Title: Office of Lawyer Regulation v. Carl Robert Scholz

State: wisconsin

Issuer: Wisconsin Supreme Court

Document:

2020 WI 84 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2017AP2530-D 
 
 
 
COMPLETE TITLE: 
In the Matter Disciplinary Proceedings Against  
Carl Robert Scholz, Attorney at Law: 
 
Office of Lawyer Regulation, 
          Complainant-Respondent, 
     v. 
Carl Robert Scholz, 
          Respondent-Appellant. 
 
 
 
 
 
DISCIPLINARY PROCEEDINGS AGAINST SCHOLZ 
 
 
OPINION FILED: 
November 10, 2020   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
        
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
        
 
COUNTY: 
        
 
JUDGE: 
        
 
 
 
JUSTICES: 
 
Per Curiam.  
NOT PARTICIPATING: 
BRIAN HAGEDORN, J., did not participate.    
 
 
 
ATTORNEYS: 
 
For the respondent-appellant, there was a brief filed by 
Carl R. Scholz, Mequon. 
 
For the complainant-respondent, there was a brief filed by 
John T. Payette and Office of Lawyer Regulation.  
 
 
 
2020 WI 84
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.  2017AP2530-D 
 
 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
In the Matter Disciplinary Proceedings 
Against Carl Robert Scholz,  
Attorney at Law: 
 
Office of Lawyer Regulation, 
 
          Complainant-Respondent, 
 
     v. 
 
Carl Robert Scholz, 
 
          Respondent-Appellant. 
FILED 
 
NOV 10, 2020 
 
Sheila T. Reiff 
Clerk of Supreme Court 
 
 
 
 
ATTORNEY 
disciplinary 
proceeding.   Attorney's 
license 
suspended.   
 
¶1 
PER CURIAM.    This disciplinary matter comes to the 
court on Attorney Scholz's appeal of a report and recommendation 
filed by Referee Kim M. Peterson.  The referee concluded that 
Attorney Scholz committed ten counts of professional misconduct 
in connection with his representation of A.B., and recommended a 
one-year suspension of Attorney Scholz's law license.  Attorney 
Scholz challenges the recommended suspension; he argues that it 
is excessive in light of the totality of the facts and 
No. 
2017AP2530-D   
 
2 
 
circumstances surrounding his representation of A.B. and he 
seeks a more lenient sanction. 
¶2 
When we review a referee's report and recommendation 
in an attorney disciplinary case we affirm the referee's 
findings of fact unless they are found to be clearly erroneous, 
and we review the referee's conclusions of law on a de novo 
basis.  In re Disciplinary Proceedings Against Inglimo, 2007 WI 
126, ¶5, 305 Wis. 2d 71, 740 N.W.2d 125.  We determine the 
appropriate level of discipline given the particular facts of 
each case, independent of the referee's recommendation, but 
benefiting from it. In re Disciplinary Proceedings Against 
Widule, 2003 WI 34, ¶44, 261 Wis. 2d 45, 660 N.W.2d 686. 
¶3 
After reviewing this matter and considering Attorney 
Scholz's appeal, we accept the referee's factual findings and 
legal conclusions.  However, we have determined that a two-year 
suspension, as originally sought by the Office of Lawyer 
Regulation (OLR), is appropriate.  We reserve the question of 
restitution, pending receipt of supplemental briefing requested 
by separate order of this court, and we impose the costs of this 
proceeding on Attorney Scholz.  
¶4 
Attorney Scholz was admitted to practice law in 
Wisconsin in 1994.  He practices in Mequon.  In 2011, he was 
privately reprimanded for failing to hold client funds in trust 
when he deposited a client's advance fee payment directly into 
his business account without giving the requisite alternative 
fee notices and then he used the funds to pay a personal tax 
obligation, and for transferring client funds from his trust 
No. 
2017AP2530-D   
 
