Office of Lawyer Regulation v. Walter W. Stern, III , 366 Wis. 2d 431 ( 2016 )

2016 WI 6SUPREME COURT OF WISCONSIN
CASE NO.: 2013AP149-D
COMPLETE TITLE: In the Matter of Disciplinary Proceedings
Against Walter W. Stern, III, Attorney at Law:
Office of Lawyer Regulation,
Complainant,
v.
Walter W. Stern, III,
Respondent.
DISCIPLINARY PROCEEDINGS AGAINST STERN
OPINION FILED: February 4, 2016
SUBMITTED ON BRIEFS:
ORAL ARGUMENT:
SOURCE OF APPEAL:
COURT:
COUNTY:
JUDGE:
JUSTICES:
CONCURRED:
DISSENTED:
NOT PARTICIPATING:
ATTORNEYS:
2016 WI 6NOTICE
This opinion is subject to further
editing and modification. The final
version will appear in the bound
volume of the official reports.
No. 2013AP149-D
STATE OF WISCONSIN : IN SUPREME COURT
In the Matter of Disciplinary Proceedings
Against Walter W. Stern, III, Attorney at Law:
Office of Lawyer Regulation, FILED
Complainant,
FEB 4, 2016
v.
Diane M. Fremgen
Clerk of Supreme Court
Walter W. Stern, III,
Respondent.
ATTORNEY reinstatement proceeding. Attorney's license
reinstated.
¶1 PER CURIAM. We review, pursuant to Supreme Court
Rule (SCR) 22.33(3),1 a report filed by Referee Dennis J. Flynn,
recommending that the court reinstate the license of Walter W.
Stern, III to practice law in Wisconsin. Upon careful review of
1
SCR 22.33(3) provides that "[i]f no appeal is timely
filed, the supreme court shall review the referee's report,
order reinstatement, with or without conditions, deny
reinstatement, or order the parties to file briefs in the
matter."
No. 2013AP149-D
the matter, we agree that Attorney Stern's license should be
reinstated upon conditions to be discussed later. As to costs,
we hold that, due to the unique nature of this case, Attorney
Stern should be responsible for one-half of the Office of Lawyer
Regulation's (OLR) $6,881.67 in costs, for a total of $3,440.84.
¶2 Attorney Stern was licensed to practice law in
Wisconsin in 1974. He was privately reprimanded in 1988;
publicly reprimanded in 1992; privately reprimanded in 1993; and
privately reprimanded in 2008. In a May 2013 per curiam
opinion, this court approved the findings and conclusions of a
referee's report that adopted a stipulation between the OLR and
Attorney Stern; in that stipulation, Attorney Stern pled no
contest to misconduct that led to his federal conviction of
conspiring to commit money laundering and a federal prison term
of one year and one day. This court suspended Attorney Stern's
license to practice law for two years, consistent with the
parties' stipulation and the referee's recommendation. See
In re Disciplinary Proceedings Against Stern, 2013 WI 46,
347 Wis. 2d 552, 830 N.W.2d 674.
¶3 In July 2013, the United States Court of Appeals for
the Seventh Circuit reversed Attorney Stern's conviction on the
ground that the trial court wrongly prevented him from
testifying about his own conduct. United States v. Leonard-
Allen, 739 F.3d 948, 954-55 (7th Cir. 2013), as amended on
denial of rehearing and rehearing en banc (Aug. 29, 2013).
Attorney Stern was released from prison after having served
approximately six months of his sentence. He later pled guilty
2
No. 2013AP149-D
to a federal misdemeanor offense of contempt of court that
resulted in no further federal prison time.
¶4 In February 2015, Attorney Stern filed a petition
seeking the reinstatement of his law license. In September
2015, the OLR filed a response not opposing the reinstatement
petition, but reserving the right to further tailor its
recommendation in accordance with the evidence received at a
public hearing in late September 2015. After holding the public
hearing, the referee filed his report and recommendation in
October 2015.
