Iowa Supreme Court Bd. of Professional Ethics & Conduct v. Gottschalk

• Decision Date: 18 September 1996
• Docket Number: No. 96-686,96-686
• Citation: 553 N.W.2d 322
• Parties: & CONDUCT, Appellee, v. Don E. GOTTSCHALK, Appellant. Supreme Court of Iowa
• Court: Iowa Supreme Court

Page 322

553 N.W.2d 322

IOWA SUPREME COURT BOARD OF PROFESSIONAL ETHICS & CONDUCT, Appellee, v. Don E. GOTTSCHALK, Appellant.

No. 96-686.

Supreme Court of Iowa.

Sept. 18, 1996.

Fred White, Waterloo, for appellant.

Don E. Gottschalk, Cedar Falls, pro se.

Norman G. Bastemeyer and Charles L. Harrington, Des Moines, for appellee.

Considered by McGIVERIN, C.J., and CARTER, LAVORATO, SNELL, and ANDREASEN, JJ.

LAVORATO, Justice.

The Iowa Board of Professional Ethics and Conduct (board) charged attorney Don E. Gottschalk with converting $1000 in client trust funds. The board also charged Gottschalk with falsely reporting he monthly reconciled his client trust account. Following a hearing, a division of the Grievance Commission (commission) found evidence substantiated the charges and recommended Gottschalk's license be suspended for not less than one year. On review we concur with the commission's findings and recommended sanctions.

Gottschalk has appealed the matters before us pursuant to Iowa Supreme Court Rule 118.11. Our review is therefore de novo. Iowa Sup.Ct.R. 118.11. We give respectful consideration to commission recommendations, but we ultimately decide what discipline is appropriate under the unique facts of each case. Iowa Supreme Ct. Bd. of Professional Ethics & Conduct v. Scheetz, 549 N.W.2d 828, 832 (Iowa 1996). In each case, we are guided by the following standards in determining whether discipline is warranted: "the nature of the alleged violation, the need for deterrence, protection of the public, maintenance of the reputation of the bar as a whole and the respondent's fitness to continue in the practice of law." Committee on Professional Ethics & Conduct v. Blomker, 379 N.W.2d 19, 21 (Iowa 1985).

The board must prove its allegations of lawyer misconduct by a convincing preponderance of the evidence. Committee on Professional Ethics & Conduct v. Conzett, 476 N.W.2d 43, 44 (Iowa 1991). In our de novo review, we find the following facts from the record.

Gottschalk has practiced law in this state since 1967. He is a Cedar Falls sole practitioner sharing office space with several other lawyers. Together they maintained a joint office account for paying office expenses. Each week each attorney deposited money into this account to cover such things as support staff salaries, utilities, and phone bills. Gottschalk maintained a separate client trust account and did the bookkeeping for that account. He kept individual ledgers for each client's funds in this account.

On November 24, 1993, the balance of the joint office account was $7.52. The same day, Gottschalk deposited $1000 into this account after writing a check to himself for this amount from his client trust account. Gottschalk had neither a court order nor a client authorization to withdraw the $1000. Gottschalk did not record the $1000 withdrawal on any particular client's ledger in the trust account. The $1000 was immediately expended for support staff wages and other office expenses.

Gottschalk believed he could shortly reimburse the client trust account for the $1000 he took. He was originally banking on an imminent personal injury settlement for a client named Polk. The settlement was delayed because the other party's insurance company needed more information. Gottschalk received the settlement check in March 1994.

On April 8, 1994, Gottschalk reimbursed the trust account from fees he had coming from a settlement involving a client named Valdaar. The settlements in the Polk and Valdaar case came several days apart.

On May 3 client security auditor Marvin Bomgaars appeared at Gottschalk's office on another matter. While he was there, Bomgaars proceeded to audit Gottschalk's trust account. During that audit, Bomgaars discovered the unauthorized $1000 withdrawal that Gottschalk eventually conceded was due to his conversion of trust funds.

In February 1994 Gottschalk filed his annual statement and questionnaire with the Client Security and Attorney Disciplinary Commission. In that statement Gottschalk certified that he monthly reconciled his trust account checkbook balances with bank statement balances. He also certified he monthly reconciled his trust account checkbook balances with client ledger balances. Although the board alleged the certification was false, Gottschalk maintained he had reconciled the account, recognizing the $1000 shortage in doing so.

Like the commission, we find that Gottschalk converted clients' funds when he withdrew the $1000 from the client trust account to pay office expenses. Although Gottschalk maintains there were probate fees in the trust account totaling more than $1000 when he wrote the check, there were no court orders allowing the fees. He was therefore not entitled at the time to withdraw the fees. See Iowa Supreme Ct. Bd. of Professional Ethics & Conduct v. Evans, 537 N.W.2d 783, 784-85 (Iowa 1995) (lawyer not entitled to probate fee until court determines amount to be allowed).

We also agree with the commission that Gottschalk falsely certified that he (1) reconciled his trust account checkbook balances with the client ledger balances on a monthly basis and (2) reconciled his trust account checkbook balances with bank statement balances on a monthly basis. At the time he made that certification there was a $1000 shortage in the client trust account. As the board argues, the shortage made it impossible to make a reconciliation. The certification was false.

The conversion and false certification constituted a violation of the Iowa Code of Professional Responsibility for Lawyers DR 9-102(A) (lawyer or firm shall maintain all client funds in trust account and may not withdraw such funds for own use unless and until due), DR 1-102(A)(3) (lawyer shall not engage in illegal conduct involving moral turpitude), and DR 1-102(A)(4) (lawyer shall not engage in conduct involving dishonesty, fraud, deceit, or misrepresentation). That brings us to the matter of discipline.

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