
questions about the bequest. Sharpe withheld the funds from the Church for
years so that she could misappropriate the property for her own use. We
conclude that Sharpe violated Iowa Rule of Professional Conduct 32:1.15(d) and
Iowa Court Rule 45.2(2).
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Rule 32:1.15(c) states that attorneys must deposit legal fees and expenses
into a client trust account until they are earned by the attorney. Iowa R. of Prof’l
Conduct 32:1.15(c). Iowa Court Rule 45.7(3) reiterates this requirement: “A
lawyer must deposit advance fee and expense payments from a client into the
trust account and may withdraw such payments only as the fee is earned or the
expense is incurred.” Sharpe violated rule 32:15(c), and subsequently
rule 45.7(3), by withdrawing funds from the Haack account without
authorization by the probate court and without having earned the fees. Sharpe
has violated Iowa Rule of Professional Conduct 32:1.15(c) and Iowa Court
Rule 45.7(3).
3. Diligence. Rule 32:1.3 states, “A lawyer shall act with reasonable
diligence and promptness in representing a client.” Iowa R. of Prof’l
Conduct 32:1.3. An attorney must handle client matters in a “reasonably timely
manner” to act with reasonable diligence and promptness. Iowa Sup. Ct. Att’y
Disciplinary Bd. v. Vandel, 889 N.W.2d 659, 667 (Iowa 2017) (quoting Iowa Sup.
Ct. Att’y Disciplinary Bd. v. Netti, 797 N.W.2d 591, 598 (Iowa 2011)). Further,
“[n]eglect ‘involves an attorney’s failure to perform obligations assumed for the
client, or a conscious disregard for the responsibilities a lawyer owes to a client.’ ”
Iowa Sup. Ct. Att’y Disciplinary Bd. v. Bartley, 860 N.W. 2d 331, 335 (Iowa 2015)
(quoting Iowa Sup. Ct. Att’y Disciplinary Bd. v. Thomas, 794 N.W.2d 290, 293
(Iowa 2011)). Rule 32:1.3 is generally not violated by missing one deadline;
instead, neglect is committed by attorneys in estate matters when “[they]
repeatedly fail[] to perform required functions as attorney for the executor,
repeatedly fail[] to meet deadlines, and fail[] to close the estate within a
reasonable period of time.” Iowa Sup. Ct. Bd. of Prof’l Ethics & Conduct v.
Grotewold, 642 N.W.2d 288, 293 (Iowa 2002). This court has held in certain
cases that an attorney assigned to an estate has been guilty of neglect when the
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attorney fails to timely file estate taxes. See, e.g., Bartley, 860 N.W.2d at 335–
36; Iowa Sup. Ct. Att’y Disciplinary Bd. v. Walker, 712 N.W.2d 683, 684–85 (Iowa
2006); Iowa Sup. Ct. Att’y Disciplinary Bd. v. Moonen, 706 N.W.2d 391, 398–99
(Iowa 2005).
Sharpe’s actions regarding the Haack estate amount to neglect and violate
rule 32:1.3. In this case, Sharpe’s attempts to contact Linn did not discharge her
responsibility to ensure that the estate taxes were timely filed. In the factual
stipulation, Sharpe admitted that she never received any contact from Linn or
assurance that he was handling the taxes. She was aware the estate taxes had
to be filed but continued to disregard the matter until Linn passed away. Even
after the closing of the estate in August 2019, and Linn’s death in February 2020,
Sharpe did not enlist a new CPA to handle the matter until early 2021.
Sharpe’s negligence resulted in penalties and interest being imposed on
the estate. The penalties imposed were over $19,000, and the interest incurred
was over $31,000. Sharpe then allowed the executor, McConnell, to pay part of
the taxes and penalties without reimbursement. Overall, Sharpe’s actions
resulted in the Iowa taxes not being finalized until almost three years after the
estate closed and caused client harm. We conclude that Sharpe neglected her
professional duties in violation of Iowa Rule of Professional Conduct 32:1.3.
4. Misrepresentation to the court. Under rule 32:3.3(a)(1), “A lawyer shall
not knowingly . . . make a false statement of fact or law to a tribunal or fail to
correct a false statement of material fact or law previously made to the tribunal
by the lawyer.” Iowa R. of Prof’l Conduct 32:3.3(a)(1). “Knowingly” is defined as
“actual knowledge of the fact in question” and “knowledge may be inferred from
circumstances.” Id. r. 32:1.0(f). This rule is violated when an attorney knowingly
misrepresents information in probate court filings. See, e.g., Bartley, 860 N.W.2d
16at 337; Iowa Sup. Ct. Att’y Disciplinary Bd. v. Van Ginkel, 809 N.W.2d 96, 105–
08 (Iowa 2012).
Sharpe’s statements in the application for partial attorney fees filed with
the probate court violated rule 32:3.3(a)(1). In the application, she stated that
the 706 tax forms were not required to be filed for the Haack estate while making
completely different representations to Linn. She told Linn multiple times that
she understood that the estate would be required to file these forms and that she
would send him the required documentation. Further, after Linn passed away,
Sharpe enlisted a new CPA to have these forms filed, showing that she
understood the forms were required.
Sharpe knowingly misrepresented the tax requirements of the estate to the
probate court in an effort to receive partial attorney fees. Iowa Court Rule 7.2(4)
dictates that she could not be partially compensated until the required taxes
were prepared: “One half of the fees for ordinary services may be paid when the
federal estate tax return, if required, and Iowa inheritance tax return, if required,
are prepared.” Sharpe misrepresented the tax requirements of the estate to the
probate court to gain fees she had not yet earned and, in the process, disregarded
her duties of candor to the court. See id.; Iowa R. of Prof’l Conduct 32:3.3(a)(1).
