Court Opinion

ID: 4321174
Source: CourtListenerOpinion
Date Created: 2018-10-16 12:36:34.282568+00
Date Added: 2024-06-11T07:49:36.783039
License: Public Domain

2018 WI 98

                  SUPREME COURT            OF   WISCONSIN
CASE NO.:               2018AP1185-D
COMPLETE TITLE:         In the Matter of Disciplinary Proceedings
                        Against Adam J. Wiensch, Attorney at Law:

                        Office of Lawyer Regulation,
                                  Complainant,
                             v.
                        Adam J. Wiensch,
                                  Respondent.

                            DISCIPLINARY PROCEEDINGS AGAINST WIENSCH

OPINION FILED:          October 16, 2018
SUBMITTED ON BRIEFS:
ORAL ARGUMENT:

SOURCE OF APPEAL:
   COURT:
   COUNTY:
   JUDGE:

JUSTICES:
   CONCURRED:
   DISSENTED:
   NOT PARTICIPATING:

ATTORNEYS:
                                                                         2018 WI 98
                                                                 NOTICE
                                                   This opinion is subject to further
                                                   editing and modification.   The final
                                                   version will appear in the bound
                                                   volume of the official reports.
No.     2018AP1185-D

STATE OF WISCONSIN                             :            IN SUPREME COURT

In the Matter of Disciplinary Proceedings
Against Adam J. Wiensch, Attorney at Law:

Office of Lawyer Regulation,                                            FILED
            Complainant,
                                                                 OCT 16, 2018
       v.
                                                                    Sheila T. Reiff
                                                                 Clerk of Supreme Court
Adam J. Wiensch,

            Respondent.

       ATTORNEY    disciplinary        proceeding.        Attorney's          license

suspended.

       ¶1   PER CURIAM.        We review a stipulation filed pursuant

to    Supreme   Court   Rule   (SCR)   22.12   by     the    Office      of    Lawyer

Regulation      (OLR)   and    Attorney   Adam      J.    Wiensch.            In   the

stipulation,      Attorney      Wiensch    admits        that      he     committed

professional misconduct, and he agrees with the OLR's request

that his license to practice law in Wisconsin be suspended for a

period of two years.
                                                                          No.     2018AP1185-D

      ¶2        After      careful   review         of   the   matter,    we    accept     the

stipulation          and    impose     the     requested        discipline.          Because

Attorney Wiensch entered into a comprehensive stipulation prior

to the appointment of a referee, we do not require him to pay

the costs of this proceeding.

      ¶3        Attorney      Wiensch     was       admitted      to    practice     law    in

Wisconsin in 1991.             He has no prior disciplinary history.                        He

was formerly a partner of Foley & Lardner, LLP, (Foley firm)

working out of the firm's Milwaukee, Wisconsin office.                                At all

times material to this matter, Attorney Wiensch worked in the

firm's trust and estates practice group.

      ¶4        On June 25, 2018, the OLR filed a complaint alleging

that Attorney Wiensch had engaged in 13 counts of misconduct.

The OLR's complaint sought a two-year suspension of Attorney

Wiensch's license to practice law in Wisconsin.

      ¶5        On August 15, 2018, the OLR and Attorney Wiensch filed

a stipulation pursuant to SCR 22.12.                           The following facts are

taken from the stipulation.
      ¶6        While      working   at      the     Foley     firm,    Attorney     Wiensch

provided estate planning services to a husband and wife who were

owners     of    a    privately      owned     business        corporation.         Attorney

Wiensch prepared a trust under the terms of which the husband

and   wife      were    the    trust    donors       and     their     children    were    the

trustees        and     beneficiaries.              Attorney      Wiensch       drafted     an

Installment Sale Agreement, pursuant to which the husband sold

most of his stock in the company to the trust in exchange for a
promissory note in an amount in excess of $50 million based on
                                                2
                                                         No.    2018AP1185-D

the appraised value of the stock sold.       The purpose of the stock

sale was to transfer wealth to the clients' children, via the

trust, free of gift and estate taxes and to ensure that any

future appreciation of the stock held by the trust would not

become part of the husband's estate.

