Office of Lawyer Regulation v. Wiensch (In Re Wiensch)

2018 WI 98
SUPREME COURT OF WISCONSIN
CASE NO.: 2018AP1185-D
COMPLETE TITLE: In the Matter of Disciplinary Proceedings
Against Adam J. Wiensch, Attorney at Law:
Office of Lawyer Regulation,
Complainant,
v.
Adam J. Wiensch,
Respondent.
DISCIPLINARY PROCEEDINGS AGAINST WIENSCH
OPINION FILED: October 16, 2018
SUBMITTED ON BRIEFS:
ORAL ARGUMENT:
SOURCE OF APPEAL:
COURT:
COUNTY:
JUDGE:
JUSTICES:
CONCURRED:
DISSENTED:
NOT PARTICIPATING:
ATTORNEYS:
2018 WI 98
NOTICE
This opinion is subject to further
editing and modification. The final
version will appear in the bound
volume of the official reports.
No. 2018AP1185-D
STATE OF WISCONSIN : IN SUPREME COURT
In the Matter of Disciplinary Proceedings
Against Adam J. Wiensch, Attorney at Law:
Office of Lawyer Regulation, FILED
Complainant,
OCT 16, 2018
v.
Sheila T. Reiff
Clerk of Supreme Court
Adam J. Wiensch,
Respondent.
ATTORNEY disciplinary proceeding. Attorney's license
suspended.
¶1 PER CURIAM. We review a stipulation filed pursuant
to Supreme Court Rule (SCR) 22.12 by the Office of Lawyer
Regulation (OLR) and Attorney Adam J. Wiensch. In the
stipulation, Attorney Wiensch admits that he committed
professional misconduct, and he agrees with the OLR's request
that his license to practice law in Wisconsin be suspended for a
period of two years.
No. 2018AP1185-D
¶2 After careful review of the matter, we accept the
stipulation and impose the requested discipline. Because
Attorney Wiensch entered into a comprehensive stipulation prior
to the appointment of a referee, we do not require him to pay
the costs of this proceeding.
¶3 Attorney Wiensch was admitted to practice law in
Wisconsin in 1991. He has no prior disciplinary history. He
was formerly a partner of Foley & Lardner, LLP, (Foley firm)
working out of the firm's Milwaukee, Wisconsin office. At all
times material to this matter, Attorney Wiensch worked in the
firm's trust and estates practice group.
¶4 On June 25, 2018, the OLR filed a complaint alleging
that Attorney Wiensch had engaged in 13 counts of misconduct.
The OLR's complaint sought a two-year suspension of Attorney
Wiensch's license to practice law in Wisconsin.
¶5 On August 15, 2018, the OLR and Attorney Wiensch filed
a stipulation pursuant to SCR 22.12. The following facts are
taken from the stipulation.
¶6 While working at the Foley firm, Attorney Wiensch
provided estate planning services to a husband and wife who were
owners of a privately owned business corporation. Attorney
Wiensch prepared a trust under the terms of which the husband
and wife were the trust donors and their children were the
trustees and beneficiaries. Attorney Wiensch drafted an
Installment Sale Agreement, pursuant to which the husband sold
most of his stock in the company to the trust in exchange for a
promissory note in an amount in excess of $50 million based on
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No. 2018AP1185-D
the appraised value of the stock sold. The purpose of the stock
sale was to transfer wealth to the clients' children, via the
trust, free of gift and estate taxes and to ensure that any
future appreciation of the stock held by the trust would not
become part of the husband's estate.
¶7 Transactions structured like the stock sale are
reviewed by the Internal Revenue Service (IRS) to determine if
the promissory note is a bona fide debt, or if the transaction
should be treated as a taxable gift, or if transferred assets
should be included in the seller's gross estate for purposes of
determining the estate tax liability. Strategies used by estate
planning professionals to minimize the risk of an IRS challenge
to transactions such as the stock sale have included the use of
personal guarantees by trust beneficiaries of a certain
percentage of the sale price, often ten percent, or of a defined
value formula clause that automatically adjusts valuation of the
transferred assets based on a final determination by the IRS or
a court.
