Title: Office of Lawyer Regulation v. Charles K. Krombach

State: wisconsin

Issuer: Wisconsin Supreme Court

Document:

2005 WI 170 
 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2004AP60-D 
COMPLETE TITLE: 
 
 
In the Matter of Disciplinary Proceedings 
Against Charles K. Krombach, Attorney at Law: 
 
Office of Lawyer Regulation,  
          Complainant-Respondent, 
     v. 
Charles K. Krombach,  
          Respondent-Appellant. 
 
 
 
 
DISCIPLINARY PROCEEDINGS AGAINST KROMBACH 
 
 
OPINION FILED: 
December 22, 2005   
SUBMITTED ON BRIEFS: 
October 12, 2005   
ORAL ARGUMENT: 
        
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
        
 
COUNTY: 
        
 
JUDGE: 
        
 
 
 
JUSTICES: 
 
 
CONCURRED: 
        
 
DISSENTED: 
        
 
NOT PARTICIPATING:         
 
 
 
ATTORNEYS: 
 
For the respondent-appellant there was a brief by Charles 
K. Krombach, Brookfield. 
 
For the complainant-respondent there was a brief by Charles 
S. Blumenfield, Milwaukee. 
 
2005 WI 170
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.  2004AP60-D  
 
 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
In the Matter of Disciplinary Proceedings 
Against Charles K. Krombach, Attorney at Law: 
 
Office of Lawyer Regulation, 
 
          Complainant-Respondent, 
 
     v. 
 
Charles K. Krombach, 
 
          Respondent-Appellant. 
 
FILED 
 
Dec 22, 2005 
 
Cornelia G. Clark 
Clerk of Supreme Court 
 
 
 
 
 
ATTORNEY 
disciplinary 
proceeding.   
Attorney's 
license 
revoked.   
 
¶1 
PER CURIAM.   Attorney Charles K. Krombach appeals 
from the referee's recommendation that Attorney Krombach's 
license to practice law in Wisconsin be revoked and that he be 
required to pay restitution in the amount of $27,135.05.  After 
our own independent review, we adopt the referee's findings of 
fact and conclusions of law.  We also agree that Attorney 
Krombach's misconduct necessitates that his license be revoked, 
No. 
2004AP60-D   
 
2 
 
that he pay restitution, and that he pay the costs of this 
proceeding. 
¶2 
On January 8, 2004, the Office of Lawyer Regulation 
(OLR) filed a five-count complaint against Attorney Krombach.  
Count I alleged that Attorney Krombach's disbursement of trust 
account funds to himself without prior consent of the client 
constituted conduct involving dishonesty, fraud, deceit or 
misrepresentation in violation of SCR 20:8.4(c).1  Count II 
alleged a violation of former SCR 20:1.15(d)2 by Attorney 
Krombach's withdrawal of trust account funds prior to an 
accounting and severance of the interests in the trust account 
funds.  Count III alleged that Attorney Krombach had violated 
SCR 22.03(6)3 by making misrepresentations to, and failing to 
                                                 
1 SCR 20:8.4(c) provides that it is professional misconduct 
for a lawyer to "engage in conduct involving dishonesty, fraud, 
deceit or misrepresentation." 
2 Former SCR 20:1.15 applies to misconduct committed prior 
to July 1, 2004.  Former SCR 20:1.15(d) provided: 
When, in the representation, a lawyer is in 
possession of property in which both the lawyer and 
another person claim interests, the property shall be 
treated by the lawyer as trust property until there is 
an accounting and severance of their interests.  If a 
dispute arises concerning their respective interests, 
the portion in dispute shall continue to be treated as 
trust property until the dispute is resolved. 
3 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." 
No. 
2004AP60-D   
 
3 
 
cooperate with, the OLR.  Count IV alleged that Attorney 
Krombach had failed to provide a full accounting of trust funds 
upon 
request 
of his client 
in violation 
of 
former SCR 
20:1.15(b).4  Finally, Count V alleged that Attorney Krombach had 
violated former SCR 20:1.15(e)(ii)5 by making cash withdrawals 
from his client trust account instead of writing checks drawn on 
that account. 
¶3 
Attorney Krombach filed an answer that admitted the 
occurrence of many of the transactions alleged in the complaint, 
affirmatively claimed that many of the transactions were done 
with the knowledge and consent of one of the clients and denied 
that he had engaged in any professional misconduct. 
¶4 
Richard M. Esenberg was appointed referee on February 
12, 2004.  He scheduled a final hearing on the matter for June 
                                                 
4 Former SCR 20:1.15(b) provided: 
 
Upon receiving funds or other property in which a 
client or third person has an interest, a lawyer shall 
promptly notify the client or third person in writing.  
Except as stated in this rule or otherwise permitted 
by law or by agreement with the client, a lawyer shall 
promptly deliver to the client or third person any 
funds or other property that the client or third 
person is entitled to receive and, upon request by the 
client or third person, shall render a full accounting 
regarding such property. 
5 Former SCR 20:1.5(e)(ii) stated that 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 "a disbursements journal, listing the date and 
payee of each disbursement, with all disbursements being paid by 
check." 
No. 
2004AP60-D   
 
