Case Title: Office of Lawyer Regulation v. Susan L. Schuster

Citation: 2006 WI 21

Docket Number: 2005AP002567-D

State: wisconsin

Court: Wisconsin Supreme Court

Date: 2006-03-07T00:00:00Z

Document:
2006 WI 21 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2005AP2567-D 
 
 
COMPLETE TITLE: 
 
 
In the Matter of Disciplinary Proceedings 
Against Susan L. Schuster, Attorney at Law: 
 
 
Office of Lawyer Regulation, 
          Complainant, 
     v. 
Susan L. Schuster, 
          Respondent. 
 
 
 
 
DISCIPLINARY PROCEEDINGS AGAINST SCHUSTER 
 
 
OPINION FILED: 
March 7, 2006   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
        
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
        
 
COUNTY: 
        
 
JUDGE: 
        
 
 
 
JUSTICES: 
 
 
CONCURRED: 
        
 
DISSENTED: 
        
 
NOT PARTICIPATING:         
 
 
 
ATTORNEYS: 
 
      
 
 
2006 WI 21
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.  2005AP2567-D  
 
 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
In the Matter of Disciplinary Proceedings 
Against Susan L. Schuster, Attorney at Law: 
 
Office of Lawyer Regulation, 
 
          Complainant, 
 
     v. 
 
Susan L. Schuster, 
 
          Respondent. 
 
FILED 
 
MAR 7, 2006 
 
Cornelia G. Clark 
Clerk of Supreme Court 
 
 
 
 
 
ATTORNEY 
disciplinary 
proceeding.   
Attorney's 
license 
suspended.   
 
¶1 
PER 
CURIAM.   We 
review 
a 
stipulation 
filed 
by 
Attorney Susan L. Schuster and the Office of Lawyer Regulation 
(OLR) pursuant to SCR 22.12 regarding Attorney Schuster's 
professional misconduct concerning the use and maintenance of 
her client trust account.  The stipulation provides that 
Attorney Schuster committed professional misconduct as set forth 
in six separate counts, which are described below.  As 
discipline for this misconduct, the parties stipulate to the 
No. 
2005AP2567-D   
 
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imposition of a nine-month suspension.  The parties further 
stipulate that Attorney Schuster be required to disburse to her 
clients any remaining trust account funds, that she close her 
trust accounts during the term of her suspension, and that for a 
period of two years following any reinstatement, Attorney 
Schuster is to submit quarterly trust account records to the OLR 
for its review and audit. 
¶2 
We approve the stipulation and adopt the stipulated 
findings of fact and conclusions of law.  We agree that the 
seriousness of Attorney Schuster's misconduct warrants the 
imposition of a nine-month suspension of her license to practice 
law in Wisconsin.  We also agree with the stipulation's 
recommendation that Attorney Schuster be required to disburse 
the funds remaining in her trust accounts and to close those 
accounts during her suspension.  Finally, we agree that for a 
period of two years following any reinstatement of Attorney 
Schuster's license, she must submit quarterly trust account 
records for the OLR's review and audit. 
¶3 
The current disciplinary proceeding grew out of the 
OLR's review of Attorney Schuster's trust account practices 
following a prior proceeding.  In the previous case, Attorney 
Schuster admitted that she had deposited personal funds into her 
trust account, had paid both personal and business expenses out 
of the trust account, had written checks on the trust account 
when there were insufficient funds, had written checks payable 
to "cash" from the trust account, had failed to create and 
maintain required trust account records, had failed to notify a 
No. 
2005AP2567-D   
 
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client four days prior to trial that she was withdrawing from 
the representation, and had made misrepresentations to the OLR 
regarding her withdrawal from the representation.  As a sanction 
for this misconduct, the court imposed a 90-day suspension of 
Attorney Schuster's license to practice law.  See In re 
Disciplinary Proceedings Against Schuster, 2003 WI 135, 266 
Wis. 2d 36, 670 N.W.2d 545.  This suspension was Attorney 
Schuster's only prior discipline since her admission to practice 
in March 2000. 
¶4 
Attorney Schuster's license was reinstated on April 
20, 2004.  In the reinstatement order, the court required that 
for a period of two years Attorney Schuster must submit 
quarterly 
trust 
account 
records 
to 
the 
OLR. 
 
