Office of Lawyer Regulation v. Schoenecker (In re Schoenecker)

• Decision Date: 22 April 2016
• Docket Number: No. 2015AP275–D.,2015AP275–D.
• Citation: 368 Wis.2d 57,2016 WI 27,878 N.W.2d 163
• Parties: In the Matter of DISCIPLINARY PROCEEDINGS AGAINST James M. SCHOENECKER, Attorney at Law. Office of Lawyer Regulation, Complainant, v. James M. Schoenecker, Respondent.
• Court: Wisconsin Supreme Court

368 Wis.2d 57

878 N.W.2d 163

2016 WI 27

In the Matter of DISCIPLINARY PROCEEDINGS AGAINST James M. SCHOENECKER, Attorney at Law.Office of Lawyer Regulation, Complainant,

v.James M. Schoenecker, Respondent.

No. 2015AP275–D.

Supreme Court of Wisconsin.

Decided April 22, 2016.

ATTORNEY disciplinary proceeding. Attorney's license suspended.

PER CURIAM.

¶ 1 We review the report of the referee, Attorney Hannah C. Dugan, recommending that the court suspend the Wisconsin law license of Attorney James M. Schoenecker for professional misconduct for a period of one year, effective February 10, 2015, which is the date the Office of Lawyer Regulation (OLR) filed its complaint in this matter. The referee also recommended that the court order Attorney Schoenecker to pay one-half of the costs of this disciplinary proceeding. The referee wrote the report following the entry of a stipulation between Attorney Schoenecker and the OLR concerning Attorney Schoenecker's dishonest business activities as a member of a limited liability company that he helped to form. Neither party has appealed from the referee's report and recommendation, and thus our review proceeds under Supreme Court Rule (SCR) 22.17(2).¹

¶ 2 We conclude that the referee's findings of fact are supported by satisfactory and convincing evidence. We also agree with the referee's conclusions of law that Attorney Schoenecker engaged in professional misconduct, and that the seriousness of this misconduct warrants a one-year suspension of Attorney Schoenecker's law license. We part ways with the referee in holding that, given the timing and seriousness of Attorney Schoenecker's misconduct, the suspension of his law license should not be retroactive, but rather should be made effective as of the date of this order. Finally, we agree with the referee that Attorney Schoenecker should pay one-half of the OLR's $8,500.59 in costs, for a total of $4,250.30.

¶ 3 Attorney Schoenecker was licensed to practice law in Wisconsin in 2004. On July 15, 2011, we suspended Attorney Schoenecker's law license for misconduct that included attempting to defraud his client through law firm invoices; engaging in a pattern of attempted and completed thefts from his client's bank accounts, for which he pled guilty to one felony count of identity theft; and failing to inform his law firm employer that he had set up his own separate law firm on the side. In re Disciplinary Proceedings Against Schoenecker, 2011 WI 76, 336 Wis.2d 253, 804 N.W.2d 686. The three-year suspension, which went into effect on August 15, 2011, would have ended on August 15, 2014. Attorney Schoenecker's license remains suspended.

¶ 4 On February 10, 2015, the OLR filed a two-count complaint in this case, which alleged that Attorney Schoenecker engaged in the unauthorized practice of law, contrary to SCR 10.03(4)(a)² and SCR 22.26(2),³ as enforced via SCR 20:8.4(F),⁴ and engaged in conduct involving dishonesty, fraud, deceit, or misrepresentation, in violation of SCR 20:8.4(c).⁵ Attorney Schoenecker answered and denied all misconduct. In August 2015, the OLR amended its complaint by dropping the unauthorized practice of law charge, while maintaining the charge of engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation. See SCR 20:8.4(c).

¶ 5 The OLR's amended complaint alleged, and the parties ultimately stipulated, that the misconduct in this case concerns Attorney Schoenecker's involvement in a business partnership that he entered into in 2012 with two other individuals, M.M. and T.H. Attorney Schoenecker, on behalf of himself and his partners, established a limited liability company named GameMaster, LLC. Attorney Schoenecker drafted and filed the organizing documents, including the Articles of Organization and the Limited Liability Company Operating Agreement.

¶ 6 In May 2012, T.H. gave Attorney Schoenecker $25,000 in cash as his capital contribution. In August 2012, M.M. made a $20,000 capital contribution.

¶ 7 Attorney Schoenecker set up a business checking account in the name of GameMaster, LLC. The bank issued Attorney Schoenecker a bank card allowing him to charge to the account as well as withdraw funds. Attorney Schoenecker also had the bank issue him an American Express corporate card to use for business expenses.

¶ 8 Attorney Schoenecker did not immediately deposit T.H.'s $25,000 cash contribution into any GameMaster, LLC account. Instead, Attorney Schoenecker deposited the bulk of T.H.'s cash into his own personal checking account.

