Court Opinion

ID: 2811138
Source: CourtListenerOpinion
Date Created: 2015-06-24 13:25:39.701044+00
Date Added: 2024-06-11T15:35:27.277695
License: Public Domain

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,                                    FILED
            Complainant,
                                                           JUN 24, 2015
      v.
                                                              Diane M. Fremgen
                                                           Clerk of Supreme Court
Sarah E.K. Laux,

            Respondent.

      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

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.

                                            2
                                                            No.    2014AP974-D

     ¶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.

                                       3
                                                                         No.     2014AP974-D

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
                                            4
                                                                           No.      2014AP974-D

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
                                                5
                                                                           No.    2014AP974-D

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
                                                 6
                                                                  No.       2014AP974-D

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
                                         7
                                                                No.   2014AP974-D

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.

                                         8
                                                                  No.     2014AP974-D

     ¶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."

                                        9
                                                                                  No.     2014AP974-D

            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
                                                   10
                                                                           No.     2014AP974-D

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.
                                             11
                                                          No.   2014AP974-D

     ¶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.

                                   12
                                                                       No.   2014AP974-D

     •    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)
                                          13
                                                                 No.        2014AP974-D

    •    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."

                                        14
                                                                                  No.     2014AP974-D

        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)."

                                                  15
                                                                           No.      2014AP974-D

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:
                                             16
                                                                             No.        2014AP974-D

     •   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.
                                             17
                                                                             No.       2014AP974-D

       ¶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

                                              18
                                                                         No.   2014AP974-D

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.
                                             19
                                                                                  No.    2014AP974-D

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
                                              20
                                                                      No.        2014AP974-D

          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."

                                            21
                                                                         No.       2014AP974-D

       ¶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)
                                            22
                                                           No.    2014AP974-D

(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)
                                     23
                                                              No.   2014AP974-D

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)
                                       24
                                                                                       No.        2014AP974-D

       ¶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."

                                                    25
                                                                  No.     2014AP974-D

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.

                                          26
                                                                          No.       2014AP974-D

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.

                                            27
                                                                                            No.    2014AP974-D

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).
                                                        28
                                                                   No.    2014AP974-D

     ¶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.
                                          29
                                                          No.   2014AP974-D

     ¶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.

                                   30
    No.   2014AP974-D

1