IN THE SUPREME COURT OF FLORIDA +4 (Before a Referee)

Transcription

1 IN THE SUPREME COURT OF FLORIDA +4 (Before a Referee) THE FLORIDA BAR, Supreme Court Case co No. SC Complainant, The Florida Bar File v. No ,094(09A)(CFC) RICHARD RUSSELL BAKER, Respondent. REPORT OF REFEREE I. SUMMARY OF PROCEEDINGS Pursuant to the undersigned being duly appointed as referee to conduct disciplinary proceedings herein according to Rule 3-7.6, Rules of Discipline, the following proceedings occurred: On August 28, 2014, The Florida Bar filed its Notice of Determination or Judgment of Guilt with the Supreme Court of Florida seeking respondent's suspension due to his felony conviction. On August 28, 2014, the Court issued an order suspending respondent from the practice of law pursuant to Rule 3-7.2(f) and referred the matter to The Tenth Judicial Circuit to appoint a referee to determine the appropriate discipline. On November 6, 2014, a sanction hearing was held in this matter. The Florida Bar presented the testimony of Shirley Coleman, Florida Bar Staff Investigator. The Respondent presented the testimony of Lori Patton, a

2 Chapter 7 Bankruptcy Trustee, Laurie Weather, Chapter 13 Bankruptcy Trustee, Eben Self, a long-time friend and attorney, who represented the Respondent in his criminal case resulting from his non-filing of tax returns, as well as represented the Respondent in negotiations with the Internal Revenue Service. The Respondent also testified. The Florida Bar's exhibits consisted of the following: 1.) Information and Plea Agreement dated April 21,2014; 2.) Clerk's Minutes for entry of Respondent's plea of guilty dated May 13, 2014; 3.) Respondent's sentencing proceeding court minutes from September 29, 2014; 4.) Affidavit as to Respondent's prior disciplinary record dated October 28, 2014; and 5.) composite exhibit of documents from the Respondent's prior discipline in case number SC The Respondent tendered as an exhibit his sentencing memorandum from his criminal case, which included letters of support from over forty individuals. All items properly filed including pleadings, recorded testimony (if transcribed), exhibits in evidence and the report of referee constitute the record in this case and are forwarded to the Supreme Court of Florida. II. FINDINGS OF FACT Jurisdictional Statement: Respondent is, and at all times mentioned during this investigation was, a member of The Florida Bar, subject to the jurisdiction and Disciplinary Rules of the Supreme Court of Florida. 2

3 Narrative Summary Of Case. Respondent, an attorney practicing bankruptcy law knowingly failed to file his personal and corporate federal tax returns from 2002 to 2008, even though his adjusted gross income was above the thresholds set forth by federal law to trigger his responsibility to file a tax return. Respondent's total unreported income for the tax years 2002 to 2008 was approximately $991,008, and he evaded paying taxes totaling approximately $160,348 by his failure to timely file his personal and corporate tax returns. Respondent failed to timely file his personal tax returns from 1995 through Respondent failed to file any of his returns from 2002 through Respondent claimed more allowances than he was allowed to claim for his withholding so the Internal Revenue Service (IRS) would be misled to believe that respondent owed no federal income tax. Respondent requested an extension in years 2007 and 2008 and falsely represented that he had $0 tax liability and $0 taxes were owed. Respondent failed to mail his and his employees W-2 forms to the IRS thus impeding the IRS from learning of his earned income and possibly subjecting his employees to tax penalties. Respondent submitted a Collection Information Statement to the IRS falsely stating that he had only claimed one exemption for his withholding when in fact he had claimed more than one exemption. Respondent also failed to disclose two bank accounts controlled by the respondent that contained over fifty-five thousand dollars in each account. 3

4 Respondent failed to file any corporate returns for his law firm over the course of several years hiding the fact that his law firm was profitable. Respondent hired an accounting firm that prepared his outstanding tax returns. Respondent testified that early on, when these problems arose, they were exacerbated by an accountant closing a practice and retaining his records. Respondent would go on to hire a series of attorneys to attempt to reach a resolution with the Internal Revenue Service, but despite paying substantial attorney's fees, they were unable to secure a resolution for the Respondent. Respondent's accountant and attorney advised him to file the tax returns on multiple occasions. Respondent still failed to file his returns. For over two years, the Internal Revenue Service attempted to make contact with respondent with little success. Instead, the Internal Revenue Service began to treat the non-filing of returns as a criminal matter, and referred the case to the United States attorney, and in November 2013, the Office of the United States Attorney initiated filing criminal charges on the Respondent. In November 2013, the Office of the United States Attorney began to investigate filing criminal charges on respondent. On April 21, 2014, in United States ofamerica v. Richard R. Baker, Case No. 6:14-cr-93-ORL-37DAB, United States District Court, Middle District of Florida, Orlando Division, the United 4

