Title: Disciplinary Counsel v. Smith

State: ohio

Issuer: Ohio Supreme Court

Document:

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 
Disciplinary Counsel v. Smith, Slip Opinion No. 2011-Ohio-957.] 
 
 
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. 2011-OHIO-957 
DISCIPLINARY COUNSEL v. SMITH. 
[Until this opinion appears in the Ohio Official Reports advance sheets, it 
may be cited as Disciplinary Counsel v. Smith,  
Slip Opinion No. 2011-Ohio-957.] 
Attorneys — Misconduct — Felony conviction for tax fraud and impeding IRS 
investigation — Indefinite license suspension ordered, with credit for time 
served under interim suspension, but petition for reinstatement not 
permitted until completion of supervised release and restitution agreement 
with federal government. 
(No. 2010-1888 — Submitted January 4, 2011 — Decided March 9, 2011.) 
ON CERTIFIED REPORT by the Board of Commissioners on Grievances and 
Discipline of the Supreme Court, No. 10-029. 
__________________ 
Per Curiam. 
{¶ 1} Respondent, Joseph Harold Smith of Avon, Ohio, Attorney 
Registration No. 0041412, was admitted to the practice of law in Ohio in 1989.  
On April 24, 2009, we suspended respondent’s license to practice on an interim 
SUPREME COURT OF OHIO 
2 
 
basis pursuant to Gov.Bar R. V(5)(A)(4) upon receiving notice that he had been 
convicted of a felony.  See In re Smith, 121 Ohio St.3d 1456, 2009-Ohio-1891, 
905 N.E.2d 195. 
{¶ 2} In April 2010, relator, Disciplinary Counsel, filed a complaint 
charging respondent with four violations of the Code of Professional 
Responsibility arising from the conduct that resulted in his federal convictions: 
failing to accurately report his income to the Internal Revenue Service (“IRS”), 
conspiring to defraud the IRS, and corruptly endeavoring to obstruct and impede 
the ensuing IRS investigation. 
{¶ 3} A panel of the Board of Commissioners on Grievances and 
Discipline accepted the parties’ agreed stipulations of fact and misconduct and the 
recommendation that respondent be indefinitely suspended from the practice of 
law in Ohio with credit for time served under his interim suspension.  The panel, 
however, recommended that respondent not be permitted to apply for 
reinstatement until he completes his federal supervised release and enters into an 
agreement with the federal government for payment of restitution.  The board has 
accepted the panel’s findings and its recommended sanction, as do we. 
Misconduct 
{¶ 4} The parties have stipulated that from 1983 through February 17, 
2003, respondent was employed by the Catholic Diocese of Cleveland.  He began 
as the diocese treasurer.  By 2000, he had been promoted to chief financial 
officer, and was finally named financial and legal secretary.  In August 2006, a 
federal grand jury issued a 27-count indictment against respondent and a 
codefendant.  Respondent was charged with one count of conspiracy to commit 
mail fraud, eight counts of mail fraud, eight counts of money laundering, one 
count of conspiring to defraud the IRS, four counts of making false tax returns, 
and one count of corruptly endeavoring to obstruct and impede an IRS 
investigation. 
January Term, 2011 
3 
 
{¶ 5} A jury found respondent guilty of one count of conspiracy to 
defraud the IRS, four counts of making false tax returns, and one count of 
corruptly endeavoring to obstruct and impede an IRS investigation.  He was 
acquitted of mail fraud and conspiracy to commit mail fraud, and the court 
dismissed the money-laundering charges. 
{¶ 6} At the panel hearing, respondent testified that the conduct leading 
to his federal convictions began in the late 1990s when he received a series of 
offers to go into private or public practice.  According to respondent, the priest 
who oversaw respondent’s employment did not want respondent to leave the 
diocese and agreed to pay him approximately $250,000 annually, but stated that 
this compensation could not go through the diocese payroll.  To conceal 
respondent’s compensation, respondent and his codefendant, who provided 
comptroller services for the diocese through his company, moved money from the 
diocese, through the codefendant’s company, and into two businesses owned by 
respondent.  Respondent failed to pay taxes on this compensation, and while 
representing respondent in a 1999 audit, the codefendant presented fraudulent 
documentation of expenses purportedly incurred by respondent and falsely stated 
that respondent had no sources of income other than those reported on his tax 
return. 
{¶ 7} Respondent was sentenced to one year and one day in federal 
prison and was ordered to perform 150 hours of community service.  He was also 
ordered to pay restitution of $395,154 to the IRS, based on the statutory default 
tax rate of 28 percent as applied to his unreported income of $1,411,265.  
Respondent was released from the federal prison in Morgantown, West Virginia 
on November 14, 2009, and stayed at a halfway house in Cleveland for 
approximately two months.  He is currently serving a two-year period of 
supervised release that will terminate in January 2012.  At the time of the panel 
hearing, he had paid approximately $2,000 in restitution, and upon the conclusion 
SUPREME COURT OF OHIO 
4 
 
