In re Halpern

Decision Date04 June 2020
Docket NumberDocket No. DRB 19-356
PartiesIn the Matter of Susan Penny Halpern An Attorney at Law
CourtNew Jersey Supreme Court

Disciplinary Review Board


Amanda W. Figland appeared on behalf of the Office of Attorney Ethics.

Suzanne M. McSorley appeared on behalf of Susan Penny Halpern.

To the Honorable Chief Justice and Associate Justices of the Supreme Court of New Jersey.

This matter was before us on a motion for final discipline filed by the Office of Attorney Ethics (OAE), pursuant to R. 1:20-13(c)(2), following respondent's guilty pleas in the United States District Court for the Eastern District of Pennsylvania (EDPA), to two misdemeanor violations of 26 U.S.C. § 7203 (willful failure to pay tax). These offenses constitute violations of RPC 8.4(b) (criminal act that reflects adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects) and RPC 8.4(c) (conduct involving dishonesty, fraud, deceit or misrepresentation).

For the reasons set forth below, we determine to grant the motion for final discipline and impose a censure.

Respondent earned admission to the New Jersey bar in 1986 and to the Pennsylvania bar in 1984. At the relevant time, she maintained an office for the practice of law in Philadelphia, Pennsylvania. She has no history of discipline in New Jersey. In Pennsylvania, she received a public reprimand for the convictions at issue. Office of Disciplinary Counsel v. Susan P. Halpern, No. 144 DB 2019 (D.Bd. Rpt. 8/2/2019) (S.Ct. Order 9/12/2019).

On April 11, 2017, a grand jury for the EDPA charged respondent and her estranged husband, Edward Millstein, with tax offenses. Respondent was charged with two misdemeanor counts of failure to pay taxes to the Internal Revenue Service (IRS), for tax years 2010 and 2011, in violation of 26 U.S.C. § 7203. Millstein, who also is an attorney, was charged with felony tax evasion, in violation of 26 U.S.C. § 7201, and two misdemeanor counts of failure to pay taxes, in violation of 26 U.S.C. § 7203.

The indictment alleged that, in 2010, respondent and Millstein willfully failed to pay $143,473.35 in taxes, and that, in 2011, they willfully failed to pay $153,560.69 in taxes. Only Millstein was charged with tax evasion, however. The indictment alleged that he willfully attempted to evade the payment of a total of $444,225.53 in income taxes that he and respondent owed to the IRS, for calendar years 2007 through 2011, by attempting to conceal or actually concealing the nature and extent of his assets from the IRS, and by making false statements to IRS agents.

On November 5, 2018, respondent appeared for trial before the Honorable Cynthia M. Rufe, U.S.D.J. Rather than proceed with the trial, respondent entered guilty pleas to two misdemeanor counts of failure to pay income tax. During the change of plea hearing, the Assistant United States Attorney (AUSA) read to respondent the elements of the counts, which specifically included the willful nature of her failure to pay. The AUSA explained that "willfulness means that the defendant acted in a voluntary and intentional way to violate a known legal duty, that is, to pay her taxes." In response to questioning by Judge Rufe, respondent admitted that her conduct was "willful." Judge Rufe confirmed that respondent understood the elements of the charged offenses and accepted her decision to knowingly and voluntarily plead guilty.

During the criminal proceedings, and before us, respondent and her counsel proffered, in mitigation, that respondent and her husband married in 1996; that he was the main source of income in their household; and that after the birth of their twin daughters, respondent assumed primary responsibility for parenting, while also operating her solo law practice. Respondent has repeatedly asserted that she had been unaware of the issues with the IRS, because her husband served as the primary point of contact for their financial affairs. Respondent, thus, has claimed that she lacked knowledge regarding the full extent of the tax liability issues, and had relied on Millstein in respect of their taxes.

In 2011, respondent and Millstein separated, leaving her without the same financial support or stability. Respondent asserted a belief that, despite their separation, Millstein was continuing to work toward resolving their outstanding tax liabilities. She also claimed that she continued to be unaware of the details of their issues with the IRS.