4 
 
28, 2004.  Shortly before the hearing, Attorney Krombach's 
counsel withdrew from the case, with Attorney Krombach's 
consent, because Attorney Krombach was no longer able to pay the 
fees.  Attorney Krombach and the OLR then entered into a 
stipulation in which Attorney Krombach admitted most of the 
factual allegations and the five allegations of misconduct set 
forth in the complaint.  The stipulation reserved the issues of 
restitution and discipline for further development and argument. 
¶5 
The referee held a one-day hearing concerning certain 
factual issues and the question of discipline.  Following the 
hearing, the referee allowed Attorney Krombach's therapist to 
submit a letter concerning his treatment of Attorney Krombach 
and he allowed the parties to submit evidentiary materials and 
briefs on the issue of restitution. 
¶6 
The referee then issued his report and recommendation.  
The referee's report included detailed findings of fact and 
conclusions of law based on the parties' stipulation and the 
evidence submitted at and following the hearing.  The voluminous 
findings of fact will be summarized below. 
 
¶7 
Charles K. Krombach was admitted to practice law in 
Wisconsin in 1977.  His prior disciplinary record includes a 
private reprimand.  Attorney Krombach's license was temporarily 
suspended on April 6, 2005, for failure to cooperate with two 
additional investigations.  His license has remained suspended 
until the date of this opinion. 
 
¶8 
Attorney Krombach began representing John M. on a 
personal basis in 1994.  John M. was apparently a man of fairly 
No. 
2004AP60-D   
 
5 
 
modest means, although at one point he did come to own a couple 
of houses in Milwaukee, a parcel of land in the Town of 
Cedarburg and another parcel out of state. 
¶9 
In 1997, John M. and his two sons, John P. and 
Michael, agreed to develop and subdivide the Cedarburg parcel.  
The three retained Attorney Krombach to form a limited liability 
company (LLC) for that purpose.  The LLC borrowed funds from 
AVCO Financial Services to pay for development expenses.  
Attorney Krombach deposited $45,610.69 of the AVCO loan proceeds 
into his client trust account.  On the same day, Attorney 
Krombach wrote a trust account check to himself in the amount of 
$7565.28, primarily for John M.'s outstanding personal attorney 
fees.  The referee concluded that, although these were LLC funds 
that were being used to pay John M.'s personal attorney fees on 
other matters, it appears that the members of the LLC approved 
of this payment to Attorney Krombach.  At least, the referee 
could 
not 
affirmatively 
conclude 
that 
this 
payment 
was 
unauthorized or improper. 
¶10 Beginning shortly thereafter, Attorney Krombach made a 
number of disbursements from the LLC's funds in his trust 
account.  For example, on August 27, 1997, he wrote a $500 check 
payable to "Cash," which he endorsed and cashed the same day.  
Attorney Krombach claims that he delivered this cash along with 
another $1000 check to John M. on the same day.  He claims that 
the cash and the check represented loans from the LLC to John M.  
Although the referee could not conclude that John M. did not 
receive the money, there is no doubt that these disbursements 
No. 
2004AP60-D   
 
6 
 
were unauthorized at the time because the agreement among the 
members of the LLC was that any disbursement of $1000 or more 
required the approval of two members.  Attorney Krombach has 
produced no evidence that anyone other than John M. approved of 
these "loans" at the time they were made. 
¶11 During the following months, Attorney Krombach made a 
substantial number of payments to himself out of the LLC trust 
funds.  The referee found that Attorney Krombach repeatedly paid 
himself from LLC funds on non-LLC matters involving only John M. 
personally. 
 
Attorney 
Krombach 
has 
produced 
no 
written 
authorization for these payments and has not alleged that anyone 
other than John M. gave him verbal authorizations, although John 
M. did not have such authority by himself.  Indeed, when 
Attorney Krombach requested permission from John P. to pay his 
father's personal legal fees out of the LLC's funds, John P. 
expressly denied that permission. 
¶12 Although these payments to Attorney Krombach from the 
trust funds were not authorized at the time they were made, 
there was some evidence that John P. and Michael, the other LLC 
members, ratified these payments after the fact.  John P. 
acknowledged that he received statements regarding the use of 
the trust funds that would have indicated the amount of these 
payments.  Although these trust statements may not have 
explicitly communicated the fact that these monies were being 
used to pay his father's personal legal fees, John P. did admit 
that he knew that his father's personal legal bills had been 
No. 
2004AP60-D   
 
7 
 
paid up to date as of July 1999, presumably from LLC trust 
funds. 
¶13 Because 
Attorney 
Krombach 
was 
unsuccessful 
in 
obtaining governmental approval to subdivide the Cedarburg 
parcel, the LLC members decided to suspend payments on the AVCO 
loan, causing the property to go into foreclosure.  By September 
1998 the AVCO loan proceeds had been almost depleted, with 
nearly $26,000 of the original $45,610.69 having been paid to 
Attorney Krombach.  Ultimately, the LLC was able to sell the 
parcel at what Attorney Krombach described as a "fire sale" 
price. 
¶14 Attorney Krombach produced two invoices dated July 1, 
1999, the date of the closing for the sale of the Cedarburg 
property.  The first invoice was in the amount of $7752.62 and 
the second was in the amount of $4082.18.  These invoices were 
apparently paid out of the proceeds of the closing. 
¶15 After payment of the AVCO loan and other outstanding 
expenses, the LLC received $83,879.48 in proceeds from the sale, 
all of which was initially deposited into Attorney Krombach's 
trust account.  Attorney Krombach then disbursed $31,915.81 to 
John P. as guardian for his father.  In addition to the payment 
of the two invoices identified above dated July 1, 1999, 
Attorney Krombach also wrote himself a check in the amount of 
$1963.67 on the date of closing, although he has never presented 
any invoice to justify this payment.  The remaining $50,000 was 
retained in Attorney Krombach's general trust account until 
No. 
2004AP60-D   
 
