Iowa Supreme Court Attorney Disciplinary Bd. v. Bieber

• Decision Date: 07 December 2012
• Docket Number: No. 12–1203.,12–1203.
• Parties: IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD, Complainant, v. Paul J. BIEBER, Respondent.
• Court: Iowa Supreme Court

824 N.W.2d 514

IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD, Complainant,

v.Paul J. BIEBER, Respondent.

No. 12–1203.

Supreme Court of Iowa.

Dec. 7, 2012.

Charles L. Harrington and Wendell J. Harms, Des Moines, for complainant.

Mark S. Pennington of Kutmus, Pennington & Hook, P.C., West Des Moines, for respondent.

MANSFIELD, Justice.

An Iowa attorney helped facilitate a fraudulent real estate transaction in which the sales price was overstated by $55,000. The attorney subsequently pled guilty to misprision of a felony, see18 U.S.C. § 4 (2006), and received probation. We are now asked to decide what ethical rules he violated and what the consequences should be.

This case comes before us on the report of a division of the Grievance Commission of the Supreme Court of Iowa (commission). SeeIowa Ct. R. 35.10(1) (2009).¹ The Iowa Supreme Court Attorney Disciplinary Board (Board) alleged the respondent, Paul J. Bieber, violated several rules of professional conduct. The commission agreed and accordingly found that Bieber violated Iowa Rules of Professional Conduct 32:1.2(d), 32.1.16(a)(1), 32:4.1(a), 32:4.1(b), and 32:8.4(b). Additionally, the commission found that Bieber's felony conviction met the requirements for revocation or suspension under Iowa Code section 602.10122 (2011).

The commission recommended an indefinite suspension from the practice of law with no possibility of reinstatement for six months. Upon our consideration of the commission's findings of fact, conclusions of law, and recommendations, and our de novo review of the record, we agree Bieber has committed all the violations found by the commission. We also agree with the recommended sanction and order Bieber's license suspended indefinitely with no possibility of reinstatement for six months.

I. Factual and Procedural Background.

Bieber was admitted to practice law in Iowa in 1980. At all relevant times in this proceeding, he has resided and maintained his law office in Scott County. Bieber's law practice includes divorce, personal injury, probate, and some real estate work. Bieber has no history of disciplinary violations. Bieber has a distinguished record of community involvement including service with the Davenport Historic Preservation Commission, the Salvation Army, Neighborhood Housing Services, and “In From the Cold,” an organization that assists the homeless. Bieber also has been president of an inn of court and president of the board of a Catholic school.

On June 30, 2011, Bieber appeared in the United States District Court for the Southern District of Iowa and, under a plea agreement, pled guilty to misprision of a felony.² As agreed upon by Bieber and the federal government, Bieber was sentenced to three years of probation, which was within the federal sentencing guidelines. Bieber also was ordered to pay restitution to the lender in the amount of $37,969.99.

The facts of this transaction are set forth in the plea agreement:

Mary Pat Lord, a real estate agent, had a listing for the sale of 1818 Esplanade Avenue, Davenport, Iowa, then owned by Denisa Woods. Lord arranged to sell the property to Darryl Hanneken and Robert Herdrich for the price of $100,000. Lord and the parties agreed that the HUD–1 Settlement Statement and other documents pertaining to the sale would reflect a price of $155,000, thereby allowing Hanneken and Herdrich to obtain a mortgage loan for $108,500, greater than the actual sale price. Further, Lord and the parties agreed that after proceeds of the sale had been paid to Woods, she would convey a $55,000 “cash back” payment (the difference between the actual price and inflated sale price) to Hanneken and Herdrich. The actual price and the existence of the cash back payment to Hanneken and Herdrich would be concealed from the mortgage lender, Interbay Funding, by omitting those details from the HUD–1 Settlement Statement.

Woods lived outside the Davenport area, so [Bieber], an attorney, was retained to act for Woods in connection with the sale and closing pursuant to a power of attorney. [Bieber] was aware of the lower actual price and the cash back payment, and the fact that those details would not be conveyed to the lender on the HUD–1 Settlement Statement.

[Bieber] did an affirmative act to conceal the offense, in that [Bieber] provided via the closing process information that falsely represented that the higher inflated price was the agreed price and failed to reveal the lower actual price and cash back payment. [Bieber] knew this information would be included on the HUD–1 Settlement Statement. [Bieber] also completed a declaration of value form that falsely represented the sale price.

On or about December 9, 2005, [Bieber] represented Woods at the closing for the sale of 1818 Esplanade and took custody of the proceeds of the sale on behalf of Woods. Thereafter, [Bieber] conveyed the $55,000 cash back payment to Hanneken.

....

In connection with this transaction, [Bieber] did not collect any fees or payments except for his $400 fee for representing Woods, which was duly reflected on the HUD–1 form. [Bieber] acted in the interests of Woods in that he carried out her instructions to conduct the transaction.

