Iowa Supreme Ct. Atty. Disc. Bd. v. Iversen, 06-0747.

• Decision Date: 17 November 2006
• Docket Number: No. 06-0747.,06-0747.
• Citation: 723 N.W.2d 806
• Parties: IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD, Complainant, v. Gary D. IVERSEN, Respondent.
• Court: Iowa Supreme Court

723 N.W.2d 806

IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD, Complainant, v. Gary D. IVERSEN, Respondent.

No. 06-0747.

Supreme Court of Iowa.

November 17, 2006.

Charles L. Harrington and David J. Grace, Des Moines, for complainant.

Timothy J. Luce of Anfinson & Luce, Waterloo, for respondent.

WIGGINS, Justice.

The Iowa Supreme Court Attorney Disciplinary Board filed a complaint alleging Gary D. Iversen violated numerous rules of the Iowa Code of Professional Responsibility for Lawyers by not filing federal or state income tax returns for 1992 to 2001 and by not paying his Iowa income taxes for 1996 and 1997. The Grievance Commission filed its report finding the Board had proven the factual allegations of the complaint as well as Iversen's violations of the Code by a convincing preponderance of the evidence. The Commission recommended we suspend Iversen's license to practice law indefinitely with no possibility of reinstatement for two years. On our de novo review, we agree with the Commission that the Board has proven by a convincing preponderance of the evidence that Iversen's conduct violated the Code. Accordingly, we suspend Iversen's license to practice law in this state indefinitely with no possibility of reinstatement for one year.

I. Background Facts and Proceedings.

We admitted Iversen to the Iowa bar in 1977. He presently maintains a law office in Waterloo, Iowa. His major areas of practice include preparation of tax returns, real estate, and probate matters. On December 1, 2005, the Board filed a complaint against Iversen alleging various violations of the Iowa Code of Professional Responsibility for Lawyers. The Board claimed: (1) as of February 18, 2003, Iversen had not filed federal or state income tax returns for the years 1992 through 2001; (2) on or about May 1, 1997, Iversen failed to pay his Iowa income tax for the year 1996; and (3) on or about May 1, 1998, Iversen failed to pay his Iowa income tax for the year 1997.

In connection with these claims, the Board alleged Iversen violated Iowa Code sections 422.25(5), 714.8(10), 714.10(1), and 714.11(1) (1997). The Board alleged in October 2003, Iversen pled guilty to the crimes of fraudulent practice in the second degree in violation of Iowa Code sections 422.25(5), 714.8(10), and 714.10 and fraudulent practice in the third degree in violation of Iowa Code sections 422.25(5), 714.8(10), and 714.11. The Board further alleged the court granted Iversen a deferred judgment and placed him on probation for sixty months.

Accordingly, the Board charged Iversen with violating the following provisions of the Iowa Code of Professional Responsibility for Lawyers: DR 1-102(A)(3) (providing a lawyer shall not engage in illegal conduct involving moral turpitude); DR 1-102(A)(4) (providing a lawyer shall not engage in conduct involving dishonesty, fraud, deceit, or misrepresentation); DR 1-102(A)(5) (providing a lawyer shall not engage in conduct that is prejudicial to the administration of justice); and DR 1-102(A)(6) (providing a lawyer shall not engage in any other conduct that adversely reflects on the fitness to practice law). The Board noted it intended to invoke issue preclusion in proving the allegations of the complaint.

In his answer, Iversen admitted to not filing federal or state income tax returns for 1992 to 2001 and to not paying his Iowa income taxes for 1996 and 1997. He also admitted to his guilty plea. In response to the Board's requests for admission, Iversen stated he had "no specific knowledge as to inaccuracies in the minutes, but having not interviewed the witnesses regarding the specifics, he [was] unable to admit whether the facts [were] accurate." Iversen further stated, however, that "the deferred judgment granted in the [criminal case] was based on facts similar to those set forth in the minutes" and he would not object to them.

At the hearing on the complaint, the Board and Iversen appeared to agree the focus was not on Iversen's conduct, but rather on the issue of the appropriate sanction. In his testimony, Iversen admitted to not filing his federal and state tax returns beginning in 1992, but stated he has since filed them. He testified he made an estimated tax payment in 1993 for the year 1992. He further explained he is not sure he knows why he did not file the 1992 returns, alluding to financial and marital issues. Initially, Iversen chose not to file his earlier returns thinking he would "catch up." After he failed to file the first few returns, Iversen stated by that point he felt he was in a hole that he could not get himself out of financially and began to fear the tax authorities would destroy his law practice.