¶ 9 The OLR conducted an investigation of the GameMaster, LLC business account statements for the period of May 30, 2012 through October 2013. The investigation revealed that:

(a) Attorney Schoenecker repeatedly charged personal expenses to the company.

(b) Attorney Schoenecker repeatedly used company funds to pay his own credit card bills.

(c) Attorney Schoenecker repeatedly wrote company checks to pay his own personal expenses.

(d) Attorney Schoenecker used the company debit card to make ATM withdrawals at Potawatomi Casino.

(e) Attorney Schoenecker repeatedly charged personal expenses to the company American Express card.

(f) Attorney Schoenecker undertook use of company funds without preapproval from either of his business partners.

(g) Attorney Schoenecker charged significant personal expenses to the GameMaster, LLC business account. Included in those expenses were charges to Potawatomi Casino, Apple iTunes, a cellular telephone company, and a variety of fast food, gasoline, and other businesses, all without preapproval from his partners.

¶ 10 On September 2, 2015, the OLR and Attorney Schoenecker filed a stipulation whereby Attorney Schoenecker withdrew his answer to the original complaint and pled no contest to the single SCR 20:8.4(c) violation alleged in the OLR's amended complaint. In so doing, Attorney Schoenecker agreed not to dispute the OLR's charge that, as Chief Executive Manager of GameMaster, LLC, he failed to account clearly or timely for capital contributions made by other members, withdrew excessive funds from GameMaster, LLC, and charged personal expenses to GameMaster, LLC, all without preapproval from his business partners, in violation of SCR 20:8.4(c). Attorney Schoenecker and the OLR jointly recommended that the court order a one-year license suspension imposed retroactively to the date he became eligible for reinstatement from his earlier disciplinary suspension, August 15, 2014, so that his earliest reinstatement date would be in August 2015. The stipulation did not explain the basis for the retroactive nature of the suspension.

¶ 11 The referee filed her report and recommendation on December 3, 2015. The referee found that Attorney Schoenecker had engaged in the one count of misconduct alleged in the OLR's amended complaint. The referee agreed with the parties that a one-year license suspension was of appropriate length, citing In re Disciplinary Proceedings Against Cotter, 213 Wis.2d 196, 570 N.W.2d 248 (1997) as support. While both the OLR and Attorney Schoenecker recommended a one-year suspension retroactive to August 15, 2014, the referee recommended that the one-year suspension should be retroactive to the filing date of the OLR's original complaint, February 10, 2015, so that Attorney Schoenecker's earliest reinstatement date would be in February 2016. The referee wrote that this court's most common justification for ordering a suspension to run retroactively—that the misconduct occurred before or during the previous disciplinary proceeding—is not present here, as Attorney Schoenecker committed the misconduct here well after he was suspended in 2011. However, the referee still proposed a retroactively imposed suspension on the ground that the OLR did not act with sufficient promptness in pursuing and resolving this matter, which in turn delayed Attorney Schoenecker from filing for reinstatement from his previous suspension.

¶ 12 As stated earlier, no appeal has been filed, so this matter is submitted to the court pursuant to SCR 22.17(2). A referee's findings of fact are affirmed unless clearly erroneous. Conclusions of law are reviewed de novo. See In re Disciplinary Proceedings Against Eisenberg, 2004 WI 14, ¶ 5, 269 Wis.2d 43, 675 N.W.2d 747. The court may impose whatever sanction it sees fit regardless of the referee's recommendation. See In re Disciplinary Proceedings Against Widule, 2003 WI 34, ¶ 44, 261 Wis.2d 45, 660 N.W.2d 686.

¶ 13 There is no showing that any of the referee's findings of fact are erroneous. Accordingly, we adopt them. We also agree with the referee's conclusion of law that Attorney Schoenecker violated SCR 8.4(c). Attorney Schoenecker's repeated misuse of GameMaster, LLC business funds clearly involved deceit and misrepresentation in violation of that rule.

¶ 14 We further agree with the referee that the level of discipline to which the parties stipulated, a one-year law license suspension, is appropriate. We, like the referee, find support for this length of suspension in the case of Cotter. In 1992, we suspended Attorney Cotter for two years for, among other things, retaining client fees to which he was not entitled, neglecting a client's legal matter and the client's requests for information, and failing to file income tax returns for several years. In re Disciplinary Proceedings Against Cotter, 171 Wis.2d 373, 491 N.W.2d 475 (1992). As of 1997, Attorney Cotter's law license had not been reinstated. In a 1997 disciplinary decision, this court found that Attorney Cotter had pled guilty to a criminal violation of the Motor Vehicle Code—using a false name on an application for a license. Because this was a criminal act that reflected adversely on Attorney Cotter's honesty, trustworthiness, or fitness as a lawyer, this court suspended him for one year, effective the date of the order. See SCR 20:8.4(b) ;⁶ In re Disciplinary Proceedings Against Cotter, 213 Wis.2d 196, 570 N.W.2d 248 (1997).

¶ 15 The present case bears...