Court Opinion

ID: 3196807
Source: CourtListenerOpinion
Date Created: 2016-04-22 13:16:14.129662+00
Date Added: 2024-06-11T14:29:14.421263
License: Public Domain

2016 WI 27

                  SUPREME COURT            OF   WISCONSIN
CASE NO.:                 2015AP275-D
COMPLETE TITLE:           In the Matter of Disciplinary Proceedings
                          Against James M. Schoenecker, Attorney at Law:

                          Office of Lawyer Regulation,
                                    Complainant,
                               v.
                          James M. Schoenecker,
                                    Respondent.

                           DISCIPLINARY PROCEEDINGS AGAINST SCHOENECKER

OPINION FILED:            April 22, 2016
SUBMITTED ON BRIEFS:
ORAL ARGUMENT:

SOURCE OF APPEAL:
   COURT:
   COUNTY:
   JUDGE:

JUSTICES:
   CONCURRED:
   CONCURRED/DISSENTED:   ABRAHAMSON, J. concurs and dissents, joined by
                          BRADLEY, A. W., J.
  DISSENTED:
  NOT PARTICIPATING:

ATTORNEYS:
                                                                                 2016 WI 27
                                                                        NOTICE
                                                         This opinion is subject to further
                                                         editing and modification.   The final
                                                         version will appear in the bound
                                                         volume of the official reports.
No.   2015AP275-D

STATE OF WISCONSIN                                  :               IN SUPREME COURT

In the Matter of Disciplinary Proceedings
Against James M. Schoenecker, Attorney at Law:

Office of Lawyer Regulation,                                                FILED
           Complainant,
                                                                       APR 22, 2016
      v.
                                                                          Diane M. Fremgen
                                                                       Clerk of Supreme Court
James M. Schoenecker,

           Respondent.

      ATTORNEY    disciplinary      proceeding.                     Attorney's      license

suspended.

      ¶1   PER   CURIAM.      We    review         the    report      of   the    referee,

Attorney Hannah C. Dugan, recommending that the court suspend

the Wisconsin law license of Attorney James M. Schoenecker for

professional     misconduct   for        a    period      of   one     year,     effective

February   10,   2015,   which      is       the   date       the    Office    of    Lawyer
Regulation   (OLR)   filed    its    complaint           in    this    matter.           The
                                                                      No.        2015AP275-D

referee     also        recommended      that     the   court        order        Attorney

Schoenecker to pay one-half of the costs of this disciplinary

proceeding.       The referee wrote the report following the entry of

a   stipulation         between     Attorney      Schoenecker         and        the    OLR

concerning Attorney Schoenecker's dishonest business activities

as a member of a limited liability company that he helped to

form.     Neither party has appealed from the referee's report and

recommendation, and thus our review proceeds under Supreme Court

Rule (SCR) 22.17(2).1

     ¶2     We conclude that the referee's findings of fact are

supported    by    satisfactory         and   convincing      evidence.           We    also

agree    with     the    referee's      conclusions      of    law    that        Attorney

Schoenecker     engaged      in   professional      misconduct,        and       that   the

seriousness of this misconduct warrants a one-year suspension of

Attorney    Schoenecker's         law    license.       We    part    ways       with   the

referee in holding that, given the timing and seriousness of

Attorney    Schoenecker's         misconduct,     the   suspension          of    his    law

license should not be retroactive, but rather should be made
effective as of the date of this order.                  Finally, we agree with

     1
         SCR 22.17(2) provides:

     If no appeal is filed timely, the supreme court shall
     review the referee's report; adopt, reject or modify
     the referee's findings and conclusions or remand the
     matter to the referee for additional findings; and
     determine and impose appropriate discipline.      The
     court, on its own motion, may order the parties to
     file briefs in the matter.

                                              2
                                                                 No.      2015AP275-D

the referee that Attorney Schoenecker should pay one-half of the

OLR's $8,500.59 in costs, for a total of $4,250.30.