On May 18, 2011, the Board filed an amended complaint alleging Bieber violated Iowa Rules of Professional Conduct 32:1.2(d), 32:1.16(a)(1), 32:4.1(a), 32:4.1(b), and 32:8.4(b). The Board also alleged that Bieber's felony conviction met the requirements for revocation or suspension under Iowa Code section 602.10122.

Bieber filed an amended answer admitting most of the allegations in the amended complaint. However, he specifically denied knowing that preparing the HUD–1 document with the inflated sale price amounted to criminal conduct. Additionally, while admitting that he knew the inflated sale price was false, Bieber denied that he had any knowledge the false statement was “material” to the lender.

A one-day hearing before the commission took place on June 6, 2012. Bieber conceded all of the violations charged by the Board except the alleged violations of rule 32:4.1 subparts (a) and (b).³ He also acknowledged that his guilty plea had preclusive effect as to the elements of the crime he had admitted to. See Emp'rs Mut. Cas. Co. v. Van Haaften, 815 N.W.2d 17, 23 (Iowa 2012) (noting the well-established rule that a guilty plea in an Iowa state court “ ‘precludes a criminal defendant from relitigating essential elements of the criminal offense in a later civil case arising out of the same transaction or incident’ ” (quoting Dettmann v. Kruckenberg, 613 N.W.2d 238, 244 (Iowa 2000))).

However, Bieber asserted that both he and his client Woods believed the $55,000 rebate would actually go toward needed repairs and improvements to the property. By their account, which no one disputed, Bieber and Woods were unaware the buyers intended simply to pocket the difference between the $108,500 they had borrowed and the $100,000 net they had transferred to Woods. Bieber also testified that he had repaid the $37,969.99 restitution ordered by the federal court.⁴

The Board proposed a six-month suspension of Bieber's law license; Bieber conceded a suspension was appropriate but argued for sixty days. After thoroughly discussing the relevant facts and law, the commission recommended that Bieber's license be suspended indefinitely with no possibility of reinstatement for six months.

II. Scope of Review.

Our review of attorney disciplinary proceedings is de novo. Iowa Ct. R. 35.10(1); Iowa Supreme Ct. Att'y Disciplinary Bd. v. Fields, 790 N.W.2d 791, 793 (Iowa 2010). We give respectful consideration to the commission's findings and recommendations but are not bound by them. Iowa Supreme Ct. Att'y Disciplinary Bd. v. Lickiss, 786 N.W.2d 860, 864 (Iowa 2010). The burden is on the Board to prove attorney misconduct by a convincing preponderance of the evidence. Id. “This burden is less than proof beyond a reasonable doubt, but more than the preponderance standard required in the usual civil case.” Iowa Supreme Ct. Bd. of Prof'l Ethics & Conduct v. Lett, 674 N.W.2d 139, 142 (Iowa 2004). It is also a less stringent burden than clear and convincing evidence which is “the highest civil law standard of proof.” Iowa Supreme Ct. Bd. of Prof'l Ethics & Conduct v. Ronwin, 557 N.W.2d 515, 517 (Iowa 1996). If a violation is established, we “may impose a lesser or greater sanction than recommended by the commission.” Iowa Supreme Ct. Att'y Disciplinary Bd. v. Murphy, 800 N.W.2d 37, 42 (Iowa 2011); see alsoIowa Ct. R. 35.10(1).

III. Review of Alleged Ethical Violations.

The Board alleged, and the commission found, that Bieber violated five separate provisions of the Iowa Rules of Professional Conduct. Upon our review, we agree with those findings.

A. Rule 32:1.2(d).Rule 32:1.2(d) forbids a lawyer from “counsel[ing] a client to engage, or assist[ing] a client, in conduct that the lawyer knows is criminal or fraudulent.” Iowa R. Prof'l Conduct 32:1.2(d). Comment 9 to rule 32:1.2 explains that “[p]aragraph (d) prohibits a lawyer from knowingly counseling or assisting a client to commit a crime or fraud.” Id. r. 32:1.2(d) cmt. 9. Comment 10 explains that a lawyer in a situation such as Bieber's “is required to avoid assisting the client ... by drafting or delivering documents that the lawyer knows are fraudulent.” Id. r. 32:1.2(d) cmt. 10.

Rule 32:1.2(d) took effect on July 1, 2005, and since that time we have not applied it in any disciplinary opinions. However, the language of rule 32:1.2(d) is substantially similar to our prior disciplinary rule DR 7–102(A)(7), which stated in part, “In the representation of a client, a lawyer shall not ... [c]ounsel or assist a client in conduct that the lawyer knows to be illegal or fraudulent.” We find cases interpreting prior disciplinary rule DR 7–102(A)(7) to be instructive in this matter. See Iowa Supreme Ct. Att'y Disciplinary Bd. v. Gailey, 790 N.W.2d 801, 806 (Iowa 2010) (relying on c...