In re Moulton, No. A05-1865.

CourtSupreme Court of Minnesota (US)
Writing for the CourtPer Curiam
Citation721 N.W.2d 900
Docket NumberNo. A05-1865.
Decision Date28 September 2006
PartiesIn re PETITION FOR DISCIPLINARY ACTION AGAINST Daniel J. MOULTON, a Minnesota Attorney, Registration No. 136888.

Page 900

721 N.W.2d 900
In re PETITION FOR DISCIPLINARY ACTION AGAINST Daniel J. MOULTON, a Minnesota Attorney, Registration No. 136888.
No. A05-1865.
Supreme Court of Minnesota.
September 28, 2006.

Page 901

Martin A. Cole, Director Office of Lawyers Professional Responsibility, Betty M. Shaw, Senior Assistant Director, St. Paul, MN, for Appellant.

Edward F. Kautzer, Ruvelson & Kautzer, Ch., St. Paul, MN, for Respondent.

Heard, considered, and decided by the court en banc.

OPINION

PER CURIAM.


Daniel J. Moulton was admitted to practice law in Minnesota on May 7, 1982. His disciplinary history includes a September 11, 1992, admonition for violating Rules 1.6, 3.4(c), 4.4, 5.3(c), and 8.4(a) and (d) of the Minnesota Rules of Professional Conduct; a September 15, 1992, admonition for violating Rule 1.8(j); an April 14, 1995, admonition for violating Rules 1.15 and 1.16; a February 25, 2000, admonition for violating Rule 3.7; and a March 22, 2002, stipulation to a two-year probationary period for violating Rules 1.1, 1.3, 1.4(a), 1.6(a), 1.15(c)(2), 5.3(c), 7.1, 7.5, and 8.4(a). This current disciplinary matter arises from a June 1, 2005, Petition for Disciplinary Action filed by the Director of the

Page 902

Office of Lawyers Professional Responsibility, which alleges generally that Moulton failed to file federal and state income taxes and failed to file employer withholding returns. More specifically, the petition alleges that Moulton failed to file certain state employer withholding tax returns, failed to timely pay certain state employer withholding taxes even when the withholding tax returns were timely filed, and failed to timely file certain federal employer withholding tax returns and failed to timely pay certain federal employer withholding taxes in violation of Minn. R. Prof. Conduct Rule 8.4(d).

The Honorable Bruce W. Christopherson was appointed as referee in this matter and, after an evidentiary hearing, concluded that Moulton's conduct violated Minn. R. Prof. Conduct 8.4(d).1 In his Findings of Fact and Conclusions of Law and Recommendation for Discipline, the referee recommended that Moulton be

suspended from the practice of law for 90 days, that reinstatement pursuant to Rule 18(e) and (f), Rules on Lawyers Professional Responsibility (RLPR), be conditioned upon entering into and remaining in compliance with a repayment agreement or making an offer in compromise acceptable to the IRS, and compliance with Rules 24 and 26, RLPR.

The referee also recommended that, upon reinstatement, Moulton be placed on unsupervised probation for the longer of:

1. Two years from the date of the disciplinary order from the Supreme Court, during which period Respondent shall have timely filed all employer withholding tax returns due in the future and timely paid the taxes due thereon from the Moulton Law Office and any other businesses for which he is personally so responsible; or

2. Until Respondent has fully paid, or fully paid any lesser amount agreed by the taxing authorities, all past due employer withholding tax liabilities for the Moulton Law Office or any other business for which he is responsible for payment.

Moulton timely ordered a transcript to contest the referee's Findings and Conclusions and, as a result, pursuant to Rule 14(e), Rules on Lawyers Professional Responsibility (RLPR), the referee's findings and conclusions are not conclusive. Further, while conceding that he failed to timely file some quarterly employer withholding tax returns and failed to timely pay some employer withholding taxes, Moulton argues that the appropriate sanction is a stayed 30-day suspension.

From 1998 through 2005, Moulton engaged in a pattern of noncompliance with the Internal Revenue Service (IRS) during which he failed to timely file and pay employer withholding taxes for several of his businesses, including his law firm. The total past-due liability for his businesses, including fees and penalties, exceeds $600,000.

According to the referee's findings, Moulton owns and operates Moulton Law Office as a sole proprietorship and employs personnel to assist in its operation. In conjunction with the law office, Moulton operates two other sole proprietorships, a chinchilla ranch and a storage rental business.

Page 903

Each of these entities uses the same tax identification number as the law office. Although Moulton deducted employee withholding taxes from his employees' pay between 1998 and 2005, he failed to timely file quarterly employer withholding tax returns 11 times for these entities and failed to timely pay the required taxes 23 times.2

Page 904

In addition to the three sole proprietorships, Moulton is the sole corporate officer of two corporations, Southern Minnesota Air Freight (SMAF) and Rochester Express (LAGNAF). As the sole corporate officer, he is responsible for filing the federal employer withholding tax returns and paying the tax liabilities.

The referee calculated that from 1998 through July 31, 2005, Moulton's three sole proprietorships accrued unpaid tax liabilities for employer withholding taxes totaling $184,249.71, not including penalties and interest. In addition, the referee calculated that SMAF owed $100,768 and LAGNAF owed $236,107.36 in outstanding federal employer withholding tax liabilities.