     ¶3     Attorney Schoenecker was licensed to practice law in

Wisconsin in 2004.            On July 15, 2011, we suspended Attorney

Schoenecker's       law   license      for     misconduct       that       included

attempting    to    defraud    his   client    through    law   firm      invoices;

engaging in a pattern of attempted and completed thefts from his

client's bank accounts, for which he pled guilty to one felony

count of identity theft; and failing to inform his law firm

employer that he had set up his own separate law firm on the

side.     In re Disciplinary Proceedings Against Schoenecker, 2011
WI 76,     336 Wis. 2d 253,      804 N.W.2d 686.       The       three-year

suspension, which went into effect on August 15, 2011, would

have ended on August 15, 2014.               Attorney Schoenecker's license

remains suspended.

     ¶4     On     February    10,   2015,    the   OLR   filed       a   two-count

complaint in this case, which alleged that Attorney Schoenecker

engaged in the unauthorized practice of law, contrary to SCR
10.03(4)(a)2 and SCR 22.26(2),3 as enforced via SCR 20:8.4(f),4
     2
       SCR 10.03(4)(a) provides:   "No individual other than an
enrolled active member of the state bar may practice law in this
state or in any manner purported to be authorized or qualified
to practice law."
     3
       SCR 22.26(2) provides:    "An attorney whose license to
practice law is suspended or revoked or who is suspended from
the practice of law may not engage in this state in the practice
of law or in any law work activity customarily done by law
students, law clerks, or other paralegal personnel, except that
the attorney may engage in law related work in this state for a
commercial employer itself not engaged in the practice of law."

                                        3
                                                                 No.    2015AP275-D

and engaged in conduct involving dishonesty, fraud, deceit, or

misrepresentation,     in   violation    of    SCR     2:8.4(c).5         Attorney

Schoenecker answered and denied all misconduct.                 In August 2015,

the   OLR   amended   its   complaint    by   dropping      the    unauthorized

practice of law charge, while maintaining the charge of engaging

in    conduct     involving       dishonesty,          fraud,      deceit,      or

misrepresentation.     See SCR 20:8.4(c).

      ¶5    The OLR's amended complaint alleged, and the parties

ultimately stipulated, that the misconduct in this case concerns

Attorney    Schoenecker's    involvement      in   a    business       partnership

that he entered into in 2012 with two other individuals, M.M.

and T.H. Attorney Schoenecker, on behalf of himself                       and his

partners,    established      a   limited      liability        company      named

GameMaster, LLC.       Attorney Schoenecker drafted and filed the

organizing documents, including the Articles of Organization and

the Limited Liability Company Operating Agreement.

      ¶6    In May 2012, T.H. gave Attorney Schoenecker $25,000 in

cash as his capital contribution. In August 2012, M.M. made a
$20,000 capital contribution.

      4
       SCR 20:8.4(f) provides:  "It is professional misconduct
for a lawyer to: . . . . (f) violate a statute, supreme court
rule, supreme court order or supreme court decision regulating
the conduct of lawyers."
      5
       SCR 20:8.4(c) provides:    "It is professional misconduct
for a lawyer to:     . . . . (c) engage in conduct involving
dishonesty, fraud, deceit or misrepresentation."

                                     4
                                                                    No.     2015AP275-D

    ¶7      Attorney    Schoenecker        set    up     a     business      checking

account in the name of GameMaster, LLC. The bank issued Attorney

Schoenecker a bank card allowing him to charge to the account as

well as withdraw funds.       Attorney Schoenecker also had the bank

issue him an American Express corporate card to use for business

expenses.

    ¶8      Attorney    Schoenecker        did    not        immediately      deposit

T.H.'s     $25,000   cash   contribution         into    any     GameMaster,        LLC

account.    Instead,    Attorney   Schoenecker          deposited     the    bulk    of

T.H.'s cash into his own personal checking account.

    ¶9      The OLR conducted an investigation of the GameMaster,

LLC business account statements for the period of May 30, 2012

through October 2013. The investigation revealed that:

    (a)      Attorney    Schoenecker        repeatedly         charged       personal

expenses to the company.

