State ex rel. Counsel for Dis. v. Wintroub

• Citation: 277 Neb. 787,765 N.W.2d 482
• Decision Date: 22 May 2009
• Docket Number: No. S-05-1518.,No. S-07-942.,S-05-1518.,S-07-942.
• Parties: STATE of Nebraska ex rel. COUNSEL FOR DISCIPLINE OF the NEBRASKA SUPREME COURT, Relator, v. David S. WINTROUB, Respondent.
• Court: Supreme Court of Nebraska

765 N.W.2d 482

277 Neb. 787

STATE of Nebraska ex rel. COUNSEL FOR DISCIPLINE OF the NEBRASKA SUPREME COURT, Relator, v. David S. WINTROUB, Respondent.

No. S-05-1518.

No. S-07-942.

Supreme Court of Nebraska.

May 22, 2009.

John W. Steele, Assistant Counsel for Discipline, for relator.

Robert B. Creager, of Anderson, Creager & Wittstruck, P.C., Lincoln, for respondent in No. S-05-1518.

Melvin C. Hansen and Brian C. Hansen, of Nolan, Olson, Hansen, Lautenbaugh & Buckley, L.L.P., Omaha, for respondent in No. S-07-942.

WRIGHT, CONNOLLY, GERRARD, STEPHAN, McCORMACK, and MILLER-LERMAN, JJ.

PER CURIAM.

I. INTRODUCTION

These two attorney disciplinary actions involve separate formal charges filed by the Counsel for Discipline of the Nebraska Supreme Court against David S. Wintroub, who was admitted to the practice of law in the State of Nebraska on September 28, 1995. Case No. S-05-1518 stems from Wintroub's involvement in illegally structuring transactions to avoid federal bank reporting laws. After a felony conviction for this conduct, Wintroub was temporarily suspended from the practice of law in the State of Nebraska. The suspension became effective on January 19, 2006. Case No. S-07-942 involves eight additional formal charges that were filed against Wintroub on September 6, 2007. These charges relate to his representation of various clients both before and after his suspension. In both cases, the court-appointed referee found that Wintroub had violated disciplinary rules, and Wintroub takes exception to the referee's findings and recommended sanctions. We impose discipline as indicated below.

II. FACTS

1. CASE No. S-05-1518

In 2000, Wintroub agreed to sell to Gary Storey, Wintroub's neighbor, a 50-percent interest in an Internet business Wintroub was developing. The agreement called for Storey to invest $40,000 upon the execution of the written contract, $50,000 for operating expenses by August 25, 2000, and $30,000 for operating expenses by September 22, if deemed necessary.

Storey told Wintroub that he owned used car dealerships and that many of his customers paid him in cash and asked if he could make some payments in cash. Wintroub agreed. Apparently, Storey made all his payments to Wintroub in cash, and he made them all in increments of less than $10,000. Wintroub received approximately $67,000 from Storey through seven cash deposits. At one point, in a period of just 7 days, Wintroub made four deposits of $9,000 each. When making these deposits, Storey would meet Wintroub at the bank, and Wintroub would deposit the cash into his business account and create a receipt for purposes of filing his corporate tax returns.

On October 4, 2005, pursuant to a plea agreement, Wintroub was convicted in the U.S. District Court for the District of Nebraska of structuring transactions to evade reporting requirements, in violation of 31 U.S.C. § 5324 (2000). Section 5324(a)(3) provides that no person shall structure or assist in structuring any transaction for the purpose of evading the reporting requirements of 31 U.S.C. § 5313 (2000). Section 5313(a), in conjunction with 31 C.F.R. § 103.22 (2005), requires banks to file currency transaction reports for any cash transaction exceeding $10,000.

Before accepting the plea, the U.S. District Court reviewed the factual basis for the charges. The parties agreed that 31 U.S.C. § 5324 did not require knowledge that structuring transactions was an illegal activity. However, they understood that it was necessary to show that Wintroub knew the law required banking institutions to report transactions over $10,000 and that he knowingly assisted in structuring the transactions with the purpose of avoiding the 31 U.S.C. § 5313 reporting requirement.

Wintroub admitted he knew at the time of the deposits that banks were required to report all cash transactions in excess of $10,000. He further admitted that it occurred to him that "Storey's decision to give me only cash amounts of less than $10,000 for deposit, may have been because he did not want the transaction to be subject to any report." As Wintroub's counsel stated to the court, "[I]t doesn't stretch the imagination for someone who knows that there is a $10,000 reporting requirement, that if you continually deposit $9,000 at a time, that there's some correlation between the amount given and the reporting requirement." Nevertheless, counsel explained that Wintroub "didn't think it mattered to him whether ... Storey was trying to avoid reporting requirements." Wintroub stated:

I had no reason to be concerned about the transaction, and from my point of view, I did not know or understand that there was any prohibition on "structuring" financial transactions to avoid the reporting requirements, or that my making of those deposits was prohibited in any manner, as I was not the one who structured the manner in which the payments were made to me.