3 
 
account to his business account without giving notice to the 
client at the time of the transfer that the funds represented a 
fee payment.  Private Reprimand, No. 2011-21.1 
¶5 
On December 27, 2017, the OLR filed a ten-count 
disciplinary complaint relating to his representation of A.B. in 
a foreclosure/partition action between A.B. and her former 
daughter-in-law, K.D.  The complaint alleged that Attorney 
Scholz converted funds that were to be held in trust, then 
engaged in various misrepresentations to hide his misconduct.  
The 
complaint 
sought 
a 
two-year 
license 
suspension 
and 
restitution of $60,975.94 paid either to the Ozaukee County 
Circuit Court or to opposing counsel's trust account, pending 
resolution of the foreclosure/partition action between Attorney 
Scholz's client, A.B., and K.D.  
¶6 
The referee conducted a two-day hearing in January 
2019 and concluded that the OLR had proved, by clear and 
convincing evidence, all ten counts of misconduct.  The referee 
recommended we impose a one-year suspension and costs, but did 
not address restitution.  Attorney Scholz appeals.  
¶7 
This matter has a long history that will be greatly 
abridged for purposes of this opinion.  In 1985, A.B., her 
husband, and their son, D.B., purchased a partially constructed 
home on almost 80 acres of land in Ozaukee County.  Several 
years later, D.B. married K.D.  The two couples co-owned the 
                                                 
1 Electronic copy available at https://compendium.wicourts. 
gov/app/raw/002454.html. 
No. 
2017AP2530-D   
 
4 
 
property until K.D. filed for divorce from D.B. in 2008.  D.B. 
had been in prison since 1994.  Attorney Scholz represented D.B. 
in the divorce. 
¶8 
The primary issue in the divorce was the division of 
the jointly owned residence and surrounding real estate.  A.B. 
hired Attorney Donald Fraker, who filed a separate lawsuit to 
assert her interests in the shared property.  Months of 
collateral litigation ensued.  During this time, A.B.'s husband 
passed away.  The court ruled that D.B. and K.D. (whose divorce 
was still pending) jointly owned a one-half interest in the 
property 
and 
A.B. 
owned 
the 
other 
one-half 
interest.  
Eventually, in the divorce action, K.D. was awarded the one-half 
interest in the property and was assigned responsibility for the 
outstanding mortgage.  
¶9 
In May 2012, a foreclosure action was filed against 
the property.  A.B. and K.D. litigated who was responsible for 
the unpaid mortgage.  Then, the Department of Natural Resources 
(DNR) purchased most of the jointly owned acreage.  After the 
mortgagee was paid along with some other expenses, there 
remained approximately $180,000, plus the house and a five-acre 
lot.  A.B. and K.D. proceeded to litigate their respective 
rights to this property. 
¶10 In February 2013 A.B. and K.D. reached a stipulation 
providing that their lawyers would each hold half the disputed 
funds in their respective trust accounts pending the outcome of 
the lawsuit to partition the property.  The stipulation stated, 
"Such funds shall continue to be held in such trust accounts, to 
No. 
2017AP2530-D   
 
5 
 
be disbursed as later may be agreed upon in writing by the 
parties or ordered by the Court."  The stipulation was approved 
by court order issued on February 22, 2013. 
¶11 This brings us to Attorney Scholz's involvement in the 
matters giving rise to this disciplinary proceeding.  In June 
2013, Attorney Scholz assumed representation of A.B. from 
Attorney Fraker.  At the time, Attorney Fraker held in trust 
$91,545.64 in disputed funds, pursuant to the terms of the 
stipulation.  Attorney Fraker had "earmarked" approximately 
$30,000 of these funds for his own attorney fees but offered to 
disburse the remaining two-thirds to Attorney Scholz as part of 
the substitution of attorneys.  When this occurred, in Attorney 
Scholz's own words, "[A.B.] and [Attorney Scholz] struck a deal 
that would enable her to continue the fight [against K.D.]."   
¶12 At the ensuing disciplinary hearing Attorney Scholz 
revealed that he and A.B. had agreed that she would "loan" 
Attorney Scholz the balance of the disputed funds.  In exchange, 
Attorney Scholz promised to represent A.B. for the duration of 
her case against K.D. for a $5,000 fee payable at some future 
date plus 10 percent of any recovery obtained for her.  This 
"deal" was memorialized in a pair of written agreements.   
¶13 On July 8, 2013, Attorney Fraker disbursed $60,975.94 
of the disputed funds to Attorney Scholz.  Attorney Scholz 
deposited the disputed funds into his business account – not a 
trust account.  Attorney Scholz then began spending the money, 
mostly for his own benefit, and by mid-August, it was gone.  We 
will not recount all the transactions.  Summarized, the OLR 
No. 
2017AP2530-D   
 