    (b) Attorney Schoenecker repeatedly used company funds to

pay his own credit card bills.

    (c) Attorney Schoenecker repeatedly wrote company checks to
pay his own personal expenses.

    (d) Attorney Schoenecker used the company debit card to

make ATM withdrawals at Potawatomi Casino.

    (e)      Attorney    Schoenecker        repeatedly         charged       personal

expenses to the company American Express card.

    (f)     Attorney    Schoenecker    undertook        use    of   company     funds

without preapproval from either of his business partners.

    (g)      Attorney    Schoenecker       charged       significant         personal
expenses to the GameMaster, LLC business account. Included in
                                       5
                                                                       No.    2015AP275-D

those expenses were charges to Potawatomi Casino, Apple iTunes,

a   cellular   telephone      company,       and   a     variety       of    fast   food,

gasoline, and other businesses, all without preapproval from his

partners.

      ¶10   On September 2, 2015, the OLR and Attorney Schoenecker

filed a stipulation whereby Attorney Schoenecker withdrew his

answer to the original complaint and pled no contest to the

single   SCR   20:8.4(c)      violation      alleged      in    the     OLR's    amended

complaint.        In so doing, Attorney Schoenecker agreed not to

dispute the OLR's charge that, as Chief Executive Manager of

GameMaster, LLC,      he     failed to account clearly or timely for

capital contributions made by other members, withdrew excessive

funds from GameMaster, LLC, and charged personal expenses to

GameMaster,    LLC,    all    without     preapproval           from    his     business

partners, in violation of SCR 20:8.4(c).                    Attorney Schoenecker

and the OLR jointly recommended that the court order a one-year

license suspension imposed retroactively to the date he became

eligible     for    reinstatement       from       his     earlier          disciplinary
suspension, August 15, 2014, so that his earliest reinstatement

date would be in August 2015.             The stipulation did not explain

the basis for the retroactive nature of the suspension.

      ¶11   The    referee    filed   her     report      and    recommendation        on

December 3, 2015.       The referee found that Attorney Schoenecker

had engaged in the one count of misconduct alleged in the OLR's

amended complaint.         The referee agreed with the parties that a

one-year license suspension was of appropriate length, citing In
re Disciplinary Proceedings Against Cotter, 213 Wis. 2d 196, 570
                                         6
                                                                              No.      2015AP275-D

N.W.2d 248 (1997) as support.                     While both the OLR and Attorney

Schoenecker         recommended       a    one-year         suspension       retroactive        to

August    15,       2014,    the     referee         recommended       that    the       one-year

suspension should be retroactive to the filing date of the OLR's

original       complaint,          February          10,    2015,     so      that       Attorney

Schoenecker's earliest reinstatement date would be in February

2016.         The     referee       wrote        that      this    court's        most     common

justification for ordering a suspension to run retroactively——

that    the    misconduct       occurred          before      or     during    the       previous

disciplinary          proceeding——is         not        present       here,       as     Attorney

Schoenecker         committed      the     misconduct         here    well    after       he   was

suspended       in    2011.        However,          the    referee       still     proposed     a

retroactively imposed suspension on the ground that the OLR did

not act with sufficient promptness in pursuing and resolving

this matter, which in turn delayed Attorney Schoenecker from

filing for reinstatement from his previous suspension.

       ¶12    As stated earlier, no appeal has been filed, so this

matter is submitted to the court pursuant to SCR 22.17(2).                                      A
referee's       findings        of        fact       are    affirmed        unless        clearly

erroneous. Conclusions of law are reviewed de novo. See In re

Disciplinary Proceedings Against Eisenberg, 2004 WI 14, ¶5, 269
Wis. 2d 43,          675 N.W.2d 747.       The       court    may    impose        whatever

sanction it sees fit regardless of the referee's recommendation.

See In re Disciplinary Proceedings Against Widule, 2003 WI 34,

¶44, 261 Wis. 2d 45, 660 N.W.2d 686.