8 
 
August 13, 1999, when the funds were transferred to a separate 
money market trust account controlled by Attorney Krombach. 
¶16 Following 
the establishment 
of the 
money 
market 
account, Attorney Krombach engaged in a series of improper 
transactions.  On August 13, 1999, he wrote a $1000 check to 
himself out of the money market account.  Although this payment 
was allegedly for legal fees, Attorney Krombach could produce no 
documentation to show that he was owed outstanding fees anywhere 
near this amount.  On August 20, 1999, Attorney Krombach wrote 
another check to himself in the amount of $2000.  Although the 
$1000 and $2000 amounts were later credited toward fees for 
services provided to the LLC, Attorney Krombach's invoices show 
that those services were provided almost entirely after the date 
of the checks. 
¶17 On September 14, 1999, Attorney Krombach wrote another 
check drawn on the money market account for $2000.  Although 
Attorney Krombach's subsequent accounting claimed that this was 
for "JMR cash," the referee found that no cash was ever given to 
John M. at this time.  Attorney Krombach's time entries on his 
invoice indicate that John M. requested a personal loan from the 
remaining LLC funds at this time, but that Attorney Krombach 
denied his request.  Attorney Krombach's invoice of October 6, 
1999, shows that Attorney Krombach applied this payment toward 
fees allegedly relating to the sale of the Cedarburg property, 
although the sale had been completed more than two months 
earlier and the invoice showed a balance due of only $212.80.  
No. 
2004AP60-D   
 
9 
 
The resulting credit balance of $1787.20 was never repaid or 
applied to the LLC's account. 
¶18 On October 8, 1999, Attorney Krombach transferred 
$5000 from the LLC's money market account to his trust account 
and wrote a check to himself in the amount of $2000.  Attorney 
Krombach's check stub falsely shows that this check was voided.  
There is no invoice that supports the fees and it never did 
appear on any subsequent billing statement.  Attorney Krombach 
claimed that the $2000 payment related to a personal legal 
matter for John M. regarding the potential creation of a charter 
school (the "school matter").  Attorney Krombach, however, 
produced no invoice concerning the school matter that showed 
that he was justified in taking this payment.  Moreover, by this 
time it was crystal clear to Attorney Krombach that he was not 
authorized to use the LLC funds to pay John M.'s personal legal 
fees.  Finally, the documentation provided by Attorney Krombach 
shows that he collected nearly $9000 in legal fees for the 
school matter, although he submitted invoices that totaled less 
than $2500. 
¶19 On October 18, 1999, Attorney Krombach wrote a check 
to John M. for $9500 out of the LLC account.  Although it 
appears that John M. endorsed the check and retained the money, 
Attorney Krombach again misappropriated the LLC funds because he 
admittedly had no authority to disburse LLC funds to John M. 
¶20 On November 18, 1999, Attorney Krombach wrote a $1500 
check to himself out of the LLC funds, which he then converted 
to cash.  Attorney Krombach asserted to the OLR that he retained 
No. 
2004AP60-D   
 
10 
 
$300 for legal fees and gave the rest to John M.  Attorney 
Krombach has no receipt to prove that he gave the cash to John 
M.  Moreover, distribution of LLC funds to John M. was not 
authorized and distributing trust funds in the form of cash is 
improper.  Just as important is the fact that Attorney Krombach 
has produced no invoice that supported the $300 payment to 
himself. 
¶21 On December 15 and 30, 1999, Attorney Krombach wrote 
himself checks for $2500 and $1500, respectively.  Again, he 
claims to have given $2000 in cash to John M., but has no 
receipts to prove that this occurred on either occasion.  
Attorney Krombach also has no invoices showing that either John 
M. or the LLC owed him $2000 in fees at this time.  He has no 
documentation showing that these amounts were credited against 
any subsequent fees. 
¶22 The check dated December 30, 1999, raises another 
issue.  The copy of the check received from the bank contains 
the notation "fees" on the memo line.  On the copy that Attorney 
Krombach produced to the OLR during its investigation, Attorney 
Krombach added the words "& cash for JMR."   
¶23 With respect to the time period described above, 
Attorney Krombach repeatedly asserted that he was acting with 
the consent of John M., who Attorney Krombach believed was the 
person that should have been in charge.  For instance, when 
asked at one point why he gave LLC funds to John M., Attorney 
Krombach responded that he had done so "[b]ecause it was his 
money, it was his land, and because he asked me to."  As the 
No. 
2004AP60-D   
 
