Iowa Supreme Court Attorney Disciplinary Board v. Mason James Ouderkirk

IN THE SUPREME COURT OF IOWA
No. 13–1124

Filed March 28, 2014

IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD,

Appellee,

vs.

MASON JAMES OUDERKIRK,

Appellant.

Appeal from the report of the Grievance Commission of the

Supreme Court of Iowa.

Ouderkirk appeals from the grievance commission’s

recommendation of a public reprimand. COMPLAINT DISMISSED.

Michael J. Carroll of Babich Goldman, P.C., Des Moines, for

appellant.

Charles L. Harrington and Amanda K. Robinson, Des Moines, for

appellee.
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WATERMAN, Justice.

How far can a lawyer go to assist a client in preserving assets from

a potential creditor? In this appeal, we must decide whether

Mason James Ouderkirk violated our prior disciplinary rules 1 in his

representation of Rodney Heemstra, a wealthy Iowa farmer who shot and

killed his neighbor, Tommy Lyon. Heemstra was charged with first-

degree murder and ultimately convicted of voluntary manslaughter.

Ouderkirk represented Heemstra at the outset of the criminal

proceedings and during part of the civil wrongful-death litigation, which

later resulted in a multimillion dollar judgment against Heemstra. The

Board’s complaint is based on Ouderkirk’s drafting of transfer

documents in the months following the shooting. These documents

conveyed property from Heemstra to his wife, then to various trusts, and

finally to purported third parties who were actually Heemstra relatives.

The Lyon estate brought collection actions challenging the asset

transfers as fraudulent conveyances. The district court ruled in favor of

the estate and found the transactions with which Ouderkirk assisted to

be “part of a complex shell game.” The court found the Heemstras

transferred assets in an “intentional, harsh and cruel effort to put truth

in Rodney Heemstra’s arrogant claim that Ronda Lyon would never see a

dime of his money.” The court unwound a number of the asset transfers

and awarded actual and punitive damages against the Heemstras.

Tommy Lyon’s widow, Ronda Lyon, filed an ethics complaint

against Ouderkirk, and the Iowa Supreme Court Attorney Disciplinary

Board charged him with violating several rules. The Grievance

1The Iowa Rules of Professional Conduct became effective July 1, 2005,
replacing the Iowa Code of Professional Responsibility for Lawyers. We apply the rules
in effect at the time of Ouderkirk’s conduct at issue in 2003.
 3

Commission of the Supreme Court of Iowa found that the Heemstras had

deceived Ouderkirk, telling him that they had valid reasons for

transferring their property and that they were selling much of their

property to a bona fide purchaser. The commission also found that

Ouderkirk lacked actual knowledge the key transaction was a sham.

Nevertheless, the commission found Ouderkirk’s representation in one

transaction violated several rules and recommended a public reprimand.

For the reasons explained below, on our de novo review, we find the

Board failed to prove any rule violation by the requisite convincing

preponderance of the evidence. We therefore dismiss the Board’s

complaint against Ouderkirk with prejudice.

I. Scope of Review.

We review attorney disciplinary proceedings de novo. Iowa

Supreme Ct. Att’y Disciplinary Bd. v. Rhinehart, 827 N.W.2d 169, 171

(Iowa 2013). We give deference to the commission’s credibility findings

because the commission hears live testimony and observes the demeanor

of witnesses. Iowa Supreme Ct. Att’y Disciplinary Bd. v. Clarity, 838

N.W.2d 648, 659 (Iowa 2013). The Board must prove attorney

misconduct by a convincing preponderance of the evidence. Rhinehart,

827 N.W.2d at 171. This standard is more demanding than proof by

preponderance of the evidence, but less demanding than proof beyond a

reasonable doubt. Iowa Supreme Ct. Att’y Disciplinary Bd. v. Adams, 809

N.W.2d 543, 545 (Iowa 2012). We respectfully consider the commission’s

findings of fact and recommended sanction, but we are not bound by

them. Iowa Supreme Ct. Att’y Disciplinary Bd. v. Earley, 774 N.W.2d 301,

304 (Iowa 2009).
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II. Background Facts and Proceedings.

The commission held a two-day evidentiary hearing on

December 18–19, 2012. Two witnesses testified for the Board. The

Board offered no expert testimony that Ouderkirk violated any of our

disciplinary rules. Ouderkirk testified on his own behalf, along with an

expert witness and six character witnesses, which included two district

court judges. In total, over two hundred exhibits were submitted. Based

on our de novo review of the record, we find the following facts.

Ouderkirk graduated from Drake University Law School in 1978

and joined his father in general practice at the Ouderkirk Law Firm in

Indianola. Ouderkirk has practiced law for over thirty-five years there

with an unblemished disciplinary record. He enjoys a reputation as a

zealous advocate for his clients and received an AV Rating from

Martindale-Hubbell.

