Office of Lawyer Regulation v. Carl Robert Scholz , 2020 WI 84 ( 2020 )

2020 WI 84
SUPREME COURT OF WISCONSIN
CASE NO.: 2017AP2530-D
COMPLETE TITLE: In the Matter Disciplinary Proceedings Against
Carl Robert Scholz, Attorney at Law:
Office of Lawyer Regulation,
Complainant-Respondent,
v.
Carl Robert Scholz,
Respondent-Appellant.
DISCIPLINARY PROCEEDINGS AGAINST SCHOLZ
OPINION FILED: November 10, 2020
SUBMITTED ON BRIEFS:
ORAL ARGUMENT:
SOURCE OF APPEAL:
COURT:
COUNTY:
JUDGE:
JUSTICES:
Per Curiam.
NOT PARTICIPATING:
BRIAN HAGEDORN, J., did not participate.
ATTORNEYS:
For the respondent-appellant, there was a brief filed by
Carl R. Scholz, Mequon.
For the complainant-respondent, there was a brief filed by
John T. Payette and Office of Lawyer Regulation.
2020 WI 84
NOTICE
This opinion is subject to further
editing and modification. The final
version will appear in the bound
volume of the official reports.
No. 2017AP2530-D
STATE OF WISCONSIN : IN SUPREME COURT
In the Matter Disciplinary Proceedings
Against Carl Robert Scholz,
Attorney at Law:
Office of Lawyer Regulation,
FILED
Complainant-Respondent, NOV 10, 2020
v. Sheila T. Reiff
Clerk of Supreme Court
Carl Robert Scholz,
Respondent-Appellant.
ATTORNEY disciplinary proceeding. Attorney's license
suspended.
¶1 PER CURIAM. This disciplinary matter comes to the
court on Attorney Scholz's appeal of a report and recommendation
filed by Referee Kim M. Peterson. The referee concluded that
Attorney Scholz committed ten counts of professional misconduct
in connection with his representation of A.B., and recommended a
one-year suspension of Attorney Scholz's law license. Attorney
Scholz challenges the recommended suspension; he argues that it
is excessive in light of the totality of the facts and
No. 2017AP2530-D
circumstances surrounding his representation of A.B. and he
seeks a more lenient sanction.
¶2 When we review a referee's report and recommendation
in an attorney disciplinary case we affirm the referee's
findings of fact unless they are found to be clearly erroneous,
and we review the referee's conclusions of law on a de novo
basis. In re Disciplinary Proceedings Against Inglimo, 2007 WI
126, ¶5, 305 Wis. 2d 71, 740 N.W.2d 125. We determine the
appropriate level of discipline given the particular facts of
each case, independent of the referee's recommendation, but
benefiting from it. In re Disciplinary Proceedings Against
Widule, 2003 WI 34, ¶44, 261 Wis. 2d 45, 660 N.W.2d 686.
¶3 After reviewing this matter and considering Attorney
Scholz's appeal, we accept the referee's factual findings and
legal conclusions. However, we have determined that a two-year
suspension, as originally sought by the Office of Lawyer
Regulation (OLR), is appropriate. We reserve the question of
restitution, pending receipt of supplemental briefing requested
by separate order of this court, and we impose the costs of this
proceeding on Attorney Scholz.
¶4 Attorney Scholz was admitted to practice law in
Wisconsin in 1994. He practices in Mequon. In 2011, he was
privately reprimanded for failing to hold client funds in trust
when he deposited a client's advance fee payment directly into
his business account without giving the requisite alternative
fee notices and then he used the funds to pay a personal tax
obligation, and for transferring client funds from his trust
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No. 2017AP2530-D
account to his business account without giving notice to the
client at the time of the transfer that the funds represented a
fee payment. Private Reprimand, No. 2011-21.1
¶5 On December 27, 2017, the OLR filed a ten-count
disciplinary complaint relating to his representation of A.B. in
a foreclosure/partition action between A.B. and her former
daughter-in-law, K.D. The complaint alleged that Attorney
Scholz converted funds that were to be held in trust, then
engaged in various misrepresentations to hide his misconduct.
The complaint sought a two-year license suspension and
restitution of $60,975.94 paid either to the Ozaukee County
Circuit Court or to opposing counsel's trust account, pending
resolution of the foreclosure/partition action between Attorney
Scholz's client, A.B., and K.D.