¶8 The husband died first, and pursuant to his estate
plan, ownership of his remaining shares in the company passed to
his wife as the surviving spouse. Attorney Wiensch was retained
to represent the husband's estate. Attorney Wiensch prepared
the estate tax return for the husband's estate and filed it with
the IRS. The IRS audited the husband's estate tax return, as
well as other gift tax returns filed on behalf of the clients
for years prior to the husband's death.
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No. 2018AP1185-D
¶9 An IRS estate tax attorney served as the examiner for
the IRS in conducting the audit. The IRS attorney corresponded
with Attorney Wiensch in an effort to obtain information
material to the audit. In September 2012, in response to
requests from the IRS attorney, Attorney Wiensch sent the IRS
copies of an Installment Sale Agreement, a Collateral Pledge
Agreement, and a Guaranty of Specific Transaction. Attorney
Wiensch represented to the IRS that the Installment Sale
Agreement memorialized the terms of the stock sale and that the
Collateral Pledge and Guaranty related to the stock sale. The
copy of the Installment Sale Agreement Attorney Wiensch sent to
the IRS in September 2012 contained a defined value formula
clause. Attorney Wiensch altered and misdated the Installment
Sale Agreement he sent to the IRS in September 2012. He did not
prepare this document contemporaneously with the stock sale.
The Installment Sale Agreement the husband actually executed on
an earlier date did not contain the defined value formula
clause.
¶10 Attorney Wiensch also altered and misdated the
Guaranty he sent to the IRS in September of 2012. He did not
prepare this document contemporaneously with the stock sale. He
copied the signatures of the clients' children from a different
document bearing a different date and pasted the signatures on
the copy of the Guaranty he sent to the IRS attorney.
¶11 Subsequent to its receipt of Attorney Wiensch's
September 2012 letter and enclosures, the IRS issued a Notice of
Deficiency with respect to the estate and gift tax returns
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No. 2018AP1185-D
Attorney Wiensch filed on behalf of the husband's estate. In
the Notice of Deficiency, the IRS asserted that the stock sale
was a gift. The IRS also asserted, in the alternative, that if
the sale was not a gift, the stock value at the time of the
transfer was double the appraised value of the stock. The
notice stated that the IRS sought gift and estate taxes and
negligence penalties against the husband's estate in the sum of
multiple millions of dollars.
¶12 The IRS simultaneously issued a Notice of Deficiency
regarding the wife, asserting she owed gift taxes and penalties
in the sum of multiple millions of dollars. In the Notice of
Deficiency issued to the wife, the IRS raised the same issues it
had raised in the Notice of Deficiency issued to the husband's
estate.
¶13 After the IRS issued the Notice of Deficiency to her,
the wife died. The clients' children, as personal
representatives of the husband's estate, retained the Foley firm
to respond to the Notice of Deficiency issued to his estate.
The clients' children, as personal representatives of the wife's
estate, also retained the Foley firm to respond to the Notice of
Deficiency issued to the wife.
¶14 Attorneys with the Foley firm other than Attorney
Wiensch filed a petition on behalf of both the husband and
wife's estate seeking a redetermination of the deficiencies
found by the IRS. The petitions filed by the Foley attorneys
alleged the stock sale was made pursuant to the Installment Sale
Agreement Attorney Wiensch had altered to contain a defined
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No. 2018AP1185-D
value formula clause. The petitions also relied on the altered
Guaranty purportedly signed by the clients' children that
Attorney Wiensch had sent to the IRS. At the time they filed
the petitions on behalf of the clients' estates, the Foley
attorneys did not know that the Installment Sale Agreement
relied on and the Guaranty purportedly signed by the clients'
children had been altered by Attorney Wiensch. Attorney Wiensch
did not inform the IRS attorney or the Foley attorneys that he
had altered and misdated the Installment Sale Agreement and the
Guaranty.
¶15 While the petitions were pending, the IRS continued
its audit of the wife's estate and gift tax returns. One item
focused upon by the IRS was a lifetime gift transfer by the wife
of some shares of the company she had inherited directly from
the husband. These transfers were reported on gift tax returns
filed with the IRS after the wife's death indicating that just
months prior to her death, the wife had transferred the shares
to the clients' children.
