Title: Office of Lawyer Regulation v. Walter W. Stern, III

State: wisconsin

Issuer: Wisconsin Supreme Court

Document:

2016 WI 6 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2013AP149-D 
COMPLETE TITLE: 
In the Matter of Disciplinary Proceedings  
Against Walter W. Stern, III, Attorney at Law: 
 
Office of Lawyer Regulation, 
          Complainant, 
     v. 
Walter W. Stern, III, 
          Respondent. 
 
 
 
 
DISCIPLINARY PROCEEDINGS AGAINST STERN 
 
 
OPINION FILED: 
February 4, 2016 
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
      
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
      
 
COUNTY: 
      
 
JUDGE: 
      
 
 
 
JUSTICES: 
 
 
CONCURRED: 
      
 
DISSENTED: 
      
 
NOT PARTICIPATING:          
 
 
 
ATTORNEYS: 
 
 
 
 
 
 
 
 
 
2016 WI 6
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.   2013AP149-D 
 
 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
In the Matter of Disciplinary Proceedings 
Against Walter W. Stern, III, Attorney at Law: 
 
Office of Lawyer Regulation, 
 
          Complainant, 
 
     v. 
 
Walter W. Stern, III, 
 
          Respondent. 
 
FILED 
 
FEB 4, 2016 
 
Diane M. Fremgen 
Clerk of Supreme Court 
 
 
 
 
ATTORNEY 
reinstatement 
proceeding.  Attorney's 
license 
reinstated.   
 
¶1 
PER CURIAM.   We review, pursuant to Supreme Court 
Rule (SCR) 22.33(3),1 a report filed by Referee Dennis J. Flynn, 
recommending that the court reinstate the license of Walter W. 
Stern, III to practice law in Wisconsin.  Upon careful review of 
                                                 
1 SCR 22.33(3) provides that "[i]f no appeal is timely 
filed, the supreme court shall review the referee's report, 
order 
reinstatement, 
with 
or 
without 
conditions, 
deny 
reinstatement, or order the parties to file briefs in the 
matter." 
No. 
2013AP149-D   
 
2 
 
the matter, we agree that Attorney Stern's license should be 
reinstated upon conditions to be discussed later.  As to costs, 
we hold that, due to the unique nature of this case, Attorney 
Stern should be responsible for one-half of the Office of Lawyer 
Regulation's (OLR) $6,881.67 in costs, for a total of $3,440.84. 
¶2 
Attorney Stern was licensed to practice law in 
Wisconsin in 1974.  He was privately reprimanded in 1988; 
publicly reprimanded in 1992; privately reprimanded in 1993; and 
privately reprimanded in 2008.  In a May 2013 per curiam 
opinion, this court approved the findings and conclusions of a 
referee's report that adopted a stipulation between the OLR and 
Attorney Stern; in that stipulation, Attorney Stern pled no 
contest to misconduct that led to his federal conviction of 
conspiring to commit money laundering and a federal prison term 
of one year and one day.   This court suspended Attorney Stern's 
license to practice law for two years, consistent with the 
parties' stipulation and the referee's recommendation.  See 
In re Disciplinary Proceedings Against Stern, 2013 WI 46, 
347 Wis. 2d 552, 830 N.W.2d 674. 
¶3 
In July 2013, the United States Court of Appeals for 
the Seventh Circuit reversed Attorney Stern's conviction on the 
ground 
that 
the 
trial 
court 
wrongly 
prevented 
him 
from 
testifying about his own conduct.  United States v. Leonard-
Allen, 739 F.3d 948, 954-55 (7th Cir. 2013), as amended on 
denial of rehearing and rehearing en banc (Aug. 29, 2013).  
Attorney Stern was released from prison after having served 
approximately six months of his sentence.  He later pled guilty 
No. 
2013AP149-D   
 
3 
 
to a federal misdemeanor offense of contempt of court that 
resulted in no further federal prison time. 
¶4 
In February 2015, Attorney Stern filed a petition 
seeking the reinstatement of his law license.  In September 
2015, the OLR filed a response not opposing the reinstatement 
petition, but reserving the right to further tailor its 
recommendation in accordance with the evidence received at a 
public hearing in late September 2015.  After holding the public 
hearing, the referee filed his report and recommendation in 
October 2015.   
¶5 
SCR 22.31(1)2 provides the standards to be met for 
reinstatement.  Specifically, the petitioner must show by clear, 
satisfactory, and convincing evidence that he or she has the 
                                                 
