Court Opinion

ID: 3175060
Source: CourtListenerOpinion
Date Created: 2016-02-05 11:53:33.868342+00
Date Added: 2024-06-11T09:20:32.752401
License: Public Domain

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,                                         FILED
              Complainant,
                                                                 FEB 4, 2016
      v.
                                                                   Diane M. Fremgen
                                                                Clerk of Supreme Court
Walter W. Stern, III,

              Respondent.

      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

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
                                               2
                                                                     No.       2013AP149-D

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.

                                            3
                                                                  No.    2013AP149-D

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)
                                          4
                                                               No.    2013AP149-D

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.

                                    5
                                                                          No.       2013AP149-D

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.

                                              6
                                                                             No.     2013AP149-D

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
                                              7
                                                                         No.    2013AP149-D

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
                                                8
                                                                         No.    2013AP149-D

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
                                              9
                                                                       No.        2013AP149-D

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
                                       10
                                                                         No.     2013AP149-D

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.

                                             11
    No.   2013AP149-D

1