Title: Cincinnati Bar Assn. v. Kellogg

State: ohio

Issuer: Ohio Supreme Court

Document:

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 
Cincinnati Bar Assn. v. Kellogg, Slip Opinion No. 2010-Ohio-3285.] 
 
 
NOTICE 
This slip opinion is subject to formal revision before it is published in 
an advance sheet of the Ohio Official Reports.  Readers are requested 
to promptly notify the Reporter of Decisions, Supreme Court of Ohio, 
65 South Front Street, Columbus, Ohio 43215, of any typographical or 
other formal errors in the opinion, in order that corrections may be 
made before the opinion is published. 
 
SLIP OPINION NO. 2010-OHIO-3285 
CINCINNATI BAR ASSN. v. KELLOGG. 
[Until this opinion appears in the Ohio Official Reports advance sheets, it 
may be cited as Cincinnati Bar Assn. v. Kellogg,  
Slip Opinion No. 2010-Ohio-3285.] 
Attorney misconduct, including money-laundering conviction — Indefinite 
suspension. 
(No. 2009-2302 — Submitted March 30, 2010 — Decided July 20, 2010.) 
ON CERTIFIED REPORT by the Board of Commissioners on Grievances and 
Discipline of the Supreme Court, No. 08-092. 
__________________ 
Per Curiam. 
{¶ 1} Respondent, Paul Joseph Kellogg of West Chester, Ohio, Attorney 
Registration No. 0062303, was admitted to the practice of law in Ohio in 1993. 
{¶ 2} In December 2008, relator, Cincinnati Bar Association, filed a 
complaint charging respondent with multiple violations of the Code of 
Professional Responsibility arising from his August 2008 conviction in the United 
States District Court for the Southern District of Ohio on two counts of money 
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laundering, two counts of conspiracy to commit money laundering, one count of 
conspiracy to obstruct proceedings before the United States Federal Trade 
Commission (“FTC”), and one count of conspiracy to obstruct proceedings before 
the United States Food and Drug Administration (“FDA”). 
{¶ 3} In May 2009, a three-member panel of the Board of 
Commissioners on Grievances and Discipline conducted a hearing, wherein it 
heard testimony from respondent and two character witnesses, and admitted 18 
exhibits, including several stipulations of the parties.  At the hearing, relator 
suggested that the appropriate sanction for respondent’s misconduct is 
disbarment, while respondent asked the panel to recommend a two-year 
suspension with either a partial stay, or credit for his voluntary withdrawal from 
the practice of law upon his conviction. 
{¶ 4} In July 2009, the panel approved a proposed agreed order 
permitting relator to amend its complaint to allege that respondent’s conduct 
violated either the Ohio Code of Professional Responsibility or the Ohio Rules of 
Professional Conduct.  The original complaint alleged violations of only the Rules 
of Professional Conduct, but the conduct occurred prior to the effective date of 
those rules. 
{¶ 5} After considering all the evidence, the panel made findings of fact, 
including a finding that respondent’s misconduct occurred before February 1, 
2007, the effective date of the Rules of Professional Conduct.  The panel 
concluded that respondent had committed six violations of the Code of 
Professional Responsibility and recommended that respondent be suspended from 
the practice of law for two years, with the final six months of the suspension 
stayed on the condition that he comply with the requirements of his supervised 
release. 
{¶ 6} On December 14, 2009, we imposed an interim felony suspension 
on respondent’s license pursuant to Gov.Bar R. V(5)(A)(4).  In re Kellogg, 123 
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Ohio St.3d 1518, 2009-Ohio-6503, 918 N.E.2d 163.  And on December 22, 2009, 
the board adopted the panel report in its entirety and recommended that 
respondent’s suspension begin to run on January 15, 2009, the date that he began 
serving his prison sentence. 
{¶ 7} Relator objects to the board’s recommended sanction, arguing that 
pursuant to our precedent, respondent’s felony convictions for money laundering 
warrant permanent disbarment.  Respondent urges us to adopt the board’s 
recommended sanction, which he contends reflects the panel’s assessment of the 
unique facts and circumstances of his case.  However, we reject these 
recommendations and find that the appropriate sanction for respondent’s 
misconduct is an indefinite suspension. 
Misconduct 
{¶ 8} From the time he was admitted to practice until 2003, respondent’s 
practice consisted mainly of estate-planning and small-business matters.  In 
August 2003, he accepted a position as general counsel for a rapidly growing 
nutraceutical company owned by his childhood friend, Steve Warshak. 
{¶ 9} In late 2003 and early 2004, numerous government agencies, 
including the FTC, the FDA, and attorneys general from 17 states, began to 
investigate the company’s operations.  And in March 2004, the first of six class-
actions suits was filed against the company.  The primary focus of these 
investigations, other than the FDA’s,  and lawsuits was the company’s practice of 
enrolling its customers into a “continuity program,” under which the company 
automatically shipped and charged customers for products that they had not 
ordered. 
{¶ 10} As a result of the FTC and FDA investigations, a federal grand 
jury indicted respondent on nine felony counts.  In February 2008, a jury found 
him guilty of two counts of conspiracy to commit money laundering, two counts 
of money laundering, and one count of conspiracy to obstruct proceedings before 
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the FTC for his role in a scheme to protect Warshak’s assets from the FTC and 
future legal claims by transferring $14 million into two separate trusts.  Although 
outside counsel prepared the trust documents, respondent reviewed them to ensure 
that they complied with Ohio law and served as the trustee for both trusts.  The 
jury also found respondent guilty of a single count of conspiracy to obstruct 
proceedings before the FDA, for instigating the removal of a misbranded1 
supplement from the company’s warehouse after learning that an FDA inspection 
of the facility was imminent.  The jury acquitted respondent of the remaining 
counts. 
{¶ 11} Despite a guideline sentencing range of 235 to 293 months, and a 
probation office’s recommendation of a 188-month sentence, the trial court 
sentenced respondent to one year and one day in federal prison, making him 
eligible for a 15 percent reduction in his prison time.  He was released to a 
halfway house in August 2009, and upon the expiration of the remainder of his 
prison term in November 2009, began serving a three-year period of supervised 
release. 
{¶ 12} Based upon these findings, the board concluded that respondent’s 
conduct, all of which occurred prior to February 1, 2007, violated DR 1-
102(A)(3) (prohibiting a lawyer from engaging in illegal conduct involving moral 
turpitude), 1-102(A)(4) (prohibiting a lawyer from engaging in conduct involving 
dishonesty, fraud, deceit, or misrepresentation), 1-102(A)(5) (prohibiting a lawyer 
from engaging in conduct prejudicial to the administration of justice), 7-
102(A)(7) (prohibiting a lawyer from counseling or assisting his client in conduct 
that the lawyer knows to be illegal or fraudulent), 7-102(A)(8) (prohibiting a 
lawyer from knowingly engaging in illegal conduct), and 7-109(A) (prohibiting a 
                                                 