¶6 The referee conducted a two-day hearing in January
2019 and concluded that the OLR had proved, by clear and
convincing evidence, all ten counts of misconduct. The referee
recommended we impose a one-year suspension and costs, but did
not address restitution. Attorney Scholz appeals.
¶7 This matter has a long history that will be greatly
abridged for purposes of this opinion. In 1985, A.B., her
husband, and their son, D.B., purchased a partially constructed
home on almost 80 acres of land in Ozaukee County. Several
years later, D.B. married K.D. The two couples co-owned the
Electronic copy available at https://compendium.wicourts.
1
gov/app/raw/002454.html.
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No. 2017AP2530-D
property until K.D. filed for divorce from D.B. in 2008. D.B.
had been in prison since 1994. Attorney Scholz represented D.B.
in the divorce.
¶8 The primary issue in the divorce was the division of
the jointly owned residence and surrounding real estate. A.B.
hired Attorney Donald Fraker, who filed a separate lawsuit to
assert her interests in the shared property. Months of
collateral litigation ensued. During this time, A.B.'s husband
passed away. The court ruled that D.B. and K.D. (whose divorce
was still pending) jointly owned a one-half interest in the
property and A.B. owned the other one-half interest.
Eventually, in the divorce action, K.D. was awarded the one-half
interest in the property and was assigned responsibility for the
outstanding mortgage.
¶9 In May 2012, a foreclosure action was filed against
the property. A.B. and K.D. litigated who was responsible for
the unpaid mortgage. Then, the Department of Natural Resources
(DNR) purchased most of the jointly owned acreage. After the
mortgagee was paid along with some other expenses, there
remained approximately $180,000, plus the house and a five-acre
lot. A.B. and K.D. proceeded to litigate their respective
rights to this property.
¶10 In February 2013 A.B. and K.D. reached a stipulation
providing that their lawyers would each hold half the disputed
funds in their respective trust accounts pending the outcome of
the lawsuit to partition the property. The stipulation stated,
"Such funds shall continue to be held in such trust accounts, to
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No. 2017AP2530-D
be disbursed as later may be agreed upon in writing by the
parties or ordered by the Court." The stipulation was approved
by court order issued on February 22, 2013.
¶11 This brings us to Attorney Scholz's involvement in the
matters giving rise to this disciplinary proceeding. In June
2013, Attorney Scholz assumed representation of A.B. from
Attorney Fraker. At the time, Attorney Fraker held in trust
$91,545.64 in disputed funds, pursuant to the terms of the
stipulation. Attorney Fraker had "earmarked" approximately
$30,000 of these funds for his own attorney fees but offered to
disburse the remaining two-thirds to Attorney Scholz as part of
the substitution of attorneys. When this occurred, in Attorney
Scholz's own words, "[A.B.] and [Attorney Scholz] struck a deal
that would enable her to continue the fight [against K.D.]."
¶12 At the ensuing disciplinary hearing Attorney Scholz
revealed that he and A.B. had agreed that she would "loan"
Attorney Scholz the balance of the disputed funds. In exchange,
Attorney Scholz promised to represent A.B. for the duration of
her case against K.D. for a $5,000 fee payable at some future
date plus 10 percent of any recovery obtained for her. This
"deal" was memorialized in a pair of written agreements.
¶13 On July 8, 2013, Attorney Fraker disbursed $60,975.94
of the disputed funds to Attorney Scholz. Attorney Scholz
deposited the disputed funds into his business account – not a
trust account. Attorney Scholz then began spending the money,
mostly for his own benefit, and by mid-August, it was gone. We
will not recount all the transactions. Summarized, the OLR
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No. 2017AP2530-D
alleged that Attorney Scholz disbursed at least $60,343.40 of
the $60,975.94 for his own purposes, or for the benefit of other
clients or third parties, thereby converting at least $60,343.40
as of August 12, 2013.
¶14 Meanwhile, A.B. and K.D. were still litigating
ownership of these funds. Commencing in August 2013, their
lawyers participated in a mediation and reached a written one-
page "Interim Agreement" whereby K.D.'s lawyer could "release
funds in her trust account to her client [K.D.]." There was no
written agreement that A.B.'s lawyers could disburse any of the
disputed funds. During this mediation Attorney Scholz did not
disclose that he had already disbursed nearly all of the
disputed funds he was supposed to be holding in trust.
