Title: Office of Lawyer Regulation v. Sarah E.K. Laux
Citation: 2015 WI 59
Docket Number: 2014AP000974-D
State: Wisconsin
Issuer: Wisconsin Supreme Court
Date: June 24, 2015

2015 WI 59 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2014AP974-D 
COMPLETE TITLE: 
In the Matter of Disciplinary Proceedings 
Against  
Sarah E. K. Laux, Attorney at Law: 
 
Office of Lawyer Regulation, 
          Complainant, 
     v. 
Sarah E.K. Laux, 
          Respondent. 
 
 
 
 
DISCIPLINARY PROCEEDINGS AGAINST LAUX 
 
 
OPINION FILED: 
June 24, 2015 
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
      
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
      
 
COUNTY: 
      
 
JUDGE: 
      
 
 
 
JUSTICES: 
 
 
CONCURRED: 
      
 
DISSENTED: 
      
 
NOT PARTICIPATING: ROGGENSACK, C.J. did not participate.    
 
 
 
ATTORNEYS: 
 
 
 
 
 
 
 
 
 
2015 WI 59
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.   2014AP974-D 
 
 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
In the Matter of Disciplinary Proceedings 
Against Sarah E. K. Laux, Attorney at Law: 
 
Office of Lawyer Regulation, 
 
          Complainant, 
 
     v. 
 
Sarah E.K. Laux, 
 
          Respondent. 
 
FILED 
 
JUN 24, 2015 
 
Diane M. Fremgen 
Clerk of Supreme Court 
 
 
 
 
ATTORNEY 
disciplinary 
proceeding.  Attorney's 
license 
revoked.   
 
¶1 
PER CURIAM.   Pending before the court is a report and 
recommendation filed on April 23, 2015, by Referee Richard C. 
Ninneman.  The report recommends that this court accept Attorney 
Sarah E.K. Laux's petition for consensual license revocation, 
order her to pay restitution, and revoke her license to practice 
law in Wisconsin.  Attorney Laux is the subject of a 
disciplinary proceeding alleging that she committed 23 counts of 
misconduct in four client matters.  She is also the subject of 
No. 
2014AP974-D   
 
2 
 
28 
additional 
pending 
Office 
of 
Lawyer 
Regulation 
(OLR) 
grievance matters that have not yet been fully investigated by 
the OLR. 
¶2 
We wholly agree that both revocation and restitution 
are appropriate, and we also direct Attorney Laux to pay the 
costs of this proceeding, which are $4,144.99 as of May 12, 
2015. 
¶3 
Attorney 
Laux 
was 
admitted 
to 
practice 
law 
in 
Wisconsin on May 17, 2004.  She resides in Mequon.  She has not 
previously been disciplined. 
¶4 
On April 30, 2014, the OLR filed a complaint against 
Attorney Laux, alleging six counts of misconduct in a single 
client 
matter 
and 
requesting 
revocation 
and 
restitution.  
Attorney Laux retained counsel and filed an answer and, on 
September 4, 2014, following substitution of the originally 
appointed 
referee, 
Referee 
Ninneman 
was 
appointed. 
 
On 
October 27, 2014, the OLR filed an amended complaint, this time 
alleging 23 counts of misconduct involving four different client 
matters.1 
                                                 
1 We take judicial notice of the fact that on December 2, 
2014, a federal grand jury returned a 33-count indictment 
charging Attorney Laux with two counts of bank fraud, nine 
counts of wire fraud, one count of mail fraud, 20 counts of 
money laundering, and one count of filing a false tax return.  
The indictment charges Attorney Laux with defrauding four 
different clients to whom Attorney Laux provided trust and 
estate advice and to whose funds Attorney Laux gained access 
through 
her 
solo-practice 
law 
firm. 
 
According 
to 
the 
indictment, Attorney Laux defrauded those clients out of more 
than $2.2 million in funds that Attorney Laux then converted to 
her own use.  The matter is pending. 
No. 
2014AP974-D   
 
3 
 
¶5 
On March 27, 2015, Attorney Laux filed a petition for 
consensual license revocation pursuant to Supreme Court Rule 
(SCR) 22.19.2  In her petition, she acknowledges that she cannot 
successfully defend herself against the allegations in the 
                                                 
2 SCR 22.19 provides: 
(1) An attorney who is the subject of an 
investigation 
for 
possible 
misconduct 
or 
the 
respondent in a proceeding may file with the supreme 
court a petition for the revocation by consent or his 
or her license to practice law.  
(2) The petition shall state that the petitioner 
cannot successfully defend against the allegations of 
misconduct. 
(3) If a complaint has not been filed, the 
petition shall be filed in the supreme court and shall 
include the director's summary of the misconduct 
allegations being investigated.  Within 20 days after 
the date of filing of the petition, the director shall 
file in the supreme court a recommendation on the 
petition.  Upon a showing of good cause, the supreme 
court may extend the time for filing a recommendation. 
(4) If a complaint has been filed, the petition 
shall be filed in the supreme court and served on the 
director and on the referee to whom the proceeding has 
been assigned.  Within 20 days after the filing of the 
petition, the director shall file in the supreme court 
a response in support of or in opposition to the 
petition and serve a copy on the referee.  Upon a 
showing of good cause, the supreme court may extend 
the time for filing a response.  The referee shall 
file a report and recommendation on the petition in 
the supreme court within 30 days after receipt of the 
director's response. 
(5)The supreme court shall grant the petition and 
revoke the petitioner's license to practice law or 
deny the petition and remand the matter to the 
director or to the referee for further proceedings. 
No. 
2014AP974-D   
 
