Case Title: Office of Lawyer Regulation v. Mark A. Phillips

Citation: 2007 WI 63

Docket Number: 2006AP000334-D

State: wisconsin

Court: Wisconsin Supreme Court

Date: 2007-05-30T00:00:00Z

Document:
2007 WI 63 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
CASE NO.: 
2006AP334-D 
COMPLETE TITLE: 
 
 
In the Matter of Disciplinary Proceedings 
Against Mark A. Phillips, Attorney at Law: 
 
Office of Lawyer Regulation, 
          Complainant, 
     v. 
Mark A. Phillips, 
          Respondent. 
 
 
 
 
 
 
DISCIPLINARY PROCEEDINGS AGAINST PHILLIPS 
 
 
OPINION FILED: 
May 30, 2007   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
        
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
        
 
COUNTY: 
        
 
JUDGE: 
        
 
 
 
JUSTICES: 
 
 
CONCURRED: 
        
 
DISSENTED: 
        
 
NOT PARTICIPATING:         
 
 
 
ATTORNEYS: 
 
      
 
 
2007 WI 63
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.  2006AP334-D  
 
 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
In the Matter of Disciplinary Proceedings 
Against Mark A. Phillips,  Attorney at Law: 
 
Office of Lawyer Regulation, 
 
          Complainant, 
 
     v. 
 
Mark A. Phillips, 
 
          Respondent. 
 
FILED 
 
MAY 30, 2007 
 
David R. Schanker 
Clerk of Supreme Court 
 
 
 
 
 
ATTORNEY 
disciplinary 
proceeding.   
Attorney's 
license 
suspended.   
 
¶1 
PER CURIAM.   We review the referee's recommendation 
that the license of Attorney Mark A. Phillips to practice law in 
this state be suspended for a period of three years due to his 
professional misconduct.   
¶2 
Neither the Office of Lawyer Regulation (OLR) nor 
Attorney Phillips has appealed the referee's recommendation.  
No. 
2006AP334-D   
 
2 
 
Thus, the matter is submitted to the court for its review 
pursuant to SCR 22.17(2).1   
¶3 
In conducting our review, we will affirm the referee's 
findings of fact unless they are clearly erroneous.  See In re 
Disciplinary Proceedings Against Sosnay, 209 Wis. 2d 241, 243, 
562 N.W.2d 137 (1997).  We review the referee's conclusions of 
law, however, on a de novo basis.  See In re Disciplinary 
Proceedings Against Carroll, 2001 WI 130, ¶29, 248 Wis. 2d 662, 
636 N.W.2d 718.  After establishing the number and nature of any 
violations of the Rules of Professional Conduct, we determine 
the level of discipline that is appropriate under the particular 
circumstances, 
regardless 
of 
the 
referee's 
sanction 
recommendation.  See In re Disciplinary Proceedings Against 
Widule, 2003 WI 34, ¶44, 261 Wis. 2d 45, 660 N.W.2d 686. 
¶4 
After our independent review of this matter, we adopt 
the referee's findings of fact and conclusions of law.  We also 
agree with the referee's recommendation that Attorney Phillips' 
license to practice law in Wisconsin should be suspended for a 
period of three years, effective on the expiration of a previous 
suspension, with credit for 112 days (the period of time between 
                                                 
1 SCR 22.17(2) provides:  Review; appeal. 
(2) If no appeal is filed timely, the supreme 
court shall review the referee's report; adopt, reject 
or modify the referee's findings and conclusions or 
remand the matter to the referee for additional 
findings; 
and 
determine 
and 
impose 
appropriate 
discipline.  The court, on its own motion, may order 
the parties to file briefs in the matter. 
No. 
2006AP334-D   
 
3 
 
the date when Attorney Phillips' license was summarily suspended 
under SCR 22.20(1) due to his criminal conviction and the date 
when his previous suspension for other misconduct began).  We 
also conclude that Attorney Phillips should be required to pay 
the costs of this disciplinary proceeding, which were $2149.21 
as of January 11, 2007. 
¶5 
Before turning to the referee's findings of fact in 
the present case, we summarize the facts and the result of the 
prior disciplinary proceeding.  In re Disciplinary Proceedings 
Against Phillips, 2006 WI 43, 290 Wis. 2d 87, 713 N.W.2d 629 
(Phillips I).  They provide important context for the facts and 
analysis of this proceeding. 
¶6 
Phillips I stemmed from two grievances.  The first 
grievance was lodged by a former client and friend, R.M.  That 
grievance arose from two loans that Attorney Phillips convinced 
R.M. to make to him, from Attorney Phillips' handling of the 
estate of R.M.'s father, and from Attorney Phillips' failure to 
return R.M.'s files to him in a timely manner. 
¶7 
With respect to the R.M. grievance, this court 
affirmed the referee's findings that Attorney Phillips had 
violated SCR 20:1.8(a) on two separate occasions because he had 
obtained two loans2 from a client that were not fair and 
reasonable, because Attorney Phillips had not provided the terms 
of the loan in an understandable writing, because he had not 
                                                 