The referee found that an IRS lien on Moulton's assets mitigated his misconduct because the lien adversely affected his ability to repay the delinquent taxes. The referee also found mitigation in the fact that Moulton made some payments on his tax obligations during 2005; paid court-ordered child support for his three minor children; made organizational changes to his business that, according to the referee, are "intended to result in more positive cash balances"; and was reasonably cooperative with the disciplinary proceedings. The referee also found, however, that Moulton's misconduct was aggravated by his disciplinary history; the fact that, in addition to the tax liabilities for his sole proprietorship, he also had employer withholding tax liabilities for his two corporations; and the fact that the misconduct involved relatively large amounts of money over a long period of time. An aggravating factor not addressed by the referee is the fact that some of Moulton's misconduct took place while he was on probation between March 22, 2002, and March 2004. One condition of that probation required that Moulton abide by the Minnesota Rules of Professional Conduct. While on probation, Moulton filed one quarterly employer withholding return late and failed to file one at all. Further, although Moulton made some payments on his tax liabilities during his probationary period, he never once paid the entire quarterly balance due and paid nothing at all for six quarters.

Here, Moulton challenges findings of fact 73 and 13,4 in addition to the referee's conclusion that his conduct violated

Page 905

Minn. R. Prof. Conduct 8.4(d). We will uphold a referee's findings and conclusions in attorney discipline proceedings if they have evidentiary support in the record and are not clearly erroneous. In re Pinotti, 585 N.W.2d 55, 62 (Minn.1998). Deference to the referee is particularly appropriate when the findings are based on a respondent's demeanor, credibility, or sincerity. Id. Accordingly, this court will only reverse findings of fact if, "upon review of the entire evidence, a reviewing court is left with the definite and firm conviction that a mistake has been made." Id. (quoting In re Strid, 551 N.W.2d 212, 215 (Minn.1996)).

A careful review of the record before us leads us to conclude that findings 7 and 13 and the referee's conclusion that Moulton violated Rule 8.4(d) are amply supported by evidence in the record and are not clearly...

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22 practice notes
  • In re Petition for Disciplinary Action Against Severson, No. A13–1382.
    • United States
    • Supreme Court of Minnesota (US)
    • February 18, 2015
    ...Severson's credibility and demeanor, concluded that remorse was neither an aggravating nor mitigating factor. See In re Moulton, 721 N.W.2d 900, 905 (Minn.2006) (“Deference to the referee is particularly appropriate when the findings are based on a respondent's demeanor, credibility, or sin......
  • In re Bonner, A15-1813
    • United States
    • Supreme Court of Minnesota (US)
    • May 31, 2017
    ...is required by the rules and is not a factor for mitigation); In re Grigsby , 764 N.W.2d 54, 61 (Minn. 2009) (same); In re Moulton , 721 N.W.2d 900, 906 (Minn. 2006) (same). Because cooperation with the Director and compliance with the law are not mitigating factors, the referee clearly err......
  • In re Disciplinary Action against Czarnik, No. A07-1885.
    • United States
    • Supreme Court of Minnesota (US)
    • January 15, 2009
    ...a referee's findings and conclusions "if they have evidentiary support in the record and are not clearly erroneous." In re Moulton, 721 N.W.2d 900, 905 (Minn.2006), amended by In re Moulton, 733 N.W.2d 777 (Minn.2007). Findings that are based on an attorney's "demeanor, credibility, or sinc......
  • In re Petition for Disciplinary Action against Selmer, No. A06-2254.
    • United States
    • Supreme Court of Minnesota (US)
    • May 22, 2008
    ...when tax violations result in criminal charges, id., or when an attorney fails to file and pay employer taxes, e.g., In re Moulton, 721 N.W.2d 900, 905 (Minn.2006). See also In re Doom, 463 N.W.2d 499, 500 (Minn.1990). Additionally, the failure to file tax returns altogether is a more serio......
  • Request a trial to view additional results
22 cases
  • In re Petition for Disciplinary Action Against Severson, No. A13–1382.
    • United States
    • Supreme Court of Minnesota (US)
    • February 18, 2015
    ...Severson's credibility and demeanor, concluded that remorse was neither an aggravating nor mitigating factor. See In re Moulton, 721 N.W.2d 900, 905 (Minn.2006) (“Deference to the referee is particularly appropriate when the findings are based on a respondent's demeanor, credibility, or sin......
  • In re Bonner, A15-1813
    • United States
    • Supreme Court of Minnesota (US)
    • May 31, 2017
    ...is required by the rules and is not a factor for mitigation); In re Grigsby , 764 N.W.2d 54, 61 (Minn. 2009) (same); In re Moulton , 721 N.W.2d 900, 906 (Minn. 2006) (same). Because cooperation with the Director and compliance with the law are not mitigating factors, the referee clearly err......
  • In re Disciplinary Action against Czarnik, No. A07-1885.
    • United States
    • Supreme Court of Minnesota (US)
    • January 15, 2009
    ...a referee's findings and conclusions "if they have evidentiary support in the record and are not clearly erroneous." In re Moulton, 721 N.W.2d 900, 905 (Minn.2006), amended by In re Moulton, 733 N.W.2d 777 (Minn.2007). Findings that are based on an attorney's "demeanor, credibility, or sinc......
  • In re Petition for Disciplinary Action against Selmer, No. A06-2254.
    • United States
    • Supreme Court of Minnesota (US)
    • May 22, 2008
    ...when tax violations result in criminal charges, id., or when an attorney fails to file and pay employer taxes, e.g., In re Moulton, 721 N.W.2d 900, 905 (Minn.2006). See also In re Doom, 463 N.W.2d 499, 500 (Minn.1990). Additionally, the failure to file tax returns altogether is a more serio......
  • Request a trial to view additional results

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