Dayton Bar Assn. v. Schram

[Cite as Dayton Bar Assn. v. Schram, 122 Ohio St.3d 8, 2009-Ohio-1931.]

DAYTON BAR ASSOCIATION v. SCHRAM.

[Cite as Dayton Bar Assn. v. Schram, 122 Ohio St.3d 8, 2009-Ohio-1931.]

Attorneys at law — Misconduct — Failure to withhold and pay taxes of employees

— Failure to file income tax returns — Disbarment.

(No. 2008-2403 — Submitted February 4, 2009 — Decided April 30, 2009.)

ON CERTIFIED REPORT by the Board of Commissioners on Grievances and

Discipline of the Supreme Court, No. 08-016.

__________________

Per Curiam.

{¶ 1} Respondent, Deborah C. Schram of Dayton, Ohio, Attorney

Registration No. 0025554, was admitted to the practice of law in Ohio in 1978.

On August 30, 2007, we suspended respondent’s license to practice pursuant to

Gov.Bar R. V(5)(A)(4) upon receiving notice that she had been convicted of a

felony for failing to pay federal withholding for her employees. See In re

Schram, 114 Ohio St.3d 1517, 2007-Ohio-4425, 872 N.E.2d 956. Respondent’s

license is also under suspension for her failure to register as an attorney for the

2007-2009 biennium. In re Atty. Registration Suspension of Schram, 116 Ohio

St.3d 1420, 2007-Ohio-6463, 877 N.E.2d 305.

{¶ 2} The Board of Commissioners on Grievances and Discipline

recommends that we now permanently disbar respondent, based on findings that

she failed to file federal, state, and municipal income taxes for over 20 years,

failed for much of that time to pay federal withholding for her employees, and has

been convicted of federal tax crimes as a result. We agree that respondent

violated the Disciplinary Rules of the former Code of Professional Responsibility

as found by the board and that respondent’s disbarment is warranted.

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{¶ 3} Relator, Dayton Bar Association, charged respondent with

professional misconduct, including violations of DR 1-102(A)(4) (prohibiting a

lawyer from engaging in conduct involving fraud, deceit, dishonesty, or

misrepresentation) and 1-102(A)(6) (prohibiting a lawyer from engaging in

conduct that adversely reflects on the lawyer’s fitness to practice law). A panel of

the board heard the case, found the cited Disciplinary Rule violations, and

recommended disbarment. The board adopted the panel’s findings and

recommendation.

{¶ 4} Respondent has not filed objections to the board’s report.

Misconduct

{¶ 5} For most of her career, respondent has been a domestic relations

lawyer in solo practice. From 1979 through 2001, respondent did not file federal,

state, and municipal income tax returns. For roughly the same period, respondent

did not withhold federal income taxes or pay FICA contributions for her

employees. In 2002, she turned herself in to federal tax authorities and later filed

delinquent returns for the years 1989 through 2001.

{¶ 6} On June 5, 2007, respondent pleaded guilty to a violation of

Section 7202, Title 26, U.S.Code (willful failure to collect or pay over tax), a

felony, for failing to pay $8,451.97 in withholdings for the second quarter of

2002. She also pleaded guilty to a violation of Section 7203, Title 26, U.S.Code

(failing to file tax return), a misdemeanor, for failing to report her $250,485 gross

income in 1999. Respondent has completed her sentence of one year’s

imprisonment. As part of her sentence, respondent is required to pay restitution to

the Internal Revenue Service. As of the September 23, 2008 panel hearing, she

still owed approximately $200,000.

{¶ 7} The board found clear and convincing evidence that respondent

had violated DR 1-102(A)(4) and (6) by failing to file federal income tax returns,

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failing to pay those taxes, and failing to report and pay her employees’

withholding as required. We accept these findings of misconduct.

Sanction

{¶ 8} When imposing sanctions for attorney misconduct, we consider

relevant factors, including the duties violated by the lawyer and the sanctions

imposed in similar cases. Stark Cty. Bar Assn. v. Buttacavoli, 96 Ohio St.3d 424,

2002-Ohio-4743, 775 N.E.2d 818, ¶ 16. In making a final determination, we also

weigh evidence of the aggravating and mitigating factors listed in Section 10 of

the Rules and Regulations Governing Procedure on Complaints and Hearings

Before the Board of Commissioners on Grievances and Discipline (“BCGD

Proc.Reg.”). Disciplinary Counsel v. Broeren, 115 Ohio St.3d 473, 2007-Ohio-

5251, 875 N.E.2d 935, ¶ 21. Because each disciplinary case is unique, we are not

limited to the factors specified in the rule but may take into account “all relevant

factors” in determining what sanction to impose. BCGD Proc.Reg. 10(B).

