Case Title: Office of Lawyer Regulation v. Hazel J. Washington

Citation: 2007 WI 65

Docket Number: 

State: wisconsin

Court: Wisconsin Supreme Court

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

Document:
2007 WI 65 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
CASE NO.: 
2006AP578-D 
COMPLETE TITLE: 
 
 
In the Matter of Disciplinary Proceedings 
Against Hazel J. Washington, Attorney at Law: 
 
Office of Lawyer Regulation, 
          Complainant, 
     v. 
Hazel J. Washington, 
          Respondent. 
 
 
 
 
 
 
DISCIPLINARY PROCEEDINGS AGAINST WASHINGTON 
 
 
OPINION FILED: 
May 30, 2007   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
        
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
        
 
COUNTY: 
        
 
JUDGE: 
        
 
 
 
JUSTICES: 
 
 
CONCURRED: 
        
 
DISSENTED: 
        
 
NOT PARTICIPATING: BUTLER, Jr., J., did not participate.   
 
 
 
ATTORNEYS: 
 
      
 
 
2007 WI 65
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.  2006AP578-D  
 
 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
In the Matter of Disciplinary Proceedings  
Against Hazel J. Washington, Attorney at Law: 
 
Office of Lawyer Regulation, 
 
          Complainant, 
 
     v. 
 
Hazel J. Washington, 
 
          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 report and recommendation 
of the referee following the entry of a stipulation by the 
Office of Lawyer Regulation (OLR) and Attorney Hazel J. 
Washington.  As requested by the stipulation, the referee 
recommended that Attorney Washington's license to practice law 
in Wisconsin be suspended for one year, effective February 3, 
2006, the date on which Attorney Washington's license was 
summarily suspended due to her criminal conviction. 
No. 
2006AP578-D   
 
2 
 
¶2 
On January 10, 2007, after reviewing the referee's 
recommendation, this court issued an order directing the parties 
to show cause why the discipline to be imposed should not be an 
18-month suspension.  The OLR and Attorney Washington each filed 
a written response maintaining that the one-year suspension 
contemplated 
by 
their 
stipulation 
would 
be 
appropriate 
discipline. 
¶3 
After consideration of the facts of this case and the 
parties' responses to the order to show cause, we conclude that 
an 18-month suspension of Attorney Washington's license to 
practice law in this state is necessary to reflect the serious 
nature of her professional misconduct.  We agree with the 
recommendation of the referee that this suspension should be 
deemed to have commenced on the date of the summary suspension 
of 
Attorney 
Washington's 
license 
pursuant 
to 
SCR 
22.20.  
Finally, we conclude that Attorney Washington should pay the 
costs of this disciplinary proceeding, which were $488.14 as of 
December 5, 2006. 
¶4 
Attorney Washington was admitted to the practice of 
law in Wisconsin in June 1988.  She has not been the subject of 
discipline prior to the proceedings in this matter.  She has 
most recently practiced in Milwaukee. 
¶5 
This disciplinary proceeding grew out of Attorney 
Washington's guilty plea and conviction for attempting to evade 
and defeat the payment of a large portion of her federal income 
taxes for 1998. 
No. 
2006AP578-D   
 
3 
 
¶6 
According to Attorney Washington's plea agreement, 
which was filed without objection in this court in connection 
with a motion for the summary suspension of her license, she 
used the same individual as the accountant and tax preparer for 
both her legal practice, Washington Law Offices, Inc., and for 
her personal affairs.  Attorney Washington was to give the 
accountant the monthly statements and canceled checks from her 
firm's client trust accounts, business checking account and 
business payroll account.  The accountant used these items to 
calculate Attorney Washington's income and to generate general 
ledgers, payroll reports and financial statements, which the 
accountant regularly reviewed with Attorney Washington.   
¶7 
The accountant used the general ledger and a list of 
itemized deductions provided by Attorney Washington to prepare 
Attorney 
Washington's 
business 
and 
personal 
tax 
returns.  
Although the accountant reminded Attorney Washington of the need 
to capture all income, Attorney Washington never advised the 
accountant of any additional income beyond that shown on the 
business account statements (with a minor exception irrelevant 
to this opinion). 
¶8 
For 1998, Attorney Washington claimed gross receipts 
of $591,725, listed $40,136 in total income, and showed income 
tax due of $8930.  Attorney Washington's receipts, income and 
tax due were actually much higher because she deposited at least 
$93,514 in legal fees into a personal account that she never 
disclosed to the accountant.  Attorney Washington then used 
these hidden monies to pay for personal expenses.  Attorney 
No. 
2006AP578-D   
 