2 The first loan was in the amount of $20,000.  The second 
loan, made in March 1999, was in the amount of $125,000. 
No. 
2006AP334-D   
 
4 
 
given R.M. a reasonable opportunity to seek outside legal 
advice, and because he had not obtained R.M.'s written consent 
to the loans.  The court also found that Attorney Phillips had 
used his knowledge of R.M.'s father's estate gained during his 
representation of the estate to his client's disadvantage in 
connection with one of the loans, in violation of SCR 20:1.8(b).  
The court further found that Attorney Phillips had violated SCR 
20:8.4(c) by concealing and misrepresenting the dire state of 
his finances in order to persuade R.M. to make the loans.  The 
court also concluded that Attorney Phillips had not acted with 
reasonable diligence in closing R.M.'s father's estate, contrary 
to SCR 20:1.3, and had failed to return R.M.'s files promptly, 
in violation of SCR 20:1.16(d). 
¶8 
The second grievance at issue in Phillips I was filed 
by the Wisconsin Department of Revenue (DOR) concerning Attorney 
Phillips' failure to file state income tax returns or to pay the 
taxes due.  Based on Attorney Phillips' admission, this court 
adopted the referee's finding that Attorney Phillips had failed 
to file state income tax returns for the years 1998-2001 and had 
failed to make payments on his tax deficiencies since 1995, 
contrary to In re Disciplinary Proceedings Against Owens, 172 
Wis. 2d 54, 492 N.W.2d 157 (1992), and SCR 20:8.4(f). 
¶9 
After considering and rejecting Attorney Phillips' 
arguments on appeal, we concluded that Attorney Phillips' 
serious professional misconduct required that his license to 
practice law in Wisconsin be suspended for one year.  We also 
ordered that Attorney Phillips (1) pay restitution to R.M. in 
No. 
2006AP334-D   
 
5 
 
the amount of a 2001 judgment entered after Attorney Phillips 
had failed to repay the loans and (2) pay a separate punitive 
damage judgment that had been entered in favor of R.M. in a 
malpractice action.  Finally, we required Attorney Phillips to 
pay the costs of the Phillips I disciplinary proceeding. 
¶10 In Phillips I, Attorney Phillips appealed from the 
referee's report and recommendation, arguing that he had not 
violated any rules in connection with either the loans he had 
obtained from R.M. or his representation of R.M.'s father's 
estate, and that the referee's recommended discipline was 
excessive.  While Attorney Phillips' appeal in Phillips I was 
pending and he was submitting briefs to this court, he was 
charged in federal district court with attempting to evade the 
payment of a large portion of his federal income tax.  Attorney 
Phillips pled guilty to and was convicted of one count of tax 
evasion.  He did not, however, inform this court of any of these 
facts. 
¶11 The OLR then filed a motion seeking the summary 
suspension of Attorney Phillips' license to practice law in 
Wisconsin due to his criminal conviction, pursuant to SCR 
22.20(1).3  On January 20, 2006, this court granted the OLR's 
motion and summarily suspended Attorney Phillips' license.   
                                                 
3 SCR 22.20(1) Summary license suspension on criminal 
conviction provides: 
 
(1) 
Summary 
suspension. 
 