4 
 
amended complaint, which is attached to her petition as Appendix 
A.  She also acknowledges that she cannot successfully defend 
herself against the pending grievances, a summary of which is 
attached to her petition as Appendix B. 
¶6 
On March 30, 2015, the OLR filed a recommendation 
supporting Attorney Laux's SCR 22.19 petition.  The referee 
issued a report on April 23, 2015, recommending revocation and 
restitution.  No appeal has been filed in this matter, so our 
review proceeds pursuant to SCR 22.17(2).   
¶7 
We 
revoke 
Attorney 
Laux's 
Wisconsin 
law 
license 
effective the date of this order.  The scope of Attorney Laux's 
misconduct is staggering.   
Matter of H.F. and M.F. 
¶8 
The first six counts of misconduct alleged in the 
OLR's amended complaint involve Attorney Laux's representation 
of H.F. and M.F., a married couple who, in 2012, retained 
Attorney Laux for estate planning.  At the time, the clients 
held over two million dollars in investments in a Wells Fargo 
Advisor Account.  Attorney Laux recommended that the clients 
sell their investments and purchase a series of annuities from 
Phoenix Life Insurance Company (Phoenix) and American Equity 
(American). 
 
In 
late 
2012, 
following 
Attorney 
Laux's 
recommendation, the clients retained a broker and $2,337,365.27 
was transferred from the clients' Wells Fargo Advisor Account 
into a brokerage account. 
¶9 
Attorney Laux subsequently created an entity called 
HMFF Investments, LLC (HMFF), for which Attorney Laux was the 
No. 
2014AP974-D   
 
5 
 
registered agent.  Attorney Laux informed the clients that HMFF 
would be the owner of the Phoenix and American annuities.  On 
January 3, 2013, Attorney Laux had the clients sign a third-
party check request for a cash withdrawal from their brokerage 
account in the amount of $2,184,125.30, payable to HMFF.  In 
late 
January 
2013, 
without 
the 
clients' 
knowledge 
or 
authorization, Attorney Laux deposited the $2,184,125.30 into a 
U.S. Bank checking account and money market account, in the name 
of HMFF.  Attorney Laux was the sole signatory. 
¶10 In February 2013, Attorney Laux withdrew $64,125.30 at 
the clients' request to make gifts to family members.  At some 
point, $195,000 was withdrawn to pay the clients' taxes.  
¶11 On February 6, 2013, Attorney Laux provided the 
clients with a Proposed Annuity Policy Memorandum (Memorandum) 
which recommended a list of nine annuities in the sum of 
$2,120,000.  
¶12 In March 5, 2013, Attorney Laux made two $250,000 
withdrawals from the U.S. Bank checking account.  Attorney Laux 
used this money for her own personal or business purposes.  
¶13 In April 2013, H.F. passed away.  On June 7, 2013, 
Attorney Laux met with M.F. and her son, Mark, regarding the 
purchase of annuities listed in the February 6, 2013 Memorandum.  
At the meeting, Attorney Laux made several misrepresentations, 
including that:  (1) she had purchased three $250,000 annuity 
contracts for M.F. in March, April, and May 2013, totaling 
$750,000, and the contracts were locked in a safe in her office; 
(2) after the clients' stock portfolio was liquidated, funds of 
No. 
2014AP974-D   
 
6 
 
about $2,100,000 were transferred from the brokerage account to 
two annuity companies, Phoenix and American, and the companies 
were holding the funds in a bank account until the annuities 
were purchased as per the Memorandum; (3) the annuities would 
not "kick in" until 12 months after purchase and a lock or hold 
would be placed on the accounts during that time, so they would 
not be available to M.F.; and (4) M.F. would not be able to 
access her account until the lock or hold period was over.  
Attorney Laux also falsely stated that the Phoenix policy paid 
an eight percent bonus.  
¶14 After the meeting, M.F.'s son contacted Phoenix and 
American.  Both companies informed him that they do not hold 
customer funds in an account or bank until the purchase of 
annuities and do not deny access to customers.  M.F.'s son 
subsequently called Attorney Laux and demanded to see the three 
annuity contracts.  
¶15 The next day, Attorney Laux met with M.F. and her son 
and again falsely informed them that she had purchased annuities 
for 
M.F.; 
she 
provided 
them 
with 
three 
false 
Contract 
Specification documents with certain policy numbers.  Attorney 
Laux 
also 
falsely 
informed 
M.F. 
and 
her 
son 
that 
the 
$2,184,125.30 had been deposited into a U.S. Bank Account in the 
name of the clients, under HMFF, using the funds from the stock 
portfolio liquidation. 
¶16 After the June 8 meeting, Mark learned that the policy 
numbers existed but were not in M.F.'s name; Attorney Laux was 
the agent of record.  Mark also learned from U.S. Bank that his 
No. 
2014AP974-D   
 
7 
 
parents did not hold any accounts with U.S. Bank; Attorney Laux 
was the holder of the HMFF account at U.S. Bank.   
¶17 On June 11, 2013, Mark contacted Attorney Laux and 
directed she not purchase any annuities in his mother's name 
until things were cleared up.  Attorney Laux agreed to a meeting 
at M.F.'s home.  There, Attorney Laux informed M.F. and her son 
that she had, without M.F.'s knowledge or permission, taken 
hundreds of thousands of dollars from the HMFF account, which 
she used for her own personal and business expenses.  Attorney 
Laux admitted that she began making withdrawals to herself from 
the clients' account beginning in March 2013 and that she had 
committed fraud.  Attorney Laux also admitted that she did not 
purchase $750,000 in annuities for M.F., contrary to her 
previous statements.  Attorney Laux provided M.F. with five U.S. 
Bank cashier's checks, all dated June 11, 2013, as follows: 
$250,000 to Phoenix; $250,000 to Phoenix; $250,000 to American; 
$250,000 to American; and $90,827.21 to American.  Attorney Laux 
also falsely informed M.F. that the purchase of a Phoenix 
annuity in the amount of $250,000 was in progress and could not 
be stopped.  
¶18 The next morning, just prior to another meeting with 
M.F. and her son, Attorney Laux went to a U.S. Bank location and 
withdrew $84,172.79 from the checking account.  She then went to 
another U.S. Bank location and withdrew $822.23 in cash from the 
money market fund.  This zeroed out both accounts.   
¶19 That same day, Attorney Laux, M.F., and M.F.'s son met 
at a U.S. Bank branch location, cancelled the five bank checks 
No. 
2014AP974-D   
 
