Wines, Matter of

• Decision Date: 28 January 1983
• Docket Number: No. SB-140-2,No. 80-1-5A,SB-140-2,80-1-5A
• Parties: In the Matter of a Member of the State Bar of Arizona, Eugene Walter WINES, Respondent. State Bar
• Court: Arizona Supreme Court

Page 454

660 P.2d 454

135 Ariz. 203

In the Matter of a Member of the State Bar of Arizona, Eugene Walter WINES, Respondent.

No. SB-140-2.

State Bar No. 80-1-5A.

Supreme Court of Arizona, In Banc.

Jan. 28, 1983.

Michael N. Harrison, Phoenix, State Bar Counsel.

Fenton J. McDonough, Scottsdale, for respondent.

FELDMAN, Justice.

Respondent was admitted to the practice of law in the State of Arizona on November 10, 1964, having previously practiced in the State of Missouri. On September 30, 1981, Local Administrative Committee 5A of the State Bar of Arizona issued a complaint charging respondent with violations of the Code of Professional Responsibility as adopted by this court in Ariz.R.S.Ct. 29(a) Respondent objected to the findings of fact, conclusions and recommendations of the local administrative committee, and requested a hearing before the disciplinary board pursuant to Rules 35(c)(4) and 36(b). That board unanimously approved the findings, conclusions and recommendations of the local administrative committee. Respondent then objected to the recommendations of the disciplinary board. As required by Rule 36(d), the matter was then docketed in this court for decision. This court is the ultimate trier of both fact and law in disciplinary proceedings. In re Moore, 110 Ariz. 312, 313, 518 P.2d 562, 563 (1974). We are also required to use our independent judgment in determining the appropriate discipline under the circumstances of each case. See In re Steward, 96 Ariz. 49, 55, 391 P.2d 911, 915 (1964).

                17A A.R.S. 1  Specifically, respondent was charged with violation of Disciplinary Rule 1-102(A)(3) and (4) and Rule 29(c).  After an evidentiary hearing, the committee found that the charges were sustained by the evidence and recommended that respondent be suspended from practice for a minimum period of five years, with credit given for a period of interim suspension
                

FACTS

On March 30, 1977, respondent was indicted by a federal grand jury sitting in the United States District Court for the District of Arizona and charged with violation of 26 U.S.C. § 7201 (1976) (willful attempt to evade income taxes). The indictment alleged that respondent had willfully failed to report his income for the calendar years 1970, 1971 and 1972. On December 23, 1977, after a jury trial, respondent was convicted of these charges. Since the conviction was for commission of a felony, we suspended respondent from the practice of law effective March 14, 1978 as required by Rule 29(d). Respondent appealed to the United States Court of Appeals for the Ninth Circuit. The majority of the court concluded that the government had failed to comply with the "Jencks Act" (18 U.S.C. § 3500 (1976)) and the conviction was reversed. ²

Under Rule 29(d), we were therefore required to reinstate respondent, and did so effective July 23, 1979. The Court of Appeals for the Ninth Circuit remanded the case to the United States District Court for a new trial. Respondent and the United States Attorney then entered into a plea agreement. By the terms of this agreement, the government dismissed the original indictment and filed a new indictment alleging violation of 26 U.S.C. § 7203 (1976), which charges willful failure to supply information relating to income taxes, a misdemeanor. ³ Respondent entered a plea of guilty to the charge and on the same day was committed to the custody of the Attorney General of the United States for imprisonment for a period of one year. Execution of the sentence was suspended and respondent was placed on unsupervised probation on the condition that he first spend three months in a work release program at a community treatment center.

Thus, the crime of which respondent was ultimately convicted was a misdemeanor offense. Our rules provide for automatic disbarment upon conviction of any felony (Rule 29(c)); however, in the case or a

                misdemeanor conviction, the rule provides that discipline shall be imposed only if the misdemeanor is one which involves moral turpitude. 4  Since proof of conviction is "conclusive evidence of guilt," a hearing before the local administrative committee on a charge involving conviction of a misdemeanor is limited to determining whether the crime involves moral turpitude and the discipline the committee shall recommend.  Id
                