Upon 
receiving 
satisfactory proof that an attorney has been found 
guilty or convicted of a serious crime, the supreme 
court may summarily suspend the attorney's license to 
No. 
2006AP334-D   
 
6 
 
¶12 On February 8, 2006, the OLR filed the complaint in 
the current case, alleging that by engaging in willful attempted 
federal income tax evasion, for which he had been convicted and 
sentenced, Attorney Phillips had committed a criminal act that 
reflected adversely on his honesty, trustworthiness, or fitness 
as a lawyer in other respects, in violation of SCR 20:8.4(b).4 
¶13 Attorney Phillips filed an answer in which he admitted 
his criminal conviction for tax evasion.  His answer asserted, 
however, that he had been convicted only for failing to pay the 
entire amount of federal income tax due and that he had not been 
found guilty of filing fraudulent tax returns.  He denied that 
his failure to pay income taxes reflected adversely on his 
honesty, trustworthiness, or fitness as a lawyer in other 
respects, contrary to SCR 20:8.4(b).  He also asserted that his 
loans from R.M. were already being addressed in Phillips I. 
¶14 In our opinion in Phillips I, which was issued on May 
12, 
2006, 
we 
acknowledged 
Attorney 
Phillips' 
criminal 
conviction, the summary suspension and the OLR's complaint.  We 
specifically 
stated, 
however, 
that 
"[a]lthough 
the 
facts 
underlying 
the 
criminal 
conviction 
appear 
to 
have 
some 
                                                                                                                                                             
practice 
law 
pending 
final 
disposition 
of 
a 
disciplinary proceeding, whether the finding of guilt 
or the conviction resulted from a plea of guilty or no 
contest or from a verdict after trial and regardless 
of the pendency of an appeal. 
4 SCR 20:8.4(b) provides that it is professional misconduct 
for a lawyer to "commit a criminal act that reflects adversely 
on the lawyer's honesty, trustworthiness or fitness as a lawyer 
in other respects." 
No. 
2006AP334-D   
 
7 
 
connection with one of the loans at issue in this proceeding, we 
do not address at this time whether discipline should be imposed 
for that conduct."  Phillips I, 290 Wis. 2d 87, ¶35. 
¶15 Attorney Richard Esenberg was subsequently appointed 
referee in the present case.5  He issued an order requiring 
Attorney Phillips to provide contact information to the referee 
and the OLR within 10 days of his release from federal prison.  
Attorney Phillips did not comply with the order.  After Attorney 
Phillips failed to appear at a telephonic scheduling conference 
or otherwise to contact the referee, the referee issued an order 
to show cause why Attorney Phillips should not be found to be in 
default.  The referee sent a copy of the order to Attorney 
Phillips' last known home address as well as his last known 
business address in an attempt to ensure notice to him.  Rather 
than explain why he had not responded to previous orders issued 
by the referee, Attorney Phillips sent a letter to the clerk of 
this court, asserting that since his home address was public 
information, the referee's order to show cause and request for 
contact information was "little more than harassment."   
¶16 After further scheduling difficulties, both the OLR 
and Attorney Phillips filed motions for summary judgment.  The 
OLR's motion argued that Attorney Phillips' answer admitted all 
of the facts necessary to find a violation of SCR 20:8.4(b), or 
alternatively, that the facts necessary to find a violation of 
                                                 
5 Attorney Stanley F. Hack served as the referee in Phillips 
I. 
No. 
2006AP334-D   
 
8 
 
that rule had been conclusively established in Phillips I.  
Attorney Phillips' motion, on the other hand, argued that the 
OLR's complaint should be dismissed because it placed him in 
double jeopardy and otherwise violated various constitutional 
provisions. 
¶17 A hearing on the competing motions was held on 
September 19, 2006.  At that hearing, Attorney Phillips withdrew 
his summary judgment motion and its double jeopardy and other 
constitutional claims.  He argued, nonetheless, that because the 
misconduct alleged in the current complaint was part of a 
"continuing enterprise of borrowing the money and not paying my 
taxes," there should be little additional discipline imposed 
because that conduct was already considered by the court in 
Phillips I. 
¶18 Also at the September 19, 2006 hearing, certified 
copies of the plea agreement and judgment of conviction in the 
federal criminal case were received into evidence without 
objection.  The referee then established a briefing schedule for 
the 
parties 
to 
address 
whether 
the 
criminal 
conviction 
constituted 
a 
violation 
of 
SCR 
20:8.4(b) 
and 
what 
the 
appropriate sanction should be. 
¶19 The OLR filed a brief arguing that engaging in federal 
tax evasion did reflect adversely on Attorney Phillips' honesty, 
trustworthiness and fitness as a lawyer, and thereby violated 
SCR 20:8.4(b).  The OLR requested a three-year suspension to be 
served consecutively to the one-year suspension imposed in 
No. 
2006AP334-D   
 