¶15 In December 2013, following another mediation session,
Attorney Scholz told Attorney Fraker that he could disburse to
himself the $29,069.73 he had earmarked for attorney fees, and
Attorney Fraker did so.
¶16 In February 2014, Attorney Scholz filed an amended
cross-claim in the civil property/partition dispute on behalf of
A.B. The pleading states that $183,091.29 of disputed funds had
not been divided and remained to be partitioned. Attorney
Scholz did not advise the court that these funds were no longer
in trust.
¶17 On January 29, 2015, mediation having failed, the
court appointed a Special Master to decide A.B.'s and K.D.'s
rights and interests in the disputed funds and property. In
June 2015, the Special Master advised the attorneys that he was
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No. 2017AP2530-D
awaiting more information from K.D.'s attorney and that he had
received "no information or accounting" from Attorney Scholz.
The Special Master informed both attorneys that he expected that
"full accountings with supporting documents would be in [his]
office no later than July 1, 2015." Attorney Scholz did not
provide the accounting. On July 1, 2015, the Special Master
wrote to the attorneys, stating, as relevant here: "As to Mr.
Scholz I have heard nothing further regarding documentation."
Attorney Scholz asked for more time to respond but then failed
to do so.
¶18 On July 15, 2015, the Special Master issued a report
determining that K.D. was entitled to 97 percent of the proceeds
of any sale of the home and property. K.D.'s lawyer then asked
the Special Master to explicitly resolve the allocation of the
disputed funds. The Special Master forwarded this email to
Attorney Scholz and requested a response by July 30, 2015.
Attorney Scholz did not respond. On August 4, 2015, the Special
Master sent a follow-up letter asking if Attorney Scholz had any
response or disagreement. Again, Attorney Scholz did not
respond.
¶19 On August 6, 2015, the Special Master filed an amended
report with the court, which allocated 97 percent of the
disputed funds to K.D. The Special Master added that when the
acreage had been sold, certain expenses had been paid from the
sale proceeds that were A.B.'s obligations. These amounts
included some $28,034.97 in legal fees paid to Attorney Scholz
for D.B.'s divorce. The Special Master ordered that K.D. should
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No. 2017AP2530-D
be reimbursed for these expenditures before the remaining
disputed funds were distributed between A.B. and K.D.
¶20 Attorney Scholz filed a formal objection to the
Special Master's amended report. A.B. filed for bankruptcy.
¶21 In January 2016, Attorney Scholz and K.D.'s lawyer
told the circuit court that the remaining property had been
sold, subject to bankruptcy court approval, and disclosed that
they no longer held in trust any of the disputed funds from the
DNR sale. The circuit court expressed consternation, stating:
"You two are going to get in a lot of trouble on this. There's
a court order that said that was to be maintained in the trust
accounts, and you cannot just disregard a court order."
¶22 K.D.'s lawyer clarified that she had relied on the
written interim agreement prepared by their mediator as "written
agreement by the parties." The court then addressed Attorney
Scholz: "[I]t certainly looks like there was an agreement that
[K.D.'s lawyer] could release the funds in her trust account to
her client. It doesn't say anything about [A.B.] releasing
those funds. She better find a way to restore them, or there's
going to be contempt proceedings." The court continued
addressing Attorney Scholz:
Because you know what? That is - that is an ethical
violation, what you did there. And I have an
obligation to report that, Mr. Scholz, and I will do
that. There was a court order, and there's nothing
that says you can do what you did. You just went
beyond what I said you could do, and that's a problem.
That's a huge problem.
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No. 2017AP2530-D
¶23 Notably, the circuit court assumed Attorney Scholz had
disbursed the funds to A.B. Attorney Scholz did not inform the
court that he had "borrowed" the money from A.B. or that he had
arranged to reimburse A.B. in part with services-in-kind. He
also told the court that parts of the mediator's interim
agreement were missing, implying the missing pages would confirm
his right to disburse funds. The interim agreement was a one-
page document.
¶24 The circuit court directed Attorney Scholz to submit
an "accounting" of his disbursement of the disputed funds.
Attorney Scholz submitted a one-page document that the referee
later found was a misrepresentation of what had transpired.