of his supervised release, he will be required to enter an agreement with the IRS 
for continued payment of restitution. 
{¶ 8} The panel and board concluded that the parties’ stipulated facts and 
exhibits and respondent’s testimony clearly and convincingly established that 
respondent’s conduct 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 
that is prejudicial to the administration of justice), and 1-102(A)(6) (prohibiting a 
lawyer from engaging in conduct that adversely reflects on the lawyer’s fitness to 
practice law).  We accept these findings of fact and misconduct. 
Sanction 
{¶ 9} 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. 
{¶ 10} Respondent has admitted that he engaged in a course of conduct 
designed to conceal the true value and source of the compensation he received for 
services provided to the Catholic Diocese of Cleveland, that he failed to 
accurately report his income to the IRS, and that during an IRS audit, his agent 
falsely stated that all of respondent’s sources of income were reported on his tax 
return.  As a result of this conduct, respondent has been convicted of conspiracy 
to defraud the IRS, making false tax returns, and corruptly endeavoring to 
January Term, 2011 
5 
 
obstruct and impede an IRS investigation.  He has served a federal prison 
sentence, has spent time in a halfway house, will remain on supervised release 
until January 2012, and has been ordered to pay almost $400,000 in restitution to 
the IRS. 
{¶ 11} As aggravating factors, the parties stipulated and the panel and 
board found that respondent had acted with a dishonest or selfish motive and had 
engaged in a pattern of misconduct.  See BCGD Proc.Reg. 10(B)(1)(b) and (c).  
Mitigating factors include respondent’s lack of a prior disciplinary record, his full 
and free disclosure to Disciplinary Counsel and cooperative attitude toward these 
proceedings, and evidence of his good character and reputation, including letters 
from an auxiliary bishop of the Catholic Diocese of Cleveland and a paralegal, 
both of whom worked with respondent at the diocese, and a family friend who is 
also an attorney.  See BCGD Proc.Reg. 10(B)(2)(a), (d), and (e).  The panel and 
board also found that other penalties had been imposed, including incarceration.  
See BCGD Proc.Reg. 10(B)(2)(f). 
{¶ 12} In light of these factors and our precedent, the board recommends 
that we adopt the parties’ recommendation to indefinitely suspend respondent, 
with credit for time served under his interim suspension, but suggests that we 
condition his reinstatement upon completion of his federal supervised release and 
consummation of a final restitution agreement with the federal government. 
{¶ 13} In Dayton Bar Association v. Brunner (2001), 91 Ohio St.3d 398, 
746 N.E.2d 596, we imposed an indefinite suspension with credit for time served 
under an interim felony suspension on an attorney who had violated DR 1-
102(A)(4) by structuring and orchestrating a commercial real estate transaction in 
contravention of federal regulations that prohibited the seller from financing 100 
percent of the purchase price.  Mitigating factors in Brunner included the 
respondent’s cooperation with the federal investigation, his completion of a 
SUPREME COURT OF OHIO 
6 
 
federal prison term, his halfway-house confinement, and his payment of his 
criminal fines. 
{¶ 14} More recently, in Cincinnati Bar Assn. v. Kellogg, 126 Ohio St.3d 
360, 2010-Ohio-3285, 933N.E.2d 1085, we sanctioned an attorney for his role in 
a scheme to shield $14 million of his employer’s assets from the Federal Trade 
Commission and future legal claims, concluding that his conduct, which resulted 
in multiple federal felony convictions, violated DR 1-102(A)(3) through (5), as 
well as 7-102(A)(7)  (prohibiting a lawyer from counseling a client in conduct he 
knows to be illegal) and (8) (prohibiting a lawyer from knowingly engaging in 
illegal conduct), and 7-109(A) (prohibiting a lawyer from suppressing evidence 
he has an obligation to produce).  Kellogg at ¶ 10, 12.  Citing Kellogg’s assistance 
to the employer’s bankruptcy trustee, which helped preserve the jobs of more than 
200 innocent employees, his cooperation in a related federal investigation, and 
evidence of his good character, we imposed an indefinite suspension rather than a 
permanent disbarment.  Kellogg at ¶ 25-26.  Observing, however, that Kellogg 
had served less than one year of his three-year term of federal supervised release 
at the time of our decision, we conditioned his reinstatement upon completion of 
that term.  Kellogg at ¶ 11, 26. 
{¶ 15} Here, in contrast, respondent’s license to practice law has been 
suspended for almost two years, and respondent has accepted responsibility and 
expressed genuine remorse for his misconduct.  Moreover, his supervised release 
is scheduled to terminate in January 2012.  Under these facts, we agree that an 
indefinite suspension with credit for time served, with reinstatement conditioned 
upon both the completion of federal supervised release and execution of a final 
agreement for payment of restitution, is the appropriate sanction for respondent’s 
misconduct. 
{¶ 16} Accordingly, Joseph Harold Smith is hereby indefinitely 
suspended from the practice of law in Ohio.  He shall receive credit for time 
January Term, 2011 
7 
 
served under his interim suspension, but he shall not be permitted to petition for 
reinstatement until he has completed his federal supervised release and entered 
into a final agreement with the federal government for payment of restitution.  
Costs are taxed to respondent. 
Judgment accordingly. 
 
O’CONNOR, C.J., and PFEIFER, LUNDBERG STRATTON, O’DONNELL, 
LANZINGER, CUPP, and MCGEE BROWN, JJ., concur. 
__________________ 
Jonathan E. Coughlan, Disciplinary Counsel, and Joseph M. Caligiuri, 
Senior Assistant Disciplinary Counsel, for relator. 
Joseph H. Smith, pro se. 
______________________