Throughout the 1990s, Ouderkirk represented Rodney Heemstra

and his wife, Berta, in transactions involving their extensive farm real

estate interests. He periodically prepared title work, real estate

contracts, and deeds for the Heemstras. The Heemstras did not employ

Ouderkirk on a retainer, nor were they one of his law firm’s biggest

clients. According to Ouderkirk, the Heemstras were sophisticated real

estate buyers and sellers who “did all their own deals” and were intensely

private about their finances. Rodney would come to Ouderkirk for help

drafting land-transfer documents. Rodney would dictate the particulars

to Ouderkirk, who would draft the legal documents to effectuate

Rodney’s plan. James Dougherty, who practiced with Ouderkirk in the

1990s, described Rodney as “the type of client that would run in, say

something like, ‘I bought a farm. Here [are] the details, put down a

purchase agreement, I need it right now.’ ” Ouderkirk would give the
 5

completed paperwork to the Heemstras, who then typically handled their

own closings and filings. According to Ouderkirk, the Heemstras “always

just took care of things” once he drafted the necessary documents.

On January 13, 2003, Rodney fatally shot Tommy Lyon over a

dispute relating to farmland and hid Tommy’s body in a cistern. See

State v. Heemstra, 721 N.W.2d 549, 551–52 (Iowa 2006) (describing the

facts of the criminal case). Rodney was arrested and charged with first-

degree murder on January 15. Rodney asserted he had shot Tommy in

self-defense and retained Ouderkirk to defend him against the charges.

Ouderkirk meanwhile continued to assist the Heemstras with real estate

transactions, as the Heemstras transferred millions of dollars of property

out of their names in the ensuing months. Ouderkirk’s assistance with

these transfers forms the basis of the Board’s complaint.

The Heemstras moved quickly after the shooting to ensure

continuity for their farming operation. On January 16, Ouderkirk wrote

to Berta to “follow up with a number of items regarding the business and

farming matters.” He enclosed a power of attorney to “aid [Berta] in

conducting the family business with respect to farming operation loans,

farm programs, refinancing farm programs, operating loans, etc.” He

also alerted Berta that, if any of the family property was transferred, “the

Lyon family may attempt to set aside any conveyance as fraudulent or an

attempt to avoid a creditor” and noted “should a court deem the

conveyance fraudulent . . . there is always the possibility that the

conveyances could be set aside.”

Ouderkirk recounted that the Heemstras’ creditors pressed for a

reorganization of the couple’s assets after Rodney’s arrest. The

Heemstras’ net worth—represented primarily by real estate holdings—

exceeded $4,000,000 in January 2003. They were considerably indebted
 6

to Wells Fargo, John Deere, Commodity Credit Corporation, and Farm

Credit Services for money they had borrowed to purchase farm

implements and farmland. Farm Credit Services’s security interest was

secured on land, but Wells Fargo’s security interest was mostly in the

Heemstras’ farm equipment, which they had valued at around $900,000.

Wells Fargo urged a reorganization that would give it a security interest

in some of the Heemstras’ mortgaged real estate. Additionally, both

Wells Fargo and Farm Credit Services wanted a reorganization of the

Heemstras’ assets to place Berta in control, in order to provide continuity

if Rodney was convicted and imprisoned. Ouderkirk testified, “We had to

reorganize, or they would have called the loans.” Rodney was released on

bond January 21, and Ouderkirk and Rodney entered into negotiations

with Farm Credit Services and Wells Fargo.

Tommy Lyon’s widow, Ronda, filed a wrongful-death lawsuit

against Rodney on January 27 and secured writs of attachment on some

of the Heemstras’ Warren County real estate. Ouderkirk disputed the

validity of these writs of attachment on behalf of the Heemstras. The

writs were eventually set aside by the court of appeals in Estate of Lyon

v. Heemstra, No. 09–0164, 2010 WL 200454, at *3 (Iowa Ct. App.

Jan. 22, 2010) (unpublished opinion), after Wells Fargo moved to quash

the writs because they were adversely affecting the company’s ability to

enforce a judgment lien.

Throughout January and February of 2003, the Heemstras, with

Ouderkirk’s assistance, transferred ownership of a significant amount of

their property into revocable trusts. The Heemstras told Ouderkirk the

impetus for the transfers was Berta’s expected need for cash flow to

make scheduled loan payments to their creditors and to pay federal and

state real estate taxes. Ouderkirk drafted almost three dozen real estate
 7

documents concerning fourteen parcels of land held by Rodney and

Berta. These documents created four revocable trusts and enabled the

Heemstras to transfer over a thousand acres of farmland—worth millions

of dollars—from Rodney, through Berta, to the trusts. All of the trustees

of the four revocable trusts were relatives of the Heemstras. Much of the

property passed through the Brisco Revocable Trust, for which Berta

served as the trustee.

The commission’s decision sets forth the timeline of these

transfers:

January 22, 2003 — Ouderkirk drafts and notarizes a
warranty deed in which Rodney and Berta convey their
interests in Parcel 22 to Rodney’s parents. . . .
January 28, 2003 — Ouderkirk drafts and notarizes a
quitclaim deed transferring Rodney and Berta’s interests in
Parcels 1, 3, 4, 5, 6, 7, 7A, and 10 to Berta.
January 30, 2003 — Ouderkirk drafts and notarizes a
quitclaim deed transferring Rodney and Berta’s interest in
Parcels 8, 9, and 11 to Berta.
January 31, 2003 — Ouderkirk (1) drafts Brisco
Revocable Trust and (2) drafts and notarizes a warranty deed
conveying Berta’s interest in Parcels 1, 3, 4, 5, 6, 7, 7A, 8, 9,
10, and 11 to Brisco Revocable Trust.
February 3, 2003 — Ouderkirk drafts several
documents related to parcels 14 and 15:
a. Parcel 14 — He drafts (1) a quitclaim deed
conveying Rodney and Berta’s interest in Parcel 14 to
Berta, (2) a warranty deed conveying Rodney and
Berta’s interest in Parcel 14 to Berta’s mother, and (3)
a mortgage between Berta and her mother.
b. Parcel 15 — He drafts and notarizes (1) a
quitclaim deed in which Rodney and Berta convey
their interest in Parcel 15 to Berta, (2) a warranty deed
in which Berta conveys her interest in Parcel 15 to
Rodney’s parents as co-trustees of the Heemstra
Revocable Trust, and (3) a mortgage between this trust
and Berta.
February 10, 2003 — Ouderkirk drafts a quitclaim
deed in which Rodney’s parents convey their interest in
Parcel 22 to themselves as trustees for the Heemstra
Revocable Trust.
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February 19, 2003 — Ouderkirk drafts and notarizes a
correction warranty deed conveying Berta’s interest in
Parcels 8 and 9 to Brisco Revocable Trust.