Attorney Scholz also provided the court with a "receipt"
purportedly signed by A.B. on December 23, 2013, which stated
that she had received $50,975.94 "as the balance of her share of
the proceeds . . . " and purported to authorize Attorney Scholz
to retain $10,000 toward past and future expenses related to the
representation. As of December 23, 2013, Attorney Scholz had
not made any such payment to A.B. and he was no longer holding
any of the disputed funds in trust.
¶25 Following the evidentiary hearing and submission of
post-hearing briefs, the referee determined that the OLR clearly
and convincingly proved that Attorney Scholz committed all ten
counts of misconduct:
Count One: By converting to his own use or purposes,
or for the benefit of other clients or third parties,
9
No. 2017AP2530-D
funds that he was to hold in trust, Attorney Scholz
violated SCR 20:8.4(c).2
Count Two: By failing to hold in trust, separate from
his own property, the proceeds from the sale of the
parcel of land, Attorney Scholz violated
SCR 20:1.15(b)(1).3
Count Three: By failing to hold all of the disputed
funds in trust until the dispute was resolved,
Attorney Scholz violated former SCR 20:1.15(d)(3).4
2 SCR 20:8.4(c) provides: "It is professional misconduct
for a lawyer to engage in conduct involving dishonesty, fraud,
deceit or misrepresentation."
3 SCR 20:1.15(b)(1) provides:
A lawyer shall hold in trust, separate from the
lawyer's own property, that property of clients and
3rd parties that is in the lawyer's possession in
connection with a representation. All funds of
clients and 3rd parties paid to a lawyer or law firm
in connection with a representation shall be deposited
in one or more identifiable trust accounts.
4 Effective July 1, 2016, substantial changes were made to
Supreme Court Rule 20:1.15, the "trust account rule." See S.
Ct. Order 14-07, 2016 WI 21 (issued Apr. 4, 2016, eff. July 1,
2016). Because the conduct underlying this case arose prior to
July 1, 2016, unless otherwise indicated, all references to the
supreme court rules will be to those in effect prior to July 1,
2016.
Former SCR 20:1.15(d)(3) provided:
When the lawyer and another person or the client
and another person claim ownership interest in trust
property identified by a lien, court order, judgment,
or contract, the lawyer shall hold that property in
trust until there is an accounting and severance of
the interests. If a dispute arises regarding the
division of the property, the lawyer shall hold the
disputed portion in trust until the dispute is
resolved. Disputes between the lawyer and a client
are subject to the provisions of sub.(g)(2).
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No. 2017AP2530-D
Count Four: By failing to hold the disputed funds in
trust until there was a written agreement or court
order permitting the release of the funds, Attorney
Scholz violated SCR 20:3.4(c).5
Count Five: By causing Attorney Fraker to disburse
the funds he was holding in trust, when there was no
written agreement or court order authorizing the
disbursement, Attorney Scholz violated SCR 20:3.4(c),
via SCR 20:8.4(a).6
Count Six: By engaging in communications with the
mediator and opposing counsel regarding whether
Attorney Scholz could disburse any of the disputed
funds, when Attorney Scholz had already disbursed
substantially all of the disputed funds, Attorney
Scholz violated SCR 20:8.4(c).
Count Seven: By failing to respond to opposing
counsel's filings with the Special Master or the
Special Master's requests for [A.B.'s] response to
opposing counsel's filings, or to clarify whether the
Special Master had granted Attorney Scholz's request
for additional time to respond and the deadline to do
so, Attorney Scholz violated SCR 20:1.3.7
Count Eight: By presenting false evidence to the
court regarding his handling of the disputed funds and
his client's receipt of funds, by making false
statements to the court regarding his handling and
disbursement of the disputed funds, and by failing to
5 SCR 20:3.4(c) provides: "A lawyer shall not knowingly
disobey an obligation under the rules of a tribunal, except for
an open refusal based on an assertion that no valid obligation
exists."
6 SCR 20:8.4(a) provides: "It is professional misconduct
for a lawyer to violate or attempt to violate the Rules of
Professional Conduct, knowingly assist or induce another to do
so, or do so through the acts of another."
7 SCR 20:1.3 provides: "A lawyer shall act with reasonable
diligence and promptness in representing a client."
