In re Petition for Disciplinary Action Against Schulte, A14–1311.

• Decision Date: 16 September 2015
• Docket Number: No. A14–1311.,A14–1311.
• Parties: In re PETITION FOR DISCIPLINARY ACTION AGAINST Frank Arend SCHULTE, a Minnesota Attorney, Registration No. 244934.
• Court: Minnesota Supreme Court

869 N.W.2d 674

In re PETITION FOR DISCIPLINARY ACTION AGAINST Frank Arend SCHULTE, a Minnesota Attorney, Registration No. 244934.

No. A14–1311.

Supreme Court of Minnesota.

Sept. 16, 2015.

Martin A. Cole, Director, Siama Y. Chaudhary, Senior Assistant Director, Office of Lawyers Professional Responsibility, Saint Paul, MN, for petitioner.

Frank Arend Schulte, Saint Paul, MN, pro se.

OPINION

PER CURIAM.

The Director of the Office of Lawyers Professional Responsibility filed a petition for disciplinary action against respondent Frank Arend Schulte, alleging that Schulte paid for non-client-related expenses from his trust account, failed to properly maintain trust account books and records, and failed to cooperate with the Director's investigation. We deemed the allegations in the petition admitted after Schulte did not respond to the petition.See Rule 13(b), Rules on Lawyers Professional Responsibility (RLPR). The only issue before us, therefore, is the appropriate discipline to impose. We conclude that Schulte's misconduct warrants an indefinite suspension from the practice of law with no right to petition for reinstatement for a minimum of 4 months.

869 N.W.2d 676

I.

Schulte was admitted to the practice of law in Minnesota in 1994. In 2005 he was placed on private probation for yelling at a client in a courthouse building, disclosing confidential client information, failing to return client property, and failing to cooperate with a disciplinary investigation. In 2010 he received an admonition for failing to diligently pursue a client's case, properly serve an opposing party, communicate with a client, and timely provide a client's file to new counsel. One month later, he received a separate admonition for failing to communicate with a client, safely hold client property, and attend court.

The instant disciplinary petition alleged that Schulte failed to properly maintain his trust account books and records, paid personal expenses out of his trust account, and subsequently did not cooperate with the Director's inquiry into his misconduct, in violation of Minn. R. Prof. Conduct 1.15(a), 1.15(b), 1.15(c)(3), and 1.15(h), as interpreted by Appendix 1 thereto, and Minn. R. Prof. Conduct 8.1(b) and Rule 25, RLPR. Because Schulte did not answer the disciplinary petition, we deemed the allegations admitted. In re De Rycke, 707 N.W.2d 370, 372 (Minn.2006) ; Rule 13(b), RLPR. We summarize the admitted allegations below.

Trust Account

Schulte overdrew his trust account in September 2013, and the bank reported the overdraft to the Director. After an investigation, the Director determined that between September 2012 and March 2014, Schulte failed to keep the required trust account books and records, including a check register, client subsidiary ledgers, monthly trial balances, and monthly trust account reconciliations. Additionally, the Director determined that between at least August 2013 and January 2014, Schulte improperly paid a monthly Internet bill that was a personal or business expense out of his trust account. Because Schulte never provided copies of his complete trust account books and records during the investigation, the Director was unable to ascertain either the ownership of the funds that Schulte withdrew from his trust account to pay this Internet bill, or whether Schulte paid other non-client-related expenses out of his trust account. Thus, the Director was unable to determine whether Schulte misappropriated client funds by paying his personal Internet bill with client funds in his trust account.¹ At the very least, however, Schulte failed to withdraw attorney fees from his trust account if he had already earned them.

Schulte's conduct with respect to his trust account violated Minn. R. Prof. Conduct 1.15(a) (generally prohibiting a lawyer from keeping funds belonging to the lawyer in a trust account), 1.15(b) (requiring a lawyer to withdraw earned fees from the trust account within a reasonable time after the fees have been earned), 1.15(c)(3) (requiring a lawyer to “maintain complete records of all funds ... coming into the possession of the lawyer”), and 1.15(h), as interpreted by Appendix 1 thereto (requiring a lawyer to maintain trust account books and records).

Failure to Cooperate

When the bank reported the overdraft in Schulte's trust account, the Director initiated an overdraft inquiry and requested that Schulte provide a written explanation for the overdraft with supporting documentation. Schulte did not respond within the requested timeframe, and the Director

869 N.W.2d 677

sent a second letter requesting a written response. Schulte then provided a copy of the check that caused the overdraft and some bank statements. Because the information that Schulte provided was incomplete, the Director twice more requested additional information, but Schulte did not respond to these requests.

The Director subsequently converted the overdraft inquiry into a formal disciplinary investigation and sent Schulte a notice of investigation regarding the trust account overdraft. Schulte did not respond to the notice of investigation or, again, to multiple follow-up requests. He also did not attend a meeting at the Director's office.

Schulte eventually called the Director and admitted that he had not kept the required trust account books and records, but he agreed to provide the documentation he did have. Schulte submitted a reconstructed and unannotated checkbook register and bank statements for the period from August 1, 2013, through January 31, 2014. Shortly thereafter, Schulte met with the Director and again stated that he had not been keeping all of the required trust account books and records. Although Schulte agreed to reconstruct his trust account books and records within 30 days, he never did so, even after receiving several follow-up letters from the Director. Lastly, Schulte failed to provide a written response to the disciplinary charges presented to the panel of the Lawyers Professional Responsibility Board.

Schulte's noncooperation in the investigation violated Minn. R. Prof. Conduct 8.1(b) (prohibiting a lawyer from knowingly failing to respond to a lawful demand for information in a disciplinary matter) and Rule 25, RLPR (requiring lawyers to cooperate with disciplinary investigations).

II.

Because we have deemed the allegations in the petition admitted, see Rule 13(b), RLPR, the sole question before us is the appropriate discipline for Schulte's professional misconduct. See In re Swensen, 743 N.W.2d 243, 247 (Minn.2007). The Director contends that Schulte should receive an indefinite suspension from the practice of law for a minimum of 6 months; Schulte contends a 3–month suspension is appropriate.

The purpose of disciplinary sanctions is “not to punish the attorney but rather to protect the public, to protect the judicial system, and to deter future misconduct by the disciplined attorney as well as by other attorneys.” In re Rebeau, 787 N.W.2d 168, 173 (Minn.2010). The four factors that guide...