4 
 
Washington also "signed over" checks payable to her law practice 
to her personal mortgage lender without disclosing them to the 
accountant so that the funds would not show up on her business 
records or her tax return.  In total, Attorney Washington had 
unreported gross income in 1998 of more than $100,000, causing a 
tax loss to the federal government of more than $31,000. 
¶9 
The federal criminal records also showed that Attorney 
Washington engaged in similar conduct in 1999 and 2000, although 
the federal government chose not to charge her with tax evasion 
for those years.  For those two years, Attorney Washington had 
additional unreported income of more than $100,000.  Although 
she was not convicted of criminal offenses for those two years, 
Attorney Washington has admitted her unlawful conduct. 
¶10 Pursuant to the plea agreement, Attorney Washington 
pled guilty to one count of attempting to evade and defeat 
payment of a large portion of her federal income tax liability 
for 1998.  The United States District Court for the Eastern 
District of Wisconsin subsequently sentenced Attorney Washington 
to five months in prison and two years of supervised release, 
150 days of which were required to be served in home 
confinement. 
¶11 After Attorney Washington entered her guilty plea, the 
OLR filed a motion seeking the summary suspension of Attorney 
Washington's license to practice law in this state pursuant to 
SCR 22.20(1).1  On January 27, 2006, this court summarily 
                                                 
1 SCR 22.20(1) Summary license suspension on criminal 
conviction provides: 
No. 
2006AP578-D   
 
5 
 
suspended 
Attorney 
Washington's 
license, 
effective 
as 
of 
February 3, 2006. 
¶12 Pursuant to SCR 22.20(6),2 the OLR then filed a 
complaint 
that 
alleged 
in 
a 
single 
count 
that 
Attorney 
Washington had violated SCR 20:8.4(b).3  After Attorney Kathleen 
Callan Brady was appointed to serve as the referee in this 
matter, the OLR and Attorney Washington filed a stipulation.  In 
the stipulation Attorney Washington admitted that by pleading 
guilty to and being convicted of willfully attempting to evade 
and defeat a large portion of the federal income tax due and 
                                                                                                                                                             
 
(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 
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. 
2 SCR 22.20(6) Summary license suspension on criminal 
conviction provides: 
 
(6) Filing of complaint.  The director, or 
special investigator acting under SCR 22.25, shall 
file the complaint in the disciplinary proceeding 
within 2 months of the effective date of the summary 
suspension or shall show cause why the summary 
suspension should continue.  The respondent attorney 
may file a response with the supreme court within 10 
days of service.  Reinstatement under this section 
does not terminate any misconduct investigation or 
disciplinary proceeding pending against the attorney. 
3 SCR 20:8.4(b) states 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. 
2006AP578-D   
 