6 
 
alleged that Attorney Scholz disbursed at least $60,343.40 of 
the $60,975.94 for his own purposes, or for the benefit of other 
clients or third parties, thereby converting at least $60,343.40 
as of August 12, 2013. 
¶14 Meanwhile, 
A.B. 
and 
K.D. 
were 
still 
litigating 
ownership of these funds.  Commencing in August 2013, their 
lawyers participated in a mediation and reached a written one-
page "Interim Agreement" whereby K.D.'s lawyer could "release 
funds in her trust account to her client [K.D.]."  There was no 
written agreement that A.B.'s lawyers could disburse any of the 
disputed funds.  During this mediation Attorney Scholz did not 
disclose that he had already disbursed nearly all of the 
disputed funds he was supposed to be holding in trust.   
¶15 
In December 2013, following another mediation session, 
Attorney Scholz told Attorney Fraker that he could disburse to 
himself the $29,069.73 he had earmarked for attorney fees, and 
Attorney Fraker did so.   
¶16 In February 2014, Attorney Scholz filed an amended 
cross-claim in the civil property/partition dispute on behalf of 
A.B.  The pleading states that $183,091.29 of disputed funds had 
not been divided and remained to be partitioned.  Attorney 
Scholz did not advise the court that these funds were no longer 
in trust.   
¶17 On January 29, 2015, mediation having failed, the 
court appointed a Special Master to decide A.B.'s and K.D.'s 
rights and interests in the disputed funds and property.  In 
June 2015, the Special Master advised the attorneys that he was 
No. 
2017AP2530-D   
 
7 
 
awaiting more information from K.D.'s attorney and that he had 
received "no information or accounting" from Attorney Scholz.  
The Special Master informed both attorneys that he expected that 
"full accountings with supporting documents would be in [his] 
office no later than July 1, 2015."  Attorney Scholz did not 
provide the accounting.  On July 1, 2015, the Special Master 
wrote to the attorneys, stating, as relevant here:  "As to Mr. 
Scholz I have heard nothing further regarding documentation."  
Attorney Scholz asked for more time to respond but then failed 
to do so.   
¶18 On July 15, 2015, the Special Master issued a report 
determining that K.D. was entitled to 97 percent of the proceeds 
of any sale of the home and property.  K.D.'s lawyer then asked 
the Special Master to explicitly resolve the allocation of the 
disputed funds.  The Special Master forwarded this email to 
Attorney Scholz and requested a response by July 30, 2015.  
Attorney Scholz did not respond.  On August 4, 2015, the Special 
Master sent a follow-up letter asking if Attorney Scholz had any 
response or disagreement.  Again, Attorney Scholz did not 
respond.  
¶19 On August 6, 2015, the Special Master filed an amended 
report with the court, which allocated 97 percent of the 
disputed funds to K.D.  The Special Master added that when the 
acreage had been sold, certain expenses had been paid from the 
sale proceeds that were A.B.'s obligations.  These amounts 
included some $28,034.97 in legal fees paid to Attorney Scholz 
for D.B.'s divorce.  The Special Master ordered that K.D. should 
No. 
2017AP2530-D   
 