1.  The misbranded product claimed to contain ingredients that it did not.  At the criminal trial, a 
warehouse employee testified that he had repackaged the product, originally in boxes that 
identified it as promoting prostate health, into boxes that identified it as promoting heart health.  
The repackaged product was then put into the company’s stock to be sold to customers.   
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lawyer from suppressing any evidence that he or his client has a legal obligation 
to reveal or produce).  We accept these findings of misconduct. 
Sanction 
{¶ 13} When imposing sanctions for attorney misconduct, we consider 
relevant factors, including the ethical duties that the lawyer violated and the 
sanctions imposed in similar cases.  Stark Cty. Bar Assn. v. Buttacavoli, 96 Ohio 
St.3d 424, 2002-Ohio-4743, 775 N.E.2d 818, ¶ 16.  In making a final 
determination, we also weigh evidence of the aggravating and mitigating factors 
listed in Section 10(B) of the Rules and Regulations Governing Procedure on 
Complaints and Hearings Before the Board of Commissioners on Grievances and 
Discipline (“BCGD Proc.Reg.”).  Disciplinary Counsel v. Broeren, 115 Ohio 
St.3d 473, 2007-Ohio-5251, 875 N.E.2d 935, ¶ 21.  Because each disciplinary 
case involves unique facts and circumstances, we are not limited to the factors 
specified in the rule and may take into account “all relevant factors” in 
determining which sanction to impose. BCGD Proc.Reg. 10(B). 
{¶ 14} Here, respondent both conspired to commit and committed money 
laundering by assisting in the creation of two trusts designed to protect $14 
million of Warshak’s assets—the ill-begotten gains of the company’s “continuity 
program”—from the FTC and future lawsuits by its customers.  By instructing an 
employee to “get rid of” a misbranded product housed in the company’s 
warehouse, he also set in motion a scheme to conceal evidence of the company’s 
misdeeds from federal investigators.  This conduct involving dishonesty and 
moral turpitude violated the very laws that respondent took an oath to uphold. 
{¶ 15} As for aggravating factors, the board determined that respondent 
acted with a dishonest or selfish motive, although he apparently did not benefit 
financially from his actions, and that he engaged in multiple offenses of 
misconduct.  BCGD Proc.Reg. 10(B)(1)(b) and (d).  And in mitigation, the board 
found that respondent has no prior disciplinary record, has made some efforts to 
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rectify the consequences of his misconduct, has been cooperative in the 
disciplinary proceedings, has established that he is a person of good character, 
despite his criminal convictions, and has been penalized by the criminal justice 
system for his misconduct.  BCGD Proc.Reg. 10(B)(2)(a), (c), (d), (e), and (f). 
{¶ 16} The board also considered that respondent has accepted 
responsibility for his actions and has expressed remorse.  It noted that, with the 
federal court’s blessing, respondent continued to work for the company, assisting 
the bankruptcy trustee in his efforts to sell the company as a going concern, and 
that he immediately ceased practicing law upon his sentencing.  Additionally, it 
appears that the board considered respondent’s leukemia, which was diagnosed 
near the time of his misconduct, to be a mitigating factor. 
{¶ 17} Weighing these factors, the board recommended that we impose a 
two-year suspension, with six months stayed, beginning on January 15, 2009, the 
date that respondent began serving his prison sentence.  While we may defer to 
the expertise of the panel or board, accepting their findings of misconduct or their 
recommended sanctions for misconduct, as the ultimate arbiter of misconduct and 
sanctions in disciplinary cases, we are not required to do so.  Disciplinary 
Counsel v. Kelly, 121 Ohio St.3d 39, 2009-Ohio-317, 901 N.E.2d 798, ¶ 11, citing 
Cincinnati Bar Assn. v. Powers, 119 Ohio St.3d 473, 2008-Ohio-4785, 895 
N.E.2d 172, ¶ 21. 
{¶ 18} In support of its objections, relator cites a number of cases in 
which this court has permanently disbarred attorneys who engaged in money 
laundering and other comparable crimes.  But those cases do not hold that 
permanent disbarment is the presumptive sanction for money laundering.  And 
even when there is a presumption in favor of permanent disbarment, that 
presumption may be rebutted by evidence in mitigation.  See, e.g., Disciplinary 
Counsel v. Smith, 101 Ohio St.3d 27, 2003-Ohio-6623, 800 N.E.2d 1129, ¶ 9 
(“Absent any mitigating factors, disbarment is the appropriate sanction for an 
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attorney’s misappropriation of client funds”); Disciplinary Counsel v. Hunter, 106 
Ohio St.3d 418, 2005-Ohio-5411, 835 N.E.2d 707, ¶ 42 (Moyer, C.J., dissenting) 
(“[B]y definition, a presumptive sanction of disbarment does not preclude the 
application of mitigation. That is, the presumption in favor of disbarment in the 
case of theft from clients is a rebuttable one”). 
{¶ 19} The cases relator cites in favor of permanent disbarment are 
factually distinguishable from the facts presented here.  In Toledo Bar Assn. v. 
Cook, 114 Ohio St.3d 108, 2007-Ohio-3253, 868 N.E.2d 973, numerous 