(Internal citations and emphasis omitted.) All of these conveyances were

publicly recorded.

In February, Wells Fargo forced a nationally advertised sale of

Rodney’s farm equipment. The Heemstras had no control over this sale

and received no proceeds from it.

Ouderkirk recounted that the Heemstras came to his office around

March 10 to discuss various options to protect their assets for Berta and

their two sons. Ouderkirk rejected Berta’s suggestion that the couple

should create an irrevocable trust. Ouderkirk testified that he told the

Heemstras, “I really think this is a bad idea, and I think you guys should

really consider not doing any of this.” He further stated he was “very

happy” when Berta later called to say she would follow his advice and

abandon the irrevocable trust idea. On March 12, Ouderkirk wrote to

the Heemstras in confirmation of Berta’s phone call. His letter stated:

As I understand it, Berta and you have decided not to
proceed with irrevocable trusts, corporate formation, offshore
trusts, etc. Additionally, it appears that you are not in favor
of exchanges out of state or sales. Taking that approach will
certainly make judgment and asset collection easier in the
event judgments are entered against any assets held
individually or by the revocable trust.

Yet, only a week later, the Heemstras told Ouderkirk they had

found—through an arms’ length transaction—an unnamed, bona fide,

out-of-state buyer for much of the land now held by Brisco: the

Appleroon Irrevocable Trust. 2 Ouderkirk knew the Heemstras had

2It is unknown who created the Appleroon Irrevocable Trust, but Ouderkirk

testified it was not him. Appleroon was created March 24, 2003, at Berta’s request.
Berta, however, denies knowing who drafted the trust, and Rodney also testified he did
not know who was behind Appleroon.
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previously listed this property for sale and believed the sale was nothing

out of the ordinary. Ouderkirk did not ask and was not told who was

behind Appleroon. In fact, Rodney’s sister was the initial trustee of

Appleroon, and the successor trustee was Rodney’s cousin’s wife. The

Heemstras’ two sons were the beneficiaries of the trust.

On March 26, Ouderkirk drafted a memorandum of contract for

the sale of parcels 3, 4, 5, 6, 7, 7A, 8, 9, 10, and 11—around 600 acres

total—from Brisco to Appleroon for the price of $2,300,000. The

Heemstras gave Ouderkirk the terms for the transfers, including the last

paragraph of the contract, which stated:

26. CLAIMED ATTACHMENT. Buyer acknowledges that
the Iowa District Court for Warren County has issued a writ
of attachment in a pending lawsuit entitled The Estate of
Tommy Ray Lyon vs. Rodney Heemstra which may be
purported to affect title to the real estate described herein,
even though Rodney Heemstra is not a party to this
transaction. Seller and Buyer are of the opinion that said
attachment does not effect [sic] the real estate which is the
subject of the contract because it was not in effect and/or
filed against the premises at the time Seller acquired title to
said real estate. Buyer shall suspend and not make any
payments due Seller which are attached, garnished, to be
paid to, executed upon, levied upon and/or assigned by, to
or for the Estate of Tommy Ray Lyon, or its personal
representative, the surviving spouse, heirs or devisees of
Tommy Ray Lyon, or successors or assigns and the same
shall be added to the principal balance due in the final
payment due Seller on April 1, 2033, under this contract but
shall not draw or accrue additional or delinquent interest on
said deferred payment amounts. Seller shall defend,
indemnify and hold Buyer harmless for any losses, damages
or other monetary sums arising out of such claim or actions.

Ouderkirk never saw any proof of an exchange of consideration

and was not present at the signing of the contract. Ouderkirk testified it

is not unusual, in his experience, to draft a contract for sale or other

transfer document and give it back to the client. He characterized the
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proposed Appleroon transaction as a typical deal presented to him by

Rodney. The Heemstras publicly recorded the Appleroon conveyance.

Ouderkirk’s involvement with the Heemstras’ property transfers

and Rodney’s criminal case ended in late March of 2003. New counsel

took over Rodney’s criminal representation.

At trial that autumn, Rodney argued that he shot and killed

Tommy in self-defense. The jury rejected this defense and convicted

Rodney of first-degree murder in October 2003. Based on the conviction,

Tommy’s estate secured a civil judgment against Rodney for

$8,913,431.44 in February 2006. 3 This award was vacated after our

court reversed Rodney’s conviction and remanded the case for a new

trial. See Heemstra, 721 N.W.2d at 563. 4

On retrial in April 2007, a jury convicted Heemstra of voluntary

manslaughter. State v. Heemstra, 759 N.W.2d 151, 152–53 (Iowa Ct.

