The Fla. BAR v. BEHM

• Decision Date: 01 July 2010
• Docket Number: No. SC07-661.,SC07-661.
• Citation: 41 So.3d 136
• Parties: THE FLORIDA BAR, Complainant, v. Charles BEHM, Respondent.
• Court: Florida Supreme Court

41 So.3d 136

THE FLORIDA BAR, Complainant, v. Charles BEHM, Respondent.

No. SC07-661.

Supreme Court of Florida.

July 1, 2010.

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John F. Harkness, Jr., Executive Director and Kenneth Lawrence Marvin, Staff Counsel, The Florida Bar, Tallahassee, FL, and Frances R. Brown-Lewis, Bar Counsel, The Florida Bar, Orlando, FL, for Complainant.

Tommy K. Cryer, Shreveport, LA, for Respondent.

PER CURIAM.

Charles Behm has been a lawyer in this state since 1999. He is currently suspended from the practice of law as a result of professional misconduct in another Bar discipline case.¹ The referee in this case recommends that Behm be found guilty of professional misconduct related to trust account violations and failure to file income tax returns since the time he became a lawyer.²

As a lawyer admitted to the practice of law by this Court, Behm earned money from the practice of law. Behm asserts, however, that he is not required to pay federal income taxes because "his time was his life capital and, in practicing law, he was trading his life capital for an hourly fee, both of equal value." This argument is devoid of merit and lacks any basis in established law.

With regard to Behm's failure to file income tax returns from 1999 to the present, our recent admonition in another bar discipline case resounds here: "No doubt there are millions of Americans who would prefer not to have to deal with filing and paying their federal income taxes each April, but have no choice under the law. As guardians of the law, lawyers have a special obligation to honor the law themselves, including the tax laws." Fla. Bar v. Del Pino, 955 So.2d 556, 560-61 (Fla. 2007).

We approve the referee's recommendations of guilt but disapprove the recommendation of a six-month suspension because it is far too lenient. Behm's continuing disregard for the laws requiring the filing of federal income tax returns, his refusal to pay federal income taxes on money he has earned in his law practice since 1999, and his avowed intention to persist in this conduct make it clear that Behm is unrepentant and regards himself as above the law. As set forth in more detail in this opinion, Behm declared in open court that he has no intention to file federal income tax returns in the future. His actions are fundamentally inconsistent with the basic obligations of a lawyer, who is sworn to uphold the law, and leave us no option but to permanently disbar him from the practice of law.

FACTS

In April 2007, the Florida Bar filed a two-count complaint with the Court, alleging that Behm engaged in unethical conduct. The first count of the complaint alleged that Behm failed to prepare and maintain certain required trust account records. The second count alleged that Behm failed to file federal income tax returns and to pay federal income taxes from 1999 to 2006, despite having taxable income exceeding the threshold amount triggering the legal obligation to file. Following a lengthy procedural course, the referee submitted the amended report in March 2009, which is currently under consideration.³ In the amended report, the referee found that the following facts had been proven by clear and convincing evidence.

As to Count I (trust account records), the Bar served Behm with a subpoena duces tecum on August 24, 2004, for the production of any and all trust account records, including but not limited to: deposit slips, checkbooks, canceled checks, check stubs, ledger cards, journals, closing statements, bank statements and reconciliations, monthly comparisons, fee agreements, and documentary evidence supporting all trust disbursements for the period October 1, 2001, to April 30, 2003. Following an audit of Behm's trust account records, the Bar's Chief Auditor, Clark Pearson, concluded that Behm's records were not in substantial compliance with the rules regulating trust accounts.

The records that were missing included: (1) separate cash receipts and disbursements journals, bank reconciliations, and monthly comparisons; (2) a number of client ledger cards detailing each deposit and disbursement, as well as the payee and check number for the checks and the reason for which all trust funds were received, disbursed, or transferred; and (3) duplicate bank deposit slips for his trust account. Further, Behm's trust account was not properly identified as a "trust account."⁴ However, there was no evidence that Behm misappropriated client funds.