       ¶13    There is no showing that any of the referee's findings
of fact are erroneous. Accordingly, we adopt them.                                       We also
                                                 7
                                                                      No.    2015AP275-D

agree     with    the    referee's        conclusion   of   law       that    Attorney

Schoenecker       violated     SCR        8.4(c).      Attorney        Schoenecker's

repeated      misuse     of   GameMaster,       LLC    business       funds    clearly

involved deceit and misrepresentation in violation of that rule.

      ¶14     We further agree with the referee that the level of

discipline       to   which   the    parties    stipulated,       a    one-year     law

license suspension, is appropriate.                 We, like the referee, find

support for this length of suspension in the case of Cotter.                         In

1992, we suspended Attorney Cotter for two years for, among

other     things,      retaining     client     fees   to   which       he    was   not

entitled, neglecting a client's legal matter and the client's

requests for information, and failing to file income tax returns

for   several     years.       In    re    Disciplinary     Proceedings        Against

Cotter, 171 Wis. 2d 373, 491 N.W.2d 475 (1992).                         As of 1997,

Attorney Cotter's law license had not been reinstated. In a 1997

disciplinary decision, this court found that Attorney Cotter had

pled guilty to a criminal violation of the Motor Vehicle Code——

using a false name on an application for a license. Because this
was a criminal act that reflected adversely on Attorney Cotter's

honesty, trustworthiness, or fitness as a lawyer, this court

suspended him for one year, effective the date of the order.

See     SCR   20:8.4(b);6     In    re     Disciplinary     Proceedings        Against

Cotter, 213 Wis. 2d 196, 570 N.W.2d 248 (1997).

      6
       SCR 20:8.4(b) provides: It is professional misconduct for
a lawyer to . . . . (b) commit a criminal act that reflects
adversely on the lawyer's honesty, trustworthiness or fitness as
a lawyer in other respects."

                                            8
                                                                           No.    2015AP275-D

       ¶15     The present case bears enough similarities to Cotter

that we find its principles should apply here.                              Both Attorney

Cotter and Attorney Schoenecker had previously received lengthy

suspensions related, at least in part, to dishonest behavior.

After receiving these suspensions, and before being reinstated

from    these     suspensions,          both       Attorney   Cotter        and    Attorney

Schoenecker engaged in additional dishonest behavior unrelated

to the practice of law.             Attorney Cotter used a false name on an

application for a driver's license; Attorney Schoenecker misused

the funds of a limited liability company that he helped to form.

By     their    actions,         both     lawyers      displayed          behaviors       that

reflected poorly on their honesty and integrity.                                 A one-year

suspension        for     such     behavior         was     within        the     range     of

reasonableness for Attorney Cotter, and the same holds true for

Attorney Schoenecker.

       ¶16     Notably, however, we imposed the one-year suspension

prospectively in          Cotter, 213 Wis. 2d at              199, and we deem it

appropriate to do the same here.                    It is troubling to this court
that,     under     the     slightly       varying         terms     of     the    parties'

stipulation        and      the         referee's         recommendation,          Attorney

Schoenecker's       earliest        reinstatement          date    (August        2015     and

February 2016, respectively) would precede the release date of

this decision.            We are convinced that Attorney Schoenecker's

present      misconduct,     when        viewed      together      with     his    previous

misconduct, warrants a sanction that does more than permit him

to petition to return to the practice of law the instant we
decide this case.
                                               9
                                                                                No.    2015AP275-D

      ¶17    More to the point, we have previously held that a

retroactive suspension is generally not favored in the absence

of    some    "compelling            circumstance,"        and        we    find       no     such

compelling      circumstance            here.        See         In        re     Disciplinary

Proceedings Against Boyd, 2009 WI 59, ¶34, 318 Wis. 2d 281, 767
N.W.2d 226.        Importantly, this is not a case where the present

misconduct occurred before or at the same time as the respondent

attorney's misconduct in a previous case, such that it might be

equitable for the new license suspension to be made retroactive

to the end of the prior suspension.                        See In re Disciplinary

Proceedings Against Cooper, 2013 WI 55, ¶25, 348 Wis. 2d 266,

833 N.W.2d 88;    In    re     Disciplinary      Proceedings              Against      and

Reinstatement of Mandelman, 182 Wis. 2d 583, 592, 514 N.W.2d 11

(1994).