App. 2008) (affirming conviction). Rodney was ordered to pay $150,000

in restitution to Tommy’s estate, pursuant to Iowa Code section

910.3B(1). The issue of damages in the civil wrongful-death action was

tried to the court a second time in November 2008, and the estate

secured a judgment for $5,700,000.
Immediately after the first civil judgment in 2006, the estate filed a

civil lawsuit alleging the Heemstra family conspired to fraudulently

transfer and conceal Rodney and Berta’s real estate in an attempt to

evade collection of the wrongful-death judgment. The estate accused

Rodney, Berta, and other family members, trusts, and entities of

3The court entered partial summary judgment in favor of the estate on the issue
of liability. The only issue at the bench trial was the amount of damages.
4After Rodney’s conviction, Wells Fargo sued the Heemstras for multiple
defaulted loans and obtained a default judgment in January 2004.
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conspiracy to commit fraud, conspiracy to commit abuse of process,

fraudulent transfer, intentional infliction of emotional distress, and

fraudulent preference of creditors. 5

Ouderkirk was not named as a defendant in the collection action,

nor did he represent any of the defendants. The Lyon estate did,

however, seek to compel Ouderkirk’s testimony. At the time the district

court ruled on the motion to compel, the court had knowledge of the

revocable trusts Ouderkirk created, but not of the Appleroon Irrevocable

Trust or the Appleroon transfer. The district court refused to order

Ouderkirk to testify under the crime-fraud exception to the attorney–

client privilege, stating, “Based on the current state of the record in this

case, the court does not find that the Plaintiffs have made a prima facie

showing of fraud encouraged or participated in by Mason Ouderkirk.”

The fraudulent-conveyance action proceeded to trial to the court after the

second criminal jury trial and second wrongful-death civil trial.

On September 18, 2009, the district court entered a seventy-page

ruling, finding in favor of the estate on the fraudulent-transfer claims

against Rodney and Berta but rejecting the other claims. The district

court summarized the Heemstras’ actions following Tommy’s death:

Rodney Heemstra transferred millions of dollars’ worth of
real estate from his name, without consideration, while
maintaining liability for all of the existing debt. The
transfers were repeated by Rodney, Berta, and the Brisco
Revocable Trust into additional trusts. The assets were
encumbered with mortgages, sold on 30-year contracts, and
generally made a part of a complex shell game.

5Several legal actions arose from the estate’s efforts to collect on the civil
judgments. See, e.g., Estate of Lyon v. Heemstra, No. 08–0934, 2009 WL 1676662 (Iowa
Ct. App. June 17, 2009) (unpublished opinion) (relating to estate’s attempt to garnish
Rodney’s $1,000,000 cash bond); Estate of Lyon v. Heemstra, No. 10–0390, 2010 WL
5394795, at *6 (Iowa Ct. App. Dec. 22, 2010) (unpublished opinion) (finding redemption
of real estate in possession of referee and garnishment of rents on that property void).
 12

Based on these actions, the court found the Heemstras “transferred

assets with the actual intent to hinder, delay and defraud [Rodney’s]

creditors, specifically Ronda Lyon and the Estate of Tommy Lyon.” 6

The court specifically addressed paragraph 26 of the Brisco-to-

Appleroon contract, concluding it established Berta’s “absolutely

fraudulent intent.” The court stated, “Rodney and Berta Heemstra were

willing to forego any payment, including interest, for up to 30 years

rather than have any of his assets made available to satisfy any debt

owed to Ronda Lyon or the Tommy Lyon estate.” In sum, the district

court found:

The conduct of the Defendants Rodney and Berta Heemstra
was oppressive and conniving. It was not only an intentional
failure to discover or prevent the wrong, but an intentional,
concerted, and protracted effort to cause the wrong. It was
conduct motivated by greed. The nature and complexity of
their scheme shows that their conduct was far more than a
willful and wanton disregard for the rights of another. It was
the intentional, harsh and cruel effort to put truth in Rodney
Heemstra’s arrogant claim that Ronda Lyon would never see
a dime of his money.

The court awarded the estate $203,895 in compensatory damages

against Rodney and others 7 and $750,000 in punitive damages against
Rodney and Berta. The court also voided the conveyances of ten parcels

of land and appointed a referee to take control of the properties. As for

the other parcels, the court determined that, although the real estate was

fraudulently conveyed, the estate did not suffer any prejudice from the

conveyances and was not entitled to relief. Finally, noting “[t]he huge

6The district court found several other Heemstra family members were knowing
participants in the conspiracy to commit fraud and held them liable for damages.
7This $203,895 compensated plaintiffs for the losses suffered due to Rodney’s
assignment of his cash-rent revenue to various other parties. Rodney stated, “My intent
on the assignment of rent was to assure, because we knew this litigation as coming up,
that . . . under no circumstances would I have had access or any benefit to those rental
proceeds.”
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expenditure of time and effort involved in attempting to unravel the

tangled web of transfers,” the court ordered the Heemstras to pay the

plaintiff’s attorney fees, which were later calculated at $250,000. 8 The

estate settled with the Heemstras in December 2012.

