State ex rel. Nebraska State Bar Ass'n v. Caskey, S-96-500

• Decision Date: 28 February 1997
• Docket Number: No. S-96-500,S-96-500
• Parties: STATE of Nebraska ex rel. NEBRASKA STATE BAR ASSOCIATION, Relator, v. Charles L. CASKEY, Respondent.
• Court: Nebraska Supreme Court

Page 414

560 N.W.2d 414

251 Neb. 882

STATE of Nebraska ex rel. NEBRASKA STATE BAR ASSOCIATION, Relator, v. Charles L. CASKEY, Respondent.

No. S-96-500.

Supreme Court of Nebraska.

Feb. 28, 1997.

Syllabus by the Court

1. Disciplinary Proceedings: Appeal and Error. A proceeding to discipline an attorney is a trial de novo on the record, in which the Nebraska Supreme Court reaches a conclusion independent of the findings of the referee; provided, however, that where the credible evidence is in conflict on a material issue of fact, the court considers and may give weight to the fact that the referee heard and observed the witnesses and accepted one version of the facts rather than another.

2. Disciplinary Proceedings: Proof: Appeal and Error. A disciplinary complaint against an attorney will only be sustained if the Nebraska Supreme Court finds it to be established by clear and convincing evidence.

3. Disciplinary Proceedings: Words and Phrases. An act of moral turpitude by an attorney is an act that is contrary to honesty and good morals.

4. Disciplinary Proceedings: Taxes. An attorney's knowing and willful failure to file a tax return, for which he or she has the legal obligation for filing, constitutes illegal conduct involving moral turpitude.

5. Disciplinary Proceedings. To determine whether and to what extent discipline should be imposed upon an attorney, it is necessary that the following factors be considered: (1) the nature of the offense, (2) the need for deterring others, (3) the maintenance of the reputation of the bar as a whole, (4) the protection of the public, (5) the attitude of the offender generally, and (6) his or her present or future fitness to continue in the practice of law.

6. Disciplinary Proceedings. Multiple acts of misconduct by an attorney are distinguishable from isolated incidents and are therefore deserving of more serious sanctions.

7. Disciplinary Proceedings. Each case justifying discipline of an attorney must be evaluated individually in light of the particular facts and circumstances.

8. Disciplinary Proceedings. It is necessary to consider mitigating factors in determining the appropriate discipline imposed on an attorney.

Kent L. Frobish, Assistant Counsel for Discipline, Lincoln, for relator.

David A. Domina, of Domina & Copple, P.C., Omaha, for respondent.

WHITE, C.J., CAPORALE, WRIGHT, CONNOLLY, and GERRARD, JJ., and BUCKLEY, D.J.

PER CURIAM.

Formal charges against the respondent, Charles L. Caskey, were filed in this court on May 13, 1996. Caskey was charged with violating Canon 1, DR 1-102(A)(1), (3), and (6), of the Code of Professional Responsibility in that he was convicted of the crime of failure to maintain records and pay taxes under Neb.Rev.Stat. § 77-27,115 (Reissue 1996), a Class II misdemeanor.

Caskey has practiced law in Nebraska since June 16, 1969, when he was duly admitted to the practice of law by this court. On July 31, 1995, Caskey was charged with the crime of failure to maintain records and pay taxes in the district court for Lancaster County, Nebraska. On October 17, 1995, pursuant to a plea agreement, Caskey pled guilty to the aforementioned charge, and the district court accepted his guilty plea. The district court sentenced Caskey to a term of probation for 2 years and ordered him to pay restitution to the Nebraska Department of Revenue in the sum of $5,289.85 for back taxes, penalties, and interest, plus any additional interest accrued prior to the date of The formal charges brought by the relator, Nebraska State Bar Association, allege the foregoing acts of Caskey constituted violations of his oath of office as an attorney and the following provisions of the Code of Professional Responsibility: "DR 1-102 Misconduct. (A) A lawyer shall not: (1) Violate a Disciplinary Rule.... (3) Engage in illegal conduct involving moral turpitude.... (6) Engage in any other conduct that adversely reflects on his or her fitness to practice law."

payment. Caskey did not appeal the conviction or sentence.

Caskey admits the acts committed by him violated DR 1-102(A)(1). However, Caskey denies that his conduct involved moral turpitude as set forth in DR 1-102(A)(3). Caskey further admits that the conduct in which he engaged reflects on his fitness to practice law but that he has endeavored, and continues to endeavor, to overcome this adverse reflection. Thus, Caskey admits a violation of DR 1-102(A)(6), but he contends that he is fit to practice law.