      ¶18    Rather,       Attorney        Schoenecker           dishonestly             handled

business     funds       well    after    his    2011    suspension              for    what    we

described     as    "a    disturbing       series     of    illegal             and    dishonest

actions, which were designed to benefit him financially to the
injury of his client, his law firm employer, and his creditors."

Schoenecker, 336 Wis. 2d 253, ¶27.                  In our previous decision, we

warned Attorney Schoenecker that, in order to practice law again

in this state, he needed to demonstrate that "he has a proper

understanding       of    and    attitude       toward     the    standards            that    are

imposed upon members of the bar in this state and that he will

act   in     conformity         with    those    standards."                Id.         Attorney

Schoenecker's response to that warning was to engage in what the
referee here described as "serious and repeated violations" of
                                            10
                                                              No.    2015AP275-D

SCR 20:8.4(c) which "mirrored, in part, . . . the misconduct

that resulted in Attorney Schoenecker's three year suspension."

    ¶19     In his filings with the referee, Attorney Schoenecker

argued that a one-year suspension "is only made reasonable as

'time     served'"   because    he     has   postponed      petitioning      for

reinstatement    while   the    OLR    investigated   and    litigated      this

matter.    We are not convinced by this argument.            We do not doubt

Attorney    Schoenecker's      assertion     that   the   pendency     of    the

instant action led him to believe it would have been futile for

him to petition for reinstatement after his earlier suspension

ended.     We also do not doubt Attorney Schoenecker's assertion

that the instant action took longer to resolve than he would

have preferred.      But Attorney Schoenecker cannot properly demand

credit for the time it took his case to work its way through the

disciplinary process when:            (1) there is no evidence that the

                                       11
                                                                   No.    2015AP275-D

OLR failed to diligently prosecute this matter;7 and (2) Attorney

Schoenecker's behavior post-dates and runs counter to the clear

warning we gave him in 2011 that he must live up to the ethical

standards of the profession.               Thus, we conclude that Attorney

Schoenecker's       one-year     suspension         should    be     prospective,

commencing from the date of this decision.

    ¶20   We    next     turn   to   the    issue   of   costs.      The    referee

recommends that this court impose half of the OLR's $8,500.59 in

costs, primarily because the OLR dropped one of the two counts

stated in its original complaint and reduced the recommended

sanction from revocation to a one-year suspension.                   Both the OLR

and Attorney Schoenecker agree with this recommendation.

    ¶21   We agree with the referee and the parties that an

assessment     of   one-half     of    the       costs   in   this       matter    is

appropriate.        In    exercising       our    discretion       regarding      the

    7
       The referee wrote in her report that the less-than-seven-
month span between the OLR's filing of the original complaint
(February 10, 2015) and the parties' entry into a stipulation
(September 2, 2015) was a "significant period[] of time for
[Attorney Schoenecker] to wait for OLR to 'make its case' or to
resolve a grievance."     To the extent this statement can be
construed as a criticism of the pace of the prosecution, we do
not share the referee's view.     The parties' filings with the
referee inform us that the OLR's retained counsel reviewed
GameMaster, LLC's financial records, interviewed witnesses,
consulted with an expert, and deposed Attorney Schoenecker.
Attorney Schoenecker's counsel took the depositions of Attorney
Schoenecker's two business partners.     Based on the parties'
evolving understanding of the facts, the OLR amended its
complaint and the parties negotiated the stipulation that formed
the basis for the referee report now before us.     A less-than-
seven-month period for accomplishing these tasks does not strike
us as dilatory.