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No. 2017AP2530-D
correct false statements he made to the court,
Attorney Scholz violated SCR 20:3.3(a)(l)8 and (3).9
Count Nine: By failing to maintain a pooled interest-
bearing trust account between sometime prior to
August, 2010, and November 12, 2014, and failing
during that period of time to participate in the
Interest on Trust Accounts Program, Attorney Scholz
violated, former SCR 20:1.15(c)(1), current
SCR 20:1.15(c)(1),10 and SCR 13.04.11
8 SCR 20:3.3(a)(l) provides: "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."
9 SCR 20:3.3(a)(3) provides:
A lawyer shall not knowingly offer evidence that
the lawyer knows to be false. If a lawyer, the
lawyer's client, or a witness called by the lawyer,
has offered material evidence and the lawyer comes to
know of its falsity, the lawyer shall take reasonable
remedial measures, including, if necessary, disclosure
to the tribunal. A lawyer may refuse to offer
evidence, other than the testimony of a defendant in a
criminal matter that the lawyer reasonably believes is
false.
10 The relevant text of SCR 20:1.15(c)(1) provides:
A lawyer or law firm who receives client or 3rd-
party funds that the lawyer or law firm determines to
be nominal in amount or that are expected to be held
for a short period of time such that the funds cannot
earn income for the benefit of the client or 3rd party
in excess of the costs to secure that income, shall
maintain a pooled interest-bearing or dividend-paying
draft trust account in an IOLTA participating
institution.
11 SCR 13.04(1) provides:
(1) An attorney shall participate in the program
as provided in SCR 20:1.15 unless:
(a) The attorney certifies on the annual trust
account statement filed with the state bar that:
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No. 2017AP2530-D
Count Ten: By making misrepresentations to the OLR
during the course of the investigation of this matter,
Attorney Scholz violated SCR 22.03(6),12 enforceable
via SCR 20:8.4(h).13
¶26 The referee found that Attorney Scholz was "careless
and negligent" and described his misconduct as "serious"
stating:
In this case, the misconduct Scholz engaged in is
serious. Scholz not only improperly converted funds,
but he covered up his conduct over the course of
several years with several instances of misleading
omissions and false representations to the court,
opposing counsel, the OLR, [the Special Master] and
[the mediator]. While Scholz's conduct might not have
harmed his client, it did harm the opposing party, who
lost out on the funds he improperly distributed to
himself, and later his client.
1. Based on the attorney's current annual trust
account experience and information from the
institution in which the attorney deposits trust
funds, service charges on the account would equal or
exceed any interest generated; or
2. Because of the nature of the attorney's
practice, the attorney does not maintain a trust
account; or (b) The board, on its own motion or upon
application from an attorney, grants a waiver from
participation in the program for good cause.
SCR
12 22.03(6) provides: "In the course of the
investigation, the respondent's willful failure to provide
relevant information, to answer questions fully, or to furnish
documents and the respondent's misrepresentation in a disclosure
are misconduct, regardless of the merits of the matters asserted
in the grievance."
SCR 20:8.4(h) provides:
13 "It is professional misconduct
for a lawyer to fail to cooperate in the investigation of a
grievance filed with the office of lawyer regulation as required
by SCR 21.15(4), SCR 22.001(9)(b), SCR 22.03(2), SCR 22.03(6),
or SCR 22.04(1)."
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No. 2017AP2530-D
However, the referee apparently accepted many of Attorney
Scholz's explanations, characterizing the conversion as an
"improper loan" and finding that Attorney Scholz "repaid it
quickly." The referee observed: "[i]n this case, Attorney
Scholz's conduct did not injure his client, and he did not
appear to manipulate or steal from his client, rather he took an
improper loan, and repaid that quickly. He did not breach a
client's trust . . .."
¶27 The referee deemed a one-year license suspension
sufficient and recommended that Attorney Scholz should be
required to pay the full costs of this proceeding. The OLR's
statement of costs discloses that these costs were $16,804.30 as
of March 17, 2020. The report does not mention restitution.
¶28 We turn to the merits of Attorney Scholz's appeal. He
explains that:
[t]his appeal was not brought for the purpose of
overturning that decision, but rather, as a plea for
leniency based on the extraordinary nature of this
case, the good work that was done, and the result that
was ultimately obtained for a very special lady, all
of which was overshadowed by [Scholz's] carelessness,
neglect and in some instances, disregard for the Rules
of Professional Conduct.