11 
 
referee notes, Attorney Krombach, as an experienced attorney, 
knew that John M. had transferred the land to the LLC, which 
meant that the loan and sale proceeds were the LLC's property.  
Attorney Krombach knew that the required number of LLC members 
did not authorize such payments to John M.  Moreover, there is 
testimony that John M. was an active alcoholic for much of this 
time period.  Thus, Attorney Krombach's reliance on his lone 
consent is certainly misplaced.  In addition, giving large 
amounts of cash to an active alcoholic without disclosing that 
fact to his sons and fellow LLC members is certainly not a wise 
course of action.  In response, Attorney Krombach claimed that 
he was unaware of John M.'s alcoholism, which the referee found 
to be simply unbelievable. 
¶24 John M. died on January 11, 2000.  John P. informed 
Attorney Krombach of that fact on the same day.  At that point, 
just six months after the sale of the Cedarburg property, the 
$50,000 in sales proceeds under Attorney Krombach's control had 
dwindled to $12,700. 
¶25 On January 14, 2000, Attorney Krombach wrote himself a 
check out of the LLC funds in the amount of $5000.  He claimed 
to the OLR that he retained $1500 for legal fees and gave $3500 
in cash to John M.  To support this assertion, Attorney Krombach 
backdated both his accounting to the OLR and his check stubs to 
show that the payment had been made on January 3, 2000, rather 
than on January 14, 2000.  The bank records demonstrate that 
this was false.  Moreover, at the time the check was negotiated, 
No. 
2004AP60-D   
 
12 
 
the memo line was blank.  On the copy that Attorney Krombach 
gave to the OLR, he had added the words "fees & cash."   
¶26 The referee found that Attorney Krombach fraudulently 
altered the check and his records in an attempt to hide the fact 
that he could not have given cash to John M. three days after 
his death.  As the referee notes, Attorney Krombach's post-hoc 
alteration of these documents casts doubt on all of the other 
instances in which Attorney Krombach claims that he gave cash to 
John M.  Moreover, even if Attorney Krombach's story had been 
true, giving cash to John M. out of the LLC funds was contrary 
to the explicit directions of the LLC. 
¶27 On February 15, 2000, Attorney Krombach wrote another 
check to himself, this time in the amount of $2000.  While the 
accounting that Attorney Krombach gave to the OLR said that this 
was payment for legal fees, the bank's copy of the check 
indicated that it was for a "loan" to Attorney Krombach.  
Attorney Krombach altered the copy of the check he gave to the 
OLR by putting a question mark after "loan," apparently in an 
attempt to make it seem that the payment could have been for 
fees.  Attorney Krombach produced no invoice or billing 
statement showing either (1) that this amount was owed by John 
M. or the LLC at the time or (2) that this amount was credited 
against subsequent fees. 
¶28 On March 4, 2000, Attorney Krombach wrote himself yet 
another check in the amount of $3000.  Attorney Krombach again 
altered the copy of the check that he produced to the OLR to 
indicate that this payment related to the school matter.  There 
No. 
2004AP60-D   
 
13 
 
is no invoice, however, that shows any fees due on that matter 
or any subsequent billing statement showing that it was ever 
credited against any account.  Moreover, Attorney Krombach's own 
computer account history shows that he received no fees on the 
school matter after December 30, 1999. 
¶29 On March 27, 2000, Attorney Krombach wrote a check for 
$1000 to himself.  The copy of the check provided to the OLR was 
again altered to reflect that the money related to fees on the 
school matter.  The check stub contained notations that the 
payment could have been either for a loan to Attorney Krombach 
or for fees on the school matter.  No loan to Attorney Krombach 
was ever authorized and it could not have related to fees earned 
on the school matter. 
¶30 On April 15, 2000, Attorney Krombach wrote yet one 
more check from the LLC funds in the amount of $1700, leaving 
only $2.91 in the LLC's money market account.  Attorney Krombach 
asserted that this amount was in payment of several charges on 
an invoice of April 14, 2000.  One charged $625 to John M.'s 
estate, although it was never sent to John M.'s personal 
representative and Attorney Krombach was never authorized to 
provide legal services to the estate.  The invoice also included 
charges for Attorney Krombach's attendance at John M.'s funeral 
and for sending flowers.  Another shows a fee of $470.54 for a 
real estate matter that had occurred many years before.  The 
invoice also included an unspecified charge of $846.47 to the 
LLC, but did not identify the nature of the work performed.  The 
No. 
2004AP60-D   
 