9 
 
Phillips I, with a credit of 112 days due to the period of 
summary suspension.   
¶20 Attorney Phillips decided not to file a brief on 
liability or sanctions.  He did file a very brief letter, 
stating that "in light of my twenty-five (25) years of practice, 
a six (6) month additional suspension, if any, is more 
appropriate."   
¶21 In the ensuing referee's report, he first addressed 
the basis for concluding that Attorney Phillips had violated SCR 
20:8.4(b).  He rejected the OLR's contention that this court had 
conclusively established the facts necessary for finding a 
violation of SCR 20:8.4(b) in Phillips I.  The referee noted 
that the court had expressly made no findings regarding whether 
Attorney Phillips' criminal conviction constituted a violation 
of the Rules of Professional Conduct or whether additional 
discipline should be imposed. 
¶22 The referee agreed with the OLR, however, that 
Attorney Phillips' criminal conviction supported the finding of 
a new rule violation not present in Phillips I.  The conduct at 
issue in Phillips I included the improper obtaining of loans 
from a client and the failure to pay state income taxes.  The 
current complaint, however, addressed not state income taxes, 
but federal income taxes.  Moreover, the criminal conviction at 
issue in this case was not based on the failure to pay taxes, 
but on Attorney Phillips' actions designed to conceal the 
proceeds of the second R.M. loan (the March 1999 loan for 
$125,000) from the IRS so that it could not attach those funds 
No. 
2006AP334-D   
 
10 
 
in 
satisfaction 
of 
his 
outstanding 
federal 
income 
tax 
deficiencies. 
¶23 The referee found that Attorney Phillips' guilty plea 
and conviction established his violation of SCR 20:8.4(b).  
Specifically, 
the 
federal 
plea 
agreement, 
which 
Attorney 
Phillips signed and did not contest in this case, established 
that Attorney Phillips had used the March 1999 loan proceeds to 
purchase 18 cashier's checks, which he had then negotiated over 
a period of time by using his client trust account and a 
separate bank account maintained by his wife.  By these 
maneuvers, Attorney Phillips had been able to prevent the IRS 
from discovering and obtaining those funds so that he could use 
them to pay ongoing personal expenses.  The referee concluded 
that, regardless of the propriety of the underlying loan, a 
criminal conviction for such a willful attempt to evade the 
payment of taxes clearly violated SCR 20:8.4(b). 
¶24 Turning to the appropriate level of discipline, the 
referee reasoned that cases involving the failure to file tax 
returns or pay taxes were not useful guides in this instance 
because Attorney Phillips had fraudulently hidden assets to 
evade the payment of taxes.  The referee stated that he was 
"tempted 
to 
recommend 
revocation," 
citing 
several 
cases 
involving tax evasion where there had been a consensual 
revocation of the attorney's license.  See, e.g., In re 
Disciplinary Proceedings Against Schierland, 2004 WI 140, 276 
Wis. 2d 11, 688 N.W.2d 653 (consensual revocation following 
criminal conviction for filing false tax return); In re 
No. 
2006AP334-D   
 
11 
 
Disciplinary Proceedings Against Paulus, 2004 WI 71, 272 Wis. 2d 
143, 682 N.W.2d 326 (consensual revocation following criminal 
conviction for accepting bribes while in public office and 
filing false tax return); In re Disciplinary Proceedings Against 
Miller, 158 Wis. 2d 396, 462 N.W.2d 520 (1990) (consensual 
revocation following criminal conviction for attempted federal 
income tax evasion and filing a false income tax return). 
¶25 Ultimately, 
the 
referee 
agreed 
with 
the 
OLR's 
recommendation for a three-year suspension.  The referee stated 
that Attorney Phillips' 25 years of practice without being 
subject to discipline prior to the series of wrongful responses 
to financial distress that resulted in Phillips I and the 
present proceeding led him to conclude that revocation was not 
required.  On the other hand, the referee stated that a lengthy 
suspension was necessary.  He pointed out that Attorney 
Phillips' continuing claim that all he did was to borrow money 
from a friend and fail to use the loan proceeds to pay his 
income taxes demonstrated that Attorney Phillips had not fully 
grasped the criminal nature of his conduct.  Moreover, the 
referee noted that Attorney Phillips had not offered any 
mitigating evidence and had given the impression that the 
current proceeding was simply a bother to him.   
¶26 Having independently reviewed this matter, we agree 
with and adopt the referee's factual findings and his conclusion 
of a violation of SCR 20:8.4(b).  The count in the current 
complaint charges a violation of the Rules of Professional 
Conduct that is different in nature from the violations found in 
No. 
2006AP334-D   
 