{¶ 9} Respondent breached duties owed to the public and the legal

profession for approximately 20 years by ignoring obligations to report and pay

income taxes and withholding contributions. As to sanctions in similar cases, the

board compared respondent’s misconduct first with Cuyahoga Cty. Bar Assn. v.

Freedman, 107 Ohio St.3d 25, 2005-Ohio-5831, 836 N.E.2d 559, in which a

lawyer had neglected the affairs of two clients in addition to failing to file tax

returns for ten years. That lawyer also owed approximately $200,000 in past-due

taxes but, unlike respondent, presented evidence of a mitigating mental disability

that had contributed to cause his misconduct. See BCGD Proc.Reg. 10(2)(g). We

suspended the lawyer from practice for 12 months and conditioned his

reinstatement upon proof of his restored mental health and the repayment of his

tax obligations.

{¶ 10} The board also looked to Dayton Bar Assn. v. Lewis (1999), 84

Ohio St.3d 517, 705 N.E.2d 1217, in which the lawyer acted dishonestly in a fee

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dispute, violated rules for trust accounts, failed to file or pay income taxes for five

years, and then, upon filing for bankruptcy, misrepresented to the bankruptcy

court that he had received extensions for filing the returns. For this misconduct

and because the lawyer had a significant prior disciplinary record, we suspended

the lawyer from practice indefinitely. Accord Geauga Cty. Bar Assn. v. Bruner,

98 Ohio St.3d 312, 2003-Ohio-736, 784 N.E.2d 687 (lawyer indefinitely

suspended from practice for failing to report and pay federal and state

withholdings from his secretary’s pay for over ten years).

{¶ 11} Common to these cases is the lawyers’ willful intent to evade tax

or withholding obligations. Cf. Cuyahoga Cty. Bar Assn. v. Veneziano, 120 Ohio

St.3d 451, 2008-Ohio-6789, 900 N.E.2d 185 (one-year suspension, stayed on

conditions of monitored probation and office-management training, imposed for

lawyer who left financial affairs to her husband, a certified public accountant,

resulting in a seven-year failure to withhold payroll taxes and five-year failure to

timely file federal and state income tax returns). As to her intent, respondent

similarly realized that she had denied her employees their contributions for Social

Security and that she was enjoying the financial advantages of living tax-free.

But even worse, she defaulted for far longer than did the lawyers in Freedman,

Lewis, and Bruner. Indeed, “[t]he sheer breadth of respondent’s default must be

seen as an aggravating circumstance.” Toledo Bar Assn. v. Abood, 104 Ohio

St.3d 655, 2004-Ohio-7015, 821 N.E.2d 560.

{¶ 12} Other aggravating factors include respondent’s previous record of

discipline, see Dayton Bar Assn. v. Schram, 98 Ohio St.3d 512, 2003-Ohio-2063,

787 N.E.2d 1184 (public reprimand for collecting a nonrefundable legal fee in a

divorce case) and incomplete restitution, see BCGD Proc.Reg. 10(B)(1)(a) and (i).

In mitigation, respondent offers many letters commending her professional

competence, dedication to her clients, and philanthropic contributions to her

community. She has also cooperated in the disciplinary proceedings, and we take

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into account that other penalties have been imposed for her wrongdoing. See

BCGD Proc.Reg. 10(B)(2)(d), (e), and (f).

{¶ 13} Like the board, we agree that the mitigating factors are outweighed

by the gravity of respondent’s misconduct and the aggravating features of her

case. We therefore accept the board’s recommendation. Respondent is hereby

permanently disbarred from the practice of law in Ohio.

{¶ 14} Costs are taxed to respondent.

Judgment accordingly.

MOYER, C.J., and PFEIFER, LUNDBERG STRATTON, O’CONNOR,

O’DONNELL, LANZINGER, and CUPP, JJ., concur.

__________________

Andrew C. Storar, for relator.

David P. Williamson, for respondent.

______________________

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