Case Title: Board of Attorneys Professional Responsibility v. Robert B. Fennig

Citation: 

Docket Number: 1998AP000039-D

State: wisconsin

Court: Wisconsin Supreme Court

Date: 1999-07-01T00:00:00Z

Document:
SUPREME COURT OF WISCONSIN 
 
 
Case No.: 
98-0039-D 
 
 
Complete Title 
of Case: 
 
 
In the Matter of Disciplinary Proceedings  
Against Robert B. Fennig, Attorney at  
Law. 
 
Board of Attorneys Professional  
Responsibility,  
 
Complainant, 
 
v. 
Robert B. Fennig,  
 
Respondent.  
 
DISCIPLINARY PROCEEDINGS AGAINS FENNIG 
 
 
Opinion Filed: 
July 1, 1999 
Submitted on Briefs: 
 
Oral Argument: 
 
 
 
Source of APPEAL 
 
COURT: 
 
 
COUNTY: 
 
 
JUDGE: 
 
 
 
JUSTICES: 
 
Concurred: 
 
 
Dissented: 
 
 
Not Participating: Steinmetz, J., did not participate. 
 
 
ATTORNEYS: 
 
 
No. 
98-0039-D 
 
1 
 
NOTICE 
This opinion is subject to further editing and 
modification.  The final version will appear in 
the bound volume of the official reports. 
 
 
No. 98-0039-D 
 
STATE OF WISCONSIN               :        
        
 
 
 
 
IN SUPREME COURT 
 
 
In the Matter of Disciplinary Proceedings 
Against Robert B. Fennig, Attorney at Law. 
Board of Attorneys Professional 
Responsibility,  
 
 
Complainant,  
 
v.  
Robert B. Fennig,  
 
 
Respondent. 
FILED 
 
JUL 1, 1999 
 
Marilyn L. Graves 
Clerk of Supreme Court 
Madison, WI 
 
 
 
ATTORNEY 
disciplinary 
proceeding.  Attorney’s 
license 
suspended.  
¶1 
PER CURIAM   We review the recommendation of the 
referee that Attorney Robert B. Fennig be publicly reprimanded 
as discipline for his professional misconduct while acting as a 
trustee. Attorney Fennig committed fraud in the course of 
administering a trust and was found guilty following a court 
trial of having committed fraud on a bank and fraud on the 
Illinois court having jurisdiction over the trust. Attorney 
Fennig had executed notes by which a development corporation set 
up by the trust’s sole beneficiary and of which the trust itself 
was sole shareholder obtained loans to provide operating 
No. 
98-0039-D 
 
2 
capital. Attorney Fennig prepared and executed a corporate 
borrowing resolution and a guaranty by which the trust undertook 
to guarantee repayment of the corporate loans. After the loans 
went into default, he agreed to pay the bank from assets of the 
trust but did not do so when he terminated the trust and 
distributed all of its assets to the beneficiary without 
reserving any trust assets for payment to the bank under the 
guaranty. In the accountings he filed periodically with the 
Illinois court, Attorney Fennig did not disclose the bank loans 
for which the trust was liable.  
¶2 
In light of the seriousness of the misconduct in which 
he engaged, particularly his failure to disclose liabilities of 
the trust to the court having jurisdiction over it, we ordered 
Attorney Fennig to show cause why we should not suspend his 
license to practice law for 60 days as discipline, rather than 
impose the public reprimand recommended by the referee. Having 
considered the response to that order, as discussed below, we 
determine that the appropriate discipline for Attorney Fennig’s 
professional misconduct is a 60-day license suspension. He 
knowingly failed to protect the interests of a creditor of the 
trust he was administering and withheld essential information 
about its liabilities from the court under whose jurisdiction it 
was being administered. Notwithstanding his claim that he was 
justified in relying on the word of the trust’s attorney in 
respect to incurring and satisfying trust liabilities, Attorney 
Fennig had a professional duty to ensure that the trust was 
No. 
98-0039-D 
 