III. Disciplinary Proceedings.

Ronda Lyon filed a complaint with the Board in December 2009,

three months after the judgment in the second wrongful-death action,

stating Ouderkirk assisted Rodney in transferring his assets “into

fraudulent family entities designed for the sole purpose of defeating,

delaying and hindering Heemstra’s creditors.” The Board filed a

complaint alleging Ouderkirk, by assisting the Heemstras in transferring

their land, violated Iowa Code of Professional Responsibility for Lawyers

DR 1–102(A)(4) (conduct involving dishonesty, fraud, deceit, or

misrepresentation), DR 1–102(A)(5) (conduct prejudicial to the

administration of justice), DR 7–102(A)(1) (action to harass or maliciously

injure another), and DR 7–102(A)(7) (assisting a client in fraudulent

conduct).

After the hearing in December 2012, the commission issued its

findings of fact, conclusions of law, and recommended sanction on

July 18, 2013. The commission concluded the proof was insufficient to

find Ouderkirk violated the disciplinary rules in relation to the revocable

trust transfers because (1) the four trusts Ouderkirk drafted were

revocable and, thus, transfers to the trusts could be voided if they were

8After the 2010 court of appeals opinion setting aside the estate’s original

attachments, the Heemstras filed a motion to vacate the district court’s ruling. The
Heemstras argued the district court relied upon the attachments in finding the
Heemstras had fraudulently transferred property, and therefore, the court of appeals
opinion finding the writs were invalid nullified the district court’s ruling. The district
court denied the Heemstras’ motion, and the court of appeals affirmed. Estate of Lyon
v. Heemstra, No. 10–1025, 2011 WL 443900, at *3–4 (Iowa Ct. App. Feb. 9, 2011)
(unpublished opinion).
 14

later determined to be fraudulent; (2) the land transferred into the Brisco

revocable trust was not subject to the estate’s writs of attachment; (3) the

estate did not have a judgment at the time of the transfers and, in any

event, the judgment would only make the estate an unsecured creditor;

(4) the district court, in denying Ronda’s motion to compel Ouderkirk’s

testimony in the fraudulent conveyance action, found no evidence that

Ouderkirk “encouraged or participated” in the fraud; (5) the commission

felt Ouderkirk did not owe an obligation to the estate under Iowa Code

chapter 684 regarding the revocable trust documents; and (6) all of the

conveyances were publicly recorded and available for anyone to see. The

commission found Ouderkirk “reasonably believed” the explanation the

Heemstras gave as motivating the transfers into revocable trusts.

Accordingly, the commission concluded Ouderkirk did not know he was

facilitating a fraudulent conveyance by assisting the Heemstras in

transferring property into revocable trusts.

The commission did, however, conclude Ouderkirk violated DR 1–

102(A)(4) and DR 7–102(A)(1) by creating the transfer documents to

convey the Heemstras’ property to Appleroon. The commission found

credible Ouderkirk’s testimony that, at the time he drafted the Appleroon

contract, he was unaware of the identity of the buyer, the familial

relationship between buyer and seller, and the fact that the buyer was

not bona fide. Yet, paragraph 26 of the Appleroon contract convinced the

commission that Ouderkirk should have recognized the Heemstras’

illegitimate motives. The commission viewed paragraph 26 as an obvious

attempt to shield the Heemstras’ assets from the estate and noted the

language of paragraph 26 was “tellingly absent” from the other real

estate transfer documents Ouderkirk created. The commission

highlighted the fact that Ouderkirk had warned the Heemstras against
 15

creating an irrevocable trust shortly before drafting the Appleroon

transfer documents. The commission concluded “[t]he record lacks a

defensible reason” for the transfer from a revocable trust into an

irrevocable trust. Deeming Ouderkirk’s actions “an isolated and

uncharacteristic lapse of his professional judgment,” the commission

faulted Ouderkirk for failing to recognize the red flags of a fraudulent

conveyance:

Because the Heemstras’ intent is apparent on the face of
paragraph 26, we don’t see how Ouderkirk could not have (1)
known it, (2) been concerned about it given his recent
written warning and his understanding from Berta that she
and Rodney had abandoned the irrevocable trust idea, (3)
questioned the Heemstras about why they wanted this
provision before he drafted it, and (4) asked them why they
were moving land from a revocable trust into an irrevocable
trust—the only irrevocable trust involved in the transactions
the Board complains of.

But, the commission found that Ouderkirk’s drafting of the

Appleroon transfer documents did not violate the disciplinary rule

prohibiting conduct that is prejudicial to the administration of justice,

DR 1–102(A)(5). The commission also declined to find a violation of

DR 1–102(A)(7), concluding that finding a violation of this rule in addition
to DR 1–102(A)(4) “would be tantamount to double-counting the cited

cases frown[ed] upon.”

IV. Alleged Ethical Violations.

As the Board noted at oral argument, assisting clients to defraud

creditors is a type of behavior that increases public distrust of attorneys.

Yet, lawyers routinely and appropriately advise clients on asset

protection measures and represent clients defending collection actions.

We would not want to chill proper advocacy or deter lawyers from

representing clients who need legal advice and who without it may be

more likely to break the law in evading creditors. We also note the
 16

dearth of precedent sanctioning lawyers, in the absence of self-dealing,

for assisting clients in transactions later found to be a fraud on creditors.