The 
OLR 
subsequently provided information to Attorney Schuster regarding 
the proper procedures for maintaining a client trust account. 
¶5 
When Attorney Schuster submitted preliminary trust 
account records for the first accounting period following 
reinstatement (December 1, 2003 through May 31, 2004), the OLR 
discovered multiple violations of the rules governing trust 
accounts.  For example, the records showed that Attorney 
Schuster had made disbursements to herself from funds allegedly 
attributable to a specific client after that client's trust 
funds had in fact been depleted, thereby improperly drawing on 
other clients' trust funds.  Attorney Schuster also failed to 
provide ledgers for individual client funds within her trust 
account.  Attorney Schuster's records also showed that she 
maintained what she labeled a "maintenance ledger," which was a 
No. 
2005AP2567-D   
 
4 
 
catch-all category that included client funds but failed to 
identify how much money was being held for which client.  
Attorney Schuster's records initially showed that her opening 
balance as of December 1, 2003 was $1970.46, which she 
attributed to the "maintenance ledger." 
¶6 
After the OLR called Attorney Schuster's attention to 
the numerous problems with her trust account and requested 
supplemental information, Attorney Schuster submitted additional 
and amended records.  She provided individual ledgers for six 
clients showing a total of $2186 on deposit as of December 1, 
2003, although the reconciled balance on deposit in the account 
was only $1970.46.  Attorney Schuster's records demonstrated 
that individual client ledgers carried negative balances at 
various times. 
¶7 
The OLR attempted to recreate Attorney Schuster's 
trust account records from the documents she had submitted, but 
could not do so because of continuing problems with Attorney 
Schuster's documentation.  The OLR again advised Attorney 
Schuster how to create and maintain proper trust account records 
and requested that Attorney Schuster submit corrected records 
for the first accounting period. 
¶8 
Attorney Schuster subsequently provided a third set of 
records for the first accounting period.  These corrected 
records showed individual ledgers for an additional eight 
clients that Attorney Schuster had previously omitted.  Attorney 
Schuster's ledgers, however, remained inaccurate because they 
No. 
2005AP2567-D   
 
5 
 
differed from the transactions shown on her deposit slips, check 
copies and check stubs. 
¶9 
In September 2004 Schuster submitted records for the 
second accounting period of June 1, 2004 through August 31, 
2004.  These records again showed transactions that differed 
from those shown on Attorney Schuster's deposit slips, check 
copies and check stubs, as well as other inaccuracies.  Attorney 
Schuster also did not provide individual ledgers for five 
clients with funds or negative balances in the trust account.  
Although the individual client ledgers she submitted showed a 
total balance larger than the actual balance in her trust 
account, Attorney Schuster gave the OLR a reconciliation that 
included only some of the individual client ledgers and lumped 
the remaining funds in her "maintenance ledger."  Attorney 
Schuster did not provide a copy of this "maintenance ledger." 
¶10 After the OLR opened a new investigative file in 
December 2004, Attorney Schuster admitted that she had not kept 
complete and accurate trust account records. 
¶11 Attorney Schuster then submitted allegedly corrected 
records for the prior accounting periods.  The revised client 
ledgers for the first accounting period showed that there should 
have been $3631 in the trust account as of December 1, 2003, but 
that the actual balance had been only $2070.46, creating a 
deficit of $1561.04.  This deficit increased to $1958.04 as of 
the end of the first accounting period on May 31, 2004.   
¶12 The records also showed that between December 1, 2003 
and May 31, 2004, Attorney Schuster wrote six trust account 
No. 
2005AP2567-D   
 
6 
 
checks to herself when the clients whose funds she was allegedly 
withdrawing did not have sufficient funds in trust to cover the 
checks.  In addition, Attorney Schuster deposited fee payments 
into her trust account when those fees had already been earned 
and billed.  She then withdrew those fee payments from the trust 
account. 
¶13 The corrected records showed that the deficit in her 
trust account between what should have been there and what 
actually was there grew to $2235.04 as of the end of the second 
accounting period on August 31, 2004.  During that period, 
Attorney Schuster wrote a trust account check for $270 to 
herself for a specific client when there were insufficient trust 
funds to cover that amount.  Indeed, Attorney Schuster's check 
stub demonstrated that she knew there were no trust funds for 
that client at the time she wrote the check.  Attorney Schuster 
also failed to provide the OLR with a billing statement showing 
that the client actually owed $270 at the time Attorney Schuster 
wrote the check.  On at least two occasions during this second 
accounting period, Attorney Schuster deposited earned fees into 
her trust account.  She wrote a total of five checks to herself 
when the relevant clients had no funds or insufficient funds in 
the account to cover the checks. 
¶14 As of the end of the third accounting period, November 
30, 2004, the deficit in Attorney Schuster's trust account had 
grown to $5141.29.  Attorney Schuster failed to submit to the 
OLR all of the individual client ledgers for this time period.  
For example, she did not produce a ledger for a client that had 
No. 
2005AP2567-D   
 