8 
 
be reimbursed for these expenditures before the remaining 
disputed funds were distributed between A.B. and K.D. 
¶20 Attorney Scholz filed a formal objection to the 
Special Master's amended report.  A.B. filed for bankruptcy. 
¶21 In January 2016, Attorney Scholz and K.D.'s lawyer 
told the circuit court that the remaining property had been 
sold, subject to bankruptcy court approval, and disclosed that 
they no longer held in trust any of the disputed funds from the 
DNR sale.  The circuit court expressed consternation, stating:  
"You two are going to get in a lot of trouble on this.  There's 
a court order that said that was to be maintained in the trust 
accounts, and you cannot just disregard a court order."  
¶22 K.D.'s lawyer clarified that she had relied on the 
written interim agreement prepared by their mediator as "written 
agreement by the parties."  The court then addressed Attorney 
Scholz:  "[I]t certainly looks like there was an agreement that 
[K.D.'s lawyer] could release the funds in her trust account to 
her client.  It doesn't say anything about [A.B.] releasing 
those funds.  She better find a way to restore them, or there's 
going to be contempt proceedings."  The court continued 
addressing Attorney Scholz: 
Because you know what?  That is - that is an ethical 
violation, what you did there.  And I have an 
obligation to report that, Mr. Scholz, and I will do 
that.  There was a court order, and there's nothing 
that says you can do what you did.  You just went 
beyond what I said you could do, and that's a problem.  
That's a huge problem.  
No. 
2017AP2530-D   
 
9 
 
¶23 Notably, the circuit court assumed Attorney Scholz had 
disbursed the funds to A.B.  Attorney Scholz did not inform the 
court that he had "borrowed" the money from A.B. or that he had 
arranged to reimburse A.B. in part with services-in-kind.  He 
also told the court that parts of the mediator's interim 
agreement were missing, implying the missing pages would confirm 
his right to disburse funds.  The interim agreement was a one-
page document.  
¶24 The circuit court directed Attorney Scholz to submit 
an "accounting" of his disbursement of the disputed funds.  
Attorney Scholz submitted a one-page document that the referee 
later found was a misrepresentation of what had transpired.  
Attorney Scholz also provided the court with a "receipt" 
purportedly signed by A.B. on December 23, 2013, which stated 
that she had received $50,975.94 "as the balance of her share of 
the proceeds . . . " and purported to authorize Attorney Scholz 
to retain $10,000 toward past and future expenses related to the 
representation.  As of December 23, 2013, Attorney Scholz had 
not made any such payment to A.B. and he was no longer holding 
any of the disputed funds in trust. 
¶25 Following the evidentiary hearing and submission of 
post-hearing briefs, the referee determined that the OLR clearly 
and convincingly proved that Attorney Scholz committed all ten 
counts of misconduct: 
Count One:  By converting to his own use or purposes, 
or for the benefit of other clients or third parties, 
No. 
2017AP2530-D   
 
10 
 
funds that he was to hold in trust, Attorney Scholz 
violated SCR 20:8.4(c).2  
Count Two:  By failing to hold in trust, separate from 
his own property, the proceeds from the sale of the 
parcel 
of 
land, 
Attorney 
Scholz 
violated 
SCR 20:1.15(b)(1).3  
Count Three:  By failing to hold all of the disputed 
funds in trust until the dispute was resolved, 
Attorney Scholz violated former SCR 20:1.15(d)(3).4   
                                                 
2 SCR 20:8.4(c) provides:  "It is professional misconduct 
for a lawyer to engage in conduct involving dishonesty, fraud, 
deceit or misrepresentation." 
3 SCR 20:1.15(b)(1) provides:   
A lawyer shall hold in trust, separate from the 
lawyer's own property, that property of clients and 
3rd parties that is in the lawyer's possession in 
connection with a representation.  All funds of 
clients and 3rd parties paid to a lawyer or law firm 
in connection with a representation shall be deposited 
in one or more identifiable trust accounts.  
4 Effective July 1, 2016, substantial changes were made to 
Supreme Court Rule 20:1.15, the "trust account rule."  See S. 
Ct. Order 14-07, 2016 WI 21 (issued Apr. 4, 2016, eff. July 1, 
2016).  Because the conduct underlying this case arose prior to 
July 1, 2016, unless otherwise indicated, all references to the 
supreme court rules will be to those in effect prior to July 1, 
2016. 
Former SCR 20:1.15(d)(3) provided: 
When the lawyer and another person or the client 
and another person claim ownership interest in trust 
property identified by a lien, court order, judgment, 
or contract, the lawyer shall hold that property in 
trust until there is an accounting and severance of 
the interests.  If a dispute arises regarding the 
division of the property, the lawyer shall hold the 
disputed portion in trust until the dispute is 
resolved.  Disputes between the lawyer and a client 
are subject to the provisions of sub.(g)(2). 
No. 
2017AP2530-D   
 