    ¶7     Transactions    structured    like   the     stock       sale   are

reviewed by the Internal Revenue Service (IRS) to determine if

the promissory note is a bona fide debt, or if the transaction

should be treated as a taxable gift, or if transferred assets

should be included in the seller's gross estate for purposes of

determining the estate tax liability.       Strategies used by estate

planning professionals to minimize the risk of an IRS challenge

to transactions such as the stock sale have included the use of

personal   guarantees     by   trust    beneficiaries    of     a     certain

percentage of the sale price, often ten percent, or of a defined

value formula clause that automatically adjusts valuation of the

transferred assets based on a final determination by the IRS or

a court.
    ¶8     The husband died first, and pursuant to his estate

plan, ownership of his remaining shares in the company passed to

his wife as the surviving spouse.       Attorney Wiensch was retained

to represent the husband's estate.          Attorney Wiensch prepared

the estate tax return for the husband's estate and filed it with

the IRS.    The IRS audited the husband's estate tax return, as

well as other gift tax returns filed on behalf of the clients

for years prior to the husband's death.

                                   3
                                                                              No.     2018AP1185-D

       ¶9     An IRS estate tax attorney served as the examiner for

the IRS in conducting the audit.                        The IRS attorney corresponded

with    Attorney       Wiensch         in    an        effort    to     obtain       information

material      to    the    audit.           In    September       2012,       in    response    to

requests from the IRS attorney, Attorney Wiensch sent the IRS

copies of an Installment Sale Agreement, a Collateral Pledge

Agreement, and a Guaranty of Specific Transaction.                                        Attorney

Wiensch      represented          to   the        IRS    that     the     Installment         Sale

Agreement memorialized the terms of the stock sale and that the

Collateral Pledge and Guaranty related to the stock sale.                                      The

copy of the Installment Sale Agreement Attorney Wiensch sent to

the IRS in September 2012 contained a defined value formula

clause.       Attorney Wiensch altered and misdated the Installment

Sale Agreement he sent to the IRS in September 2012.                                  He did not

prepare      this    document      contemporaneously              with    the       stock     sale.

The Installment Sale Agreement the husband actually executed on

an   earlier        date    did    not      contain       the    defined       value      formula

clause.
       ¶10    Attorney       Wiensch             also    altered        and        misdated    the

Guaranty he sent to the IRS in September of 2012.                                    He did not

prepare this document contemporaneously with the stock sale.                                    He

copied the signatures of the clients' children from a different

document bearing a different date and pasted the signatures on

the copy of the Guaranty he sent to the IRS attorney.

       ¶11    Subsequent          to     its      receipt        of   Attorney         Wiensch's

September 2012 letter and enclosures, the IRS issued a Notice of
Deficiency      with       respect     to        the    estate    and    gift       tax    returns
                                                   4
                                                                     No.       2018AP1185-D

Attorney Wiensch filed on behalf of the husband's estate.                                 In

the Notice of Deficiency, the IRS asserted that the stock sale

was a gift.        The IRS also asserted, in the alternative, that if

the sale was not a gift, the stock value at the time of the

transfer     was    double    the     appraised     value    of    the     stock.        The

notice stated that the IRS sought gift and estate taxes and

negligence penalties against the husband's estate in the sum of

multiple millions of dollars.

      ¶12    The IRS simultaneously issued a Notice of Deficiency

regarding the wife, asserting she owed gift taxes and penalties

in the sum of multiple millions of dollars.                        In the Notice of

Deficiency issued to the wife, the IRS raised the same issues it

had raised in the Notice of Deficiency issued to the husband's

estate.

