Iowa Supreme Court Attorney Disciplinary Bd. v. Den Beste

• Decision Date: 13 September 2019
• Docket Number: No. 19-0360,19-0360
• Parties: IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD, Complainant, v. Curtis W. DEN BESTE, Respondent.
• Court: Iowa Supreme Court

933 N.W.2d 251

IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD, Complainant,

v.Curtis W. DEN BESTE, Respondent.

No. 19-0360

Supreme Court of Iowa.

Filed September 13, 2019

Tara van Brederode and Amanda K. Robinson, Des Moines, for complainant.

Curtis W. Den Beste, Cedar Rapids, pro se.

CADY, Chief Justice.

This case is before us on review from a report and recommendation of a division of the Iowa Supreme Court Grievance Commission concerning attorney Curtis W. Den Beste. The report found Den Beste committed ethical violations and recommended a four-month suspension of his license to practice law. We find Den Beste violated the Iowa Rules of Professional Conduct by engaging in criminal conduct involving theft from his employer. We suspend his license to practice law in Iowa indefinitely with no possibility of reinstatement for four months.

I. Background Facts and Proceedings.

Curtis Den Beste is an Iowa attorney. He received his license to practice law in 2000. In 2007, Den Beste received an offer from Steve Howes to practice at the Howes Law Firm, P.C. (Howes) in Linn County, Iowa. The misconduct giving rise to this proceeding occurred while Den Beste worked at Howes.

Den Beste entered into a fee agreement with Howes requiring him to deposit all earned client fees into a trust account or the general law firm account. Pursuant to the agreement Den Beste was then paid fifty percent of the fees he earned, and Howes retained the remainder to cover overhead and other expenses. Beginning in 2015, Den Beste accepted cash payments from some clients and kept the proceeds for himself rather than depositing them as required by the fee agreement.

Den Beste’s pattern of misconduct was discovered in March 2017. He had instructed the firm’s accounting manager to "write off" a number of accounts he dishonestly deemed "uncollectable." When the manager called the clients in an attempt to collect payment, some informed her that they had already paid Den Beste directly. Steve Howes confronted him at a meeting shortly after the discovery. Den Beste admitted to the theft and was terminated. He agreed to self-report his misconduct to the disciplinary board and to provide an accounting of the diverted funds as well as a repayment plan. The accounting revealed he retained a total of $18,200. Accounting for the fifty-percent split, and other tax and reimbursement considerations, respondent wrongfully deprived Howes of $9200. A Client Security Commission auditor investigated the issue and found no evidence to conclude Den Beste’s accounting was inaccurate. He also noted respondent was cooperative and provided him with all requested information. However, he also explained Howes’s record keeping did not provide a "way to verify that the amount reported by Den Beste as stolen is accurate."

II. Board Complaint and Commission Recommendations.

After Den Beste reported his conduct to the Iowa Supreme Court Attorney Disciplinary Board, the Board filed a complaint alleging Den Beste violated Iowa Rules of Professional Conduct 32:8.4(b) and (c). Den Beste and the Board filed a joint stipulation of facts containing a recitation of events, a discussion of the rule violations and sanctions, accompanying exhibits, and a waiver of hearing. Following a hearing, the commission found Den Beste violated rules 32:8.4(b) and (c), identifying his pattern of misconduct involving "extensive or serious misrepresentations" as an aggravating factor. It also noted Den Beste’s conduct constitutes theft in violation of Iowa Code section 714.2(2), although he was not charged criminally.

The commission recognized a number of mitigating circumstances in its report. These factors include Den Beste’s self-reporting of wrongdoing, his cooperation with the Board, his voluntary plan to reimburse Howes, and the absence of a prior disciplinary record. There is no indication his indiscretions caused any financial harm to his clients. Importantly, Steve Howes submitted a letter stating he was the only person financially harmed by the theft. He gave positive remarks regarding Den Beste’s professional abilities and character and asked for sanctions short of revocation. The letter also mentioned Den Beste’s mentorship of young lawyers, his competency in legal matters, and his personal contributions to the firm.

In recommending a sanction, the commission observed instances in prior disciplinary cases in which an attorney’s theft from a law firm involved additional serious wrongdoing. These cases typically resulted in license revocation. By contrast, cases absent of these egregious aggravating factors resulted in more lenient sanctions. Finding no aggravating factors warranting revocation in this case, the commission recommended a four-month license suspension as the appropriate sanction.

III. Scope of Review.

Our review of attorney disciplinary proceedings is de novo. Iowa Supreme Ct. Att'y Disciplinary Bd. v. Dolezal , 796 N.W.2d 910, 913 (Iowa 2011). Although we give respectful consideration to the findings and recommendations by the commission, we are not bound by them. Id. The Board must prove the misconduct by a convincing preponderance of the evidence. Id.