Iversen acknowledged his conduct would not reflect the advice he would give to his clients and that he was not as responsive to the state as he should have been. He claimed he has not had any prior ethical violations, has been attentive to the needs of his clients, and has attempted to limit his work in view of his probable suspension. He appears to have cooperated with the disciplinary authorities. Iversen mentioned he was "obviously very embarrassed by pretty stupid decisions and just lack of taking action" and expressed a desire to practice law again. Witnesses who testified at Iversen's sentencing hearing opined that Iversen is a well-respected attorney.

The Commission found although Iversen was required to file both federal and state income tax returns for the years 1992 through 2001, he did not file such returns and paid no income taxes, except for one estimated tax payment in 1993. The Commission further found Iversen was charged in Black Hawk County with two counts of fraudulent practice in the first degree (class "C" felonies) and two counts of tax evasion (class "D" felonies), and as a result of a plea agreement under which two of the original counts were reduced and the other two counts were dismissed, Iversen pled guilty to one count of fraudulent practice in the second degree (a class "D" felony) and one count of fraudulent practice in the third degree (an aggravated misdemeanor).

The Commission also found Iversen was granted a deferred judgment with five years of supervised probation and was ordered to make restitution to the state in the amount of $207,743.41. Additionally, Iversen has not paid any of the approximate $180,000 to $200,000 in back taxes which he owes to the federal government and there is no payment plan to do so at this time. Finding the allegations of the complaint were sufficiently proven in light of Iversen's answer, response to requests for admission, and testimony at the hearing, as well as by issue preclusion under Iowa Court Rule 35.7(3), the Commission concluded Iversen violated DR 1-102(A)(3), (4), (5), and (6).

The Commission noted the following mitigating factors: (1) Iversen appears to be respected by his peers; (2) there is nothing in the record showing his clients were harmed; (3) Iversen was cooperative in the disciplinary process and acknowledged his misconduct; (4) Iversen showed concern for his clients' interests as he anticipated a suspension of his license; (5) it appears Iversen does not have any previous ethical violations; (6) Iversen expressed remorse and embarrassment; (7) Iversen would like to pay his tax obligations (estimated to be between $300,000 and $400,000); (8) Iversen would like to resume the practice of law; and (9) Iversen did not offer excuses or attempt to assign blame elsewhere, nor does he attribute his misconduct to mental or physical conditions, substance abuse, or gambling.

The Commission noted the following aggravating factors: (1) Iversen had no explanation for his conduct except for lack of money; (2) he admitted he would have advised a client differently under the same circumstances; (3) the misconduct continued for at least ten years during which Iversen did not attempt to address the growing problem; (4) Iversen did not take corrective action until his misconduct was discovered by the tax authorities; (5) Iversen did not fully cooperate with the tax authorities; (6) Iversen has held himself out to the public as an attorney with special expertise in tax matters; therefore, his conduct harms the public's confidence in the tax system and legal profession; and (7) Iversen managed to keep other personal financial obligations relatively current while disregarding the income tax laws. The Commission recommended Iversen receive a two-year suspension of his license to practice law.

II. Scope of Review.

This court reviews attorney disciplinary proceedings de novo. Iowa Supreme Ct. Att'y Disciplinary Bd. v. Walker, 712 N.W.2d 683, 684 (Iowa 2006). The Board must prove ethical violations by a convincing preponderance of the evidence. Id. "Although we consider the Commission's factual findings and discipline recommendations, they do not bind us." Id. (citation omitted).

III. Analysis.

Under Iowa Court Rule 35.7(3), principles of issue preclusion may be used in a lawyer disciplinary case where certain conditions exist. These conditions include:

a. The issue has been resolved in a civil proceeding that resulted in a final judgment, or in a criminal proceeding that resulted in a finding of guilt, even if the Iowa Supreme Court Attorney Disciplinary Board was not a party to the prior proceeding.

b. The burden of proof in the prior proceeding was greater than a mere preponderance of the evidence.

c. The party seeking preclusive effect has given written notice to the opposing party, not less than ten days prior to the hearing, of the party's intention to invoke issue preclusion.

Iowa Ct. R. 35.7(3). These conditions have been met here, meaning Iversen is barred from relitigating the issue of his criminal conduct in this disciplinary action.

Iversen pled guilty to the crimes of fraudulent practice in the second degree (a class "D" felony) and fraudulent practice in the third degree (an aggravated misdemeanor) in...