¶5 SCR 22.31(1)2 provides the standards to be met for
reinstatement. Specifically, the petitioner must show by clear,
satisfactory, and convincing evidence that he or she has the
2
SCR 22.31(1) provides:
The petitioner has the burden of demonstrating,
by clear, satisfactory, and convincing evidence, all
of the following:
(a) That he or she has the moral character to
practice law in Wisconsin.
(b) That his or her resumption of the practice of
law will not be detrimental to the administration of
justice or subversive of the public interest.
(c) That his or her representations in the
petition, including the representations required by
SCR 22.29(4)(a) to (m) and 22.29(5), are
substantiated.
(d) That he or she has complied fully with the
terms of the order of suspension or revocation and
with the requirements of SCR 22.26.
3
No. 2013AP149-D
moral character to practice law, that his or her resumption of
the practice of law will not be detrimental to the
administration of justice or subversive to the public interest,
and that he or she has complied with SCR 22.26 and the terms of
the order of suspension. In addition, SCR 22.31(1)(c)
incorporates the statements that a petition for reinstatement
must contain pursuant to SCR 22.29(4)(a)-(4m).3 Thus, the
3
SCR 22.29(4)(a) through (4m) provides that a petition for
reinstatement must show all of the following:
(a) The petitioner desires to have the
petitioner's license reinstated.
(b) The petitioner has not practiced law during
the period of suspension or revocation.
(c) The petitioner has complied fully with the
terms of the order of suspension or revocation and
will continue to comply with them until the
petitioner's license is reinstated.
(d) The petitioner has maintained competence and
learning in the law by attendance at identified
educational activities.
(e) The petitioner's conduct since the suspension
or revocation has been exemplary and above reproach.
(f) The petitioner has a proper understanding of
and attitude toward the standards that are imposed
upon members of the bar and will act in conformity
with the standards.
(g) The petitioner can safely be recommended to
the legal profession, the courts and the public as a
person fit to be consulted by others and to represent
them and otherwise act in matters of trust and
confidence and in general to aid in the administration
of justice as a member of the bar and as an officer of
the courts.
(continued)
4
No. 2013AP149-D
petitioning attorney must demonstrate that the required
representations in the reinstatement petition are substantiated.
¶6 When reviewing referee reports in reinstatement
proceedings, we utilize standards of review similar to those we
use for reviewing referee reports in disciplinary proceedings.
We do not overturn a referee's findings of fact unless they are
clearly erroneous. On the other hand, we review a referee's
legal conclusions, including whether the attorney has satisfied
the criteria for reinstatement, on a de novo basis. In re
Disciplinary Proceedings Against Jennings, 2011 WI 45, ¶39,
334 Wis. 2d 335, 801 N.W.2d 304; In re Disciplinary Proceedings
Against Gral, 2010 WI 14, ¶22, 323 Wis. 2d 280, 779 N.W.2d 168.
¶7 The referee found that Attorney Stern demonstrated by
clear, satisfactory, and convincing evidence all of the
requirements for reinstatement of his Wisconsin law license. In
(h) The petitioner has fully complied with the
requirements set forth in SCR 22.26.
(j) The petitioner's proposed use of the license
if reinstated.
(k) A full description of all of the petitioner's
business activities during the period of suspension or
revocation.
(4m) The petitioner has made restitution to or
settled all claims of persons injured or harmed by
petitioner's misconduct, including reimbursement to
the Wisconsin lawyers’ fund for client protection for
all payments made from that fund, or, if not, the
petitioner's explanation of the failure or inability
to do so.
5
No. 2013AP149-D
particular, the referee found that Attorney Stern has not
practiced law during the period of his suspension; that he has
complied fully with the terms of the order of suspension and
will continue to do so until his license is reinstated; that he
has maintained competence and learning in the law; that his
conduct since the suspension has been exemplary and above
reproach; that he has a proper understanding of and attitude
toward the standards that are imposed upon members of the bar
and will act in conformity with those standards; and that he can
be safely recommended to the legal profession, the courts, and
the public as a person fit4 to be consulted by others and to
represent them and otherwise act in matters of trust and
confidence and in general to aid in the administration of
justice as a member of the bar and an officer of the courts.