6 
 
owing by her and her husband for 1998, she had committed a 
criminal 
act 
that 
reflects 
adversely 
on 
her 
honesty, 
trustworthiness or fitness as a lawyer, in violation of SCR 
20:8.4(b).  The stipulation states that the OLR recommends, and 
Attorney Washington agrees, that an appropriate level of 
discipline 
would 
be 
a 
one-year 
suspension 
of 
Attorney 
Washington's license to practice law in this state. 
¶13 On the basis of the stipulation, the referee found 
that all of the factual allegations in the OLR's complaint had 
been proven and concluded that Attorney Washington had violated 
SCR 20:8.4(b).  The referee recommended the one-year suspension 
requested by the parties, retroactive to the date of the summary 
suspension of Attorney Washington's license.  In addition, she 
recommended that the court order Attorney Washington to pay the 
costs of the disciplinary proceeding. 
¶14 As noted 
above, after considering the referee's 
recommendation, on January 10, 2007, this court issued an order 
to the parties to show cause why the suspension should not be 
for a period of 18 months.  
¶15 The OLR and Attorney Washington both filed responses 
that continued to argue in favor of a one-year suspension.  The 
OLR's response stated that it had considered a number of cases 
that it believed to be somewhat similar to the facts of the 
present case, although it acknowledged that no Wisconsin case is 
directly on point.  For example, it argued that Attorney 
Washington's misconduct was not as serious as the conduct that 
supported a stipulated 18-month suspension against Attorney Mark 
No. 
2006AP578-D   
 
7 
 
Brown.  In re Disciplinary Proceedings Against Brown, 2005 WI 
49, 280 Wis. 2d 44, 695 N.W.2d 295.  In that case, Attorney 
Brown admitted that he had converted to his personal use over 
$16,000 in fees belonging to his law firm, had failed to report 
fee income on his personal income tax return, had made multiple 
misrepresentations to his law partner and associate, and had 
made misrepresentations to the OLR.  Id., ¶¶13-14.   
¶16 The OLR asserted that the present case was similar to 
In re Disciplinary Proceedings Against Hausmann, 2005 WI 131, 
285 Wis. 2d 608, 699 N.W.2d 923 (one-year suspension due to 
federal conviction for conspiracy to commit mail and wire fraud, 
where attorney had no prior discipline and a record of community 
service), and In re Disciplinary Proceedings Against Brown-
Perry, 2003 WI 151, 267 Wis. 2d 184, 672 N.W.2d 287 (stipulated 
one-year suspension for multiple counts of misconduct, including 
failing to place client funds in trust, failing to return 
unearned retainer fees, failing to forward settlement funds to a 
client, using client funds for personal expenses, failing to 
cooperate with the OLR, and failing to file income tax returns 
for a number of years).   
¶17 The OLR acknowledged, however, that in another case 
involving a single conviction for federal tax evasion, the 
decision in which is being released on the same date as this 
opinion, it was recommending a three-year suspension.  In re 
Disciplinary 
Proceedings 
Against 
Phillips, 
No. 
2006AP334-D 
(Phillips II).  In that case, Attorney Phillips hid the proceeds 
of a $125,000 loan by converting the funds to cashier's checks 
No. 
2006AP578-D   
 
8 
 
and negotiating them through his client trust account and a 
separate bank account maintained by his wife so that the 
Internal Revenue Service (IRS) could not attach the funds to pay 
past income tax liabilities.  The OLR attempted to distinguish 
its recommendation in Phillips II by noting that Attorney 
Phillips had previously received a one-year suspension and that 
he had a long-standing pattern of failing to file income tax 
returns and to pay the taxes due.  See In re Disciplinary 
Proceedings Against Phillips, 2006 WI 43, 290 Wis. 2d 87, 713 
N.W.2d 629 (Phillips I) (one-year suspension imposed for 
improperly obtaining loans from client, failing to act with 
reasonable diligence, failing to return client files and failing 
to file state income tax returns). 
¶18 Attorney Washington's response noted that the sanction 
imposed 
in 
disciplinary 
proceedings 
involving 
tax-related 
misconduct has ranged from reprimands to revocation.  She argues 
that because of mitigating factors in her case, including the 
lack of a prior disciplinary history, her voluntary entry of a 
guilty plea, her self-reporting to and cooperation with the OLR, 
and the lack of direct harm to her clients, the discipline 
should be on the lower end of the spectrum. 
¶19 On the basis of the documentary evidence of Attorney 
Washington's federal conviction for tax evasion and the parties' 
stipulation, we determine that the referee's factual findings 
are well-founded.  We also agree with the referee's conclusion 
that the facts prove that Attorney Washington committed a 
criminal 
act 
that 
reflects 
adversely 
on 
her 
honesty, 
No. 
2006AP578-D   
 