We conclude that Sharpe violated Iowa Rule of Professional Conduct 32:3.3(a)(1).
5. Recordkeeping. Rule 32:1.15(a) requires attorneys to hold client
property in a separate account and to maintain “[c]omplete records of such
account funds and other property . . . for a period of six years after termination
of the representation.” Iowa R. of Prof’l Conduct 32:1.15(a). The Iowa Court Rules
reinforce this requirement. Iowa Court Rule 45.2(3)(a)(4) and (9) states:
A lawyer who practices in this jurisdiction must maintain current
financial records as provided in these rules and required by Iowa
Rule of Professional Conduct 32:1.15. The following records must be
retained for each client trust account for a period of six years after
termination of the representation:
17
....
(4) Copies of accountings to clients or third persons showing
the disbursement of funds to them or on their behalf.
....
(9) Copies of monthly lists of individual client ledger balances
and monthly triple reconciliations of bank statement balance to
receipt and disbursement journal balance to sum of individual client
ledger balances.
Further, Iowa Court Rule 45.7(4) states, “A lawyer accepting advance fee or
expense payments must notify the client in writing of the time, amount, and
purpose of any withdrawal of the fee or expense, together with a complete
accounting. The attorney must transmit such notice no later than the date of the
withdrawal.”
Based on the parties’ factual stipulation, Sharpe has violated these rules.
The audit demonstrated that Sharpe failed to provide written notice to clients at
or before making withdrawals from the client trust account, failed to perform
monthly triple reconciliations, and failed to maintain complete, accurate records
of her client matters. We conclude that Sharpe violated Iowa Rule of Professional
Conduct 32:1.15(a) and Iowa Court Rules 45.2(3)(a)(4) and (9), and 45.7(4).
Finally, rule 32:1.15(f) states that “[a]ll client trust accounts shall be
governed by chapter 45 of the Iowa Court Rules.” Iowa R. of Prof’l
Conduct 32:1.15(f). By violating several rules within chapter 45 of the Iowa Court
Rules, Sharpe has violated rule 32:1.15(f).
B. Sanction. There is no standard sanction for misconduct in attorney
disciplinary cases. Aeilts, 974 N.W.2d at 129 (citing Iowa Sup. Ct. Att’y
Disciplinary Bd. v. Blessum, 861 N.W.2d 575, 591 (Iowa 2015)). For each case,
we will consider the totality of the facts and circumstances. Id. (citing Iowa Sup.
Ct. Att’y Disciplinary Bd. v. Deremiah, 875 N.W.2d 728, 737 (Iowa 2016)). To
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reach the appropriate sanction, we consider a multitude of factors, including
“the nature of the violations, the need for deterrence, protection of the public,
maintenance of the reputation of the bar as a whole, and the attorney’s fitness
to continue practicing law, as well as any aggravating or mitigating
circumstances.” Id. (quoting Bartley, 860 N.W.2d at 337).
Although there is no standard sanction for attorney disciplinary cases, we
have repeatedly held that converting client funds without a colorable future
claim will result in revocation of the attorney’s license. See, e.g., Kozlik, 943
N.W.2d at 599–600; Iowa Sup. Ct. Att’y Disciplinary Bd. v. Moran, 919 N.W.2d
754, 760 (Iowa 2018); Iowa Sup. Ct. Att’y Disciplinary Bd. v. Kowalke, 918
N.W.2d 158, 163 (Iowa 2018); Iowa Sup. Ct. Att’y Disciplinary Bd. v. Carter, 847
N.W.2d 228, 234 (Iowa 2014). “[T]here is no place in our profession for attorneys
who convert funds entrusted to them. It is almost axiomatic that we revoke
licenses of lawyers who do so.” Iowa Sup. Ct. Att’y Disciplinary Bd. v. Thomas,
844 N.W.2d 111, 117 (Iowa 2014) (quoting Comm. on Prof’l Ethics & Conduct v.
Ottesen, 525 N.W.2d 865, 866 (Iowa 1994)).
This case is an egregious example of converting client funds in violation of
our professional rules. Sharpe converted $65,290.71 for her own personal use
and has presented no evidence of a colorable future claim to the funds. It does
not matter that her firm later reimbursed part of the funds to the client trust
account or that Sharpe eventually settled with the Church concerning its
bequest. See Iowa Sup. Ct. Att’y Disciplinary Bd. v. Kelsen, 855 N.W.2d 175, 182
(Iowa 2014) (citing Carter, 847 N.W.2d at 232–34; Thomas, 844 N.W.2d at 117–
18) (“[A]n attorney crosses an important line when he or she misappropriates or
converts client funds without a ‘colorable future claim’ to those funds. . . . Later
restitution of client funds does not preclude us from revoking the attorney’s
19
license.”). The commission recommended that Sharpe’s license be revoked, and
we agree that revocation is the appropriate sanction.
Further, we need not consider mitigating and aggravating factors when an
attorney has converted client funds with no colorable future claim. Kozlik, 943
N.W.2d at 600. Still, it should be noted that Sharpe’s actions resulted in multiple
rule violations, caused client and third-party harm, and her lack of cooperation
with the Board prolonged the commission’s proceedings.
IV. Conclusion.
We revoke Sharpe’s license to practice law in Iowa. All costs of this
proceeding are assessed against her under Iowa Court Rule 36.24(1). Under our
rules, Sharpe may apply for readmission after a period of at least five years with
a showing that “the applicant is of good moral character and is in all respects
worthy of readmission to the bar.” Iowa Ct. R. 34.27.
License Revoked.
All justices concur except Waterman, J., who takes no part.