We recognize the factual and legal complexities in determining whether a

particular conveyance is a fraud on creditors. And, we approach with

caution ethics complaints initiated by a litigation adversary.

We first consider Ouderkirk’s argument that a fraudulent

conveyance in and of itself cannot be a “fraud” for the purposes of our

disciplinary rules. See Iowa Code of Prof’l Responsibility DR 1–102(A)(4)

(prohibiting “conduct involving dishonesty, fraud, deceit, or

misrepresentation”); id. DR 7–102(A)(7) (prohibiting “[c]ounsel[ing] or

assist[ing] a client in conduct that the lawyer knows to be illegal or

fraudulent”). Iowa Code Chapter 684 governs fraudulent transactions. 9

9Courts apply Iowa Code section 684.4 to determine if a transfer is fraudulent as
to present or future creditors. That section states in full:
1. A transfer made or obligation incurred by a debtor is
fraudulent as to a creditor, whether the creditor’s claim arose before or
after the transfer was made or the obligation was incurred, if the debtor
made the transfer or incurred the obligation under any of the following
circumstances:
a. With actual intent to hinder, delay, or defraud any creditor of
the debtor.
b. Without receiving a reasonably equivalent value in exchange
for the transfer or obligation, if either of the following applies:
(1) The debtor was engaged or was about to engage in a business
or a transaction for which the remaining assets of the debtor were
unreasonably small in relation to the business or transaction.
(2) The debtor intended to incur, or believed or reasonably should
have believed that the debtor would incur, debts beyond the debtor's
ability to pay as they became due.
2. In determining actual intent under subsection 1, paragraph
“a”, consideration may be given, among other factors, to any or all of the
following:
a. Whether the transfer or obligation was to an insider.
b. Whether the debtor retained possession or control of the
property transferred after the transfer.
c. Whether the transfer or obligation was disclosed or concealed.
 17

“A fraudulent conveyance is a transaction by means of which the owner

of real or personal property has sought to place the land or goods beyond

the reach of his creditors, or which operates to the prejudice of their legal

or equitable rights.” Benson v. Richardson, 537 N.W.2d 748, 756 (1995)

(internal quotation marks omitted). Ouderkirk asserts that proving fraud

for the purposes of disciplinary proceedings is a higher bar: he argues

the Board must prove the common law elements of a fraud claim—

“materiality, falsity, representation, scienter, intent to deceive, justifiable

reliance, and resulting injury and damage.” Plymouth Farmers Mut. Ins.

Ass’n v. Armour, 584 N.W.2d 289, 291 (Iowa 1998).

The Iowa Code of Professional Responsibility for Lawyers did not

contain a definition of “fraud.” “In its most basic sense, ‘[d]eliberate

action that misleads another is fraud, and a lawyer may not counsel or

assist a client in such conduct.’ ” 16 Gregory C. Sisk & Mark S. Cady,

Iowa Practice Series: Lawyer and Judicial Ethics § 8:1(d), at 761 (2013

ed.) (quoting 2 Geoffrey C. Hazard, Jr. & W. William Hodes, The Law of
_________________________
d. Whether, before the transfer was made or obligation was
incurred, the debtor had been sued or threatened with suit.
e. Whether the transfer was of substantially all the debtor’s
assets.
f. Whether the debtor absconded.
g. Whether the debtor removed or concealed assets.
h. Whether the value of the consideration received by the debtor
was reasonably equivalent to the value of the asset transferred or the
amount of the obligation incurred.
i. Whether the debtor was insolvent or became insolvent shortly
after the transfer was made or the obligation was incurred.
j. Whether the transfer occurred shortly before or shortly after a
substantial debt was incurred.
k. Whether the debtor transferred the essential assets of the
business to a lienor who transferred the assets to an insider of the
debtor.
Iowa Code § 684.4 (2003) (emphasis added).
 18

Lawyering § 37.5, at 37-12 (3d ed. Supp. 2004). Iowa Rule of

Professional Conduct 32:1.0(d) defines “fraud” as “conduct that is

fraudulent under the substantive or procedural law of the applicable

jurisdiction and has a purpose to deceive.”

We have previously sanctioned a lawyer for preparing a sham

mortgage for a client who believed placing a large mortgage on his

already over encumbered property “would discourage other persons from

filing new liens.” Comm. on Prof’l Ethics & Conduct v. Jacobsen, 511

N.W.2d 611, 615 (Iowa 1994). In Jacobsen, the junior mortgage had no

effect on the client’s creditors. Id. Yet, we recognized that fraudulent

transactions—even those that do not involve “fraud, dishonesty, or an

attempt to deceive any known person to that person’s disadvantage”—

can violate DR 1–102(A)(4). Id. We stated, “Although this was not a

misrepresentation intended to defeat the present interest of a known

person . . . , it did involve a misrepresentation of material fact spread

upon and perpetuated upon the public record.” Id. at 616. We conclude

assisting a client with a fraudulent transaction can in the appropriate

circumstances constitute a “fraud” under our disciplinary rules. See id.

Courts in other jurisdictions have similarly concluded that lawyers

can run afoul of disciplinary rules by facilitating fraudulent conveyances

or fraudulently conveying property themselves. See, e.g., In re Morris,

No. 11-O-13518, 2013 WL 6598701, at *1 (Cal. Bar Ct. Dec. 4, 2013)

(unpublished opinion) (finding lawyer violated rule prohibiting moral

turpitude, dishonesty, and corruption by assisting a client in creating

promissory notes and recording deeds of trust to delay a creditor’s

collection of its judgment); Fla. Bar v. Rood, 620 So. 2d 1252, 1255 (Fla.