      ¶13    After the IRS issued the Notice of Deficiency to her,

the   wife         died.        The     clients'      children,           as        personal

representatives of the husband's estate, retained the Foley firm

to respond to the Notice of Deficiency issued to his estate.
The clients' children, as personal representatives of the wife's

estate, also retained the Foley firm to respond to the Notice of

Deficiency issued to the wife.

      ¶14    Attorneys       with     the   Foley    firm    other       than       Attorney

Wiensch     filed    a     petition    on   behalf   of     both    the    husband       and

wife's    estate     seeking     a    redetermination        of    the     deficiencies

found by the IRS.            The petitions filed by the Foley attorneys

alleged the stock sale was made pursuant to the Installment Sale
Agreement     Attorney       Wiensch    had     altered     to    contain       a    defined
                                            5
                                                                         No.     2018AP1185-D

value formula clause.            The petitions also relied on the altered

Guaranty    purportedly         signed       by    the    clients'        children       that

Attorney Wiensch had sent to the IRS.                      At the time they filed

the   petitions      on     behalf   of     the    clients'    estates,          the   Foley

attorneys   did       not    know    that    the     Installment         Sale     Agreement

relied on and the Guaranty purportedly signed by the clients'

children had been altered by Attorney Wiensch.                       Attorney Wiensch

did not inform the IRS attorney or the Foley attorneys that he

had altered and misdated the Installment Sale Agreement and the

Guaranty.

      ¶15   While the petitions were pending, the IRS continued

its audit of the wife's estate and gift tax returns.                               One item

focused upon by the IRS was a lifetime gift transfer by the wife

of some shares of the company she had inherited directly from

the husband.         These transfers were reported on gift tax returns

filed with the IRS after the wife's death indicating that just

months prior to her death, the wife had transferred the shares

to the clients' children.
      ¶16   The same IRS attorney examining the husband's estate

was assigned the examination of the wife's estate and gift tax

returns.        In     conducting      the    examination,         the     IRS     attorney

requested   information         from      Attorney       Wiensch    showing       that    the

wife was mentally competent and authorized to make or consent to

stock   gifts     to      the   clients'      children.        By    letter        sent   in

September 2015, the IRS attorney asked Attorney Wiensch if the

stock gifts were made pursuant to a Power of Attorney.                             Attorney
Wiensch responded to the IRS in October 2015, saying that the
                                             6
                                                               No.    2018AP1185-D

stock gifts were made directly by the wife.                In his October 2015

letter to the IRS attorney, Attorney Wiensch enclosed a copy of

a Durable Power of Attorney to Make Gifts bearing an August 1999

date containing the wife's signature.                The instrument states

that the wife appointed the husband as her agent and that if he

lacked capacity to act, she appointed the clients' children to

be her agents.         Attorney Wiensch created an altered Durable

Power of Attorney to Make Gifts dated August 1999 by copying the

wife's signature from another document.              Attorney Wiensch never

informed the IRS attorney or the Foley attorneys that he had

altered and misdated the Durable Power of Attorney to Make Gifts

that he sent to the IRS attorney in October 2015.

    ¶17   The    IRS     noted    that   the   altered      Durable     Power   of

Attorney gave the wife limited authority to make transfers of

stock and in November 2015, the IRS attorney advised Attorney

Wiensch that all shares of the company purportedly gifted by the

wife would be considered part of the wife's estate.

    ¶18   While the audit of the wife's estate and gift tax
returns was still underway, the IRS and the husband's estate

settled the issues presented in the petition filed on behalf of

the husband's estate.        The settlement of the petition filed on

behalf of the husband's estate was induced by fraud, based on

the altered and misdated documents that Attorney Wiensch had

provided to the IRS attorney in September of 2012.

    ¶19   By    letter    dated    April     14,   2016,    the   IRS    attorney

requested a response from Attorney Wiensch to the letter sent in
November 2015 addressing the wife's authority to make the stock
                                         7
                                                                      No.     2018AP1185-D

transfers under the August 1999 Durable Power of Attorney to

Make Gifts that Attorney Wiensch had provided in October 2015.