8 
 
written out to Phoenix and American, and obtained a cashier's 
check in the amount of $1,090,827.21, made payable to the HMFF 
Transitional Trust and M.F.  
¶20 A couple days later, Attorney Laux forwarded an 
application, with M.F.'s signature, for a $250,000 Phoenix 
annuity for M.F.  On June 18, 2013, a Needs Assessment was faxed 
to Phoenix with changes initialed "MF."  M.F. denies that her 
signature is on the annuity application or that she initialed 
the Needs Assessment.  
¶21 On June 12, 2013, M.F.'s son alerted the Milwaukee 
office of the Federal Bureau of Investigation of Attorney Laux's 
conduct.  Attorney Laux was criminally charged and the matter 
remains pending as of the date of this decision.  Mark also 
filed a grievance against Attorney Laux with the OLR.3  
¶22 In her petition, Attorney Laux does not contest, for 
purposes of this disciplinary proceeding, that she converted 
$584,995.02 from M.F. and H.F. for her own personal and business 
purposes.   
                                                 
3 On August 14, 2013, Mark filed a complaint against 
Attorney Laux on his mother's behalf with the Wisconsin Office 
of the Commissioner of Insurance (OCI).  Attorney Laux, 
asserting 
her 
Fifth 
Amendment 
privilege 
against 
self-
incrimination, did not participate in the OCI proceedings.  
Attorney Laux's insurance license was revoked and she was 
ordered to pay restitution to M.F. in the amount of $584,995.02, 
as well as a forfeiture of $32,000 to the State of Wisconsin and 
an additional restitutionary forfeiture of $600,000 to the State 
of Wisconsin.  To date, Attorney Laux has apparently not 
provided the ordered restitution to M.F. 
No. 
2014AP974-D   
 
9 
 
¶23 Attorney Laux does not contest that she engaged in the 
following misconduct: 
• By transferring $2,184,125.03 of her clients' money into 
the HMFF account at U.S. Bank, an account over which she 
had sole control, without the clients' consent or 
authorization, Attorney Laux violated SCR 20:1.15(j)(l).4  
• On March 5, 2013, by making two $250,000 withdrawals of 
the clients' funds from an HMFF checking account to 
herself via cashier's checks, Attorney Laux violated 
SCR 20:1.15(j)(1) and SCR 20:8.4(c).5 
• On June 12, 2013, by appearing at a U.S. Bank branch in 
Greendale, 
Wisconsin 
and 
withdrawing 
for 
personal 
enrichment $84,172.79 (via cashier's check) of the 
client's funds from an HMFF checking account, zeroing out 
the account, Attorney Laux violated SCR 20:1.15(j)(1) and 
SCR 20:8.4(c). 
• On June 12, 2013, by making a cash withdrawal of $822.23 
of the client's funds for personal enrichment from an 
HMFF money market account at a U.S. Bank branch in 
                                                 
4 SCR 20:1.15(j)(1) provides that "[a] lawyer shall hold in 
trust, separate from the lawyer's own funds or property, those 
funds or that property of clients or 3rd parties that are in the 
lawyer's possession when acting in a fiduciary capacity that 
directly arises in the course of, or as a result of, a lawyer-
client relationship or by appointment of a court." 
5 SCR 20:8.4(c) provides that it is professional misconduct 
for a lawyer to "engage in conduct involving dishonesty, fraud, 
deceit or misrepresentation." 
No. 
2014AP974-D   
 
10 
 
Mequon, Wisconsin, zeroing out the account, Attorney Laux 
violated SCR 20:1.15(j)(1) and SCR 20:8.4(c). 
• By 
making 
multiple 
representations 
to 
her 
client 
regarding her purchase of annuities on the client's 
behalf, when at the time no annuities had been purchased, 
Attorney Laux violated SCR 20:8.4(c). 
• By submitting forged documents to purchase annuities on 
behalf of M.F. a few days after she confessed her fraud 
to 
M.F. 
and 
M.F.'s 
son, 
Attorney 
Laux 
violated 
SCR 20:8.4(c). 
Matter of R.F. and Y.F.  
¶24 The amended complaint also alleges eight counts of 
misconduct 
committed 
in 
connection 
with 
Attorney 
Laux's 
representation of R.F. and Y.F.  
¶25 In 2009 or 2010, Attorney Laux purchased Family 
Foundation of Midwest (FFM), an estate planning company that 
used 
targeted 
mailing 
to 
invite 
certain 
people 
to 
free 
educational seminars about estate planning.  Attorney Laux had 
prepared documents for FFM clients and given educational 
presentations at monthly seminars.  Attorney Laux renamed the 
company Family Foundation Planning (FFP) and represented FFP as 
a nonprofit organization.  FFP referred its legal work to 
Attorney Laux's own law firm, Laux Law LLC (Laux Law).   
¶26 In 2010, R.F. and Y.F. attended a FFP seminar, then 
met with Attorney Laux to discuss their estate planning needs.  
The clients entered into a one-year "Patronship Agreement" with 
FFP for a fee of $4,250.  The agreement entitled the clients to 
No. 
2014AP974-D   
 
11 
 
basic and advanced estate planning documents, as well as other 
benefits, to be prepared by licensed attorneys retained by FFP.  
There was no written fee agreement explaining the basis or the 
rate of Laux Law's legal fees.  Attorney Laux did not have an 
IOLTA account and did not deposit the clients' advance fees in 
trust. 
¶27 Attorney Laux made a number of errors preparing estate 
planning 
documents 
for 
R.F. 
and 
Y.F. 
 