11 
 
Count Four:  By failing to hold the disputed funds in 
trust until there was a written agreement or court 
order permitting the release of the funds, Attorney 
Scholz violated SCR 20:3.4(c).5   
Count Five:  By causing Attorney Fraker to disburse 
the funds he was holding in trust, when there was no 
written agreement or court order authorizing the 
disbursement, Attorney Scholz violated SCR 20:3.4(c), 
via SCR 20:8.4(a).6  
Count Six:  By engaging in communications with the 
mediator 
and 
opposing 
counsel 
regarding 
whether 
Attorney Scholz could disburse any of the disputed 
funds, when Attorney Scholz had already disbursed 
substantially all of the disputed funds, Attorney 
Scholz violated SCR 20:8.4(c).  
Count Seven:  By failing to respond to opposing 
counsel's filings with the Special Master or the 
Special Master's requests for [A.B.'s] response to 
opposing counsel's filings, or to clarify whether the 
Special Master had granted Attorney Scholz's request 
for additional time to respond and the deadline to do 
so, Attorney Scholz violated SCR 20:1.3.7  
Count Eight:  By presenting false evidence to the 
court regarding his handling of the disputed funds and 
his client's receipt of funds, by making false 
statements to the court regarding his handling and 
disbursement of the disputed funds, and by failing to 
                                                 
5 SCR 20:3.4(c) provides:  "A lawyer shall not knowingly 
disobey an obligation under the rules of a tribunal, except for 
an open refusal based on an assertion that no valid obligation 
exists."   
6 SCR 20:8.4(a) provides:  "It is professional misconduct 
for a lawyer to violate or attempt to violate the Rules of 
Professional Conduct, knowingly assist or induce another to do 
so, or do so through the acts of another." 
7 SCR 20:1.3 provides:  "A lawyer shall act with reasonable 
diligence and promptness in representing a client." 
No. 
2017AP2530-D   
 
12 
 
correct false statements he made to the court, 
Attorney Scholz violated SCR 20:3.3(a)(l)8 and (3).9 
Count Nine:  By failing to maintain a pooled interest- 
bearing trust account between sometime prior to 
August, 2010, and November 12, 2014, and failing 
during that period of time to participate in the 
Interest on Trust Accounts Program, Attorney Scholz 
violated, 
former 
SCR 20:1.15(c)(1), 
current 
SCR 20:1.15(c)(1),10 and SCR 13.04.11 
                                                 
8 SCR 20:3.3(a)(l) provides:  "A lawyer shall not knowingly 
make a false statement of fact or law to a tribunal or fail to 
correct a false statement of material fact or law previously 
made to the tribunal by the lawyer." 
9 SCR 20:3.3(a)(3) provides: 
A lawyer shall not knowingly offer evidence that 
the lawyer knows to be false.  If a lawyer, the 
lawyer's client, or a witness called by the lawyer, 
has offered material evidence and the lawyer comes to 
know of its falsity, the lawyer shall take reasonable 
remedial measures, including, if necessary, disclosure 
to the tribunal. A lawyer may refuse to offer 
evidence, other than the testimony of a defendant in a 
criminal matter that the lawyer reasonably believes is 
false. 
10 The relevant text of SCR 20:1.15(c)(1) provides:  
A lawyer or law firm who receives client or 3rd-
party funds that the lawyer or law firm determines to 
be nominal in amount or that are expected to be held 
for a short period of time such that the funds cannot 
earn income for the benefit of the client or 3rd party 
in excess of the costs to secure that income, shall 
maintain a pooled interest-bearing or dividend-paying 
draft 
trust 
account 
in 
an 
IOLTA 
participating 
institution. 
11 SCR 13.04(1) provides: 
(1) An attorney shall participate in the program 
as provided in SCR 20:1.15 unless: 
(a) The attorney certifies on the annual trust 
account statement filed with the state bar that:  
No. 
2017AP2530-D   
 