By letter dated June 16, 2016 and transmitted by facsimile,

Attorney Wiensch sent the IRS attorney a copy of a Durable Power

of Attorney for Financial Matters bearing a February 2011 date

purportedly signed by the wife.                   Attorney Wiensch created this

document     by   copying      and    pasting      the   wife's      signature       from

another document.

      ¶20    Suspecting     that      the    February    2011    Durable       Power   of

Attorney was not what Attorney Wiensch purported it to be, the

IRS attorney asked that Attorney Wiensch produce the original

copies of the 1999 and 2011 powers of attorney and the February

2011 amendment to the wife's trust.                  Attorney Wiensch told the

IRS   that   he   did    not    have        the   originals     of     the     requested

documents.

      ¶21    The IRS attorney then wrote directly to the clients'

children     asking     that    the    original      documents        that     had   been

requested from Attorney Wiensch be produced.                     On July 13, 2016,
Attorney     Wiensch     told    the        IRS   attorney    that      the     clients'

children were looking for the original documents but that "there

is no reason to retain an original power of attorney after a

principal's death because the power of attorney lapses on a

principal's death."

      ¶22    In July 2016, the IRS attorney told Attorney Wiensch

the IRS would need to interview the clients' children in person.

      ¶23    By   letter    dated      August      22,   2016,       the     Foley   firm
informed the IRS that Attorney Wiensch was no longer with the
                                             8
                                                               No.     2018AP1185-D

firm and that they believed the August 1999 Durable Power of

Attorney to Make Gifts and the February 2011 Durable Power of

Attorney    for    Financial    Matters      that     Attorney       Wiensch    had

provided to the IRS were not authentic and were being withdrawn.

The   Foley       firm    subsequently      alerted     the      IRS     to    the

irregularities later discovered with regard to the Guaranty and

the   defined     value    formula    clause    in    the   Installment        Sale

Agreement and the firm reported Attorney Wiensch's conduct to

the OLR.

      ¶24   In a December 23, 2016, letter from his counsel to the

OLR, Attorney Wiensch admitted that he had created the August

1999 Durable Power of Attorney to Make Gifts and the February

2011 Durable Power of Attorney for Financial Matters in late

2015 or early 2016.         By email transmitted to the OLR on March

31, 2017, counsel for Attorney Wiensch informed the OLR that

Attorney Wiensch conceded that he had altered and misdated the

Installment Sale Agreement and Guaranty of Specific Transaction

he provided to the IRS in September 2012 in connection with the
audit of the husband's estate.

      ¶25   In the stipulation, Attorney Wiensch states that he

has no defense to any of the disciplinary violations alleged in

the OLR's complaint.        Attorney Wiensch asserts that during the

time of his misconduct, he faced several highly disruptive and

challenging     personal    issues.        Attorney   Wiensch     says    he    was

suffering   from    substantial      clinical   depression       for   which    his

treatment had not been meaningfully effective.                Attorney Wiensch
says he also suffered from an active, uncontrolled dependency on
                                       9
                                                                       No.     2018AP1185-D

alcohol.         Attorney Wiensch says he has since stopped drinking

and has been sober since the time he was confronted with his

misconduct, having incorporated Alcoholics Anonymous (AA) into

his life, and he has supplied the OLR with verification that he

has attended AA meetings regularly since March 2017.                             Attorney

Wiensch says he has also focused on dealing with his clinical

depression        and     has    successfully    taken      steps    to    substantially

achieve a stable and healthy mental health status.