She 
repeatedly 
miscalculated the percentages of the estate that various 
beneficiaries were to receive.  The trust documents drafted by 
Attorney 
Laux 
contained 
many 
significant 
drafting 
errors, 
including failing to properly identify the scholarship fund 
established in memory of the clients' daughter.  Attorney Laux 
also created a "Transition Trust" for these clients, a document 
which potentially placed the clients in a devastating financial 
position, depriving them of all their assets.  She was difficult 
to reach and sent legal documents to the wrong recipients.  
Eventually, 
R.F. 
and 
Y.F. 
terminated 
Attorney 
Laux's 
representation and retained another attorney to redo their 
estate plan.  
¶28 During the OLR's ensuing investigation into Attorney 
Laux's conduct, Attorney Laux told the district committee that 
she used vague terms in the estate documents because the clients 
did not know the name of the organization to which they wanted 
to leave their property and other entities were not yet 
established.  This was not true.  Attorney Laux also failed to 
produce documents requested by the OLR.  
No. 
2014AP974-D   
 
12 
 
¶29 Attorney Laux does not contest that she engaged in the 
following misconduct in this matter: 
• By entering into a business entity known as FFP that 
provided estate planning and other legal services to 
clients, where the entity held itself out as a not-for-
profit corporation and the partners in the entity were 
nonlawyers, Attorney Laux violated SCR 20:5.4(b).6 
• Having received legal fees in excess of $1,000, including 
advanced fees, by failing to enter into a written fee 
agreement that clearly explained the basis of her fees, 
Attorney Laux violated SCR 20:1.5(b)(1) and (2).7 
                                                 
6 SCR 20:5.4(b) provides that "[a] lawyer shall not form a 
partnership with a nonlawyer if any of the activities of the 
partnership consist of the practice of law." 
7 SCR 20:1.5(b)(1) and (2) provide: 
(1) The scope of the representation and the basis 
or rate of the fee and expenses for which the client 
will be responsible shall be communicated to the 
client in writing, before or within a reasonable time 
after commencing the representation, except when the 
lawyer will charge a regularly represented client on 
the same basis or rate as in the past.  If it is 
reasonably 
foreseeable 
that 
the 
total 
cost 
of 
representation to the client, including attorney's 
fees, will be $1000 or less, the communication may be 
oral or in writing. Any changes in the basis or rate 
of the fee or expenses shall also be communicated in 
writing to the client.  
(2) If the total cost of representation to the 
client, including attorney's fees, is more than $1000, 
the purpose and effect of any retainer or advance fee 
that is paid to the lawyer shall be communicated in 
writing. 
No. 
2014AP974-D   
 
13 
 
• By failing to hold advance fees in a trust account, 
without 
complying 
with 
the 
requirements 
of 
SCR 20:1.15(b)(4m), 
Attorney 
Laux 
violated 
SCR 20:1.15(b)(4).8 
• By failing to properly draft estate documents and by 
failing to provide appropriate estate planning advice, 
while holding herself out as an estate expert, Attorney 
Laux violated SCR 20:1.1.9 
• By preparing a Transition Trust for the clients and by 
failing to explain the consequences of such a trust, 
which was outside the purposes for which the clients 
hired her, Attorney Laux violated SCR 20:1.2(a).10 
                                                 
8 SCR 20:1.15(b)(4) provides that, "[e]xcept as provided in 
par. (4m), unearned fees and advanced payments of fees shall be 
held in trust until earned by the lawyer, and withdrawn pursuant 
to sub. (g).  Funds advanced by a client or 3rd party for 
payment of costs shall be held in trust until the costs are 
incurred." 
9 SCR 20:1.1 provides that "[a] lawyer shall provide 
competent representation to a client.  Competent representation 
requires 
the 
legal 
knowledge, 
skill, 
thoroughness 
and 
preparation reasonably necessary for the representation." 
10 SCR 20:1.2(a) provides: 
Subject to pars. (c) and (d), a lawyer shall 
abide 
by 
a 
client's 
decisions 
concerning 
the 
objectives of representation and, as required by SCR 
20:1.4, shall consult with the client as to the means 
by which they are to be pursued. A lawyer may take 
such action on behalf of the client as is impliedly 
authorized to carry out the representation. A lawyer 
shall abide by a client's decision whether to settle a 
matter. In a criminal case or any proceeding that 
could result in deprivation of liberty, the lawyer 
(continued) 
No. 
2014AP974-D   
 
14 
 
• By failing to provide promised revisions or proposed 
language changes to documents related to the clients' 
desire to leave property to a not-for-profit corporation, 
Attorney Laux violated SCR 20:1.3.11 
• By failing to communicate with her clients, including 
failing to keep the clients informed and failing to 
respond to their reasonable requests for information, 
Attorney Laux violated SCR 20:1.4(a)(3) and (4).12 
• By making inconsistent statements to the OLR's district 
committee 
investigators 
and 
by 
failing 
to 
produce 
requested documents to the OLR, Attorney Laux violated 
SCR 22.03(6),13 enforced via SCR 20:8.4(h).14 
                                                                                                                                                             
shall 
abide 
by 
the 
client's 
decision, 
after 
consultation with the lawyer, as to a plea to be 
entered, whether to waive jury trial and whether the 
client will testify. 
11 SCR 20:1.3 provides that "[a] lawyer shall act with 
reasonable diligence and promptness in representing a client." 
12 SCR 20:1.4(a)(3) and (4) provide that a lawyer shall 
"keep the client reasonably informed about the status of the 
matter" and "promptly comply with reasonable requests by the 
client for information." 
13 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. 
2014AP974-D   
 