5 States Attorney filed an information and respondent signed a plea of guilty to tax evasion in violation of 26 U.S.C. 7201, a felony offense (TFB-Ex. 1). On May 13, 2014, respondent entered his plea of guilty and United States Magistrate Judge David A. Baker recommended and accepted the plea agreement and adjudged Respondent guilty (TFB-Ex. 2). On September 29, 2014, Respondent was sentenced to thirty six months of probation and as a condition of the probation, ordered to pay restitution in the amount of $160,348 (TFB-Ex. 3) Summary of Testimony Respondent testified that he was not an office manager and that he neglected his personal and corporate tax returns. He blamed his accountant for losing his tax related documents, the hurricanes for bringing in more business than he could handle his paralegal for incorrectly managing his accounts and his lawyers for failing to guide him to correct his tax liens. The testimony from Shirley Coleman on behalf of The Florida Bar indicated that the Internal Revenue Service considered it an act of dishonesty when Respondent filed tax return extension requests indicating that he owed no taxes. Lori Patton, Chapter 7 Bankruptcy Trustee, and Laurie Weatherford, a Chapter 13 Bankruptcy Trustee, each testified that the Respondent was an excellent practitioner who was very involved in bankruptcy bar activities. They also testified that his filings in the bankruptcy court were invariably accurate and 5

6 reliable. They verified that the Respondent enjoys an excellent reputation in the legal community, among other compliments about the Respondent. Attorney Eben Selftestified that prior attorneys had not given the Internal Revenue Service the courtesy of trying to have a face to face meeting and once that was done, things got on a better track. Mr. Self testified that he knew the Respondent since college when they were fraternity brothers and that he holds the Respondent in the highest regard in terms of character and honesty. He also verified that many ofrespondent's delays in terms of getting his tax filings completed resulted from what turned out to be poor strategic decisions by Respondent's prior attorneys. Respondent also testified. He detailed his tax history in respect to the years in question. He initially got behind in his filings, hampered in part by an accountant who relocated and retained his records. Recognizing that he had penalty and late fee issues to address, he engaged attorneys to help get a resolution with the Internal Revenue Service. Despite spending a substantial amount in attorney's fees and hiring multiple attorneys, Respondent had no success until he hired Eben Self, who was also his criminal attorney and longtime friend. Mr. Self approached the Internal Revenue Service with a different tactic and was able to arrange a meeting with the Internal Revenue Service. Respondent testified he was C not a tax protestor or attempting to evade paying taxes, but that he was not an 6

7 office manager and that he neglected his personal and corporate tax returns, while going above and beyond to take care of clients and to be a productive part ofthe local bankruptcy bar. III. RECOMMENDATIONS AS TO GUILT. I recommend that respondent be found guilty of violating the following Rules Regulating The Florida Bar: 4-8.4(b) which states that a lawyer shall not commit a criminal act that reflects adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects and 4-8.4(c) which states that a lawyer shall not engage in conduct involving dishonesty, fraud, deceit, or misrepresentation. IV. STANDARDS FOR IMPOSING LAWYER SANCTIONS I considered the following Standards prior to recommending discipline: 5.1 Failure to Maintain Personal Integrity 5.11 Disbarment is appropriate (a) when a lawyer is convicted of a felony under applicable law; or (f) when a lawyer engages in any other intentional conduct involving dishonesty, fraud, deceit, or misrepresentation that seriously adversely reflects on the lawyer's fitness to practice. Aggravating Factors (9.22): (a) (b) prior disciplinary offenses; a pattern of misconduct; 7

8 (c) (h) multiple offenses; vulnerability of victims (respondent failed to submit W-2 forms on behalf of his employees subjecting them to potential tax harm); and (i) substantial experience in the practice of law. Mitigating Factors (9.32): (g) (k) character or reputation; and imposition of other penalties or sanctions. V. CASE LAW The undersigned recognizes in recent years, the Court has moved towards stronger sanctions for attorney misconduct. The Florida Bar v. Adler, 126 So. 3d 244, 247 (Fla. 2013), citing The Florida Bar v. Rotstein, 835 So. 2d 241, 246 (Fla. 2002). In The Florida Bar v. Del Pino, 955 So. 2d 556, 561 (Fla. 2007), the Court stated that, "[a]s guardians of the law, lawyers have a special obligation to honor the law themselves, including the tax laws." The Court in Del Pino further held that when an attorney has been convicted of a felony, disbarment is the presumptively correct discipline. Therefore, the burden is upon the attorney to prove that something less than disbarment is warranted by the circumstances and mitigation. Id. at 561. After Del Pino was convicted of felony tax evasion, the Court ordered that she be suspended for 3 years only due to substantial and