13 
 
Count Ten:  By making misrepresentations to the OLR 
during the course of the investigation of this matter, 
Attorney Scholz violated SCR 22.03(6),12 enforceable 
via SCR 20:8.4(h).13  
¶26 The referee found that Attorney Scholz was "careless 
and negligent" and described his misconduct as "serious" 
stating: 
In this case, the misconduct Scholz engaged in is 
serious.  Scholz not only improperly converted funds, 
but he covered up his conduct over the course of 
several years with several instances of misleading 
omissions and false representations to the court, 
opposing counsel, the OLR, [the Special Master] and 
[the mediator].  While Scholz's conduct might not have 
harmed his client, it did harm the opposing party, who 
lost out on the funds he improperly distributed to 
himself, and later his client.   
                                                                                                                                                             
1. Based on the attorney's current annual trust 
account 
experience 
and 
information 
from 
the 
institution in which the attorney deposits trust 
funds, service charges on the account would equal or 
exceed any interest generated; or  
2. Because of the nature of the attorney's 
practice, the attorney does not maintain a trust 
account; or (b) The board, on its own motion or upon 
application from an attorney, grants a waiver from 
participation in the program for good cause.  
12 SCR 
22.03(6) 
provides: 
 
"In 
the 
course 
of 
the 
investigation, the respondent's willful 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." 
13 SCR 20:8.4(h) provides:  "It is professional misconduct 
for a lawyer to fail to cooperate in the investigation of a 
grievance filed with the office of lawyer regulation as required 
by SCR 21.15(4), SCR 22.001(9)(b), SCR 22.03(2), SCR 22.03(6), 
or SCR 22.04(1)." 
No. 
2017AP2530-D   
 
14 
 
However, the referee apparently accepted many of Attorney 
Scholz's explanations, characterizing the conversion as an 
"improper loan" and finding that Attorney Scholz "repaid it 
quickly."  The referee observed:  "[i]n this case, Attorney 
Scholz's conduct did not injure his client, and he did not 
appear to manipulate or steal from his client, rather he took an 
improper loan, and repaid that quickly.  He did not breach a 
client's trust . . .." 
 
¶27 The referee deemed a one-year license suspension 
sufficient and recommended that Attorney Scholz should be 
required to pay the full costs of this proceeding.  The OLR's 
statement of costs discloses that these costs were $16,804.30 as 
of March 17, 2020.  The report does not mention restitution. 
¶28 We turn to the merits of Attorney Scholz's appeal.  He 
explains that: 
[t]his appeal was not brought for the purpose of 
overturning that decision, but rather, as a plea for 
leniency based on the extraordinary nature of this 
case, the good work that was done, and the result that 
was ultimately obtained for a very special lady, all 
of which was overshadowed by [Scholz's] carelessness, 
neglect and in some instances, disregard for the Rules 
of Professional Conduct.  
¶29 We first consider the referee's factual findings.  
Attorney Scholz does not challenge the referee's factual 
findings, per se, taking issue only with "certain inferences."  
There has been no showing that any of the referee's findings are 
clearly erroneous and we accept and affirm those findings.  
No. 
2017AP2530-D   
 