MORAL TURPITUDE

There is considerable debate on whether violation of the tax laws is, per se, an offense involving moral turpitude. One view is that such a conviction is an offense involving moral turpitude only when the facts and circumstances surrounding the act charged establish the presence of dishonesty, fraud, deceit or misrepresentation. See In re Rohan, 21 Cal.3d 195, 200, 145 Cal.Rptr. 855, 857, 578 P.2d 102, 104 (1978). The other view holds that the nature of the tax offenses described in 26 U.S.C. §§ 7201, 7202 and 7203 is such that mere conviction of such an offense is evidence of conduct involving moral turpitude and ground for disciplinary action without regard to the facts and circumstances of the particular case. In re MacLeod, 479 S.W.2d 443, 445 (Mo.1972). The divergent views on the question are set forth in the following annotations: Attorneys--Tax Offense as Misconduct, 63 A.L.R.3d 512 (1975); Attorneys--"Moral Turpitude"--Tax Offense, 63 A.L.R.3d 476 (1975); Disbarment-- Income Tax Conviction, 59 A.L.R.2d 1398 (1958).

The question has not been decided in Arizona and we need not reach it in this case. The committee reviewed the transcripts of the testimony in respondent's jury trial. It heard respondent's explanations of his acts and ultimate plea of guilty to violation of § 7203. Acknowledging the view that mere conviction of a violation of § 7203 "may not, per se, constitute an offense involving moral turpitude," the committee concluded after the evidentiary hearing that respondent's methods of maintaining records and information for tax purposes and in reporting his income for the years 1970 through 1972 had shown a pattern of violations of the statute and that, reviewed in their totality, the circumstances clearly established that respondent had committed acts which were fraudulent, deceitful and dishonest in nature and which involved knowing misrepresentation of his income. Indeed, though he did contest some of the findings in the proceedings before the disciplinary board, respondent's brief to this court does not raise an issue with regard to the propriety of any particular finding. Our independent review of the record reveals that the findings are supported by the necessary standard of clear and convincing evidence, In re Moore, supra, and we therefore approve and adopt the findings of the local administrative committee.

Thus, even assuming, without deciding, that conviction of the offense in question is not per se a conviction of an offense involving moral turpitude, we find that the acts which led to that conviction were acts involving fraud, deceit, dishonesty and misrepresentation. Therefore, the particular offense committed by this respondent was a misdemeanor involving moral turpitude. Rule 29(c) thus requires that respondent "shall be disciplined as the facts warrant."

DISCIPLINE

The administrative committee and the disciplinary board both recommend that under the facts of this case the appropriate discipline is a suspension for five years, with credit for the 16-month period during which respondent was suspended while his first conviction was on appeal to the Ninth Circuit. Respondent argues that the recommended discipline is inappropriately severe.

We disagree with respondent's contentions. The facts of this case do not show a minor transgression. They do show that respondent "knowingly and willfully manipulated his gross income in such a manner as to avoid in substantial part the proper entry of such income for bookkeeping purposes ...." Local Administrative Committee 5A, Findings of Fact, Conclusions and Recommendation p 12(d). Respondent was aware that his method of keeping records and his bookkeeping procedures "were inadequate" and had the effect of misrepresenting the gross income which respondent received from the practice of law, but "made no effort to improve" his bookkeeping procedures. Id., at p 12(e). The facts show that among the devices used by respondent to avoid reporting all of his taxable income were such practices as failing to deposit his legal fees in proper accounts and diverting fees to cash or other accounts, so that the same would not be recorded for tax reporting purposes; depositing less than the full amount of fees received, so that the amounts recorded misrepresented the actual amounts of the fees; and placing fees directly into his savings account without first depositing them to his office account, so that the receipts were not reported as income.

Respondent, a lawyer, must be charged with knowledge of the income reporting requirements of the federal tax laws and of the necessity of establishing adequate bookkeeping procedures to ensure that all income received was properly recorded and shown on his books for tax reporting purposes. While some taxpayers may be allowed to claim that they were unaware of the necessity of keeping proper books or were so unsophisticated that they were unable to establish proper bookkeeping procedures for their business affairs, we will not entertain the notion that a lawyer may avail himself of such an excuse. We charge lawyers with knowledge of what the law requires and place them under an affirmative duty to accomplish what is required of them. Cf. In re Rubi, 133 Ariz. 491, 652 P.2d 1014 (1982) (dealing with the same type of problem--"sloppy" procedures--with regard to clients' trust accounts).

Taken as a whole, the evidence clearly establishes that respondent knowingly and intentionally operated his office in such a manner that his gross income would not be properly recorded and, as a result, would not be properly reported in preparation of his tax returns....