15 
 
Matter of S.C. 
¶30 The amended complaint also alleges three counts of 
misconduct pertaining to Attorney Laux's representation of S.C. 
¶31 In August 2007, S.C. was placed in a nursing home due 
to her declining physical and mental health.  Her sister-in-law 
had a general power of attorney for S.C.  While in the nursing 
home, S.C. was contacted by a representative of FFM to do some 
estate planning.  Attorney Laux met with S.C. at the nursing 
home.  At that time, S.C.'s estate had a value of approximately 
$500,000.  There were four beneficiaries to the estate, 
including J.C., the client's brother. 
¶32 On August 9, 2007, S.C. signed a membership agreement 
with FFM for estate planning documents and paid FFM a total fee 
of $3,000.  There was no written fee agreement.  Attorney Laux 
drafted a trust document for S.C., relying on a spreadsheet and 
information gathered and prepared by a FFM representative.  
Attorney Laux also initially set up a LLC, which was never 
funded or closed.  In addition, Attorney Laux recommended 
advanced estate planning in the form of a Transition Trust to 
protect S.C.'s assets.  In 2008, when Attorney Laux left her 
previous firm, Kitzke & Associates, and formed Laux Law, S.C. 
                                                                                                                                                             
14 SCR 20:8.4(h) provides that 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. 
2014AP974-D   
 
16 
 
apparently became a client of Laux Law without her specific 
consent and without documentation. 
¶33 In August 2008, a Transition Trust was drafted by 
Attorney Laux and signed by S.C.  At the time the Transition 
Trust was signed, there were questions about S.C.'s competence.  
In November 2011, S.C. passed away.  At the time, her estate was 
worth approximately $100,000.  
¶34 On June 18, 2012, Attorney Laux sent a letter to the 
Trust beneficiaries, including J.C., attaching a Trust Receipt 
and Release requesting that J.C. "accept and approve the 
attached accounting of receipts and disbursements for the Trust" 
in order to receive his share of the Trust proceeds.  However, 
no accounting was attached to the letter. 
¶35 Frustrated by Attorney Laux's lack of response to his 
requests for an accounting, J.C. contacted another attorney.  In 
August 2012, Attorney Laux sent the new attorney a letter, 
enclosing a spreadsheet of expenses incurred at the time of 
S.C.'s death.  In October 2012, Attorney Laux sent the attorney 
bank statements from November 2011 through July 2012.  Attorney 
Laux did not, however, provide an accounting relating to the 
time period prior to S.C.'s death.   
¶36 J.C. eventually filed a grievance with the OLR against 
Attorney Laux.  During the ensuing grievance investigation, 
Attorney Laux failed to produce requested documents and made 
misrepresentations to the OLR's district committee members.   
¶37 Attorney Laux does not contest that she engaged in the 
following misconduct in this matter: 
No. 
2014AP974-D   
 
17 
 
• By entering into a business entity known as FFP that 
provided estate planning and other legal services to 
clients, where the entity held itself out as a not-for-
profit corporation and the partners in the entity were 
nonlawyers, Attorney Laux violated SCR 20:5.4(b).  
• By failing to hold advance fees in a trust account, 
without complying with any of the requirements of 
SCR 20:1.15(b)(4m), 
Attorney 
Laux 
violated 
SCR 20:1.15(b)(4). 
• By making inconsistent statements to the OLR's district 
committee 
investigators 
and 
by 
failing 
to 
produce 
requested documents to the OLR, Attorney Laux violated 
SCR 22.03(6), enforced via SCR 20:8.4(h). 
Matter of A.C. and J.C. 
¶38 The amended complaint also alleges six counts of 
misconduct 
committed 
in 
connection 
with 
Attorney 
Laux's 
representation of A.C. and J.C.  
¶39 In late fall 2007, A.C. and J.C. responded to a FFM 
advertisement for a free luncheon near West Bend, Wisconsin.  
J.C. was beginning to exhibit signs of dementia and the couple 
sought assistance protecting their assets.  On November 13, 
2007, A.C. and J.C. entered into a membership agreement with FFM 
and paid $1,600 for basic estate planning.  No fee agreement was 
executed.   
¶40 On January 8, 2008, A.C. and J.C. signed forms and 
documents including a marital property agreement, a family 
trust, last wills and testaments, and powers of attorney.   
No. 
2014AP974-D   
 
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¶41 In 2008, when Attorney Laux formed Laux Law, A.C. and 
J.C. apparently became clients of Laux Law without their 
specific consent and without documentation.  
¶42 As 
J.C.'s 
health 
worsened, 
A.C. 
consulted 
with 
Attorney Laux and FFM and was told she now needed advanced 
estate planning.  On June 3, 2009, A.C., using a power of 
attorney for her husband, entered into another membership 
agreement with FFM for a payment of $3,500.  There was no 
written fee agreement.  Attorney Laux also charged the clients 
additional sums for work Attorney Laux purportedly performed 
during the representation.  Attorney Laux has not produced to 
the clients or to the OLR either a fee agreement or any billing 
records for her work. 
¶43 In June 2009, J.C. was diagnosed with Alzheimer's 
disease and placed in a private assisted living facility.  
Attorney Laux had A.C. sign numerous documents transferring the 
clients' 
assets 
between 
themselves 
and 
then 
into 
the 
a 
Transition Trust, utilizing a "Spousal Refusal."  
¶44 It is not disputed here that "Spousal Impoverishment" 
would have been the preferable option given the size of the 
clients' estate, which was under $300,000, and their limited 
annual income.  Spousal Impoverishment would have allowed A.C. 
to retain her husband's income and most, if not all, of the 
couple's assets.  Under Spousal Refusal, A.C. was unable to 
collect her husband's social security checks.  A.C. also signed 
a document which explained the difference between Spousal 
No. 
2014AP974-D   
 