1993) (finding rule violation when lawyer fraudulently transferred

property to his father); Att’y Grievance Comm’n v. Culver, 849 A.2d 423,
 19

444 (Md. 2004) (sanctioning lawyer for, among other things, advising

client “how she could avoid repaying” creditors); Dayton Bar Ass’n v.

Marzocco, 680 N.E.2d 970, 971 (Ohio 1997) (disbarring lawyer based in

part on lawyer’s “apparent attempt to transfer property to evade the

effect of a judgment”); In re Conduct of Hockett, 734 P.2d 877, 883–84

(Or. 1987) (suspending lawyer for violating rules prohibiting

misrepresentation and illegal conduct when lawyer helped client

unlawfully convey property to avoid the claims of creditors).

Ouderkirk next argues he cannot be found to be in violation of our

disciplinary rules because he owed no duty to the Heemstras’ creditors.

We disagree. As EC 7–10 instructs:

The duty of a lawyer to represent a client with zeal
does not militate against a concurrent obligation to treat
with consideration all persons involved in the legal process
and to avoid the infliction of needless harm.

Iowa Code of Prof’l Responsibility EC 7–10; see also Comm. on Prof’l

Ethics & Conduct v. Hurd, 360 N.W.2d 96, 104 (Iowa 1984)

(“Respondent’s conduct cannot be defended as zealous representation of

his client. The disciplinary rules set boundaries within which zeal must

be confined.”). While Ouderkirk’s primary duty was to his clients, this
alone does not excuse a violation of the disciplinary rules. See Iowa

Supreme Ct. Att’y Disciplinary Bd. v. McGinness, ___ N.W.2d ___, ___ (Iowa

2014) (finding lawyer violated disciplinary rules by making

misrepresentation to opposing counsel and the district court, despite

lawyer’s explanation that “he was ‘motivated by a misguided loyalty and

[was] attempt[ing] to protect a client’ ”); Iowa Supreme Ct. Att’y

Disciplinary Bd. v. Nelsen, 807 N.W.2d 259, 266 (Iowa 2011) (revoking

license of attorney who helped divert to his clients $141,335 in accounts

receivable that belonged to a third-party secured creditor and noting
 20

“[a]lthough an attorney has a duty to represent his or her client

zealously, the attorney must do so within the bounds of the law”); Comm.

on Prof’l Ethics & Conduct v. Chipokas, 493 N.W.2d 414, 418 (Iowa 1992)

(finding lawyer violated DR 1–102(A)(4) by misrepresenting his settlement

authority to opposing counsel).

Yet, we do not believe that an attorney who drafts documents for a

transaction that is later set aside as a fraudulent conveyance has

necessarily participated in a fraud within the meaning of the disciplinary

rules. Clearly, an attorney who creates sham documents to falsify what

he knows to be the true state of affairs has committed a fraud. See

Jacobsen, 511 N.W.2d at 615–16. Also, an attorney who accurately and

transparently documents a transaction that he nonetheless knows is a

fraudulent conveyance may well have violated our disciplinary rules.

However, short of either of these two scenarios, an attorney should be

able to assist a client in achieving his business purposes, including asset

protection, even if the attorney believes the transaction potentially could

be set aside.

The maxim that “[t]he bounds of the law in a given case are often

difficult to ascertain” applies in fraudulent conveyance cases. Iowa Code

of Prof’l Responsibility EC 7–2. The question of whether a transaction is

fraudulent can be a close one that “must be decided upon facts peculiar

to it alone.” Prod. Credit Ass’n of Midlands v. Shirley, 485 N.W.2d 469,

473 (Iowa 1992). “All of the circumstances of any given transaction must

ordinarily be considered together,” id., and a lawyer who does not know

all of the circumstances is at a disadvantage in evaluating whether a

transaction is legitimate. 10

10Iowa attorneys are now permitted to limit the scope of their representation, see

Iowa Ct. R. 32:1.2(c), and in a limited-representation relationship, the client may not
 21

We must take into account the complexity of the fraudulent-

transfer statute. For example, under one alternative, a transfer is

fraudulent if made “with actual intent to hinder, delay, or defraud any

creditor of the debtor.” Iowa Code § 684.4(1)(a) (2003). This is a

complicated inquiry subject to the consideration of a number of factors.

See id. § 684.4(2). Under the other statutory alternative, a transfer is

fraudulent if made “without receiving a reasonably equivalent value” if

the debtor “was engaged or was about to engage in a business or a

transaction for which the remaining assets of the debtor were

unreasonably small” or the debtor “intended to incur, or believed or

reasonably should have believed that the debtor would incur, debts

beyond the debtor’s ability to pay as they became due.” Id.

§ 684.4(1)(b)(1)–(2). To conclude that a transaction meets this standard,

an attorney would have to know a good deal about the value of the

client’s property, what the client was getting in return, and what the

client’s overall financial picture was.

A lawyer’s inability to read a client’s mind creates additional

uncertainties as to whether a given conveyance is legitimate. See Ralfs v.