14 
 
referee noted that the LLC was not engaged in any activity at 
this time that would have required legal services.   
¶31 Finally, Attorney Krombach included a charge of $6126 
on the 
invoice of April 
14, 2000, 
which 
represented a 
retroactive increase in Attorney Krombach's hourly rate from 
$125 to $150 per hour.  Although Attorney Krombach claims that 
John M. had previously authorized this retroactive rate change, 
the referee found this assertion to be incredible.  Moreover, 
even if John M. had in fact made such a statement, John M. had 
no authority, by himself, to agree to a retroactive rate change 
on behalf of the LLC. 
¶32 As noted above, Attorney Krombach was never retained 
by John M.'s estate to perform any legal services.  Instead, 
John P. hired Attorney Judith Bostetter to handle his father's 
estate.  When Attorney Bostetter on two occasions wrote to 
Attorney 
Krombach 
inquiring 
about 
estate 
assets 
in 
his 
possession, he did not reply.  Finally, several months later, 
Attorney Krombach telephoned Attorney Bostetter and told her 
that there was "no money left."  Indeed, he claimed that the 
estate owed him money, but that he was willing to forgive that 
debt.  Although John P. and Attorney Bostetter asked for an 
accounting, Attorney Krombach never provided one, causing John 
M.'s estate to remain open. 
¶33 Based upon Attorney Krombach's stipulation and the 
factual findings detailed above, the referee concluded that 
Attorney Krombach had engaged in professional misconduct as 
No. 
2004AP60-D   
 
15 
 
alleged in each of the five counts contained in the OLR's 
complaint.   
¶34 The 
referee 
concluded 
that 
Attorney 
Krombach's 
multiple disbursements to himself of trust account funds, 
without the prior knowledge or consent of the respective 
clients, constituted conversion of client funds to Attorney 
Krombach's own personal use.  Moreover, Attorney Krombach failed 
to disclose and pay to John M.'s estate the trust account funds 
that Attorney Krombach held at the time of John M.'s death, but 
instead took them for his personal use.  As alleged in Count I, 
these actions by Attorney Krombach constituted conduct involving 
dishonesty, fraud, deceit or misrepresentation in violation of 
SCR 20:8.4(c). 
¶35 The referee concluded that Attorney Krombach had 
violated former SCR 20:1.15(d) by withdrawing funds from his 
client trust account for alleged legal fees without the clients' 
prior knowledge or consent. 
¶36 The referee further found that Attorney Krombach had 
made false and misleading representations to the OLR, had 
provided inaccurate accountings, and had altered copies of 
canceled checks that he produced to the OLR.  The referee 
concluded that Attorney Krombach's willful conduct of failing to 
provide relevant and full information to the OLR and his 
intentional misrepresentations to the OLR violated SCR 22.03(6). 
¶37 As alleged in Count IV, the referee determined that by 
failing to provide accountings as requested by John P. and by 
the attorney for John M.'s estate, Attorney Krombach had failed 
No. 
2004AP60-D   
 
16 
 
to render a full accounting of trust funds upon request of the 
client or third person in violation of former SCR 20:1.15(b). 
¶38 Finally, 
the 
referee 
concluded 
that 
Attorney 
Krombach's multiple disbursements of cash from trust account 
funds violated former SCR 20:1.15(e)(ii), which requires that 
all trust account disbursements be made by check. 
¶39 The referee noted that, even in cases where an 
attorney has stolen funds from a client, the assessment of the 
level of discipline to be imposed requires an analysis of the 
particular facts of the case.  In conducting this assessment, 
however, it is important to note that clients that are 
vulnerable especially require protection from those who abuse 
their professional position to enrich themselves.  See In re 
Disciplinary Proceedings Against Gilbert, 227 Wis. 2d 444, 474, 
595 N.W.2d 715 (1999). 
¶40 One area of major concern for the referee was Attorney 
Krombach's 
intent. 
 
Although 
Attorney 
Krombach 
acted 
in 
violation of former SCR 20:1.15 in disbursing LLC funds to 
himself prior to the property sale in July 1999, the referee 
concluded 
that 
Attorney 
Krombach 
was 
generally 
able 
to 
substantiate that the monies he paid to himself during that time 
period were for fees that Attorney Krombach actually earned for 
work on behalf of either the LLC or John M. personally.  
Moreover, although the referee concluded that neither John P. 
nor Michael had ever clearly "signed off" on an accounting for 
these funds, there was not clear and satisfactory evidence that 
would support a finding that a majority of the LLC members never 
No. 
2004AP60-D   
 
17 
 
acquiesced in these payments.  Thus, while Attorney Krombach had 
failed to treat the funds as trust account funds until an 
agreed-upon severance of his clients' interests, in violation of 
former SCR 20:1.15(d), it does not appear that he stole these 
pre-sale funds without his clients' knowledge. 
¶41 The referee reached an entirely different conclusion 
concerning Attorney Krombach's intent after the July 1999 sale 
of the Cedarburg property.  From this point forward the referee 
concluded that Attorney Krombach in many instances was simply 
stealing the LLC's money.  Attorney Krombach was unable to 
produce invoices or other documentation to justify his payments 
to himself or his purported disbursements to John M.  Moreover, 
Attorney Krombach's alteration of documents and his "shifting 
explanations" for these payments indicate that Attorney Krombach 
was simply converting his clients' money for his own personal 
needs. 
¶42 The 
referee 
concluded 
that 
Attorney 
Krombach's 
reliance on alleged oral authorizations by John M. was further 
evidence of Attorney Krombach's wrongful intent.  By this time 
John M. was suffering from active alcoholism, such that his son 
was appointed to act as his guardian.  Thus, Attorney Krombach's 
own statements, even if true, would indicate that he was 
manipulating a vulnerable client to cover his taking of funds. 
¶43 Furthermore, the referee notes that even Attorney 
Krombach's excuse of oral consent from John M. cannot cover the 
taking of nearly $12,700 that occurred after John M.'s death.  
Instead, Attorney Krombach attempted to hide what he had done by 
No. 
2004AP60-D   
 