15 
 
¶30 We turn to the referee's conclusions of law.  Attorney 
Scholz questions the conclusion that he violated SCR 20:1.3 
(Diligence), as alleged in Count 7:  
By failing to respond to opposing counsel's filings 
with the Special Master or the Special Master's 
requests for [A.B.'s] response to opposing counsel's 
filings, or to clarify whether the Special Master had 
granted Attorney Scholz's request for additional time 
to respond and the deadline to do so, Attorney Scholz 
violated SCR 20:1.3. 
¶31 Attorney Scholz maintains that he gave the Special 
Master adequate information shortly after the Special Master was 
appointed.  He argues that his efforts on A.B.'s behalf reflect 
his "commitment" and "dedication" and "zeal."  It is clear from 
the record, however, that Attorney Scholz repeatedly failed to 
respond to the Special Master's requests for information.  As 
the OLR observed, Attorney Scholz's lack of diligence in in this 
regard "deprived [A.B.] of credit for any of the other value she 
contributed to the property."  Referee Peterson found that "[i]n 
the end, Scholz never filed any substantive written response to 
[the Special Master's] report."  We affirm the referee's 
determination that Attorney Scholz violated SCR 20:1.3.  
¶32 Attorney Scholz does not challenge the referee's other 
conclusions of law, including her conclusion that he converted 
the disputed funds in violation of SCR 20:8.4(c), and the record 
supports the referee's conclusions.  We emphasize that Attorney 
Scholz's temporary use of the disputed funds constitutes 
conversion notwithstanding the referee's unchallenged finding 
that he "repaid" A.B.; his use of the funds does not have to be 
No. 
2017AP2530-D   
 
16 
 
a permanent deprival.  In re Disciplinary Proceedings Against 
Mulligan, 2015 WI 96, ¶36, 365 Wis. 2d 43, 870 N.W.2d 233 
(citing In re Disciplinary Proceedings Against Weigel, 2012 WI 
124, ¶41, 345 Wis. 2d 7, 823 N.W.2d 798 (quoting ABA/BNA 
Lawyers' Manual on Professional Conduct § 45:503 (2007)).  The 
referee's other conclusions are supported by the record and we 
affirm them. 
¶33 We turn to considering the appropriate sanction for 
Attorney Scholz's misconduct.  We are free to impose discipline 
more or less severe than that recommended by the referee.  In re 
Disciplinary Proceedings Against Krill, 2020 WI 20, ¶54, 390 
Wis. 2d 466, 
938 
N.W.2d 589, 
(citing 
In 
re 
Disciplinary 
Proceedings Against Elliott, 133 Wis. 2d 110, 394 N.W.2d 313 
(1986); In re Disciplinary Proceedings Against Reitz, 2005 WI 
39, 279 Wis. 2d 550, 694 N.W.2d 894).  The OLR requested a two-
year suspension.  The referee recommended we impose a one-year 
suspension.   
¶34 On this appeal, Attorney Scholz asks the court to 
impose a still more lenient suspension.  He emphasizes that A.B. 
was not a grievant and maintains that she was "a knowing and 
consenting participant in the transaction."  He argues that 
certain disciplinary cases support a more lenient sanction, 
citing In re Disciplinary Proceedings Against Tobin, 2007 WI 50, 
300 Wis. 2d 250, 730 N.W.2d 896 (imposing four month suspension 
for nine counts of misconduct, including converting funds 
belonging to a number of third parties for personal use in 
violation of SCR 20:1.15(b)(1) and SCR 20:8.4(c)) and In re 
No. 
2017AP2530-D   
 
17 
 
Disciplinary 
Proceedings 
Against 
Bartz, 
2015 
WI 
61, 
362 
Wis. 2d 752, 864 N.W.2d  881 (imposing a 60-day suspension on an 
attorney who committed five counts of misconduct, including 
conversion 
of 
third-party 
funds 
in 
violation 
of 
SCR 20:1.15(b)(1) and SCR 20:8.4(c), and who failed to cooperate 
with the OLR's investigation). 
¶35 Tobin is inapposite.  The four-month suspension we 
imposed there reflected "numerous mitigating factors" including 
a lack of disciplinary history, Attorney Tobin's admission of 
misconduct, 
and 
Attorney 
Tobin's 
voluntary 
payment 
of 
restitution to his trust account.  Id., ¶33.  We are similarly 
unpersuaded by Bartz.  There, the lawyer stipulated that he 
failed to timely disburse a few thousand dollars to one medical 
provider, but he ultimately paid the bill.  Attorney Scholz, by 
contrast, committed ten counts of misconduct, converted tens of 
thousands of dollars via a "loan" of funds that he knew or 
should have known his client was not entitled to make, ignored 
court orders, and then systematically misrepresented what he did 
to hide his misconduct, resulting in a significant loss to K.D.   
¶36 We conclude that the facts of this case and our case 
law indicate a two-year suspension is appropriate.  See In re 
Disciplinary Proceedings Against Krezminski, 2007 WI 21, 299 
Wis. 2d 152, 727 Wis. 2d 492 (imposing two-year suspension for 
misconduct that included conversion of $37,094.42 entrusted to 
the lawyer as personal representative of an estate, and the 
filing of a document containing false information with the 
probate 
court). 
 