¶29 We first consider the referee's factual findings.
Attorney Scholz does not challenge the referee's factual
findings, per se, taking issue only with "certain inferences."
There has been no showing that any of the referee's findings are
clearly erroneous and we accept and affirm those findings.
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No. 2017AP2530-D
¶30 We turn to the referee's conclusions of law. Attorney
Scholz questions the conclusion that he violated SCR 20:1.3
(Diligence), as alleged in Count 7:
By failing to respond to opposing counsel's filings
with the Special Master or the Special Master's
requests for [A.B.'s] response to opposing counsel's
filings, or to clarify whether the Special Master had
granted Attorney Scholz's request for additional time
to respond and the deadline to do so, Attorney Scholz
violated SCR 20:1.3.
¶31 Attorney Scholz maintains that he gave the Special
Master adequate information shortly after the Special Master was
appointed. He argues that his efforts on A.B.'s behalf reflect
his "commitment" and "dedication" and "zeal." It is clear from
the record, however, that Attorney Scholz repeatedly failed to
respond to the Special Master's requests for information. As
the OLR observed, Attorney Scholz's lack of diligence in in this
regard "deprived [A.B.] of credit for any of the other value she
contributed to the property." Referee Peterson found that "[i]n
the end, Scholz never filed any substantive written response to
[the Special Master's] report." We affirm the referee's
determination that Attorney Scholz violated SCR 20:1.3.
¶32 Attorney Scholz does not challenge the referee's other
conclusions of law, including her conclusion that he converted
the disputed funds in violation of SCR 20:8.4(c), and the record
supports the referee's conclusions. We emphasize that Attorney
Scholz's temporary use of the disputed funds constitutes
conversion notwithstanding the referee's unchallenged finding
that he "repaid" A.B.; his use of the funds does not have to be
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No. 2017AP2530-D
a permanent deprival. In re Disciplinary Proceedings Against
Mulligan, 2015 WI 96, ¶36, 365 Wis. 2d 43, 870 N.W.2d 233
(citing In re Disciplinary Proceedings Against Weigel, 2012 WI
124, ¶41, 345 Wis. 2d 7, 823 N.W.2d 798 (quoting ABA/BNA
Lawyers' Manual on Professional Conduct § 45:503 (2007)). The
referee's other conclusions are supported by the record and we
affirm them.
¶33 We turn to considering the appropriate sanction for
Attorney Scholz's misconduct. We are free to impose discipline
more or less severe than that recommended by the referee. In re
Disciplinary Proceedings Against Krill, 2020 WI 20, ¶54, 390
Wis. 2d 466, 938 N.W.2d 589, (citing In re Disciplinary
Proceedings Against Elliott, 133 Wis. 2d 110, 394 N.W.2d 313
(1986); In re Disciplinary Proceedings Against Reitz, 2005 WI
39, 279 Wis. 2d 550, 694 N.W.2d 894). The OLR requested a two-
year suspension. The referee recommended we impose a one-year
suspension.
¶34 On this appeal, Attorney Scholz asks the court to
impose a still more lenient suspension. He emphasizes that A.B.
was not a grievant and maintains that she was "a knowing and
consenting participant in the transaction." He argues that
certain disciplinary cases support a more lenient sanction,
citing In re Disciplinary Proceedings Against Tobin, 2007 WI 50,
300 Wis. 2d 250, 730 N.W.2d 896 (imposing four month suspension
for nine counts of misconduct, including converting funds
belonging to a number of third parties for personal use in
violation of SCR 20:1.15(b)(1) and SCR 20:8.4(c)) and In re
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No. 2017AP2530-D
Disciplinary Proceedings Against Bartz, 2015 WI 61, 362
Wis. 2d 752, 864 N.W.2d 881 (imposing a 60-day suspension on an
attorney who committed five counts of misconduct, including
conversion of third-party funds in violation of
SCR 20:1.15(b)(1) and SCR 20:8.4(c), and who failed to cooperate
with the OLR's investigation).