¶16 The same IRS attorney examining the husband's estate
was assigned the examination of the wife's estate and gift tax
returns. In conducting the examination, the IRS attorney
requested information from Attorney Wiensch showing that the
wife was mentally competent and authorized to make or consent to
stock gifts to the clients' children. By letter sent in
September 2015, the IRS attorney asked Attorney Wiensch if the
stock gifts were made pursuant to a Power of Attorney. Attorney
Wiensch responded to the IRS in October 2015, saying that the
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No. 2018AP1185-D
stock gifts were made directly by the wife. In his October 2015
letter to the IRS attorney, Attorney Wiensch enclosed a copy of
a Durable Power of Attorney to Make Gifts bearing an August 1999
date containing the wife's signature. The instrument states
that the wife appointed the husband as her agent and that if he
lacked capacity to act, she appointed the clients' children to
be her agents. Attorney Wiensch created an altered Durable
Power of Attorney to Make Gifts dated August 1999 by copying the
wife's signature from another document. Attorney Wiensch never
informed the IRS attorney or the Foley attorneys that he had
altered and misdated the Durable Power of Attorney to Make Gifts
that he sent to the IRS attorney in October 2015.
¶17 The IRS noted that the altered Durable Power of
Attorney gave the wife limited authority to make transfers of
stock and in November 2015, the IRS attorney advised Attorney
Wiensch that all shares of the company purportedly gifted by the
wife would be considered part of the wife's estate.
¶18 While the audit of the wife's estate and gift tax
returns was still underway, the IRS and the husband's estate
settled the issues presented in the petition filed on behalf of
the husband's estate. The settlement of the petition filed on
behalf of the husband's estate was induced by fraud, based on
the altered and misdated documents that Attorney Wiensch had
provided to the IRS attorney in September of 2012.
¶19 By letter dated April 14, 2016, the IRS attorney
requested a response from Attorney Wiensch to the letter sent in
November 2015 addressing the wife's authority to make the stock
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No. 2018AP1185-D
transfers under the August 1999 Durable Power of Attorney to
Make Gifts that Attorney Wiensch had provided in October 2015.
By letter dated June 16, 2016 and transmitted by facsimile,
Attorney Wiensch sent the IRS attorney a copy of a Durable Power
of Attorney for Financial Matters bearing a February 2011 date
purportedly signed by the wife. Attorney Wiensch created this
document by copying and pasting the wife's signature from
another document.
¶20 Suspecting that the February 2011 Durable Power of
Attorney was not what Attorney Wiensch purported it to be, the
IRS attorney asked that Attorney Wiensch produce the original
copies of the 1999 and 2011 powers of attorney and the February
2011 amendment to the wife's trust. Attorney Wiensch told the
IRS that he did not have the originals of the requested
documents.
¶21 The IRS attorney then wrote directly to the clients'
children asking that the original documents that had been
requested from Attorney Wiensch be produced. On July 13, 2016,
Attorney Wiensch told the IRS attorney that the clients'
children were looking for the original documents but that "there
is no reason to retain an original power of attorney after a
principal's death because the power of attorney lapses on a
principal's death."
¶22 In July 2016, the IRS attorney told Attorney Wiensch
the IRS would need to interview the clients' children in person.
¶23 By letter dated August 22, 2016, the Foley firm
informed the IRS that Attorney Wiensch was no longer with the
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No. 2018AP1185-D
firm and that they believed the August 1999 Durable Power of
Attorney to Make Gifts and the February 2011 Durable Power of
Attorney for Financial Matters that Attorney Wiensch had
provided to the IRS were not authentic and were being withdrawn.
The Foley firm subsequently alerted the IRS to the
irregularities later discovered with regard to the Guaranty and
the defined value formula clause in the Installment Sale
Agreement and the firm reported Attorney Wiensch's conduct to
the OLR.
¶24 In a December 23, 2016, letter from his counsel to the
OLR, Attorney Wiensch admitted that he had created the August
1999 Durable Power of Attorney to Make Gifts and the February
2011 Durable Power of Attorney for Financial Matters in late
2015 or early 2016. By email transmitted to the OLR on March
31, 2017, counsel for Attorney Wiensch informed the OLR that
Attorney Wiensch conceded that he had altered and misdated the
Installment Sale Agreement and Guaranty of Specific Transaction
he provided to the IRS in September 2012 in connection with the
audit of the husband's estate.