The 
referee 
apparently 
considered 
the 
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2017AP2530-D   
 
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Krezminski case distinguishable, noting that Attorney Krezminski 
stole from his own client.  Attorney Scholz may not have stolen 
from his client, but the record indicates he colluded with that 
client, making an improper agreement to avail himself of 
disputed funds that were not the client's to loan, at the 
expense of K.D.  As the referee found, while Attorney Scholz's 
conduct might not have harmed his client, it did harm K.D. 
"who lost out on the funds he improperly distributed to 
himself, and later his client."  See also In re Disciplinary 
Proceedings Against Goldstein, 2010 WI 26, 323 Wis. 2d 706, 782 
N.W.2d 388 (imposing two-year license suspension for various 
trust account violations and conversion of approximately $70,000 
in client funds despite the referee's finding of "no harm" 
because the attorney had reimbursed his clients).   
¶37 Attorney 
Scholz's 
misconduct 
reflects 
a 
callous 
disregard for the rights of the opposing party, and his 
fundamental obligation as an officer of the court to honor and 
obey circuit court orders.  He lied to opposing counsel, the 
mediator, the circuit court judge, a court-appointed special 
master and to the OLR, all in an effort to conceal his 
conversion.  He fabricated documents that he submitted to the 
court to try to conceal his misconduct.  Considering the 
precedent cited by the OLR, coupled with a number of aggravating 
factors, including his prior discipline, we have no difficulty 
concluding that a suspension of two years is appropriate.  
Indeed, a lengthy suspension is necessary to impress upon 
Attorney Scholz and other lawyers in this state the seriousness 
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2017AP2530-D   
 
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of the professional misconduct at issue here, and to protect the 
public from similar misconduct in the future.  See In re 
Disciplinary Proceedings Against Roitburd, 2016 WI 12, ¶20, 368 
Wis. 2d 595, 882 N.W.2d 317 (stating that "it is ultimately this 
court's responsibility" to determine appropriate disciplinary 
sanctions). 
¶38 We turn next to the issue of costs.  Our general 
practice is to impose full costs on attorneys who are found to 
have committed misconduct.  See SCR 22.24(1m).  Attorney Scholz 
has not claimed that there are reasons to depart from that 
practice in this matter, and we have not found any reason to do 
so.  We therefore impose full costs. 
¶39 Finally, we reserve our final ruling regarding the 
issue of restitution pending receipt of supplemental briefing as 
ordered by this court.  Upon receipt of the OLR's memorandum and 
any response from Attorney Scholz, an order resolving the 
restitution question will issue in due course.  Therefore, 
¶40 IT IS ORDERED that the license of Carl Robert Scholz 
to practice law in Wisconsin is suspended for a period of two 
years, effective December 22, 2020. 
¶41 IT IS FURTHER ORDERED that Carl Robert Scholz shall 
comply with the requirements of SCR 22.26 concerning the duties 
of a person whose license to practice law in Wisconsin has been 
suspended. 
¶42 IT IS FURTHER ORDERED that within 60 days of the date 
of this order Carl Robert Scholz shall pay to the Office of 
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Lawyer Regulation the costs of this proceeding, which are 
$16,804.30 as of March 17, 2020. 
¶43 IT IS FURTHER ORDERED that the court reserves the 
question of restitution pending consideration of court ordered 
briefing as set forth in this court's order dated November 10, 
2020.   
¶44 IT IS FURTHER ORDERED that compliance with all 
conditions of this order is required for reinstatement.  See 
SCR 22.29(4)(c). 
¶45 BRIAN HAGEDORN, J., did not participate. 
 
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2017AP2530-D   
 
 
 
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