On April 4, 2019, respondent and Millstein appeared before Judge Rufe for sentencing. The AUSA offered the stipulated testimony of an IRS agent who would have testified that, from 1999 through 2002, respondent had individual tax-related liabilities that resulted in her filing an offer of compromise with the IRS, which was rejected, and ultimately led to her filing for bankruptcy. Further,thereafter, respondent and Millstein had joint tax liabilities that remained unresolved. This stipulated testimony was offered to establish that respondent had a more sophisticated understanding of tax issues than she claimed.

Following the government's stipulated testimony, three character witnesses testified in behalf of respondent. Each witness testified that she was a loving mother and a good friend, was loyal, had a good reputation for integrity and hard work, and was involved in her community. Respondent's sister and brother-in-law, Cindy and Stephen Kramer, testified that respondent had received significant sums of money - at least $100,000 - from their family a few months prior to sentencing, intended to help respondent satisfy her outstanding tax obligations. Cindy also testified that their mother had provided money to respondent, over prior years, as additional support.

Respondent testified that she was remorseful for her actions, accepted responsibility for them, and recognized the pain that she had caused others, including her family and children. She asked the court to take into consideration her whole life when imposing a sentence.

Respondent's counsel sought a variance from the sentencing guidelines, based on respondent's character letters, her charitable endeavors, her lesser culpability than Millstein's, and her willingness to cooperate with the government.

In assessing the nature and circumstances of respondent's offenses, the AUSA contended that she was more sophisticated in her understanding of the underlying facts and tax issues than she represented and, that, despite having the means to do so, she had continuously failed to pay her debts. The AUSA also disputed respondent's contention that she was unaware of the full extent of the amount of taxes owed, emphasizing that the IRS had placed a levy on her bank account; she had met three times with certified public accountants who informed her of these tax issues; and the IRS had mailed seven letters to her home, which detailed the tax debts. The AUSA asserted that, despite these notices, respondent had continued to spend lavishly, without regard to her tax debt.

In addition, the AUSA asserted that respondent's life experiences did not excuse her crime. He expressed empathy for her separation from her husband, but argued that her circumstances did not excuse her failure to pay taxes over a series of years, especially in light of the significant personal support she received from her family. He observed that, nevertheless, respondent was able to act as a responsible parent and to maintain her law practice. Further, the AUSA noted that respondent is a very intelligent and sophisticated attorney, and based on her life experience and professional accomplishments, her failure to pay taxes was the antithesis of her professional life. Despite these negativepoints, when comparing respondent's conduct to Millstein's, the AUSA acknowledged that respondent was less criminally culpable.

Judge Rufe found that respondent was deeply remorseful, but concluded that she understood her role in the tax offenses, and at times was "possibly downplaying" her culpability. Although Judge Rufe recognized that respondent was not charged with attempting to evade taxes, she found that respondent had a "rather consistent deflection of her own responsibility" and had not addressed these issues, despite "her keen mind and educational background and resources." She found that respondent had a "willful ignorance of the legal obligations of every citizen to pay taxes."

While recognizing that respondent was "her own worst enemy," Judge Rufe concluded that respondent deserved consideration for her role as a supportive mother and daughter, and for her years of service to the community and the profession of law. However, Judge Rufe remarked that respondent had been "periodically evasive, if not entirely honest," and failed to consider "that her varying statements to one official or another" would "come back to haunt her." Still, Judge Rufe agreed with the prosecution that respondent was less culpable than Millstein, whose tactics were "more deceptive and calculating" than respondent's. Ultimately, in addressing both respondent and Millstein, Judge Rufe stated that these tax offenses occurred "because you two were sobusy fighting, and trying to avoid the inevitable, you paid lip service to the law. Two lawyers paid lip service in law. You should be ashamed of yourselves."

Judge Rufe sentenced respondent to a five-year term of probation on each of the two misdemeanor counts, to run concurrently; required respondent to properly report all correct taxable income to the IRS; and, as restitution, accepted respondent's check for $100,000 in full satisfaction of the remainder of respondent's portion of the tax debt.

In its brief, the OAE urged the imposition of an eighteen-month or two-year suspension, emphasizing that respondent had failed to file her income tax returns for two years; had significant tax liability for income earned; was motivated by greed; and failed to...

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