       ¶26      The     OLR's     complaint      alleges      four        violations    of

SCR 20:3.4(a),1           five    violations     of   SCR    20:8.4(c),2       and   three

violations of SCR 20:4.1(a).3               In addition, the complaint alleges

that       by   failing    to    disclose   to    Foley     and     Lardner,    LLP,   his

conduct in drafting false documents and in submitting them to

the IRS, Attorney Wiensch breached the fiduciary duties owed to

his firm and his duty of honesty in his professional dealings

with the firm, thereby violating a standard of conduct set forth

by this court in In re Disciplinary Proceedings Against Shea,

       1
       SCR 20:3.4(a) provides:   "A lawyer shall not unlawfully
obstruct another party's access to evidence or unlawfully alter,
destroy or conceal a document or other material having potential
evidentiary value. A lawyer shall not counsel or assist another
person to do any such act."
       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 20:4.1(a) provides: "In the course of representing a
client a lawyer shall not knowingly make a false statement of a
material fact or law to a 3rd person."

                                            10
                                                              No.     2018AP1185-D

190 Wis. 2d 560,     527 N.W.2d 314    (1995),      actionable      via

SCR 20:8.4(f).4

      ¶27     The    parties'     stipulation      provides    that     Attorney

Wiensch fully understands the stipulation and the ramifications

that would follow from this court's imposition of the stipulated

level of discipline, a two-year suspension of Attorney Wiensch's

license to practice law.            The stipulation further provides that

it did not result from plea bargaining; that Attorney Wiensch

fully understands his right to continue to contest the matter,

that he has consulted with counsel and that his entry into the

stipulation was made knowingly and voluntarily.

      ¶28     In its memorandum in support of the stipulation, the

OLR     states      that   in    determining    an   appropriate      level    of

discipline to seek in this matter, the OLR director considered

Attorney Wiensch's lack of disciplinary history, precedent in

other     disciplinary     cases,    aggravating     and   mitigating    factors

under the ABA Standards for Imposing Lawyer Sanctions, as well

as the particular circumstances of this case.
      ¶29     The OLR says in reviewing sanctions imposed in other

cases involving an attorney's submission of false documents to

courts or other agencies, on the low end of the spectrum is In

re Disciplinary Proceedings Against Donovan, 211 Wis. 2d 451,

564 N.W.2d 772 (1997), in which this court issued a six-month

      4
       SCR 20:8.4(f) provides:  "It is professional misconduct
for a lawyer to violate a statute, supreme court rule, supreme
court order or supreme court decision regulating the conduct of
lawyers."

                                        11
                                                                     No.     2018AP1185-D

license suspension for an attorney's misconduct in filing false

documents with the court in order to obtain favorable treatment

for an acquaintance and for a former boyfriend in a case she was

prosecuting    as    a   municipal      attorney.          The      OLR     notes    that

Attorney Donovan was an inexperienced attorney who immediately

admitted her wrongdoing and did not benefit financially from her

conduct.      In    addition,     the   OLR   points   out       Attorney         Donovan

suffered other collateral consequences of her misconduct, as she

was convicted of misdemeanor forgery.

      ¶30   The OLR notes that in In re Disciplinary Proceedings

Against Spangler, 2016 WI 61, 370 Wis. 2d 369, 881 N.W.2d 35,

this court also imposed a six-month suspension on an attorney

who    created       fabricated         documents        to         support         false

representations made to his clients that their lawsuits were

pending when in fact they were not.                 The OLR notes that like

Attorney Donovan, Attorney Spangler had no prior disciplinary

history and he stepped up and made the clients whole for their

losses.
      ¶31   The OLR says that at the opposite end of the spectrum

is In re Disciplinary Proceedings Against Elverman, 2014 WI 15,

353 Wis. 2d 98,     845 N.W.2d 653,      in   which    this      court       revoked

Attorney    Elverman's       license    to    practice        law     for     dishonest

conduct in preparing false billing invoices, stealing more than

$600,000    from    an   elderly    client     in    connection            with     estate

planning    services,       and   failing     to   cooperate         with     the    OLR.

Attorney Elverman had a prior nine-month suspension for failing
to declare income received from the client in his tax returns.
                                        12
                                                                               No.     2018AP1185-D

Attorney       Elverman       was     also       convicted          of    felony          theft     in

connection with the conduct that resulted in his revocation.