3 
administered properly and that the court under which it was 
administered was fully informed.  
¶3 
Attorney Fennig was admitted to practice law in 
Wisconsin in 1957 and maintains his practice in Milwaukee. He 
has not previously been the subject of an attorney disciplinary 
proceeding. The referee, Attorney Stanley Hack, made findings of 
fact based on Attorney Fennig’s admissions and no contest plea 
in response to the disciplinary complaint and on testimony and 
evidence presented at a disciplinary hearing.  
¶4 
Attorney 
Fennig 
became 
successor 
trustee 
of 
a 
testamentary trust in January 1990. The attorney for the trust 
had an office in the same building in which Attorney Fennig had 
his law office, and at the time of his appointment, the trust 
assets amounted to approximately $938,000. The trust situs was 
in Illinois, its sole beneficiary was the trustor’s son, and it 
was to terminate when the beneficiary reached the age of 50.  
¶5 
Two days after being appointed successor trustee, 
Attorney Fennig loaned $71,100 from the trust to a new 
development company organized by the trust’s beneficiary and 
others to purchase and subdivide property in northern Wisconsin. 
In exchange for the loan, the trust received $100 of stock in 
the corporation and a note for the balance. The trust held all 
of the company’s stock, and the beneficiary, the trust’s 
attorney, and another person served as its directors. The trust 
inventory Attorney Fennig filed with the court April 1, 1990, 
did not list the corporation’s stock or its note as assets.  
No. 
98-0039-D 
 
4 
¶6 
In March 1990 the trust’s attorney wrote the company 
on behalf of the trust that the trust was ready and willing to 
sign as guarantor or enter directly into a loan agreement 
regarding the company’s financing. Three days later, he wrote a 
bank seeking a loan and included the April 1, 1990 inventory of 
trust assets and income, and he participated in discussions with 
the bank and the company’s representatives regarding proposed 
loans to finance the company’s operations. Over the next few 
months, the bank loaned $40,000 to the company. Notwithstanding 
that activity, the trust’s attorney stated by affidavit at the 
end of the year that no initial meeting of the company had been 
held, officers had not been elected, and stock subscriptions 
were not accepted, with the result that there never were 
officers or stock holders and no one was authorized to execute 
documents or enter into agreements on behalf of the company.  
¶7 
In early 1991 Attorney Fennig was named vice president 
of the company, and the trust’s attorney, acting as the 
company’s secretary-treasurer, signed a corporate resolution 
authorizing the company to borrow and pledge collateral to the 
bank. Thereafter, the bank loaned $12,000 to the company, and 
the note evidencing that loan went into default. Attorney 
Fennig, acting as trustee, and the trust’s attorney then signed 
a guaranty of the company’s indebtedness to the bank. At the 
same time, the trust’s attorney wrote the bank that the company 
was in good standing and that 100 shares of its stock had been 
issued in the name of the trust. Soon thereafter, Attorney 
Fennig signed a $45,000 note secured by the trust’s guaranty to 
No. 
98-0039-D 
 
5 
obtain a loan from the bank. That loan consolidated two prior 
loans and provided $20,000 of new money. The bank subsequently 
made additional loans to the company, and by late 1991 and early 
1992, the company defaulted on its loans.  
¶8 
In January 1992 Attorney Fennig filed with the court 
the 1990 account for the trust, in which he listed the company 
common stock and the company’s note as assets of the trust. In 
February 
of 
that 
year, 
he 
attended 
a 
meeting 
with 
representatives of the bank regarding repayment of the defaulted 
loans and the trust’s guaranty. On March 5, 1992, he issued a 
check to the bank drawn on his client trust account for 
approximately $2500 for a deficiency following the sale of the 
collateral of one of the loans.  
¶9 
During the ensuing months, the bank and its attorney 
repeatedly contacted Attorney Fennig regarding payment of the 
outstanding principal and interest on the company’s loans. On 
two occasions, Attorney Fennig told the bank’s lawyer that 
payment would be forthcoming on a specified date, but payment 
was not made. At one point, he sent the bank’s lawyer a copy of 
a real estate sales contract concerning some of the trust’s 
property, together with a copy of the check representing the 
down payment on that sale, stating that the impending sale would 
generate sufficient funds to satisfy the company’s outstanding 
obligations to the bank.  
¶10 The bank continued to press for payment to the end of 
1992, at which time the trust’s beneficiary reached age 50. At 
that time, Attorney Fennig discussed the status of the trust 
No. 
98-0039-D 
 