9 
 
trustworthiness and fitness as a lawyer, in violation of SCR 
20:8.4(b). 
¶20 With respect to the appropriate level of discipline 
for 
an 
attorney's 
criminal 
conviction 
that 
violates 
SCR 
20:8.4(b), we have previously stated that each such case "must 
be assessed on the basis of its own facts."  Hausmann, 285 
Wis. 2d 608, ¶23; see also In re Disciplinary Proceedings 
Against Widule, 2003 WI 34, 261 Wis. 2d 45, 660 N.W.2d 686 
(court imposes appropriate disciplinary sanction regardless of 
referee's recommendation).   
¶21 In the present case, we determine that the serious 
nature of Attorney Washington's prolonged course of hiding her 
income and filing false tax returns renders the requested one-
year 
suspension 
inadequate. 
 
We 
conclude 
that 
Attorney 
Washington's misconduct requires an 18-month suspension of her 
license to practice law in this state.   
¶22 This 
was 
not 
a 
situation 
where 
an 
attorney 
inadvertently omitted on one or two occasions to record a fee in 
the financial records of her law firm or failed to file an 
income tax return.  According to her federal plea agreement, 
Attorney Washington on multiple occasions deposited fee income 
directly into her personal account so that her accountant did 
not record the income on the books of her law firm.  Although 
her accountant reminded her each year that all fee income had to 
go through the firm's business accounts to be captured on her 
tax return, Attorney Washington hid her income and signed 
intentionally false tax returns.  Indeed, although her 1998 tax 
No. 
2006AP578-D   
 
10 
 
return showed total income of only approximately $40,000, she 
told potential creditors and others that her salary for that 
year was $130,000.  Moreover, this misconduct was not limited to 
a single year.  Attorney Washington admittedly engaged in this 
fraudulent course of conduct for at least three years, resulting 
in unreported income of over $200,000.  She did not stop until 
the IRS sent her an audit notice in 2001. 
¶23 While each disciplinary case does turn on its own 
facts, we do not agree with the OLR's assertion that this course 
of conduct is less egregious than the conduct in Brown, 2005 WI 
49.  The attorneys in both cases engaged in deceptive conduct on 
multiple occasions over an extended period of time, with 
Attorney Washington converting to her own personal use a 
substantially greater amount of money (which in this case 
properly belonged to the federal government). 
¶24 We also believe that a one-year suspension in this 
case would pose too great a disparity with the three-year 
suspension we impose today in Phillips II.  Although we 
recognize that Attorney Phillips, unlike Attorney Washington, 
was the subject of prior discipline, both are being disciplined 
for engaging in federal tax evasion.  With the 18-month 
suspension we impose on Attorney Washington, she still is 
receiving a suspension that is half as long as the 3-year 
suspension that Attorney Phillips is receiving. 
¶25 Finally, we agree with the parties' request and the 
referee's 
recommendation 
that 
the 
suspension 
of 
Attorney 
Washington's license should be deemed to have commenced on 
No. 
2006AP578-D   
 
11 
 
February 3, 2006, the effective date of the summary suspension 
of her license.  We also agree that Attorney Washington should 
pay the costs of this disciplinary proceeding. 
¶26 IT IS ORDERED that the license of Attorney Hazel J. 
Washington to practice law in Wisconsin is suspended for a 
period of 18 months, retroactive to February 3, 2006. 
¶27 IT IS FURTHER ORDERED that within 60 days of the date 
of this order, Attorney Washington 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 her inability to pay those costs within that time, 
the license of Attorney Washington to practice law in Wisconsin 
shall remain suspended until further order of this court. 
¶28 IT IS FURTHER ORDERED that to the extent she has not 
already done so, Attorney Washington 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. 
¶29 LOUIS B. BUTLER, JR., J., did not participate. 
 
No. 
2006AP578-D   
 
 
 
1