Opinion ID: 2637936
Heading Depth: 1
Heading Rank: 7

Heading: The Wright Matter

Text: (Neglect  Colo. RPC 1.3; Failure to Communicate  Colo. 1.4(a); Dishonesty, Fraud, Deceit or Misrepresentation  Colo. RPC 8.4(c)) 21. Paragraphs 1 through 20 are incorporated herein. 22. Steven and Maryanne Wright are married. Steven Wright is an insurance agent who met the respondent through a mutual client in 1994 or 1995. 23. In 1997, Mr. and Mrs. Wright had been engaged in a dispute with the IRS over the amount of a tax liability owed for a number of years. The IRS contended that the Wrights owed approximately $75,600 in income tax for the 1992 through 1995 tax years. 24. On or about March 28, 1997, the Wrights entered into an installment agreement with the IRS to pay $150 per month on their tax liability until final resolution of their tax problem. The IRS had already filed a tax lien against them, but was not pursuing collection. The Wrights, through attorney James Mundt, submitted an offer in compromise to settle the matter for $25,000. 25. In about August 1997, the Wrights discussed their IRS problems with the respondent, who volunteered to take a look at their tax information. The respondent thereafter advised the Wrights that by changing their designations to a cash basis taxpayer and re-filing past tax returns, there would be no past tax due and they would be subject to a refund. The respondent also suggested filing an innocent spousal appeal, asserting that Ms. Wright had no knowledge of the tax situation. 26. The Wrights thereafter retained the respondent to amend their taxes. The Wrights did not enter into a fee agreement with the respondent. 27. Subsequently, in 1997 and 1998, the respondent represented to the Wrights that he was negotiating with the IRS and that he had prepared amended tax returns for the tax years 1992 through 1997. The respondent advised the Wright to stop making their $150 per month payments to the IRS under the installment contract because his negotiations with the IRS had proved fruitful. In fact, the respondent had made no contact with the IRS. This conduct violates Colo. RPC 8.4(c) (engaging in conduct involving dishonesty, fraud, deceit or misrepresentation). 28. The respondent misrepresented to the Wrights that not only did they have no tax liability for 1992 through 1997, but that they were also entitled to a refund of $18,000. This conduct violates Colo. RPC 8.4(c) (engaging in conduct involving dishonesty, fraud, deceit or misrepresentation). 29. In January 1999, the respondent sent the Wrights a copy of a letter purportedly written to him by Martindale-Hubbell. This letter was fraudulent and stated: This letter is to proudly inform you that you have been selected as one of the nation's top one hundred tax defense lawyers. This recognition is the result of our interviews and questionnaires with the Bar and the Bench within the jurisdictions you have practiced within the last 24 months..... This letter was prepared by the respondent and was fraudulent, and violates Colo. 8.4(c) (engaging in conduct involving dishonesty, fraud, deceit or misrepresentation). 28. In January and February 1999, the Wrights received notice that the IRS was attempting to enforce its tax lien by serving letters of intent to levy and notices of garnishment. The Wrights subsequently scheduled an appointment with the respondent. 29. In February 1999, Steve Wright traveled to the respondent's office. In the presence of Steve Wright and two of the respondent's legal assistants, John Field and Julie Belle, the respondent led everyone to believe that he was engaged in a telephone conversation with Carol Schultz, Regional Counsel for the IRS. During this staged conversation, the respondent also indicated that he had patched U.S. District Court Judge, Lewis Babcock into his conversation with Ms. Schultz. The respondent misrepresented to those present that he had worked out a deal to stop the IRS from proceeding with its collection efforts against the Wrights. The conduct described in this paragraph violates Colo. RPC 8.4(c) (engaging in conduct involving dishonesty, fraud, deceit or misrepresentation). The respondent never spoke with Ms. Schultz nor Judge Babcock. 30. In February 1999, the respondent called the Wrights at home and told them that upon Judge Babcock's insistence, he and Carol Schultz had attended a six hour conference in the Judge's chamber regarding their matter. The respondent further misrepresented to the Wrights that the conference had resulted in an award to them in excess of $800,000. The foregoing conduct by the respondent described in this paragraph violates Colo. RPC 8.4(c) (engaging in conduct involving dihonesty, fraud, deceit or misrepresentation). 