¶8 Concerning Attorney Stern's compliance with the
requirements of SCR 22.26, the referee noted, as did the
parties, that Attorney Stern was unable during his suspension to
properly and promptly close his trust account. Cf.
SCR 22.26(1)(d) (requiring that, within the first 15 days after
the effective date of suspension, the attorney must make all
arrangements for the temporary or permanent closing or winding
4
Two exhibits (Exhibits 1 and 2) related to Attorney
Stern's fitness as a lawyer were received during the public
hearing in this matter. These exhibits consist of medical
correspondence regarding Attorney Stern's treatment for certain
mental health issues. Consistent with the joint recommendation
of the parties, we instruct the clerk of this court to maintain
these two exhibits under seal.
6
No. 2013AP149-D
up of the attorney's practice). This was so because, since
2009, Attorney Stern has had a $585.25 surplus in his trust
account which he has been unable to reconcile due to the loss of
certain records. The referee wrote that he was "impressed by
[Attorney] Stern's voluntarily holding the overage of $585.25
from his Trust Account for a period of 6-plus years when he did
not have records regarding who was entitled to those funds,"
rather than "default[ing] those funds to himself." The referee
also noted that Attorney Stern has agreed, at the OLR's
recommendation, to transmit the $585.25 surplus to the unclaimed
property unit of the Wisconsin Department of Revenue.
¶9 Upon review of the record, we agree that Attorney
Stern has established by clear, satisfactory, and convincing
evidence that he has satisfied all the criteria necessary for
reinstatement. Accordingly, we adopt the referee's findings of
fact and conclusions of law and we accept the referee's
recommendation to reinstate Attorney Stern's license to practice
law in Wisconsin. We further direct Attorney Stern to transmit
the $585.25 surplus in his trust account to the unclaimed
property unit of the Wisconsin Department of Revenue within 30
days of the date of this order.
¶10 The only dispute is as to costs. The referee
recommended that Attorney Stern should not be responsible for
any costs associated with this reinstatement proceeding. In his
report, and in a subsequent letter to the court, the referee
maintained that assessing costs against Attorney Stern would be
inequitable, as Attorney Stern has already been penalized by
7
No. 2013AP149-D
what the referee terms a "wrongful[]" conviction for money
laundering; by the prison time he served before that conviction
was reversed; by his reputational loss; and by his two-year law
license suspension.
¶11 In its statement of costs, the OLR disagrees with the
referee's recommendation that this court should impose no costs
against Attorney Stern. The OLR states that while it
"recognizes that the Referee found relevant Attorney Stern's
full adherence to the two year suspension and the prison time he
served," these circumstances were nevertheless not "the type of
extraordinary circumstances that justify deviation from the
Court's policy" of imposing all costs against a lawyer seeking
to be reinstated.
¶12 In a subsequent letter to the court, Attorney Stern
insists that he should pay no costs because "he has been the
victim of a great injustice, and imposing costs against him
would simply add to the magnitude of that great injustice."
¶13 Our general practice is to assess full costs against
the respondent in a disciplinary proceeding, or against the
petitioner in a reinstatement proceeding. See generally
SCR 22.24(1), (1m); see also In re Disciplinary Proceedings
Against Webster, 2002 WI 100, ¶¶51-52, 255 Wis. 2d 323,
647 N.W.2d 831. This is so for a common-sense reason: It is
only fair that a disciplined lawyer should shoulder, to the
extent the lawyer is able, the costs of an OLR proceeding that
the lawyer's misconduct necessitated, rather than transferring
those costs to the other members of the bar who have not engaged
8
No. 2013AP149-D
in misconduct. See In re Disciplinary Proceedings Against
Inglimo, 2007 WI 126, ¶94, 305 Wis. 2d 71, 740 N.W.2d 125.