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a $100 balance in the trust account since December 2003.  
Although that client's case had been dismissed in May 2004, 
Attorney Schuster did not return the client's money until April 
2005. 
¶15 As of February 28, 2005, there was still a deficit in 
Attorney Schuster's trust account, although it had fallen to 
$2583.04.  During this fourth accounting period, Attorney 
Schuster ran out of pre-printed trust account checks and began 
to use checks that were not pre-printed or pre-numbered.  When 
Attorney Schuster finally ordered new trust account checks, they 
failed to identify the account as a client trust account.  
During this period, Attorney Schuster also wrote two checks 
payable to "Cash."  One of these checks was for a client whose 
ledger showed a negative balance at the time. 
¶16 In 
February 
2005, 
Attorney 
Schuster 
allegedly 
deposited $2500 of her personal funds into her trust account to 
make up the deficit.  However, it appears that these "personal" 
funds came from a $3270 trust account check that Attorney 
Schuster had written to herself the previous day.  That check 
had created a negative balance in one client's account and had 
withdrawn more money from other clients' accounts than Attorney 
Schuster's billing statements showed she was owed. 
¶17 During the fifth accounting period, from March 1, 2005 
through May 31, 2005, Attorney Schuster again deposited an 
earned fee of $135 into her trust account, which she withdrew 
the same day.  She also, however, made restitution payments to 
the trust account that appeared to cover the deficit in the 
No. 
2005AP2567-D   
 
8 
 
account.  At the time of those restitution payments, all of the 
client ledgers showed positive balances.  Less than three weeks 
later, however, Attorney Schuster again wrote a $1000 trust 
account check to herself when the client had no funds in the 
trust account.  This $1000 deficit remained through the end of 
the accounting period on May 31, 2005.  Attorney Schuster's 
records show that she did repay the $1000 into the trust account 
on June 13, 2005. 
¶18 On the basis of the facts set forth above, the OLR and 
Attorney Schuster stipulate that Attorney Schuster committed six 
violations of the Supreme Court Rules of Professional Conduct.  
Count One states that Attorney Schuster failed to create and 
maintain complete and accurate records of trust account funds, 
including individual client ledgers and accurate reconciliation 
reports, in violation of former SCR 20:1.15(e)1 (now set forth in 
                                                 
1 Former SCR 20:1.15(e) applies to misconduct committed 
prior to July 1, 2004.  It provided:  
 
(e) Complete records of trust account funds and 
other trust property shall be kept by the lawyer and 
shall be preserved for a period of at least six years 
after termination of the representation.  Complete 
records shall include: (i) a cash receipts journal, 
listing the sources and date of each receipt, (ii) a 
disbursements journal, listing the date and payee of 
each disbursement, with all disbursements being paid 
by check, (iii) a subsidiary ledger containing a 
separate page for each person or company for whom 
funds have been received in trust, showing the date 
and amount of each receipt, the date and amount of 
each disbursement, and any unexpended balance, (iv) a 
monthly schedule of the subsidiary ledger, indicating 
the balance of each client's account at the end of 
each month, (v) a determination of the cash balance 
(checkbook balance) at the end of each month, taken 
No. 
2005AP2567-D   
 
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SCR 20:1.15(f)).  Count Two states that by submitting to the OLR 
incomplete 
and 
false 
ledgers 
and 
falsified 
account 
reconciliations, Attorney Schuster willfully failed to furnish 
requested documents and made misrepresentations to the OLR, in 
violation of SCR 22.03(6).2  Count Three states that by 
depositing earned fees into her trust account, Attorney Schuster 
commingled personal funds with client funds in her trust 
account, in violation of former SCR 20:1.15(a)3 (now set forth in 
SCR 20:1.15(b)).  Count Four states that Attorney Schuster 
engaged in conduct involving dishonesty, fraud, deceit or 
                                                                                                                                                             
from the cash receipts and cash disbursement journals 
and reconciliation of the cash balance (checkbook 
balance) with the balance indicated in the bank 
statement, and (vi) monthly statements, including 
canceled 
checks, 
vouchers 
or 
share 
drafts, 
and 
duplicate deposit slips.  A record of all property 
other than cash which is held in trust for clients or 
third persons, as required by paragraph (a) hereof, 
shall also be maintained.  All trust account records 
shall be deemed to have public aspects as related to 
the lawyer's fitness to practice. 
2 SCR 22.03(6) provides that "[i]n the course of the 
investigation, 
the 
respondent's wilful 
failure 
to provide 
relevant information, to answer questions fully, or to furnish 
documents and the respondent's misrepresentation in a disclosure 
are misconduct, regardless of the merits of the matters asserted 
in the grievance." 
3 Former SCR 20:1.15(a) provided in pertinent part that "[a] 
lawyer shall hold in trust, separate from the lawyer's own 
property, that property of clients and third persons that is in 
the lawyer's possession in connection with a representation 
. . . ." 
No. 
2005AP2567-D   
 