6 
with the beneficiary and told him of the loan guaranties, 
although the beneficiary may have been aware of them from prior 
conversations with the trust’s attorney.  
¶11 On January 15, 1993, Attorney Fennig filed his 1991 
and 1992 accounts with the court and terminated the trust, 
paying certain outstanding debts, but not those to the bank that 
the trust had guaranteed, and transferred the trust assets to 
the beneficiary. He did not inform the court of the trust’s 
guaranty, his execution of notes on behalf of the trust, his 
execution of corporate borrowing resolutions, or his promises to 
the bank to pay the outstanding loans from trust assets. 
Further, he did not retain any trust assets to satisfy the 
guaranty of the notes to the bank, despite his promises to the 
bank that he would do so.  
¶12 In September 1993 the bank filed a foreclosure action 
against the company, the trust, and Attorney Fennig as trustee. 
On the basis of the trust’s guaranty, a foreclosure judgment was 
entered at the end of January 1994 against the defendants in the 
amount of approximately $93,000.  
¶13 When the bank discovered that the trust’s property had 
been sold and the trust terminated without payment to it, the 
bank filed an action against Attorney Fennig and the trust in 
Illinois. Following trial to the court, Attorney Fennig was 
found to have committed fraud against the bank and the court in 
the course of his administration of the trust, and judgment was 
entered against him in the amount of $103,749. Attorney Fennig 
No. 
98-0039-D 
 
7 
ultimately settled the bank’s judgment by paying it $97,000 of 
his own funds.  
¶14 The referee found that Attorney Fennig participated in 
actions inducing the bank to rely on trust assets to satisfy the 
obligations of the company to which it was lending money. He 
signed notes, guaranties, and corporate borrowing resolutions, 
and in conversations, correspondence and meetings he allowed the 
bank to rely on the trust as a source of payment of the loans. 
He promised in writing complete and final payment from the 
proceeds of the sale of trust property and reassured the bank 
with copies of the sales agreement and down payment check, but 
he completed the sale and terminated the trust without paying 
the bank or informing the court of the trust’s liability.  
¶15 On the basis of the foregoing facts, the referee 
concluded that Attorney Fennig engaged in conduct involving 
dishonesty, fraud, deceit or misrepresentation, in violation of 
SCR 20:8.4(c).1 As discipline for that misconduct, the referee 
recommended that Attorney Fennig be publicly reprimanded. In 
addition, the referee recommended that Attorney Fennig be 
required to pay the costs of this disciplinary proceeding.  
                     
1  SCR 20:8.4 provides, in pertinent part: Misconduct 
It is professional misconduct for a lawyer to:  
 . . .  
(c) engage in conduct involving dishonesty, fraud, deceit 
or misrepresentation;   
No. 
98-0039-D 
 