2 SCR 22.31(1) provides: 
The petitioner has the burden of demonstrating, 
by clear, satisfactory, and convincing evidence, all 
of the following:  
(a) That he or she has the moral character to 
practice law in Wisconsin.  
(b) That his or her resumption of the practice of 
law will not be detrimental to the administration of 
justice or subversive of the public interest.  
(c) That his or her representations in the 
petition, including the representations required by 
SCR 
22.29(4)(a) 
to 
(m) 
and 
22.29(5), 
are 
substantiated.  
(d) That he or she has complied fully with the 
terms of the order of suspension or revocation and 
with the requirements of SCR 22.26. 
No. 
2013AP149-D   
 
4 
 
moral character to practice law, that his or her resumption of 
the 
practice 
of 
law 
will 
not 
be 
detrimental 
to 
the 
administration of justice or subversive to the public interest, 
and that he or she has complied with SCR 22.26 and the terms of 
the 
order 
of 
suspension. 
 
In 
addition, 
SCR 
22.31(1)(c) 
incorporates the statements that a petition for reinstatement 
must contain pursuant to SCR 22.29(4)(a)-(4m).3  Thus, the 
                                                 
3 SCR 22.29(4)(a) through (4m) provides that a petition for 
reinstatement must show all of the following: 
(a) 
The 
petitioner 
desires 
to 
have 
the 
petitioner's license reinstated.  
(b) The petitioner has not practiced law during 
the period of suspension or revocation.  
(c) The petitioner has complied fully with the 
terms of the order of suspension or revocation and 
will 
continue 
to 
comply 
with 
them 
until 
the 
petitioner's license is reinstated.  
(d) The petitioner has maintained competence and 
learning in the law by attendance at identified 
educational activities.  
(e) The petitioner's conduct since the suspension 
or revocation has been exemplary and above reproach.  
(f) The petitioner has a proper understanding of 
and attitude toward the standards that are imposed 
upon members of the bar and will act in conformity 
with the standards.  
(g) The petitioner can safely be recommended to 
the legal profession, the courts and the public as a 
person fit to be consulted by others and to represent 
them and otherwise act in matters of trust and 
confidence and in general to aid in the administration 
of justice as a member of the bar and as an officer of 
the courts.  
(continued) 
No. 
2013AP149-D   
 
5 
 
petitioning 
attorney 
must 
demonstrate 
that 
the 
required 
representations in the reinstatement petition are substantiated.  
¶6 
When 
reviewing 
referee 
reports 
in 
reinstatement 
proceedings, we utilize standards of review similar to those we 
use for reviewing referee reports in disciplinary proceedings.  
We do not overturn a referee's findings of fact unless they are 
clearly erroneous.  On the other hand, we review a referee's 
legal conclusions, including whether the attorney has satisfied 
the criteria for reinstatement, on a de novo basis.  In re 
Disciplinary Proceedings Against Jennings, 2011 WI 45, ¶39, 
334 Wis. 2d 335, 801 N.W.2d 304; In re Disciplinary Proceedings 
Against Gral, 2010 WI 14, ¶22, 323 Wis. 2d 280, 779 N.W.2d 168. 
¶7 
The referee found that Attorney Stern demonstrated by 
clear, 
satisfactory, 
and 
convincing 
evidence 
all 
of 
the 
requirements for reinstatement of his Wisconsin law license.  In 
                                                                                                                                                             
(h) The petitioner has fully complied with the 
requirements set forth in SCR 22.26.  
(j) The petitioner's proposed use of the license 
if reinstated.  
(k) A full description of all of the petitioner's 
business activities during the period of suspension or 
revocation.  
(4m) The petitioner has made restitution to or 
settled all claims of persons injured or harmed by 
petitioner's misconduct, including reimbursement to 
the Wisconsin lawyers’ fund for client protection for 
all payments made from that fund, or, if not, the 
petitioner's explanation of the failure or inability 
to do so. 
No. 
2013AP149-D   
 
6 
 
particular, the referee found that Attorney Stern has not 
practiced law during the period of his suspension; that he has 
complied fully with the terms of the order of suspension and 
will continue to do so until his license is reinstated; that he 
has maintained competence and learning in the law; that his 
conduct since the suspension has been exemplary and above 
reproach; that he has a proper understanding of and attitude 
toward the standards that are imposed upon members of the bar 
and will act in conformity with those standards; and that he can 
be safely recommended to the legal profession, the courts, and 
the public as a person fit4 to be consulted by others and to 
represent them and otherwise act in matters of trust and 
confidence and in general to aid in the administration of 
justice as a member of the bar and an officer of the courts.   
¶8 
Concerning 
Attorney 
Stern's 
compliance 
with 
the 
requirements of SCR 22.26, the referee noted, as did the 
parties, that Attorney Stern was unable during his suspension to 
properly 
and 
promptly 
close 
his 
trust 
account. 
 