IV. Violations.

A. Rule 32:8.4(b). Rule 32:8.4(b) states that "[i]t is professional misconduct for a lawyer to ... commit a criminal act that reflects adversely on the lawyer’s honesty, trustworthiness, or fitness as a lawyer in other respects." Iowa R. Prof'l Conduct 32:8.4(b). The parties stipulated that the factual basis for this rule violation is Den Beste’s own admission that "he took approximately $9,200.00 in fees that rightly belonged to his employer law firm for his personal use, which is conduct that constitutes theft." We have stated that "[a] lawyer who commits a theft of funds engages in conduct involving moral turpitude, dishonesty, and conduct that adversely reflects on the lawyer’s fitness to practice law." Iowa Supreme Ct. Att'y Disciplinary Bd. v. Stowe , 830 N.W.2d 737, 741 (Iowa 2013). Iowa Code section 714.1(2) defines theft as the misappropriation of another’s property in a manner inconsistent with the owner’s right in the property or appropriation of such property for personal use. Iowa Code § 714.1(2) (2017).

Den Beste committed theft by retaining funds in a manner inconsistent with Howes’s right to payment for his own benefit. See In re Disciplinary Proceeding Against Placide , 190 Wash.2d 402, 414 P.3d 1124, 1126, 1136 (2018) (concluding attorney committed theft based on conduct similar to the conduct in this case under a statute similar to Iowa’s theft statute). Despite his acquiescence to the fee agreement, he failed to deposit client fees into the firm’s general account. His failure to do so prevented Howes from receiving its share of the funds. We find Den Beste’s theft is conduct that reflects adversely on his fitness to practice law in violation of Iowa Rule of Professional Conduct 32:8.4(b).

B. Rule 32:8.4(c) Violation. Rule 32:8.4(c) states that "[i]t is professional misconduct for a lawyer to ... engage in conduct involving dishonesty, fraud, deceit, or misrepresentation." Iowa R. Prof'l Conduct 32:8.4(c). The stipulation frames the bases for this rule violation as respondent’s inherently dishonest act of stealing funds belonging to Howes. Additionally, it identified Den Beste’s untruthful statements to the firm’s accounting manager regarding the status of client payments as dishonest behavior.

Our analysis of attorney conduct violating rule 32:8.4(c) is not limited to criminal acts. We may consider any conduct "involving dishonesty, fraud, deceit, or misrepresentation." Id. In Iowa Supreme Court Attorney Disciplinary Board v. Henrichsen , this court discussed rule 32:8.4(c) in light of a similar factual scenario. 825 N.W.2d 525, 527 (Iowa 2013). Henrichsen involved an attorney who retained $10,000 in client fees over an extended period of time in violation of his firm’s fee agreement. Id. Henrichsen’s conduct was discovered after the firm’s bookkeeper noticed an absence of payment from a particular client. Id. In our discussion of rule 32:8.4(c), we explained the rule "is virtually identical to its predecessor, DR 1–102(A)(4). We held on numerous occasions that a lawyer violated DR 1–102(A)(4) by depositing receivables intended for the firm into a personal bank account." Id. at 527–28 (citation omitted). We found no reason to interpret the current rule differently from its predecessor and concluded Henrichsen violated Iowa Rule of Professional Conduct 32:8.4(c). Id. at 528. We imposed a suspension for a period of three months. Id. at 530.

Den Beste’s conduct is nearly identical to Henrichsen’s. Like Henrichsen, he violated the firm’s fee agreement for an extended period of time, approximately two years. In the process, he deprived the firm of a substantial amount of revenue. Den Beste also knowingly misrepresented the status of the accounts to the accounting manager in order to conceal his wrongdoing. We find respondent’s theft and misleading statements constitute conduct in violation of rule 32:8.4(c).

V. Sanction.

In Henrichsen , we reviewed the line of cases involving the conversion of law firm fees that resulted in revocation and those that resulted in sanctions less than revocation. Id. at 528–30. This review revealed that the cases resulting in revocation largely involved substantial fee conversion often accompanied by other serious conduct such as conversion of client funds, felony convictions, or involvement in other crimes. Id. at 528–29 ; see also Iowa Supreme Ct. Bd. of Prof'l Ethics & Conduct v. Irwin , 679 N.W.2d 641, 642–44 (Iowa 2004) (revoking license of attorney who converted nearly $99,000 in fees owed to his firm); Iowa Supreme Ct. Bd. of Prof'l Ethics & Conduct v. Schatz , 595 N.W.2d 794, 795–96 (Iowa 1999) (revoking license of attorney who converted over $140,000 in legal fees resulting in convictions of felony offenses involving theft and deceit); Iowa Supreme Ct. Bd. of Prof'l...