18 
 
altering documents and making up the incredible story that John 
M. had agreed to a retroactive increase in Attorney Krombach's 
hourly rate.  In sum, as the referee noted, "what may have begun 
as sloppiness and poor judgment eventually became outright 
theft."   
¶44 In addition to the items described above (manipulation 
of a vulnerable client and alteration of documents to mislead 
the OLR), the referee found other aggravating factors that 
support a more serious level of discipline.  The amount of money 
taken by Attorney Krombach was substantial, especially in light 
of the limited finances of his clients.  Moreover, Attorney 
Krombach, despite expressing an intent to reimburse what he 
took, has not made any attempt to pay back anything.  The 
referee found that, although Attorney Krombach has stipulated to 
wrongdoing 
and 
has 
admitted 
regret, 
he 
still 
has 
not 
demonstrated an understanding that what he did was steal from 
his clients.  Although he has no documentation to support many 
of the payments to himself, he continued to express the idea 
that his mistakes were due to sloppy practices, including his 
practice to "round off" his legal fees.  Moreover, his 
restitution brief to the referee seemed to indicate that, at the 
end of the day, he owed his clients nothing.  This does not 
demonstrate an acceptance of responsibility. 
¶45 On the mitigating side, the referee found that, as of 
the date of his report, Attorney Krombach had received only one 
private reprimand during a fairly lengthy career.  Attorney 
Krombach's history with John M., the informal, family nature of 
No. 
2004AP60-D   
 
19 
 
the business venture and the apparent acquiescence of John P. 
and Michael in the manner of paying John M.'s personal legal 
fees out of LLC funds may mitigate to some degree Attorney 
Krombach's disbursements of trust account funds prior to the 
property sale in July 1999.  Those factors cease to explain 
Attorney Krombach's conduct after the sale.  Finally, the 
referee 
noted 
that 
Attorney 
Krombach 
had 
been 
receiving 
treatment for depression from 1997 through 1999 and from May 
2003 through the present.  Nonetheless, the referee refused to 
consider this as a mitigating factor because Attorney Krombach 
produced no evidence that the depression caused his misconduct. 
¶46 After reviewing all of the relevant factors, the 
referee concluded that even a lengthy suspension would not do 
justice to the theft of client funds from a vulnerable man.  In 
the opinion of the referee, revocation is required in light of 
Attorney Krombach's falsifying records produced to the OLR, his 
lying about his knowledge of John M.'s alcoholism, and his 
brazen theft of money from a vulnerable man of modest means. 
¶47 As noted above, subsequent to the submission of the 
parties' stipulation and the evidentiary hearing, the referee 
invited the parties to submit memoranda concerning the proper 
amount of restitution to be paid.  Attorney Krombach submitted a 
restitution memorandum that admitted restitution was proper only 
as to the $12,700 taken after John M.'s death.  Even as to this 
amount, Attorney Krombach claimed that it was subject to an 
offset for his claims against John M.'s estate.  Needless to 
say, 
the 
referee 
found 
Attorney 
Krombach's 
restitution 
No. 
2004AP60-D   
 
20 
 
memorandum to be unhelpful.  The memorandum failed to tie 
billings and receipts and to justify the fees that Attorney 
Krombach allegedly claims he was due.  In the end, the referee 
simply found that he could draw no conclusions from Attorney 
Krombach's restitution memorandum. 
¶48 Based on his own analysis, the referee concluded, as 
the OLR had recommended, that Attorney Krombach should be 
required to pay restitution for amounts that he took that were 
not justified by an invoice for legal fees or a receipt from 
John M.  This had the effect of eliminating from the restitution 
amount a large number of payments that Attorney Krombach had 
made to himself prior to the July 1999 sale even though those 
payments had been made from LLC funds without authorization by 
the LLC.  To reach a restitution total, the referee analyzed the 
bills actually submitted by Attorney Krombach and compared them 
to the payments he received.   
¶49 The referee concluded that the OLR's schedule of 
improper payments closely followed his conclusions with a few 
modifications.  The OLR's schedule called for restitution in the 
amount of $33,632.25.  The referee's modifications eliminated 
three payments, although still violations of former SCR 20:1.15, 
because Attorney Krombach had ultimately produced invoices 
showing legal services against which the payments were credited.  
The three eliminated payments reduced the restitution amount by 
$7993.74.  The referee, however, also added a restitution amount 
of $1496.54 not shown on the OLR's schedule because that amount 
was never supported by an invoice that showed what work had been 
No. 
2004AP60-D   
 