Cf. 
SCR 22.26(1)(d) (requiring that, within the first 15 days after 
the effective date of suspension, the attorney must make all 
arrangements for the temporary or permanent closing or winding 
                                                 
4 Two exhibits (Exhibits 1 and 2) related to Attorney 
Stern's fitness as a lawyer were received during the public 
hearing in this matter.  These exhibits consist of medical 
correspondence regarding Attorney Stern's treatment for certain 
mental health issues.  Consistent with the joint recommendation 
of the parties, we instruct the clerk of this court to maintain 
these two exhibits under seal. 
No. 
2013AP149-D   
 
7 
 
up of the attorney's practice).  This was so because, since 
2009, Attorney Stern has had a $585.25 surplus in his trust 
account which he has been unable to reconcile due to the loss of 
certain records.  The referee wrote that he was "impressed by 
[Attorney] Stern's voluntarily holding the overage of $585.25 
from his Trust Account for a period of 6-plus years when he did 
not have records regarding who was entitled to those funds," 
rather than "default[ing] those funds to himself."  The referee 
also noted that Attorney Stern has agreed, at the OLR's 
recommendation, to transmit the $585.25 surplus to the unclaimed 
property unit of the Wisconsin Department of Revenue.   
¶9 
Upon review of the record, we agree that Attorney 
Stern has established by clear, satisfactory, and convincing 
evidence that he has satisfied all the criteria necessary for 
reinstatement.  Accordingly, we adopt the referee's findings of 
fact and conclusions of law and we accept the referee's 
recommendation to reinstate Attorney Stern's license to practice 
law in Wisconsin.  We further direct Attorney Stern to transmit 
the $585.25 surplus in his trust account to the unclaimed 
property unit of the Wisconsin Department of Revenue within 30 
days of the date of this order. 
¶10 The only dispute is as to costs.  The referee 
recommended that Attorney Stern should not be responsible for 
any costs associated with this reinstatement proceeding.  In his 
report, and in a subsequent letter to the court, the referee 
maintained that assessing costs against Attorney Stern would be 
inequitable, as Attorney Stern has already been penalized by 
No. 
2013AP149-D   
 
8 
 
what the referee terms a "wrongful[]" conviction for money 
laundering; by the prison time he served before that conviction 
was reversed; by his reputational loss; and by his two-year law 
license suspension.   
¶11 In its statement of costs, the OLR disagrees with the 
referee's recommendation that this court should impose no costs 
against Attorney Stern.  The OLR 
states that while it 
"recognizes that the Referee found relevant Attorney Stern's 
full adherence to the two year suspension and the prison time he 
served," these circumstances were nevertheless not "the type of 
extraordinary circumstances that justify deviation from the 
Court's policy" of imposing all costs against a lawyer seeking 
to be reinstated. 
¶12 In a subsequent letter to the court, Attorney Stern 
insists that he should pay no costs because "he has been the 
victim of a great injustice, and imposing costs against him 
would simply add to the magnitude of that great injustice." 
¶13 Our general practice is to assess full costs against 
the respondent in a disciplinary proceeding, or against the 
petitioner in a reinstatement proceeding.  See generally 
SCR 22.24(1), (1m); see also In re Disciplinary Proceedings 
Against Webster, 2002 WI 100, ¶¶51-52, 255 Wis. 2d 323, 
647 N.W.2d 831.  This is so for a common-sense reason:  It is 
only fair that a disciplined lawyer should shoulder, to the 
extent the lawyer is able, the costs of an OLR proceeding that 
the lawyer's misconduct necessitated, rather than transferring 
those costs to the other members of the bar who have not engaged 
No. 
2013AP149-D   
 