There is no doubt that Attorney Stern's misconduct, which he did
not dispute in his 2013 disciplinary proceedings, necessitated
these reinstatement proceedings. We see no reason to transfer
all of the associated costs of these reinstatement proceedings
to other attorneys who have not engaged in misconduct. See
In re Disciplinary Proceedings Against Balistrieri, 2014 WI 104,
¶62, 358 Wis. 2d 262, 852 N.W.2d 1 ("The reinstatement
proceeding is a result of the attorney's misconduct that
required the imposition of a suspension or revocation in the
first place. It is therefore generally proper to impose the
costs of a formal reinstatement proceeding upon the attorney
seeking reinstatement.").
¶14 This result is bolstered by the recent case of In re
Disciplinary Proceedings Against Hurtgen, 2015 WI 92,
364 Wis. 2d 576, 869 N.W.2d 490. In Hurtgen, this court revoked
Attorney Hurtgen's license on a petition for consensual license
revocation following a federal conviction in 2009, entered on
Attorney Hurtgen's guilty plea, for one count of aiding and
abetting wire fraud. See In re Disciplinary Proceedings Against
Hurtgen, 2009 WI 92, 321 Wis. 2d 280, 772 N.W.2d 923. In 2010,
the federal district court granted Attorney Hurtgen's motion to
withdraw his guilty plea on the ground that the United States
Supreme Court had ruled that the legal theory under which
Attorney Hurtgen had been charged was flawed. Hurtgen,
364 Wis. 2d 576, ¶3. In 2012, all remaining charges against
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No. 2013AP149-D
Attorney Hurtgen were dismissed with prejudice. Id. In 2014,
Attorney Hurtgen filed a petition for the reinstatement of his
license to practice law, which this court granted in September
2015. Of significance here, this court ordered Attorney Hurtgen
to pay the full costs of the reinstatement proceeding. Id.,
¶11. Given that it was appropriate for this court to assess the
full costs of a reinstatement proceeding against a lawyer who
was fully exonerated of all charges that led to the revocation
of his law license, it would seem incongruous to assess no costs
against Attorney Stern, who was not fully exonerated; as stated
above, he stands guilty, by his own plea, of criminal contempt
of court.
¶15 On the other hand, the OLR does not make a
particularly compelling case against the referee's
recommendation to waive the costs of this proceeding. While
this court's general policy is to award full costs to the OLR,
see SCR 22.24(1m), we have certainly made exceptions to this
policy. The OLR, in arguing that no such exception should be
made here, seems to refer to an outdated standard: whether
"extraordinary circumstances" justify a deviation from the
court's general policy to award the OLR full costs. We removed
the "extraordinary circumstances" language from our rule
governing the assessment of costs (SCR 22.24) some time ago.
See S. Ct. Order 05-01B, 2011 WI 59 (iss. Jul. 6, 2011;
eff. Jan. 1, 2012).
¶16 On balance, we deem it appropriate to impose one-half
of the costs on Attorney Stern, or $3,440.84. Our determination
10
No. 2013AP149-D
is not the result of the application of a precise mathematical
formula, but is based on our thorough consideration of the
record and the unusual posture of this case, including the
unquestionable professional and economic effects of Attorney
Stern's partial service of a federal prison sentence for a
conviction that was later reversed on appeal.
¶17 IT IS ORDERED that the license of Walter W. Stern, III
to practice law in Wisconsin is reinstated, effective the date
of this order.
¶18 IT IS FURTHER ORDERED that within 60 days of the date
of this order, Walter W. Stern, III shall pay to the Office of
Lawyer Regulation costs in the amount of $3,440.84.
¶19 IT IS FURTHER ORDERED that compliance with all of the
terms of this order remain a condition of Walter W. Stern, III's
license to practice law in Wisconsin, including the requirement
that Walter W. Stern, III shall transmit the $585.25 surplus in
his trust account to the unclaimed property unit of the
Wisconsin Department of Revenue within 30 days of the date of
this order.
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No. 2013AP149-D
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