21 
 
done to earn it.  These adjustments resulted in a recommended 
restitution amount of $27,135.05. 
¶50 Attorney Krombach has appealed from the referee's 
recommendation that his license to practice law be revoked.  
Before we turn to his arguments on appeal, we note that Attorney 
Krombach has not appealed any of the referee's factual findings 
or conclusions of law.  He also has not appealed from the 
referee's restitution recommendation.  Consequently, after our 
review of the matter, we adopt the referee's findings of fact 
and conclusions of law as to Attorney Krombach's misconduct.  
See In re Disciplinary Proceedings Against Sosnay, 209 Wis. 2d 
241, 243, 562 N.W.2d 137 (1997) (referee's findings of fact to 
be affirmed unless clearly erroneous); In re Disciplinary 
Proceedings Against Carroll, 2001 WI 130, ¶29, 248 Wis. 2d 662, 
636 N.W.2d 718 (referee's conclusions of law subject to de novo 
review).  We also agree that Attorney Krombach should pay 
restitution in the amount of $27,135.05.  
¶51 Although Krombach does not argue on appeal that any of 
the referee's factual findings are clearly erroneous, he 
nonetheless sets forth from his point of view a factual 
recitation of the history of his representation of John M. and 
the LLC.  His recitation continues to give the appearance that 
his conduct was due simply to relying on the informal manner in 
which he and John M. allegedly operated.   
¶52 Many of the assertions in his factual statement, 
however, were expressly rejected by the referee.  For example, 
Attorney Krombach claims that periodic accountings were provided 
No. 
2004AP60-D   
 
22 
 
to the LLC members, which were "satisfactory for their purposes 
at the time."  Attorney Krombach also asserts that with respect 
to disbursements after the July 1999 property sale, "[v]erbal 
authorization was obtained comparable to written authorization 
applicable to the AVCO funds."  This ignores the fact that 
Attorney Krombach did not have written authorization on most 
occasions to disburse trust account funds from the AVCO loan to 
himself prior to the sale and that John M. had no authority, by 
himself, to allow disbursements after the sale.  In addition, 
although the referee found his claim to be false, Attorney 
Krombach 
continues 
to 
assert 
that 
John 
M. 
authorized 
a 
retroactive change in Attorney Krombach's billing rates that he 
did not effectuate until months after John M.'s death. 
¶53 Ordinarily, since Attorney Krombach is not challenging 
the referee's factual findings, we would ignore his factual 
recitation.  We feel constrained to discuss it in this case, 
however, because it bears on the level of discipline to be 
imposed.  Attorney Krombach's statements show that he still 
refuses to accept that what he did was wrong.  Despite 
overwhelming evidence and his own stipulation to ethical 
violations, he continues to make excuses for his conduct. 
¶54 The primary thrust of Attorney Krombach's argument is 
that the referee's recommendation of revocation is simply too 
severe.  Although he provides no citations to the record, 
Attorney Krombach challenges a number of statements in the 
referee's report and claims that the referee incorrectly viewed 
certain aspects of his case in reaching his recommendation.   
No. 
2004AP60-D   
 
23 
 
¶55 Attorney Krombach first alleges that the referee 
improperly 
ignored 
mitigating 
factors. 
 Attorney Krombach 
asserts that he chose to terminate his legal counsel allegedly 
in order to conserve funds for payment of restitution.  He 
claims that the referee, however, imputed a negative connotation 
to the termination of his attorney's services.  Attorney 
Krombach also asserts that he "eventually" cooperated with the 
OLR and produced, allegedly at a significant expense, voluminous 
records extending all the way back to 1993.  He blames the OLR's 
staff for seeking such wide-ranging documents, viewing the 
allegations in the complaint as related only to the July 1999 
property sale.  Attorney Krombach further takes the referee to 
task for ignoring the contents of the report submitted by 
Attorney Krombach's therapist and instead focusing on the fact 
that the report showed that Attorney Krombach had not admitted 
wrongdoing even to his therapist.  Finally, Attorney Krombach 
asserts that he has in fact personally expressed remorse and 
contrition. 
¶56 We have reviewed Attorney Krombach's arguments in this 
regard and find them to be without substantial merit.  The 
referee's comments were reasonable in light of the facts of the 
case.  Attorney Krombach has not challenged those factual 
findings.  The referee properly considered many factors in his 
reaching his recommendation.  We do not find fault with his 
analysis.  Moreover, it is the responsibility of this court to 
impose whatever sanction it deems appropriate regardless of the 
No. 
2004AP60-D   
 
24 
 
referee's recommendation.  See In re Disciplinary Proceedings 
Against Ray, 2004 WI 45, ¶5, 270 Wis. 2d 651, 678 N.W.2d 246. 
¶57 In addition to his criticism of the referee and the 
OLR, Attorney Krombach cites to several cases that he claims 
support his request for a lesser sanction.  The cases he cites, 
however, are readily distinguishable from the misconduct at 
issue here. 
¶58 First, Attorney Krombach points to In re Disciplinary 
Proceedings Against Marine, 82 Wis. 2d 602, 611-12, 264 N.W.2d 
285 (1978), in which the court imposed a six-month suspension.  
That case, however, involved a single instance where the 
attorney had transferred $2500 in trust funds to himself to pay 
for legal fees.  Although the court found that the total fee had 
been excessive, it was clear that the attorney had performed a 
substantial amount of work to earn the great majority of the 
total fee.  This scenario has no relation to Attorney Krombach's 
longstanding pattern of theft from a vulnerable client. 
¶59 Attorney Krombach's reliance on In re Disciplinary 
Proceedings Against Theobald, 2004 WI 59, 271 Wis. 2d 690, 679 
N.W.2d 
804, 
is 
equally 
misplaced. 
 