aggravating factors—including respondent’s prior disciplinary record for self-
dealing, her deceptive explanations for her actions, and her failure to recognize 
how her actions violated the ethical standards for lawyers or why those standards 
even exist—weighed in favor of a more severe sanction, but there were no 
mitigating factors warranting leniency. 
{¶ 20} In Disciplinary Counsel v. Bein, 105 Ohio St.3d 62, 2004-Ohio-
7012, 822 N.E.2d 358, respondent had engaged in a pattern of criminal conduct 
over a five-year period, showed no remorse, downplayed his role in the criminal 
conspiracy, caused significant financial harm to the victims of his thefts and 
conspiracy, and was motivated by financial gain.  Moreover, relator did not learn 
about the respondent’s federal convictions until six years after the respondent was 
sentenced.  Id. at ¶ 4, 5, 8, 12.  The only mitigating factors weighing in favor of 
leniency were the respondent’s lack of a prior disciplinary record, his cooperation 
during the disciplinary process, and the imposition of other penalties in his 
criminal case.  Id. at ¶ 9.  And in Cincinnati Bar Assn. v. Banks (2002), 94 Ohio 
St.3d 428, 763 N.E.2d 1166, the respondent failed to participate in the 
disciplinary proceedings against him, and he knowingly gave materially false 
testimony on four separate occasions during his criminal trial in federal court. 
{¶ 21} Of the cases cited by relator, the related cases of Disciplinary 
Counsel v. Jones (1993), 66 Ohio St.3d 74, 609 N.E.2d 150, and Disciplinary 
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Counsel v. Williams (1993), 66 Ohio St.3d 71, 609 N.E. 149, are perhaps the most 
analogous to the case at bar.  Those respondents engaged in a conspiracy to 
launder more than $50,000 that they believed to be the proceeds from the sale of 
illegal drugs.  In permanently disbarring Jones, we acknowledged the mitigating 
evidence that he had initiated the scheme due to economic hardship and that he 
had submitted numerous letters attesting to his good character.  But we also noted 
that Jones’s active participation in the laundering scheme and his “belief that his 
conduct did not involve moral turpitude” were aggravating factors.  We also 
disbarred Williams for his participation, despite evidence that he had cooperated 
with the government, that he had accepted responsibility for his crime, and that he 
was the least culpable participant in the scheme. 
{¶ 22} But recently, in Disciplinary Counsel v. Gittinger, __ Ohio St.3d. 
__, 2010-Ohio-1830, __ N.E.2d __, we imposed an indefinite suspension on an 
attorney convicted of money laundering and conspiracy to commit bank fraud, 
based in part upon a condition in the respondent’s federal criminal sentence that 
prohibited him from practicing law during his five-year term of supervised 
release. 
{¶ 23} Here, based upon the seriousness and severity of respondent’s 
crimes, we agree that his misconduct warrants a greater sanction than the board 
has recommended.  We observe that despite federal guidelines recommending a 
sentence of 19 to 24 years in prison, respondent served only ten and one-half 
months, seven and one-half months in prison and three months in a halfway 
house, and is currently serving three years of supervised release.  If we were to 
impose the board’s recommended sanction, respondent could resume the practice 
of law more than two years before the expiration of that supervised release. 
{¶ 24} But even if we were to accept relator’s arguments that we should 
reject two factors that the board considered mitigating—namely respondent’s 
leukemia diagnosis, which relator argues should be rejected because it has not 
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been causally linked to respondent’s criminal conduct, and respondent’s 
acceptance of responsibility for his actions, which relator questions, arguing that 
respondent tried to minimize his culpability—the mitigating factors in this case 
would still weigh in favor of a sanction less severe than permanent disbarment. 
{¶ 25} In particular, we note that respondent has assisted the company’s 
bankruptcy trustee in his efforts to sell the company as a going concern, which 
preserved the jobs of more than 200 innocent employees.  Respondent also 
cooperated with a federal investigation of the legal firm that drafted the trusts and 
provided counsel to the company.  Moreover, the letters and testimony offered by 
respondent demonstrate that he is known for his honesty and integrity, despite his 
criminal convictions, and that the conduct leading to his convictions was an 
aberration, rather than the norm.  BCGD Proc.Reg. 10(B)(2)(c), (d), and (e). 
{¶ 26} Based upon the foregoing, we conclude that the appropriate 
sanction for respondent’s misconduct is an indefinite suspension.  Accordingly, 
Paul Joseph Kellogg is hereby indefinitely suspended from the practice of law in 
the state of Ohio.  Respondent may petition for reinstatement once he has 
completed the term of supervised release imposed by the federal court in his 
underlying criminal case, but not before the two-year period that respondent must 
wait before petitioning for reinstatement pursuant to Gov.Bar R. V(10)(B).  Costs 
are taxed to respondent. 
Judgment accordingly. 
 