9 
 
in misconduct.  See In re Disciplinary Proceedings Against 
Inglimo, 2007 WI 126, ¶94, 305 Wis. 2d 71, 740 N.W.2d 125.  
There is no doubt that Attorney Stern's misconduct, which he did 
not dispute in his 2013 disciplinary proceedings, necessitated 
these reinstatement proceedings.  We see no reason to transfer 
all of the associated costs of these reinstatement proceedings 
to other attorneys who have not engaged in misconduct.  See 
In re Disciplinary Proceedings Against Balistrieri, 2014 WI 104, 
¶62, 358 Wis. 2d 262, 852 N.W.2d 1 ("The reinstatement 
proceeding is a result of the attorney's misconduct that 
required the imposition of a suspension or revocation in the 
first place.  It is therefore generally proper to impose the 
costs of a formal reinstatement proceeding upon the attorney 
seeking reinstatement."). 
¶14 This result is bolstered by the recent case of In re 
Disciplinary 
Proceedings 
Against 
Hurtgen, 
2015 
WI 
92, 
364 Wis. 2d 576, 869 N.W.2d 490.  In Hurtgen, this court revoked 
Attorney Hurtgen's license on a petition for consensual license 
revocation following a federal conviction in 2009, entered on 
Attorney Hurtgen's guilty plea, for one count of aiding and 
abetting wire fraud.  See In re Disciplinary Proceedings Against 
Hurtgen, 2009 WI 92, 321 Wis. 2d 280, 772 N.W.2d 923.  In 2010, 
the federal district court granted Attorney Hurtgen's motion to 
withdraw his guilty plea on the ground that the United States 
Supreme Court had ruled that the legal theory under which 
Attorney Hurtgen had been charged was flawed.  Hurtgen, 
364 Wis. 2d 576, ¶3.  In 2012, all remaining charges against 
No. 
2013AP149-D   
 
10 
 
Attorney Hurtgen were dismissed with prejudice.  Id.  In 2014, 
Attorney Hurtgen filed a petition for the reinstatement of his 
license to practice law, which this court granted in September 
2015.  Of significance here, this court ordered Attorney Hurtgen 
to pay the full costs of the reinstatement proceeding.  Id., 
¶11.  Given that it was appropriate for this court to assess the 
full costs of a reinstatement proceeding against a lawyer who 
was fully exonerated of all charges that led to the revocation 
of his law license, it would seem incongruous to assess no costs 
against Attorney Stern, who was not fully exonerated; as stated 
above, he stands guilty, by his own plea, of criminal contempt 
of court.   
¶15 On 
the 
other 
hand, 
the 
OLR 
does 
not 
make 
a 
particularly 
compelling 
case 
against 
the 
referee's 
recommendation to waive the costs of this proceeding.  While 
this court's general policy is to award full costs to the OLR, 
see SCR 22.24(1m), we have certainly made exceptions to this 
policy.  The OLR, in arguing that no such exception should be 
made here, seems to refer to an outdated standard:  whether 
"extraordinary circumstances" justify a deviation from the 
court's general policy to award the OLR full costs.  We removed 
the 
"extraordinary 
circumstances" 
language 
from 
our 
rule 
governing the assessment of costs (SCR 22.24) some time ago.  
See S. Ct. Order 05-01B, 2011 WI 59 (iss. Jul. 6, 2011; 
eff. Jan. 1, 2012). 
¶16 On balance, we deem it appropriate to impose one-half 
of the costs on Attorney Stern, or $3,440.84.  Our determination 
No. 
2013AP149-D   
 
11 
 
is not the result of the application of a precise mathematical 
formula, but is based on our thorough consideration of the 
record and the unusual posture of this case, including the 
unquestionable professional and economic effects of Attorney 
Stern's partial service of a federal prison sentence for a 
conviction that was later reversed on appeal. 
¶17 IT IS ORDERED that the license of Walter W. Stern, III 
to practice law in Wisconsin is reinstated, effective the date 
of this order. 
¶18 IT IS FURTHER ORDERED that within 60 days of the date 
of this order, Walter W. Stern, III shall pay to the Office of 
Lawyer Regulation costs in the amount of $3,440.84. 
¶19 IT IS FURTHER ORDERED that compliance with all of the 
terms of this order remain a condition of Walter W. Stern, III's 
license to practice law in Wisconsin, including the requirement 
that Walter W. Stern, III shall transmit the $585.25 surplus in 
his trust account to the unclaimed property unit of the 
Wisconsin Department of Revenue within 30 days of the date of 
this order. 
 
 
No. 
2013AP149-D   
 
 
 
1