                                       12
                                                         No.    2015AP275-D

assessment of costs, we consider the following factors: (a) the

number of counts charged, contested, and proven; (b) the nature

of the misconduct; (c) the level of discipline sought by the

parties and recommended by the referee; (d) the respondent's

cooperation with the disciplinary process; (e) prior discipline,

if   any;   and   (f)   other   relevant    circumstances.       See    SCR

22.24(1m).8

     ¶22    Applying    these   factors,      we   observe     that    SCRs

22.24(1m)(a), (b), (c), and (d) weigh in favor of a reduction in

     8
         SCR 22.24(1m) provides as follows:

          (1m) The court's general policy is that upon a
     finding of misconduct it is appropriate to impose all
     costs, including the expenses of counsel for the
     office of lawyer regulation, upon the respondent. In
     some cases the court may, in the exercise of its
     discretion, reduce the amount of costs imposed upon a
     respondent.   In exercising its discretion regarding
     the assessment of costs, the court will consider the
     statement of costs, any objection and reply, the
     recommendation of the referee, and all of the
     following factors:

          (a) the number of counts charged, contested, and
     proven.

            (b) The nature of the misconduct.

          (c) The level of discipline sought by the parties
     and recommended by the referee.

          (d)   The   respondent's         cooperation   with    the
     disciplinary process.

            (e) Prior discipline, if any.

            (f) Other relevant circumstances.

                                   13
                                                                           No.       2015AP275-D

costs.       The original complaint alleged two counts of misconduct

and    sought    revocation         of     Attorney       Schoenecker's          license     to

practice law.           Consistent with the parties' stipulation, the

referee      concluded,       and     we    agree,    that       Attorney        Schoenecker

committed       one     count    of        misconduct,      warranting           a    one-year

suspension.           These    facts     suggest     that       Attorney    Schoenecker's

misconduct,       while       serious,       was     of     a    lesser      nature        than

originally alleged.             We note, too, that the OLR reports that

Attorney      Schoenecker        was       cooperative      with     the     disciplinary

process.      SCR 22.24(1m)(d).

       ¶23    A few facts weigh against a reduction in costs.                               One

is that Attorney Schoenecker has once before received a lengthy

disciplinary suspension.                 Another is that there is no evidence

that the charges in the OLR's original complaint were wholly

without prosecutorial merit or that the OLR's costs in pursuing

those charges were unreasonable or unnecessary.

       ¶24    Ultimately, we agree with the referee and the parties

that     a    one-half        reduction       in   costs        is   warranted.             Our
determination is not the result of the application of a precise

mathematical formula, but is based on our thorough consideration

                                              14
                                                   No.   2015AP275-D

of the record, the manner in which this case developed, and the

factors set forth in SCR 22.24(1m).9

     ¶25   The OLR does not seek restitution, so we award none.

     ¶26   IT IS ORDERED that the license of James M. Schoenecker

to practice law in Wisconsin is suspended for a period of one

year, effective the date of this order.

     ¶27   IT IS FURTHER ORDERED that within 60 days of the date

of this order, James M. Schoenecker shall pay to the Office of

Lawyer Regulation one-half of the costs of this proceeding.

     ¶28   IT IS FURTHER ORDERED that to the extent he has not

already done so, James M. Schoenecker shall comply with the

provisions of SCR 22.26 concerning the duties of a person whose

license to practice law in Wisconsin has been suspended.

     9
       We note that, on February 22, 2016, the referee filed a
"Supplementary Statement of Fees," in which she requested
$413.02   for   her   time  spent   preparing  a   "Report   and
Recommendation on Costs," filed on February 18, 2016.         We
decline this request.      The referee's costs report, which
recommended a one-half costs assessment, was belated and
duplicative of both her December 3, 2015 report and the parties'
shared position on costs.

                                15
                                                      No.   2015AP275-D.ssa

    ¶29   SHIRLEY S. ABRAHAMSON, J.          (concurring in part and

dissenting in part).     I join all but footnote 9 of the opinion

of the court.      I would grant the fees requested by the referee

in her "Supplementary Statement of Fees."

    ¶30   I   am   authorized   to   state   that   Justice   ANN   WALSH

BRADLEY joins this opinion.

                                     1
    No.   2015AP275-D.ssa

1