Following an evidentiary hearing, the referee found that Caskey had violated DR 1-102(A)(1), (3), and (6) of the Code of Professional Responsibility. The referee recommended that Caskey be suspended from the practice of law for 6 months and that he be required to divest himself of all business interests outside the practice of law, except for his title and abstracting business. Exceptions to the referee's report were filed by Caskey on October 10, 1996.

STANDARD OF REVIEW

A proceeding to discipline an attorney is a trial de novo on the record, in which this court reaches a conclusion independent of the findings of the referee; provided, however, that where the credible evidence is in conflict on a material issue of fact, this court considers and may give weight to the fact that the referee heard and observed the witnesses and accepted one version of the facts rather than another. State ex rel. NSBA v. Brown, 251 Neb. 815, --- N.W.2d ---- (1997).

FACTS

Caskey is 53 years old and has maintained a general law practice in Stanton, Nebraska, since his admission to the bar in 1969. Prior to the institution of the present proceedings, Caskey had received two private reprimands for conflict of interest violations, the first on June 21, 1978, and the second on March 31, 1986.

In November 1991, at the request of three investors, Caskey agreed to incorporate a pallet reconstruction business called SDF, Inc. Caskey prepared the articles of incorporation, signed the articles as the incorporator, and filed the articles with the Secretary of State. Caskey was paid approximately $100 to $150 in fees for his professional services incorporating the business.

SDF was in financial trouble within 2 months of its creation. In approximately February 1992, the three original investors walked away from the pallet reconstruction business, the employees were laid off, and the business came to a standstill.

Several creditors approached Caskey in February 1992 and asked him if there was a chance of getting paid for the credit they had extended to SDF. At about the same time, a former employee asked Caskey if he could manage the manual labor to allow himself and others to receive a paycheck. Caskey claims that he felt a personal obligation to the community of Stanton to provide employment and to repay certain community vendors for materials and supplies that the vendors had sold to the new business. Caskey assumed the management of SDF by performing the bookkeeping services of depositing receipts and paying the overhead from February through May 1992.

SDF continued to be under severe financial pressure during the 4-month term, and the costs of overhead and taxes continued to exceed its revenues. Caskey loaned $2,500 to SDF in March 1992 to provide extra funds and allow it to pay some of its creditors.

The corporate bookkeeping functions from February through May 1992 were performed in Caskey's law office by his legal secretary, Myrthalean Novotny. Caskey signed the signature card for SDF at a local bank. To Novotny testified that the revenues generated by the reconstruction business continued to be inadequate to pay its creditors, the wages, and the Nebraska Department of Revenue for income taxes withheld from the wages. Novotny also testified that she was instructed by Caskey to pay first the wages and the business expenses before paying the Department of Revenue. She further testified Caskey was fully aware that the quarterly withholding tax reports were not filed until sometime late in 1993 and that the withholding taxes were not paid. Caskey confirmed this testimony and admits that he alone made the decision to prioritize payments.

the extent possible, Caskey paid the corporate bills with checks that he signed on behalf of the corporation.

The reconstruction business of SDF again came to a standstill in June 1992, and the employees were laid off. Caskey testified that he made the decision in September 1992 to reopen the business under a new name by utilizing a previously incorporated business of which he was the sole stockholder. This new operating company, Stanton Leasing, made an effort from September 1992 until approximately June 1994 to operate at a profit. It, too, proved unsuccessful; however, withholding taxes were paid by Stanton Leasing to the Department of Revenue, albeit late, and were not at issue in the criminal proceedings.

The bill of exceptions from the district court criminal proceedings reveals that Caskey pled guilty as a result of his liability and responsibility as an officer and director of SDF to pay the withholding taxes. However, Caskey's testimony before the referee was, at best, confusing. Caskey was unclear as to whether or not he was actually an officer or director of the corporation. He testified that there were no corporate minutes to reflect his appointment or acceptance to serve as an officer and director. Caskey curiously questioned whether or not the corporation was validly incorporated and operated. He did admit in his testimony that there were annual reports filed with the Secretary of State reflecting that he was SDF's treasurer and other documents reflecting that he took minutes at meetings as secretary of SDF. In addition to the March 1992 loan, Caskey claimed that he loaned SDF a total of $10,000. There were no promissory notes or corporate minutes reflecting the approval or terms of these alleged loans. Thus, while it is clear that Caskey acted as more than the...