31. In April 1999, the respondent invited the Wrights to come to his office to meet with Carol Schultz to finalize the settlement. While the Wrights were in his office, the respondent misrepresented to them that Carol Schultz was on the telephone with him. The respondent misrepresented that Ms. Schultz could not meet with them in person because she needed to get back to Denver to catch a connecting flight to Washington, D.C. and appeared to be arguing with Ms. Schultz regarding how and when the payment would be made and how the IRS would handle payment of his attorney's fees. The respondent further misrepresented to the Wrights that the settlement in excess of $750,000 would be solidified within two weeks and the IRS would pay $66,000 for his attorney's fees. The respondent finally misrepresented that he would go to the FBI to pick up the settlement documents. The foregoing conduct of the respondent described in this conduct violates Colo. RPC 8.4(c) (engaging in conduct involving dishonesty, fraud, deceit or misrepresentation). 32. Upon review of documents retrieved from the respondent, the respondent had only filed the tax return for 1998 on behalf of the Wrights and did no negotiations with the IRS or any amended returns for the tax years of 1992 through 1997. This conduct violates Colo. RPC 1.3 (a lawyer shall act with reasonable diligence and promptness in representing a client and shall not neglect a legal matter entrusted to him). 33. Commencing in June 1999, the IRS became more aggressive in collecting from the Wrights. The IRS garnished the wages of both Steven and Maryanne Wright. The Wrights immediately contacted the respondent. 34. On or about June 15, 1999, the respondent obtained an IRS form entitled Agreement as to Final Determination of Tax Liability. The respondent filled in information on the form indicating that the Wrights had been awarded $794,000 as damages and were additionally entitled to two refunds from the IRS totaling in excess of $54,000. The respondent executed the documents as the Wrights' attorney and then forged the signature of Chaz Champion, the Chief District Counsel for the IRS. This conduct violates Colo. RPC 8.4(c) (engaging in conduct involving dishonesty, fraud, deceit or misrepresentation). 35. Thereafter, the respondent assured the Wrights that the award and refund would be received any day or by the end of the week. This conduct violates Colo. RPC 8.4(c) (engaging in conduct involving dishonesty, fraud, deceit or misrepresentation). 36. In the meantime the federal tax liens still encumbered the Wrights' house. 37. On June 30, 1999, the respondent sent a letter to Steven Wright wherein he wrote the following: This letter is our firm's representation that the award in your favor in the above litigation will be paid or otherwise collected within the next 90 days. As you are aware your award was in excess of $800,000 and has not been currently paid because of a dispute between the IRS and the Justice Department over whether the Justice Department had authority to acquiesce to your claims. Please advise any prospective lender to contact the undersigned in the event more information is necessary. The information contained in this letter was untrue, and the respondent's conduct in preparing and sending the same violates Colo. RPC 8.4(c) (engaging in conduct involving dishonesty, fraud, deceit or misrepresentation). 39. When the refund still had not arrived, Steven Wright called the U.S. District Court in Denver and learned that there had never been a case filed on his behalf. When confronted with this information, the respondent misrepresented to Steven Wright that the case was closed because the matter did not want the matter to become public. This conduct violates Colo. RPC 8.4(c) (engaging in conduct involving dishonesty, fraud, deceit or misrepresentation). 40. Subsequently, the majority of the Wrights' calls to the respondent went unanswered. This conduct violates Colo. RPC 1.4(a) (a lawyer shall keep a client reasonably informed about the status of a matter and promptly comply with reasonable requests for information). 41. On November 29, 1999, the IRS issued notices stating that the Wrights owed the IRS $91,780.85 in taxes, penalties and interest. These notices do not include their 1996 and 1997 taxes or Colorado State taxes. The Wrights estimate that their total tax liability now exceeds $150,000. 42. The foregoing conduct of the respondent establishes grounds for discipline as provided in C.R.C.P. 251.5; and violates Colo. RPC 1.3 (a lawyer shall act with reasonable diligence and promptness in representing a client and shall not neglect a legal matter entrusted to him); Colo. RPC 1.4(a) (a lawyer shall keep a client reasonably informed about the status of a matter and promptly comply with reasonable requests for information); and Colo. RPC 8.4(c) (a lawyer shall not engage in any conduct involving dishonesty, fraud, deceit or misrepresentation). WHEREFORE, it is prayed that the respondent be found guilty of violations of various rules of conduct which establish grounds for discipline as provided in C.R.C.P. 251.5, and the Colorado Rules of Professional Conduct and that he be appropriately disciplined and assessed the costs of these proceedings.