19 
 
Refusal and Spousal Impoverishment.  However, Attorney Laux did 
not explain the differences to A.C.  
¶45 Because Attorney Laux elected Spousal Refusal, J.C. 
had a difficult time having his application for Medicaid and 
Title 19 accepted, making the clients ineligible for Medicare 
and financially responsible for all of J.C.'s care at the 
assisted living facility.  On June 15, 2010, J.C. was moved to a 
state institution.  In an effort to "undo" the severe monetary 
predicament that A.C. was placed in due to Attorney Laux's 
decision to use Spousal Refusal, another attorney assumed 
responsibility for the case and unsuccessfully attempted to have 
the initial Medicare disqualification ruling overturned on 
appeal.  
¶46 While attempting to get J.C. accepted on Title 19 and 
Medicaid, the couple's assets were depleting at a rate of $9,000 
per month for J.C.'s care.  The couple's assets eventually 
dwindled down to $100,000.  After A.C. paid for residential care 
from June 2010 through August 2010, Attorney Laux advised A.C. 
to stop paying the care facility because her husband would be 
eligible 
for 
Title 
19 
and 
benefits 
would 
take 
effect 
retroactively.  
¶47 However, Title 19 benefits were not available to J.C. 
until February 2011.  Consequently, the couple was responsible 
for $50,000 worth of unpaid medical bills, plus interest and 
penalties.  Attorney Laux did not attempt to negotiate with the 
care facility, and instead recommended that the couple pay the 
entire amount due.  During Attorney Laux's representation, A.C. 
No. 
2014AP974-D   
 
20 
 
only spoke to Attorney Laux on two or three occasions, and she 
had a difficult time getting Attorney Laux to respond to her.  
There were lengthy periods of time during which the clients 
received no communication or status updates.  Eventually, the 
clients terminated their relationship with Attorney Laux and 
hired another attorney to represent them.  The new attorney 
negotiated a settlement with the care facility so that the 
clients would only have to pay the outstanding bills, and the 
interest and penalties were waived.  
¶48 During 
the 
ensuing 
OLR 
grievance 
investigation, 
Attorney Laux failed to produce certain documents, despite 
repeated requests.  During the course of the investigation, 
Attorney Laux made misrepresentations to the OLR's district 
committee 
members, 
including, 
but 
not 
limited 
to, 
misrepresentations related to her reasoning for choosing Spousal 
Refusal, that A.C. and J.C. were not clients of Laux Law, and 
misrepresentations 
related 
to 
her 
conversations 
with 
the 
clients.  
¶49 Attorney Laux does not contest that she engaged in the 
following misconduct in this matter: 
• By entering into a business entity known as FFP that 
provided estate planning and other legal services to 
clients, where the entity held itself out as a not-for-
profit corporation and the partners in the entity were 
nonlawyers, Attorney Laux violated SCR 20:5.4(b). 
• By failing to execute a written fee agreement with her 
clients, where her attorneys fees totaled at least $4,100 
No. 
2014AP974-D   
 
21 
 
and advanced fees exceeded $1,000, Attorney Laux violated 
SCR 20:1.5(b)(1) and (2). 
• By failing to communicate with her clients, including 
failing 
to 
respond 
to 
reasonable 
requests 
for 
information, Attorney Laux violated SCR 20:1.4(a)(3) and 
(4). 
• By failing to provide appropriate information regarding 
applying for a Spousal Refusal as part of her clients' 
estate plan, while holding herself out as an expert in 
estate planning, Attorney Laux violated SCR 20:1.1.  
• By failing to explain the difference between Spousal 
Impoverishment and Spousal Refusal and failing to explain 
the benefits and detriments of either estate planning 
action, Attorney Laux violated SCR 20:1.4(b).15 
• By making inconsistent statements to the OLR's district 
committee 
investigators 
and 
by 
failing 
to 
produce 
requested documents to the OLR, Attorney Laux violated 
SCR 22.03(6), enforced via SCR 20:8.4(h). 
Pending Grievances 
¶50 In addition, when Attorney Laux filed her petition for 
consensual license revocation, the OLR was investigating 28 
additional allegations of misconduct.   
                                                 
15 SCR 20:1.4(b) provides that "[a] lawyer shall explain a 
matter to the extent reasonably necessary to permit the client 
to make informed decisions regarding the representation." 
No. 
2014AP974-D   
 
22 
 
¶51 Several attorneys who worked with Attorney Laux filed 
grievances, including attorneys of Associated Bank, who alleged 
that Attorney Laux failed to account for funds, sent them false 
bank 
statements, 
drafted 
documents 
that 
were 
personally 
advantageous to Attorney Laux without securing a conflict 
waiver, and misappropriated funds.  A recent law graduate who 
worked briefly for Attorney Laux also expressed concern, in 
writing, about Attorney Laux's practices. 
¶52 The pending grievances are numerous.  They include an 
allegation that Attorney Laux misappropriated $1,654,140.72 from 
a client in the matter of the C.V.J. Trust.  This misconduct 
lead to a lawsuit in Milwaukee County in which the plaintiffs 
allege that Attorney Laux engaged in conversion, theft, fraud, 
misrepresentation, breach of fiduciary duty, breach of contract, 
unjust 
enrichment, 
negligence, 
fraudulent 
transfers, 
and 
conspiracy.  
¶53 Several clients have alleged that they paid Attorney 
Laux to prepare a transition trust or revocable trust and later 
learned that the documents she prepared did not meet their 
objectives and, indeed, would or did cause them serious 
financial problems.  
¶54 Other clients allege that Attorney Laux provided them 
incorrect legal guidance, failed to follow through on promised 
legal work, and failed to purchase annuities, as promised; many 
also indicate that Attorney Laux was difficult to reach.  All 
told, the pending grievances involve possible violations of the 
following supreme court rules:  20:1.1 (23 matters),  20:1.2(a) 
No. 
2014AP974-D   
 