8 
¶16 In making the recommendation for a public reprimand, 
the referee noted that ordinarily the 60-day license suspension 
urged by the Board of Attorneys Professional Responsibility 
(Board) would have been the appropriate discipline to recommend 
were it not for the following mitigating factors. Attorney 
Fennig has not been the subject of prior discipline, is over the 
age of 70 and nearing the conclusion of his legal career, has an 
impeccable personal record to which a number of character 
witnesses testified, has donated significant efforts to non-
profit 
activities, 
received 
no 
personal 
benefit 
by 
his 
misconduct, and was in some ways a victim of the trust’s 
attorney. In the latter respect, the referee found that Attorney 
Fennig relied on representations of the trust’s attorney, who 
died following the Illinois court proceeding but prior to the 
initiation 
of 
the 
instant 
disciplinary 
proceeding. 
As 
a 
consequence, the attorney’s involvement in the misconduct could 
not be established.  
¶17 In addition to those mitigating factors, the referee 
noted that the beneficiary of the trust was a “difficult” 
person, who disappeared after receiving the distribution of 
trust assets and could not be located by Attorney Fennig, and 
that Attorney Fennig personally paid the bank harmed by his 
misconduct without contribution from the trust’s attorney or its 
beneficiary, as neither was a party in the action against the 
trust.  
¶18 In response to the court’s order to show cause why his 
license should not be suspended for 60 days as discipline for 
No. 
98-0039-D 
 
9 
his misconduct as trustee, Attorney Fennig reiterated many of 
the mitigating factors addressed by the referee. In addition, he 
asserted that there was no finding by the Illinois court that 
his fraud on it in respect to the trust was intentional and that 
his omission of the trust’s contingent liability in the accounts 
he filed with the court was the result of his misplaced reliance 
on the word of the trust’s attorney. He stated further that he 
was unable to establish the attorney’s responsibility for the 
failure to pay the guaranteed debt as a result of that 
attorney’s death while litigation was in progress. In its reply 
to those assertions, the Board rejected Attorney Fennig’s 
attempt to evade responsibility by claiming reliance on the word 
of the trust’s attorney, on whom he claimed to have made 
repeated requests to resolve the trust’s liability to the 
lending bank. Even if those requests had been made, the Board 
asserted, Attorney Fennig was not entitled to rely on that 
attorney’s promise of action after the first or second request 
did not prompt appropriate action.  
¶19 We 
adopt 
the 
referee’s 
findings 
of 
fact 
and 
conclusions of law and determine that the seriousness of 
Attorney Fennig’s professional misconduct warrants the minimum 
license 
suspension 
we 
impose 
for 
attorney 
professional 
misconduct. Particularly serious was Attorney Fennig’s fraud on 
the Illinois court, which signed closing papers for the trust 
without having been given full information by Attorney Fennig in 
respect to the trust’s having guaranteed a corporate obligation 
and notice that the trust’s assets had been turned over to the 
No. 
98-0039-D 
 
10
beneficiary without either that obligation being paid or an 
amount sufficient to meet any contingent liability being 
withheld. Accordingly, we suspend Attorney Fennig’s license to 
practice law for 60 days.  
¶20 We also order Attorney Fennig to pay the costs of this 
disciplinary 
proceeding. 
We 
deny 
his 
objections 
to 
the 
assessment of those costs on the grounds that the Board was 
uncooperative in providing documents requested by the referee, 
with resultant additional costs being incurred for the services 
of Board counsel, and what he terms the “punitive” effect of 
requiring him to pay the costs. We decline Attorney Fennig’s 
invitation to consider the assessment of costs as a component of 
the discipline we impose for his professional misconduct.  
¶21 IT IS ORDERED that the license of Robert B. Fennig to 
practice law in Wisconsin is suspended for 60 days, effective 
August 16, 1999.  
¶22 IT IS FURTHER ORDERED that within 60 days of the date 
of this order, Robert B. Fennig pay to the Board of Attorneys 
Professional Responsibility 
the costs 
of this 
proceeding, 
provided that if the costs are not paid within the time 
specified and absent a showing to this court of his inability to 
pay the costs within that time, the license of Robert B. Fennig 
to practice law in Wisconsin shall remain suspended until 
further order of the court.  
¶23 IT IS FURTHER ORDERED that Robert B. Fennig comply 
with the provisions of SCR 22.26 concerning the duties of a 
No. 
98-0039-D 
 
11
person whose license to practice law in Wisconsin has been 
suspended.  
¶24 DONALD W. STEINMETZ, J., did not participate.  
 
 
1