9 C "compelling" mitigation, which included her lack of prior discipline and serious emotional and personal problems and drug use that contributed to her behavior. Id at 562. In contrast to Del Pino, respondent has a prior disciplinary history. Further, respondent has not shown evidence of compelling mitigation to overcome the presumption of disbarment. The undersigned is moved by the Bankruptcy Trustees appearing on behalf of the Respondent and their glowing testimony of the great attributes the Respondent displayed as an attorney, and member of the local bankruptcy bar, but the attributes of the Respondent described by the witnesses cannot be reconciled with the admitted failure of timely filing tax returns, that caused the Respondent to be convicted of tax evasion, a felony offense. The predicament that the Respondent found himself in more than likely occurred as the Respondent described that he was not an office manager coupled with negligence that caused him to fall so far in a hole, and that it was difficult to extricate himself from. In the best light the Respondent was extremely fortunate to avoid the imposition of prison time, but from the evidence presented he has failed to show compelling mitigating circumstances to avoid a recommendation of disbarment due to the felony adjudication. The undersigned in determining that no compelling mitigating circumstance exists to overcome the presumption of disbarment places great 9

10 weight on the duration of time involved in which the Respondent failed to file his tax returns (1995 through 2008 for personal returns).. The Florida Bar argues that several other cases support disbarment. In The Florida Bar v. Wolis, 783 So. 2d 1057 (Fla. 2001), an attorney was disbarred following his felony conviction and sentence of criminal probation for the charge of obstruction ofjustice in connection with providing false testimony during a Securities and Exchange Commission (SEC) investigation, with predicate acts involving the preparation and filing of false reports to the SEC which potentially could have resulted in personal gain. Wolis did not have any prior discipline. In The Florida Bar v. Grief, 701 So. 2d 555 (Fla. 1997), an attorney was disbarred following his felony conviction and sentence of criminal probation for the charge of conspiracy to defraud the government by filing false immigration documents for unqualified applicants. Grief did not have any prior discipline, he had an excellent reputation, and he expressed remorse and accepted responsibility for his actions. While the Court did not find that Grief's mitigation overcame the presumption of disbarment for a felony conviction, the Court did find that the mitigating factors found by the referee justified making the order of disbarment nunc pro tunc to the date Grief was suspended by reason of his criminal conviction. 10

11 In The Florida Bar v. Bustamante, 662 So. 2d 687 (Fla. 1995), an attorney was disbarred following his felony conviction and sentence of criminal probation for the charge of wire fraud in connection with fraudulently obtaining funds from an insurance company through a series of misrepresentations and for using funds embezzled from a client to repay interest on a loan. Despite Bustamante's unblemished 40 year legal career, the Court held that he had not overcome the presumption that disbarment is the appropriate discipline for a felony conviction. In The Florida Bar v. Nedick, 603 So. 2d 502 (Fla. 1992), the Court disbarred an attorney after he pled guilty to felony tax evasion for repeatedly joining with others in making and subscribing to false income tax returns. The Court ordered disbarment despite Nedick's cooperation with authorities once the behavior was exposed. The Court held that knowingly conspiring and agreeing to submit false tax returns to the federal government is fraudulent conduct of a serious order. Id. at 503. Nedick did not have any prior discipline. VI. RECOMMENDATION AS TO DISCIPLINARY MEASURES TO BEAPPLIED I recommend that respondent be found guilty of misconduct justifying disciplinary measures, and that be disciplined by: A. Disbarment from the practice of law; B. Payment of The Florida Bar's costs in these proceedings. VII. PERSONAL HISTORY, PAST DISCIPLINARY RECORD 11

12 C Prior to recommending discipline pursuant to Rule 3-7.6(m)(1)(D), I considered the following: Personal History of respondent: Age: 48 Date admitted to the bar: March 22, 1993 Prior Discipline: 1. By court order dated March 14, 2008, respondent received a public reprimand and probation for failing to maintain adequate communication with his bankruptcy clients and for failing to respond to the bar. 2. On or about September 12, 2006, respondent received a grievance committee level admonishment for minor misconduct involving improper advertising. VIII. STATEMENT OF COSTS AND MANNER IN WHICH COSTS SHOULD BE TAXED I find the following costs were reasonably incurred by The Florida Bar: Court Reporter Fees $ Investigative Costs $ Administrative Fee $1, TOTAL $1, It is recommended that such costs be charged to respondent and that interest at the statutory rate shall accrue and be deemed delinquent 30 days after the 12

13 judgment in this case becomes final unless paid in full or otherwise deferred by the Board of Governors of The Florida Bar. Dated this l ith day of December, Original To: WILLIAM BR CE SMITH Referee Clerk of the Supreme Court of Florida; Supreme Court Building; 500 South Duval Street, Tallahassee, Florida, Conformed Copies to: Barry William Rigby, Counsel for Respondent, Law Offices of Barry Rigby, P.A., 924 N. Magnolia Avenue, Suite 350, Orlando, Florida , barryrigbylaw@gmail.com Carrie Constance Lee, Bar Counsel, The Florida Bar, 1000 Legion Place, Suite 1625, Orlando, Florida , clee@flabar.org, orlandooffice@flabar.org Adria Quintela, Staff Counsel, The Florida Bar, Lakeshore Plaza II, Suite 130, 1300 Concord Terrace, Sunrise, Florida 33323, aquintel@flabar.org 13