23 
 
(two matters), 20:1.3 (19 matters), 20:1.4(a) and/or (b) (19 
matters), 20:1.5(a)16 (16 matters), 20:1.7(a)17 (two matters), 
                                                 
16 SCR 20:1.5(a) provides: 
A lawyer shall not make an agreement for, charge, 
or collect an unreasonable fee or an unreasonable 
amount for expenses. The factors to be considered in 
determining the reasonableness of a fee include the 
following: 
(1) the time and labor required, the novelty and 
difficulty of the questions involved, and the skill 
requisite to perform the legal service properly;  
(2) the likelihood, if apparent to the client, 
that the acceptance of the particular employment will 
preclude other employment by the lawyer; 
(3) the fee customarily charged in the locality 
for similar legal services; 
(4) the amount involved and the results obtained; 
(5) the time limitations imposed by the client or 
by the circumstances; 
(6) the nature and length of the professional 
relationship with the client;  
(7) the experience, reputation, and ability of 
the lawyer or lawyers performing the services; and 
(8) whether the fee is fixed or contingent. 
17 SCR 20:1.7(a) provides: 
Except as provided in par. (b), a lawyer shall 
not represent a client if the representation involves 
a 
concurrent 
conflict 
of 
interest. 
A 
concurrent 
conflict of interest exists if: 
(1) the representation of one client will be 
directly adverse to another client; or 
(continued) 
No. 
2014AP974-D   
 
24 
 
20:1.8(a)18 (two matters), 20:1.15 (four matters), 20:1.16(d)19 
(two matters), 20:8.4(b)20 (two matters), and 20:8.4(c) (26 
matters). 
                                                                                                                                                             
(2) 
there 
is 
a 
significant 
risk 
that 
the 
representation 
of 
one 
or 
more 
clients 
will 
be 
materially limited by the lawyer's responsibilities to 
another client, a former client or a third person or 
by a personal interest of the lawyer. 
18 SCR 20:1.8(a) provides: 
A 
lawyer 
shall 
not 
enter 
into 
a 
business 
transaction with a client or knowingly acquire an 
ownership, possessory, security or other pecuniary 
interest adverse to a client unless: 
(1) the transaction and terms on which the lawyer 
acquires the interest are fair and reasonable to the 
client and are fully disclosed and transmitted in 
writing in a manner that can be reasonably understood 
by the client; 
(2) the client is advised in writing of the 
desirability of seeking and is given a reasonable 
opportunity to seek the advice of independent legal 
counsel on the transaction; and 
(3) the client gives informed consent, in a 
writing signed by the client, to the essential terms 
of the transaction and the lawyer's role in the 
transaction, 
including 
whether 
the 
lawyer 
is 
representing the client in the transaction. 
19 SCR 20:1.16(d) provides: 
Upon termination of representation, a lawyer 
shall take steps to the extent reasonably practicable 
to protect a client's interests, such as giving 
reasonable notice to the client, allowing time for 
employment of other counsel, surrendering papers and 
property to which the client is entitled and refunding 
any advance payment of fee or expense that has not 
been earned or incurred. The lawyer may retain papers 
(continued) 
No. 
2014AP974-D   
 
25 
 
¶55 When reviewing a report and recommendation in an 
attorney disciplinary proceeding, we affirm a referee's findings 
of fact unless they are found to be clearly erroneous.  In re 
Disciplinary Proceedings Against Inglimo, 2007 WI 126, ¶5, 
305 Wis. 2d 71, 
740 N.W.2d 125. 
 
We 
review 
the 
referee's 
conclusions of law, however, on a de novo basis.  Id.  We 
determine 
the 
appropriate 
level 
of 
discipline 
given 
the 
particular facts of each case, independent of the referee's 
recommendation, but benefitting from it.  In re Disciplinary 
Proceedings Against Widule, 2003 WI 34, ¶44, 261 Wis. 2d 45, 
660 N.W.2d 686.   
¶56 Attorney Laux's petition for consensual revocation 
states 
that 
she 
cannot 
successfully 
defend 
against 
the 
allegations of professional misconduct set forth in both the 
amended 
complaint 
and 
the 
summary 
of 
the 
matters 
being 
investigated.  Her petition asserts that she is seeking 
consensual revocation freely, voluntarily, and knowingly and 
that restitution should be imposed.  She states that she 
understands she is giving up her right to contest the OLR's 
allegations.  She has counsel in this matter.  The OLR supports 
Attorney Laux's petition.  The referee determined, based on 
                                                                                                                                                             
relating to the client to the extent permitted by 
other law. 
20 SCR 20:8.4(b) provides that it is professional misconduct 
for a lawyer to "commit a criminal act that reflects adversely 
on the lawyer's honesty, trustworthiness or fitness as a lawyer 
in other respects." 
No. 
2014AP974-D   
 
26 
 
Attorney Laux's petition and the OLR's response, by clear, 
satisfactory, and convincing evidence, that Attorney Laux has 
engaged in very serious misconduct, and he recommends that we 
accept the petition, order restitution, and revoke Attorney 
Laux's license to practice law. 
¶57 Attorney Laux's misconduct is egregious and warrants 
the severest level of discipline that we impose, namely, the 
revocation of her license to practice law in Wisconsin.  
Anything less than a revocation of her license to practice law 
would unduly depreciate the seriousness of her misconduct.  We 
agree with the referee's recommendation that we accept Attorney 
Laux's petition for consensual license revocation. 
¶58 We 
now 
consider 
restitution. 
 