Attorney 
Theobald's 
misconduct was light years away from the referee's findings 
here.  Attorney Theobald's misconduct consisted of a number of 
instances of failing to inform clients of the status of their 
matters, improperly delaying the return of a client's file, and 
failing to cooperate promptly with the OLR's investigation.  In 
comparison, Attorney Krombach's misconduct includes theft of 
No. 
2004AP60-D   
 
25 
 
client funds for personal gain and altering documents produced 
to the OLR in order to hide his theft. 
¶60 The 
ninety-day 
suspension 
of 
In 
re 
Disciplinary 
Proceedings Against Schuster, 2003 WI 135, 266 Wis. 2d 36, 670 
N.W.2d 545, rested on misconduct significantly less egregious 
than Attorney Krombach's actions.  In that case, Attorney 
Schuster stipulated that she commingled personal funds with 
client funds, wrote checks on her client trust account when she 
did not have sufficient funds on deposit to cover them, and 
wrote checks payable to herself or to "cash" without determining 
the clients to whom the funds were attributable.  Id., ¶5.  She 
also failed to maintain proper trust account records, improperly 
withdrew from a representation in a manner that prejudiced the 
client's interests, and made misrepresentations to the OLR.  
Id., ¶¶5, 17.  Unlike Attorney Krombach's conduct, however, 
there is no indication that Attorney Schuster profited from her 
wrongdoing.  She also rectified matters when the OLR brought 
them to her attention (although in a belated fashion).  Here, 
Attorney Krombach's conduct consisted of many instances of 
conversion of client funds over a long period of time, involved 
the taking of nearly $30,000 from an alcoholic client, and has 
not resulted in any attempt to repay the misappropriated funds. 
¶61 The facts of In re Disciplinary Proceedings Against 
Webster, 217 Wis. 2d 371, 577 N.W.2d 21 (1998) (two-year 
suspension), are also different from the present case.  In that 
case, Attorney Webster participated in concealing a debtor's 
property from a bankruptcy trustee and was found to have given 
No. 
2004AP60-D   
 
26 
 
false testimony during his criminal trial.  Id. at 374-75.  The 
OLR stipulated to a number of mitigating factors in Attorney 
Webster's favor:  the client's creditors had not suffered due to 
the bankruptcy fraud, Webster did not gain any personal benefit, 
Webster had a history of helping civic and charitable groups, 
and he had fully cooperated with the investigation of the Board 
of Attorneys Professional Responsibility.  Id. at 376.  Again, 
the factual differences include Attorney Krombach's theft of 
funds for his personal use, the substantial harm to his clients, 
and his misrepresentations to the OLR. 
¶62 Although each case turns on its specific facts, in 
many instances we have revoked the licenses of attorneys that 
have converted client funds to their own personal use.  See, 
e.g., In re Disciplinary Proceedings Against O'Byrne, 2002 WI 
123, 257 Wis. 2d 8, 653 N.W.2d 111 (revocation imposed where 
attorney converted nearly $34,000 of client funds and altered 
checks produced to the OLR); In re Disciplinary Proceedings 
Against Hinnawi, 202 Wis. 2d 113, 549 N.W.2d 245 (1996) 
(revocation imposed where attorney converted substantial client 
funds while serving as personal representative and attorney for 
estate); In re Disciplinary Proceedings Against Wright, 180 
Wis. 2d 492, 509 N.W.2d 290 (1994) (attorney's use of her 
professional position to take client money for herself warranted 
license 
revocation, 
even 
where 
attorney 
had 
no 
prior 
disciplinary history). 
¶63 Given 
Attorney 
Krombach's 
extended 
pattern 
of 
converting large sums of the LLC's money for his own personal 
No. 
2004AP60-D   
 
27 
 
use, his alteration of documents in an attempt to hide his 
theft, his taking advantage of a vulnerable client, and his 
continued failure to demonstrate acceptance of responsibility 
for 
his 
wrongful 
actions, 
we 
agree 
with 
the 
referee's 
recommendation that Attorney Krombach's license to practice law 
must be revoked.  We further agree that Attorney Krombach should 
be ordered to pay restitution in the amount of $27,135.05 and 
that he should pay the costs of this proceeding, which were 
$10,193.18 as of October 12, 2005. 
¶64 IT IS ORDERED that the license of Charles K. Krombach 
to practice law in Wisconsin is revoked effective the date of 
this order. 
¶65 IT IS FURTHER ORDERED that Charles K. Krombach comply 
with the provisions of SCR 22.26 concerning the duties of a 
person whose license to practice law in Wisconsin has been 
revoked. 
¶66 IT IS FURTHER ORDERED that within 60 days of the date 
of this order, Charles K. Krombach make restitution to the LLC 
or its members in the amount of $27,135.05. 
¶67 IT IS FURTHER ORDERED that within 60 days of the date 
of this order Charles K. Krombach pay to the Office of Lawyer 
Regulation the costs of this proceeding. 
¶68 IT IS FURTHER ORDERED that restitution to the LLC or 
its members is to be paid prior to paying costs to the Office of 
Lawyer Regulation. 
 
No. 
2004AP60-D   
 
 
 
1