With regard to Behm's proven trust account conduct, the referee recommends that Behm be found guilty of violating Rules Regulating the Florida Bar 4-1.15 (failing to comply with the trust account rules); 5-1.2(b)(1) (failing to maintain a separate account in the name of the lawyer or law firm and clearly labeled and designated as a "trust account"); 5-1.2(b)(2) (failing to maintain original or duplicate deposit slips); 5-1.2(b)(5) (failing to maintain a separate cash receipts and disbursements journal); 5-1.2(b)(6) (failing to maintain a separate file or ledger with an individual card or page for each client or matter); 5-1.2(c)(1)(a) (failing to make monthly reconciliations of all trust accounts); 5-1.2(c)(1)(b) (failing to make a monthly comparison between the total of the reconciled balances of all trust accounts and the total of the trust ledger cards or pages); and 5-1.2(f) (failing to produce all records and papers concerning property and funds held in trust and to provide such explanations as may be required for the audit).

As to Count II (taxes), the referee found that Behm failed to file personal or business income tax returns or to pay taxes on earned income from 1999 to 2006. Although Behm has not been charged with or convicted of a crime, his failure to file and pay taxes was unlawful.

Behm became a member of the Bar in 1999 and went to work for the State Attorney's Office. Prior to becoming a member of The Florida Bar in 1999, Behm was an officer in the United States Navy and regularly filed and paid federal income taxes.

Behm opened his own law office in or around 2000. From that time to the present, he has run his law office as a sole proprietorship, never as a professional corporation or limited liability company. From 1999 to the present, Behm received at least $400 per year in legal tender or in-kind remuneration for his legal services.

The Bar's expert witness, Clark Pearson, testified that any self-employed person who earned at least $400 annually was legally obligated to file a federal income tax return pursuant to the Internal Revenue Code. See also I.R.C. § 1402(b)(2) (2006). He further testified concerning the amount of money deposited into Behm's operating account during several of those years (from July 31, 2004, to July 31, 2007, Behm deposited $426,926.28 into his business operating account, a monthly average of $11,538.55) and that the amounts would have been enough to legally obligate Behm to pay taxes in those years.

The Bar also introduced evidence that in a deposition taken on August 23, 2003, in a North Carolina personal injury case in which Behm was the plaintiff,⁵ Behm stated that the records prepared by his legal assistant indicated net earnings in his law practice of $22,400 in 2000; $37,000 in 2001; and $9,700 in 2002. Behm also received $15,000 in settlement funds in his personal injury case.

The referee also considered the trial court's order of November 9, 2005, entered in the personal injury case, that dismissed Behm's complaint with prejudice for failing to obey orders compelling discovery. In that order, the trial court found that Behm stated "that he had been gainfully employed and earned taxable income during the period from 1998 through 2004 and that he had (1) not filed any tax returns with any state or federal agency and (2) not paid any income taxes to any state or federal agency during that period."

In the Bar disciplinary proceedings, Behm testified that he had not filed federal income tax returns since 1999. Thus, Behm did not file either personal or business federal income tax returns from 1999 through 2006. Furthermore, Behm did not pay federal income taxes for that same period, either personal or business.

The referee found: "In mitigation, [Behm] argued that he has a good faith belief that he is not obligated to file federal tax returns or pay taxes." The referee further found that although Behm has been personally compensated for his legal services, Behm argued that he has not received income as defined by the United States Supreme Court's current definition of income. Behm claimed the federal tax system is mandatory for some people, but not for others. Behm maintained that the Bar expects him to testify against himself in a quasi-administrative arena (the disciplinary proceedings) about issues that could reasonably result in criminal prosecution. The referee expressly found the Bar's expert's testimony credible and accepted his opinions that Behm was legally obligated to file federal income tax returns and to pay federal income taxes for the years at issue.

With regard to Behm's proven tax conduct, the referee recommended that Behm be found guilty of violating rules 3-4.3 (committing any act that is unlawful or contrary to honesty and justice) and 4-8.4(c) (engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation).

The referee found three aggravating factors applicable in this case: (1) a prior disciplinary offense;⁶ (2) a refusal to acknowledge the wrongful nature of his conduct (Behm maintains that the current form of federal taxation in the United States is unconstitutional despite established law to the contrary); and (3) substantial experience in the practice of law. The referee found three mitigating factors: (1) the absence of a dishonest motive (the referee noted his belief that Behm is an honest person who made some bad choices)...