The 
referee's 
recommendations for restitution are consistent with the amended 
complaint, Attorney Laux's petition, and the OLR's response.  We 
order Attorney Laux to pay $584,995.02 in restitution to M.F., 
less $150,000 paid to M.F. by the Wisconsin Lawyers' Fund for 
Client Protection (Fund),21 and she shall also pay restitution to 
                                                 
21 Attorney 
Laux's 
petition 
for 
consensual 
license 
revocation at paragraph 7 states that she should be ordered to 
make the appropriate restitution in the amount of "$398,995.02 
to [M.F.] ($584,995.02 - $150,000 paid by the Fund), less any 
funds already provided by me to [M.F.] in restitution."  This 
does not add up.  $584,995.02 - $150,000.00 = $434,995.02.  This 
appears to be a math error that is repeated in the referee's 
report. 
 
The 
record 
reflects 
that 
M.F. 
is 
entitled 
to 
restitution in the amount of $584,995.02 and to the extent the 
Fund has paid M.F. a portion of her losses, Attorney Laux should 
reimburse the Fund. 
No. 
2014AP974-D   
 
27 
 
the Fund for the $150,000 attributable to the Fund's approval 
and payment on M.F.'s claim. 
¶59 The 
referee 
further 
recommends 
that 
we 
order 
restitution in seven of the 28 grievances under investigation at 
the time of the petition:  $4,000 to R.R. and C.R.; $1,500 to 
T.M.; $22,420 to D.B.; $4,000 to R.B. and J.B.; $2,100 to M.B.; 
$3,500 to R.G. and S.G.; and 4,000 to K.S. and L.C.S.   
¶60 The OLR has advised the court that it does not seek 
restitution in a number of the client matters implicated in this 
proceeding.22  Although the recommended restitution in this case 
exceeds the staggering sum of $590,000, it is readily apparent 
that Attorney Laux has failed to account for significantly more 
money from a number of other clients who were victimized by her 
egregious misconduct.   
¶61 Two of the grievances are also part of a criminal 
proceeding pending against Attorney Laux in federal court.  If 
Attorney Laux is ordered to pay restitution by the U.S. District 
Court in the criminal proceeding, Attorney Laux will be directed 
to pay that restitution amount. 
¶62 In several matters, however, the OLR advises this 
court that its investigation to date has not revealed a 
                                                 
22 The OLR's policy is to seek restitution only under the 
following circumstances: (1) there is a reasonably ascertainable 
amount; (2) the funds to be restored were in the respondent 
lawyer's direct control; (3) the funds to be restored do not 
constitute incidental or consequential damages; and (4) the 
grievant's or respondent's rights in a collateral proceeding 
will not likely be prejudiced. 
No. 
2014AP974-D   
 
28 
 
reasonably ascertainable amount, if any, of restitution to seek.  
In other cases, the OLR indicates that Attorney Laux performed 
some work and, again, the OLR's investigation to date does not 
provide 
a 
reasonably 
ascertainable 
amount, 
if 
any, 
of 
restitution to seek.  
¶63 It is imperative that we revoke Attorney Laux's law 
license now, so we will accede to the OLR's restitution 
recommendations.  However, we emphasize that, prior to any 
reinstatement of Attorney Laux's Wisconsin law license, we will 
revisit the issue of restitution.  See SCR 22.29(4m) (any 
attorney petitioning for reinstatement from a disciplinary 
suspension of six months or more is required to allege and 
demonstrate that the attorney "has made restitution to or 
settled all claims of persons injured or harmed by [the 
attorney's] misconduct . . . or, if not, the [attorney's] 
explanation of the failure or inability to do so").   
¶64 Indeed, Attorney Laux, herself, acknowledges in her 
petition that, should she ever seek reinstatement, as a 
condition 
of 
any 
future 
reinstatement, 
pursuant 
to 
SCR 22.29(4m), she must prove that she has made full restitution 
to and settled all claims of persons harmed by the alleged 
misconduct, including that she has satisfied any restitution 
ordered as a result of any civil or criminal charges filed 
against her. 
¶65 Finally, we further determine that Attorney Laux 
should be required to pay the full costs of this proceeding.  
SCR 22.24(1m). 
No. 
2014AP974-D   
 
29 
 
¶66 IT IS ORDERED that the license of Sarah E.K. Laux to 
practice law in Wisconsin is revoked, effective the date of this 
order. 
¶67 IT IS FURTHER ORDERED that Sarah E.K. Laux make 
restitution in the following amounts and client matters: 
• $584,995.02, less $150,000 paid by the Wisconsin Lawyers' 
Fund for Client Protection, to M.F.  
• $150,000 to the Wisconsin Lawyers' Fund for Client 
Protection, attributable to the Fund's payment on M.F.'s 
claim  
• $4,000 to R.R. and C.R.  
• $1,500 to T.M. 
• $22,420 to D.B. 
• $4,000 to R.B. and J.B.  
• $2,100 to M.B.  
• $3,500 to R.G. and S.G.  
• $4,000 to K.S. and L.C.S.  
¶68 IT IS FURTHER ORDERED that Sarah E.K. Laux shall pay 
restitution consistent with any final monetary order or judgment 
issued in any civil or criminal case filed against her in 
connection with the misconduct alleged herein. 
¶69 IT IS FURTHER ORDERED that within 60 days of the date 
of this order, Sarah E.K. Laux shall pay to the Office of Lawyer 
Regulation the costs of this proceeding. 
¶70 IT IS FURTHER ORDERED that the restitution specified 
above is to be completed prior to paying costs to the Office of 
Lawyer Regulation. 
No. 
2014AP974-D   
 
30 
 
¶71 IT IS FURTHER ORDERED that, to the extent she has not 
already done so, Sarah E.K. Laux shall comply with the 
provisions of SCR 22.26 concerning the duties of a person whose 
license to practice law in Wisconsin has been revoked. 
¶72 PATIENCE DRAKE ROGGENSACK, C.J., did not participate. 
 
No. 
2014AP974-D   
 
 
 
1