PFEIFER, LUNDBERG STRATTON, LANZINGER, and CUPP, JJ., concur. 
 
O’CONNOR and O’DONNELL, JJ., dissent. 
 
BROWN, C.J., not participating. 
__________________ 
 
O’DONNELL, J., dissenting. 
{¶ 27} I respectfully dissent.  The appropriate sanction for this level of 
misconduct is disbarment.  As the majority opinion recounts, respondent did not 
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plead guilty but rather contested the charges and was found guilty by a jury of two 
counts of conspiracy to commit money laundering, two counts of money 
laundering involving $14 million, and conspiracy to obstruct official proceedings 
before two federal agencies, the Federal Trade Commission and the Food and 
Drug Administration. 
{¶ 28} The federal sentencing guidelines suggest a prison sentence for 
such conduct of 20 to 25 years.  Respondent served less than one year.  Despite 
mitigation, our role is to protect the public from lawyers who fail to adhere to the 
highest ethical standards, not coddle offending attorneys.  Respondent’s conduct 
is the epitome of disrespect for the system of justice he swore to uphold.  
Accordingly, I would disbar respondent for this conduct. 
O’CONNOR, J., concurs in the foregoing opinion. 
__________________ 
Susan R. Bell and Peter Rosenwald, for relator. 
Bieser, Greer & Landis, L.L.P., David C. Greer, and James P. Fleisher, for 
respondent. 
______________________