12 
 
Phillips I, and is based on facts that, while somewhat related, 
are different than the facts we relied on in Phillips I.  In 
Phillips I, we addressed, inter alia, the propriety of the loans 
Attorney Phillips obtained from a client and his failure to file 
state income tax returns or to pay state income taxes. 
¶27 Attorney Phillips' liability in the present case for 
violating SCR 20:8.4(b) stems not from obtaining the loan, but 
from what he did after obtaining the loan to hide the loan 
proceeds from the IRS.  The factual predicate for that violation 
was conclusively established not by the decision in Phillips I, 
which expressly disavowed rendering any judgment on this matter, 
but by the certified record of Attorney Phillips' criminal 
conviction in federal district court.  See SCR 22.20(5).6  With 
Attorney Phillips' undisputed hiding of loan proceeds in order 
to avoid attachment by the IRS as a factual basis, we certainly 
concur with the referee's legal conclusion that Attorney 
Phillips' criminal acts reflect adversely on his honesty, 
trustworthiness, or fitness as a lawyer in other respects, and 
therefore constitute a violation of SCR 20:8.4(b). 
                                                 
6 SCR 22.20(5) Summary license suspension on criminal 
conviction provides: 
 
(5) Proof of guilt.  In a proceeding based on an 
attorney's having been found guilty or convicted of a 
crime, 
a 
certified 
copy 
of 
the 
record 
in 
the 
proceeding or the certificate of conviction shall be 
conclusive evidence of the attorney's guilt of the 
crime of which found guilty or convicted. 
No. 
2006AP334-D   
 
13 
 
¶28 With respect to the appropriate level of discipline, 
we conclude that a three-year suspension is a proper sanction in 
the present case and that it should be served after the 
expiration of the existing one-year suspension.  The presence of 
the prior disciplinary action calls for a stronger sanction 
here.  Moreover, as the referee noted, Attorney Phillips has not 
exhibited remorse for his actions.  He has consistently 
attempted to explain away his conduct as merely obtaining a loan 
from a friend and failing to pay taxes, failing to demonstrate 
an understanding of the criminal nature of his acts.  In 
addition, when the referee took extra steps to ensure that 
Attorney Phillips received notice of the proceedings in this 
matter and an opportunity to present his case, he responded by 
characterizing the referee's efforts as "little more than 
harassment."7 
¶29 We agree with the referee's recommendation that, in 
light of the consecutive nature of the suspension we impose 
today and the timing of the prior suspension, Attorney Phillips 
should be given credit for the 112 days that passed between the 
summary suspension on January 20, 2006, and May 12, 2006, the 
                                                 
7 We recognize that in another decision issued on this same 
date, we are imposing an 18-month suspension for conduct that 
also involved a single count of tax evasion.  In re Disciplinary 
Proceedings Against Washington, No. 2006AP578-D.  Unlike the 
present case, however, Attorney Washington has not been the 
subject of prior discipline, exhibited true remorse for her 
conduct, and submitted evidence of a history of community 
service.  Both cases call for a substantial sanction, but these 
differences and the particular facts at issue require a higher 
level of discipline in the present case. 
No. 
2006AP334-D   
 
14 
 
effective date of the one-year suspension imposed in Phillips I.  
Moreover, given that Attorney Phillips did not object to the 
statement of costs filed by the OLR, we determine that he should 
be required to pay the full costs of this proceeding. 
¶30 IT IS ORDERED that the license of Attorney Mark A. 
Phillips to practice law in Wisconsin is suspended for a period 
of three years, effective upon the expiration of the one-year 
suspension imposed in In re Disciplinary Proceedings Against 
Phillips, 2006 WI 43, 290 Wis. 2d 87, 713 N.W.2d 629 (No. 
2004AP1914-D)(Phillips I), with 112 days of credit to be applied 
toward the three-year period of suspension. 
¶31 IT IS FURTHER ORDERED that within 60 days of the date 
of this order, Attorney Phillips shall pay to the Office of 
Lawyer Regulation the costs of this proceeding.  If the costs 
are not paid within the time specified and absent a showing to 
this court of his inability to pay those costs within that time, 
the license of Attorney Phillips to practice law in Wisconsin 
shall remain suspended until further order of this court. 
¶32 IT IS FURTHER ORDERED that if he has not already done 
so, Attorney Phillips shall comply with the provisions of SCR 
22.26 concerning the duties of a person whose license to 
practice law in Wisconsin has been suspended. 
 
No. 
2006AP334-D   
 
 
 
1