10 
 
misrepresentation, contrary to SCR 20:8.4(c),4 when she made 
multiple payments to herself out of trust accounts funds to 
which she was not entitled and caused a deficit in her trust 
account for most of 2004 and the first quarter of 2005.  Count 
Five 
states 
that 
Attorney 
Schuster 
violated 
current 
SCR 
20:1.15(e)(4)a.,5 by writing two checks from her trust account 
payable to "Cash."  Finally, Count Six states that by using 
trust account checks that were not pre-printed and pre-numbered 
and by using checks that did not indicate they were for a client 
trust account, Schuster violated current SCR 20:1.15(f)(1)e.6 
¶19 With respect to the discipline to be imposed, the 
stipulation indicates that the OLR Director considered that 
Attorney Schuster and her accountant had voluntarily attended a 
trust account seminar given by the OLR, that Attorney Schuster 
                                                 
4 SCR 20:8.4(c) states it is professional misconduct for a 
lawyer to "engage in conduct involving dishonesty, fraud, deceit 
or misrepresentation." 
5 SCR 20:1.15(e)(4)a. states that "[n]o disbursement of cash 
shall be made from a trust account or from a deposit to a trust 
account, and no check shall be made payable to 'Cash.'" 
6 SCR 
20.1.15(f)(1)e. 
entitled 
Disbursement 
records 
provides: 
 
1. Checks.  Checks shall be pre-printed and pre-
numbered.  The name and address of the lawyer or law 
firm, and the name of the account shall be printed in 
the upper left corner of the check.  Trust account 
checks shall include the words "Client Account," or 
"Trust Account," or words of similar import in the 
account name.  Each check disbursed from the trust 
account shall identify the client matter and the 
reason for the disbursement on the memo line. 
No. 
2005AP2567-D   
 
11 
 
did submit quarterly records and provided additional records at 
the OLR's request, that no clients complained concerning 
Attorney Schuster's trust account violations.  The OLR Director 
also noted the fact that Attorney Schuster had a prior license 
suspension relating to misconduct involving her trust account, 
and that Attorney Schuster had admitted her violations. 
¶20 The stipulation states that the terms were not 
bargained for or negotiated between the parties.  Attorney 
Schuster admits to the factual statements and the conclusions of 
law regarding her misconduct.  She also represents that she 
fully 
understands 
the 
misconduct 
allegations, 
she 
fully 
understands the ramifications should the court impose the 
stipulated level of discipline, she fully understands her right 
to contest the matter, she has consulted with and retained 
counsel, and her entry into the stipulation is made knowingly 
and voluntarily. 
¶21 We adopt the parties' stipulated findings of fact and 
conclusions of law concerning Attorney Schuster's professional 
misconduct. 
 
We 
agree 
that 
the 
seriousness 
of 
Attorney 
Schuster's misconduct warrants the suspension of her license to 
practice law in Wisconsin for a period of nine months.  We also 
agree that Attorney Schuster must disburse to her clients any 
remaining trust account funds and close her trust accounts 
during her suspension.  Finally, we agree that for a period of 
two years following any reinstatement of Attorney Schuster's 
license to practice law, she must be required on a quarterly 
No. 
2005AP2567-D   
 
12 
 
basis to submit trust account records for the OLR's review and 
audit. 
¶22 IT IS ORDERED that the license of Susan L. Schuster to 
practice law in Wisconsin is suspended for a period of nine 
months, effective April 11, 2006. 
¶23 IT IS FURTHER ORDERED that Attorney Schuster comply 
with the provisions of SCR 22.26 concerning the duties of a 
person whose license to practice law in Wisconsin has been 
suspended. 
¶24 IT IS FURTHER ORDERED that, within fourteen days of 
the date of this order, Attorney Schuster disburse to the proper 
clients and third parties all remaining trust funds in her trust 
accounts and close all of her client trust accounts. 
¶25 IT IS FURTHER ORDERERD that, in the event that her 
license to practice law is reinstated, for a period of two years 
following reinstatement, Attorney Schuster shall on a quarterly 
basis submit to the OLR her trust account records and all other 
documentation that the OLR requires to review and audit the 
trust account records. 
No. 
2005AP2567-D   
 
 
 
1