¶35 Tobin is inapposite. The four-month suspension we
imposed there reflected "numerous mitigating factors" including
a lack of disciplinary history, Attorney Tobin's admission of
misconduct, and Attorney Tobin's voluntary payment of
restitution to his trust account. Id., ¶33. We are similarly
unpersuaded by Bartz. There, the lawyer stipulated that he
failed to timely disburse a few thousand dollars to one medical
provider, but he ultimately paid the bill. Attorney Scholz, by
contrast, committed ten counts of misconduct, converted tens of
thousands of dollars via a "loan" of funds that he knew or
should have known his client was not entitled to make, ignored
court orders, and then systematically misrepresented what he did
to hide his misconduct, resulting in a significant loss to K.D.
¶36 We conclude that the facts of this case and our case
law indicate a two-year suspension is appropriate. See In re
Disciplinary Proceedings Against Krezminski, 2007 WI 21, 299
Wis. 2d 152, 727 Wis. 2d 492 (imposing two-year suspension for
misconduct that included conversion of $37,094.42 entrusted to
the lawyer as personal representative of an estate, and the
filing of a document containing false information with the
probate court). The referee apparently considered the
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No. 2017AP2530-D
Krezminski case distinguishable, noting that Attorney Krezminski
stole from his own client. Attorney Scholz may not have stolen
from his client, but the record indicates he colluded with that
client, making an improper agreement to avail himself of
disputed funds that were not the client's to loan, at the
expense of K.D. As the referee found, while Attorney Scholz's
conduct might not have harmed his client, it did harm K.D.
"who lost out on the funds he improperly distributed to
himself, and later his client." See also In re Disciplinary
Proceedings Against Goldstein, 2010 WI 26, 323 Wis. 2d 706, 782
N.W.2d 388 (imposing two-year license suspension for various
trust account violations and conversion of approximately $70,000
in client funds despite the referee's finding of "no harm"
because the attorney had reimbursed his clients).
¶37 Attorney Scholz's misconduct reflects a callous
disregard for the rights of the opposing party, and his
fundamental obligation as an officer of the court to honor and
obey circuit court orders. He lied to opposing counsel, the
mediator, the circuit court judge, a court-appointed special
master and to the OLR, all in an effort to conceal his
conversion. He fabricated documents that he submitted to the
court to try to conceal his misconduct. Considering the
precedent cited by the OLR, coupled with a number of aggravating
factors, including his prior discipline, we have no difficulty
concluding that a suspension of two years is appropriate.
Indeed, a lengthy suspension is necessary to impress upon
Attorney Scholz and other lawyers in this state the seriousness
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No. 2017AP2530-D
of the professional misconduct at issue here, and to protect the
public from similar misconduct in the future. See In re
Disciplinary Proceedings Against Roitburd, 2016 WI 12, ¶20, 368
Wis. 2d 595, 882 N.W.2d 317 (stating that "it is ultimately this
court's responsibility" to determine appropriate disciplinary
sanctions).
¶38 We turn next to the issue of costs. Our general
practice is to impose full costs on attorneys who are found to
have committed misconduct. See SCR 22.24(1m). Attorney Scholz
has not claimed that there are reasons to depart from that
practice in this matter, and we have not found any reason to do
so. We therefore impose full costs.
¶39 Finally, we reserve our final ruling regarding the
issue of restitution pending receipt of supplemental briefing as
ordered by this court. Upon receipt of the OLR's memorandum and
any response from Attorney Scholz, an order resolving the
restitution question will issue in due course. Therefore,
¶40 IT IS ORDERED that the license of Carl Robert Scholz
to practice law in Wisconsin is suspended for a period of two
years, effective December 22, 2020.
¶41 IT IS FURTHER ORDERED that Carl Robert Scholz shall
comply with the requirements of SCR 22.26 concerning the duties
of a person whose license to practice law in Wisconsin has been
suspended.
¶42 IT IS FURTHER ORDERED that within 60 days of the date
of this order Carl Robert Scholz shall pay to the Office of
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No. 2017AP2530-D
Lawyer Regulation the costs of this proceeding, which are
$16,804.30 as of March 17, 2020.
¶43 IT IS FURTHER ORDERED that the court reserves the
question of restitution pending consideration of court ordered
briefing as set forth in this court's order dated November 10,
2020.
¶44 IT IS FURTHER ORDERED that compliance with all
conditions of this order is required for reinstatement. See
SCR 22.29(4)(c).
¶45 BRIAN HAGEDORN, J., did not participate.
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No. 2017AP2530-D
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