       ¶32     The OLR says based on this precedent, it believes a

two-year        suspension           of        Attorney        Wiensch's             license        is

appropriate.           The OLR says Attorney Wiensch's misconduct was

very serious, and it was calculated and deliberate.                                       It notes

Attorney Wiensch created and submitted false documents to the

IRS    on    three     occasions      in       the    course      of     the   audits       of     two

estates; he knowingly allowed the court, the IRS, and other

partners in his law firm to rely on those false documents in

reaching       an    agreement        to       settle       litigation         involving          the

estates; and he made misleading statements to the IRS when it

questioned       the    veracity          of    one    of    the       false     documents          he

provided.

       ¶33     The OLR says despite the circumstances under which it

settled the litigation involving the estates, the IRS did not

move    to    reopen    the    cases       after      it    was     informed         of    Attorney

Wiensch's misconduct.               In addition, the OLR notes that Attorney
Wiensch's       clients       have    not       asserted       to      the     OLR     that       they

sustained any harm for which they have not been made whole.

However, the OLR says that Attorney Wiensch placed his law firm

and his partners at substantial risk by submitting the false

documents and allowing the partners in his firm to rely on the

false       documents    in    litigation            with   the     IRS.        The       OLR     says

Attorney Wiensch's misconduct undermines public confidence in

the credibility of the legal system.

                                                 13
                                                                          No.        2018AP1185-D

       ¶34   As to mitigating factors, the OLR notes that Attorney

Wiensch has no prior discipline; he cooperated with the OLR's

investigation;       and     he    did     not    convert      client     funds.          As    to

aggravating factors, the OLR notes that Attorney Wiensch was a

very experienced attorney; the misconduct occurred over a period

of years and involved multiple documents and multiple instances;

the misconduct was deliberate and calculated, and it occurred in

the context of federal tax audits involving very substantial

sums of money.

       ¶35   After    closely          reviewing       the    matter,     we     accept        the

stipulation and determine that Attorney Wiensch engaged in the

13 counts of misconduct alleged in the OLR's complaint.                                        We

further      conclude      that        a    two-year         suspension         of     Attorney

Wiensch's license to practice law is an appropriate level of

discipline     to    impose       in     view     of   the    serious     nature        of     the

misconduct and the various aggravating and mitigating factors

present in this case.                  Although the misconduct here does not

rise    to   the     level        that     warranted         revocation     in        Elverman,
Attorney     Wiensch       deliberately           misled      the   IRS    and        falsified

multiple documents.           The deceptions and misrepresentations, both

to the IRS and the other attorneys at Attorney Wiensch's firm,

continued      for    several            years.        Attorney      Wiensch           was      an

experienced        attorney        who     should      have     known     better.              His

misconduct harmed his clients and his law firm and, as the OLR

noted, it undermined public confidence in the credibility of the

legal system.        A two-year suspension of Attorney Wiensch's law
license is an appropriate sanction for his misconduct.                                  Because
                                                14
                                                                    No.   2018AP1185-D

this   matter      was   brought   to   the    court   in     the   context    of    an

SCR 22.12 stipulation without the need for the appointment of a

referee, we do not impose any costs on Attorney Wiensch.

       ¶36   IT IS ORDERED that the license of Adam J. Wiensch to

practice     law   in    Wisconsin   is   suspended     for     a   period     of   two

years, effective November 27, 2018.

       ¶37   IT    IS    FURTHER   ORDERED     that    Adam    J.    Wiensch     shall

comply with the provisions of SCR 22.26 regarding the duties of

a person whose license to practice law in Wisconsin has been

suspended.

       ¶38   IT    IS    FURTHER     ORDERED    that     compliance       with      all

conditions with this order is required for reinstatement.                           See

SCR 22.29(4)(c).

                                          15
    No.   2018AP1185-D

1