¶25 In the stipulation, Attorney Wiensch states that he
has no defense to any of the disciplinary violations alleged in
the OLR's complaint. Attorney Wiensch asserts that during the
time of his misconduct, he faced several highly disruptive and
challenging personal issues. Attorney Wiensch says he was
suffering from substantial clinical depression for which his
treatment had not been meaningfully effective. Attorney Wiensch
says he also suffered from an active, uncontrolled dependency on
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No. 2018AP1185-D
alcohol. Attorney Wiensch says he has since stopped drinking
and has been sober since the time he was confronted with his
misconduct, having incorporated Alcoholics Anonymous (AA) into
his life, and he has supplied the OLR with verification that he
has attended AA meetings regularly since March 2017. Attorney
Wiensch says he has also focused on dealing with his clinical
depression and has successfully taken steps to substantially
achieve a stable and healthy mental health status.
¶26 The OLR's complaint alleges four violations of
SCR 20:3.4(a),1 five violations of SCR 20:8.4(c),2 and three
violations of SCR 20:4.1(a).3 In addition, the complaint alleges
that by failing to disclose to Foley and Lardner, LLP, his
conduct in drafting false documents and in submitting them to
the IRS, Attorney Wiensch breached the fiduciary duties owed to
his firm and his duty of honesty in his professional dealings
with the firm, thereby violating a standard of conduct set forth
by this court in In re Disciplinary Proceedings Against Shea,
1
SCR 20:3.4(a) provides: "A lawyer shall not unlawfully
obstruct another party's access to evidence or unlawfully alter,
destroy or conceal a document or other material having potential
evidentiary value. A lawyer shall not counsel or assist another
person to do any such act."
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 20:4.1(a) provides: "In the course of representing a
client a lawyer shall not knowingly make a false statement of a
material fact or law to a 3rd person."
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No. 2018AP1185-D
190 Wis. 2d 560, 527 N.W.2d 314 (1995), actionable via
SCR 20:8.4(f).4
¶27 The parties' stipulation provides that Attorney
Wiensch fully understands the stipulation and the ramifications
that would follow from this court's imposition of the stipulated
level of discipline, a two-year suspension of Attorney Wiensch's
license to practice law. The stipulation further provides that
it did not result from plea bargaining; that Attorney Wiensch
fully understands his right to continue to contest the matter,
that he has consulted with counsel and that his entry into the
stipulation was made knowingly and voluntarily.
¶28 In its memorandum in support of the stipulation, the
OLR states that in determining an appropriate level of
discipline to seek in this matter, the OLR director considered
Attorney Wiensch's lack of disciplinary history, precedent in
other disciplinary cases, aggravating and mitigating factors
under the ABA Standards for Imposing Lawyer Sanctions, as well
as the particular circumstances of this case.
¶29 The OLR says in reviewing sanctions imposed in other
cases involving an attorney's submission of false documents to
courts or other agencies, on the low end of the spectrum is In
re Disciplinary Proceedings Against Donovan, 211 Wis. 2d 451,
564 N.W.2d 772 (1997), in which this court issued a six-month
4
SCR 20:8.4(f) provides: "It is professional misconduct
for a lawyer to violate a statute, supreme court rule, supreme
court order or supreme court decision regulating the conduct of
lawyers."
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No. 2018AP1185-D
license suspension for an attorney's misconduct in filing false
documents with the court in order to obtain favorable treatment
for an acquaintance and for a former boyfriend in a case she was
prosecuting as a municipal attorney. The OLR notes that
Attorney Donovan was an inexperienced attorney who immediately
admitted her wrongdoing and did not benefit financially from her
conduct. In addition, the OLR points out Attorney Donovan
suffered other collateral consequences of her misconduct, as she
was convicted of misdemeanor forgery.