The court accepted Wintroub's plea, concluding that at the very least, Wintroub knowingly assisted in structuring a single transaction of $27,000 when he deposited that amount over the course of 3 consecutive days in cash deposits of $9,000 each. Wintroub was sentenced to 5 years' probation with 5 months of home confinement. Wintroub did not appeal his federal conviction.

After the conviction, Counsel for Discipline filed formal charges alleging that Wintroub had violated his oath of office as an attorney and the following provisions of the Code of Professional Responsibility: Canon 1, DR 1-102(A)(1) (violating disciplinary rule); DR 1-102(A)(3) (engaging in illegal conduct involving moral turpitude); and DR 1-102(A)(4) (engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation). A referee was appointed, and a hearing was held. At the disciplinary hearing, Wintroub generally accepted the factual basis for his felony conviction. He reiterated, however, that he had believed he had no duty to report his suspicion that Storey was structuring the payments so as to avoid reporting.

Wintroub testified that he did not formally investigate the legality of his actions, but instead simply "thought it through myself." Wintroub expressed his deep remorse and his regret for not having investigated the legality of his actions more thoroughly.

The referee found that Wintroub had violated DR 1-102(A)(1), (3), and (4). The referee noted that Wintroub had expressed genuine remorse and did not know he was directly violating any law. Nevertheless, the referee found that Wintroub had committed a serious crime and had failed to conduct even the simplest investigation into the legality of his conduct, because he wished to receive the benefit of the payments. The referee recommended that Wintroub be suspended from the practice of law for 2 years.

2. CASE No. S-07-942

Counsel for Discipline subsequently filed additional formal charges against Wintroub. These formal charges are before us as case No. S-07-942 and relate to Wintroub's representation of clients both before and after his suspension. For the sake of clarity, we describe the charges upon which the referee found disciplinary violations as they relate to individual clients.

(a) Andrea Franey

In February 2005, Andrea Franey retained Wintroub to represent her in a divorce action in Douglas County, Nebraska. Wintroub tried the case in September 2005, and on October 13, the judge issued a letter decision and directed Wintroub to prepare the decree. Wintroub never submitted a decree to the judge, and in February 2006, Franey hired new counsel to finally prepare the decree.

The formal charges alleged that Wintroub's conduct violated his oath of office as an attorney. The charges also alleged that his conduct violated Neb. Ct. R. of Prof. Cond. §§ 3-501.3 and 3-501.4. Section 3-501.3 requires a lawyer to act with diligence, and § 3-501.4 requires a lawyer to promptly communicate with a client.

In the referee's final report, he noted Wintroub's testimony that after receiving the letter decision from the judge, Wintroub prepared a decree and sent it to opposing counsel for approval. The referee noted, however, that Wintroub failed to offer into evidence a copy of any decree that he had prepared for Franey. The referee found that Franey's new attorney was able to contact opposing counsel, who approved the decree that the new attorney prepared. The referee concluded that Wintroub's failure "to follow through in getting the Decree entered" violated §§ 3-501.3 and 3-501.4.

(b) Scott Thompson

On June 20, 2005, Scott Thompson retained Wintroub to represent him in a driving under the influence action. Approximately 2 weeks later, Thompson terminated Wintroub's representation. A written fee agreement signed by Thompson provided that he would pay Wintroub a $1,500 "non-refundable flat fee," and Thompson had paid Wintroub that amount. After he terminated Wintroub's representation, Thompson requested a partial refund, and Wintroub stated he would look at the amount of time he spent on the matter. No amount of the fee was refunded to Thompson.

The formal charges alleged that Wintroub's acts violated his oath of office as an attorney and Neb. Ct. R. of Prof. Cond. § 3-501.16(d), which provides that upon termination of representation, a lawyer shall refund "any advance payment of fee or expense that has not been earned or incurred." Because Wintroub's acts occurred prior to September 1, 2005, however, the applicable disciplinary rule is actually Canon 2, DR 2-110(A)(3),¹ which provided that "[a] lawyer who withdraws from employment shall refund promptly any part of a fee paid in advance that has not been earned." The two rules are substantially similar.

The referee noted Wintroub testified that he met with Thompson twice, prepared for an administrative license revocation hearing, and prepared a motion. However, Wintroub's representation was terminated prior to the hearing, and Wintroub did not offer a copy of the motion he allegedly prepared...