¶30 The OLR notes that in In re Disciplinary Proceedings
Against Spangler, 2016 WI 61, 370 Wis. 2d 369, 881 N.W.2d 35,
this court also imposed a six-month suspension on an attorney
who created fabricated documents to support false
representations made to his clients that their lawsuits were
pending when in fact they were not. The OLR notes that like
Attorney Donovan, Attorney Spangler had no prior disciplinary
history and he stepped up and made the clients whole for their
losses.
¶31 The OLR says that at the opposite end of the spectrum
is In re Disciplinary Proceedings Against Elverman, 2014 WI 15,
353 Wis. 2d 98, 845 N.W.2d 653, in which this court revoked
Attorney Elverman's license to practice law for dishonest
conduct in preparing false billing invoices, stealing more than
$600,000 from an elderly client in connection with estate
planning services, and failing to cooperate with the OLR.
Attorney Elverman had a prior nine-month suspension for failing
to declare income received from the client in his tax returns.
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No. 2018AP1185-D
Attorney Elverman was also convicted of felony theft in
connection with the conduct that resulted in his revocation.
¶32 The OLR says based on this precedent, it believes a
two-year suspension of Attorney Wiensch's license is
appropriate. The OLR says Attorney Wiensch's misconduct was
very serious, and it was calculated and deliberate. It notes
Attorney Wiensch created and submitted false documents to the
IRS on three occasions in the course of the audits of two
estates; he knowingly allowed the court, the IRS, and other
partners in his law firm to rely on those false documents in
reaching an agreement to settle litigation involving the
estates; and he made misleading statements to the IRS when it
questioned the veracity of one of the false documents he
provided.
¶33 The OLR says despite the circumstances under which it
settled the litigation involving the estates, the IRS did not
move to reopen the cases after it was informed of Attorney
Wiensch's misconduct. In addition, the OLR notes that Attorney
Wiensch's clients have not asserted to the OLR that they
sustained any harm for which they have not been made whole.
However, the OLR says that Attorney Wiensch placed his law firm
and his partners at substantial risk by submitting the false
documents and allowing the partners in his firm to rely on the
false documents in litigation with the IRS. The OLR says
Attorney Wiensch's misconduct undermines public confidence in
the credibility of the legal system.
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No. 2018AP1185-D
¶34 As to mitigating factors, the OLR notes that Attorney
Wiensch has no prior discipline; he cooperated with the OLR's
investigation; and he did not convert client funds. As to
aggravating factors, the OLR notes that Attorney Wiensch was a
very experienced attorney; the misconduct occurred over a period
of years and involved multiple documents and multiple instances;
the misconduct was deliberate and calculated, and it occurred in
the context of federal tax audits involving very substantial
sums of money.
¶35 After closely reviewing the matter, we accept the
stipulation and determine that Attorney Wiensch engaged in the
13 counts of misconduct alleged in the OLR's complaint. We
further conclude that a two-year suspension of Attorney
Wiensch's license to practice law is an appropriate level of
discipline to impose in view of the serious nature of the
misconduct and the various aggravating and mitigating factors
present in this case. Although the misconduct here does not
rise to the level that warranted revocation in Elverman,
Attorney Wiensch deliberately misled the IRS and falsified
multiple documents. The deceptions and misrepresentations, both
to the IRS and the other attorneys at Attorney Wiensch's firm,
continued for several years. Attorney Wiensch was an
experienced attorney who should have known better. His
misconduct harmed his clients and his law firm and, as the OLR
noted, it undermined public confidence in the credibility of the
legal system. A two-year suspension of Attorney Wiensch's law
license is an appropriate sanction for his misconduct. Because
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No. 2018AP1185-D
this matter was brought to the court in the context of an
SCR 22.12 stipulation without the need for the appointment of a
referee, we do not impose any costs on Attorney Wiensch.
¶36 IT IS ORDERED that the license of Adam J. Wiensch to
practice law in Wisconsin is suspended for a period of two
years, effective November 27, 2018.
¶37 IT IS FURTHER ORDERED that Adam J. Wiensch shall
comply with the provisions of SCR 22.26 regarding the duties of
a person whose license to practice law in Wisconsin has been
suspended.
¶38 IT IS FURTHER ORDERED that compliance with all
conditions with this order is required for reinstatement. See
SCR 22.29(4)(c).
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No. 2018AP1185-D
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