Mowry, 586 N.W.2d 369, 373 (Iowa 1998) (noting “an otherwise valid

[transaction] may be set aside if the facts reveal bad faith and an intent

to deceive”). Clients do not always share their true intent with their

attorneys, and a client may have more than one purpose. As EC 7–6

acknowledges:

Whether the proposed action of a lawyer is within the
bounds of the law may be a perplexing question when a
client is contemplating a course of conduct having legal

_________________________
fully inform the lawyer of all the relevant circumstances. See Sabin v. Ackerman, ___
N.W.2d ___, ___ (Iowa 2014) (discussing rule providing for limited representation). The
former rules did not include a provision for limited representation.
 22
consequences that vary according to the client’s intent,
motive, or desires at the time of the action.

Iowa Code of Prof’l Responsibility EC 7–6.
In deciding if a conveyance is fraudulent, the court does not

presume fraud. Shirley, 485 N.W.2d at 473. Nor do we expect lawyers to

presume their clients are committing fraud. EC 7–3 admonishes lawyers

to “resolve in favor of the client doubts as to the bounds of the law,” and

when a lawyer “may not be certain as to the client’s state of mind,” EC 7–

6 reiterates that the lawyer is to “resolve reasonable doubts in favor of

the client.” Lawyers generally should be able to rely on a client’s

representation that a conveyance is legitimate and zealously argue for

the client’s position.

An attorney’s knowledge of the facts can determine whether ethical

lines have been crossed. See Nelsen, 807 N.W.2d at 266, 268 (revoking

license of attorney who “knowingly assisted his clients in defrauding [a]

bank” (emphasis added)). The Board relies on cases from other

jurisdictions to argue fraudulent conveyances justify disciplinary

sanctions. Most of the cases cited by the Board, however, involve

lawyers who were self-dealing. See People v. Koller, 873 P.2d 761, 762,

763 (Colo. 1994) (per curiam) (suspending lawyer who fraudulently

conveyed his property to his wife); People v. Bennett, 843 P.2d 1385,

1385–86 (Colo. 1993) (per curiam) (disbarring attorney who fraudulently

conveyed his property to his wife and his wife’s parents); Rood, 620

So. 2d at 1254–55 (disbarring lawyer who transferred his property to his

father to hinder creditors); In re Diller, 763 N.Y.S.2d 827, 829–30 (App.

Div. 2003) (per curiam) (suspending lawyer who helped her husband

fraudulently convey property). In the remaining cases, the lawyers were

found to have knowingly facilitated fraudulent conveyances. See Bd. of
 23

Overseers of the Bar v. Murphy, 570 A.2d 1212, 1213 (Me. 1990)

(per curiam) (finding rule violation when lawyer “actively promot[ed] a

fraudulent conveyance”); In re Orlow, 964 A.2d 303, 303 (N.J. 2009)

(suspending lawyer based on disciplinary review board’s conclusion that

the respondent assisted a client to conceal his assets from creditors);

Mahoning Cnty. Bar Ass’n v. Sinclair, 822 N.E.2d 360, 364–65 (Ohio

2004) (per curiam) (suspending lawyer who drafted deed despite

“kn[owing] of tax judgments against [client] and that [he] was trying to

hide assets from creditors”). In contrast, the Missouri Supreme Court

dismissed an ethical complaint after finding the prosecuting body failed

to prove by a preponderance of the evidence that the lawyers knew of

their clients’ fraudulent intentions. In re Mirabile, 975 S.W.2d 936, 941

(Mo. 1998) (dismissing ethical complaint when attorneys testified “they

believed [their clients’] separation was real” and was not attempt to

fraudulently avoid husband’s prior child support obligations).

If a lawyer knows a transfer is fraudulent and assists a client in

completing the transfer nonetheless, it is no defense that the lawyer is

acting merely as a scrivener. Though a client has “the ultimate authority

to determine the purposes to be served by legal representation,” this

authority is subject to the limitations of the law and the attorney’s

professional obligations. Iowa R. Prof’l Conduct 32:1.2 cmt. 1. As the

New Jersey Supreme Court observed:

It is no excuse for an attorney to say that he only did what
he did because [he was] directed to do so by his client. The
propriety of any proposed course of action must be initially
considered by the attorney, and it may be thereafter pursued
only if the lawyer is completely satisfied that it involves no
ethical compromise. It is for the lawyer, not the client, to
make this decision.
 24

In re Blatt, 324 A.2d 15, 18 (N.J. 1974). It should also go without saying

that a lawyer cannot avoid disciplinary sanctions simply because a

particular unethical practice is commonplace among lawyers. See Iowa

Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Rauch, 650 N.W.2d 574, 579

(Iowa 2002) (“[The] contention that everyone does it is without merit.”).

We now turn to the specific rules the Board alleges Ouderkirk

violated.

A. DR 7–102(A)(1). DR 7–102(A), captioned “Representing a

Client Within the Bounds of the Law,” prohibits a lawyer from “tak[ing

an] action on behalf of a client when the lawyer knows or when it is

obvious that such action would serve merely to harass or maliciously

injure another.” Iowa Code of Prof’l Responsibility DR 7–102(A)(1).11

Accordingly, to determine if Ouderkirk violated this rule, we first must

decide if he knew or if it was obvious that the Heemstras’ conveyances

were fraudulent and would “serve merely to harass or maliciously injure”

the estate. Id. “ ‘[K]nowingly’ . . . requires actual knowledge of the fact in

question” and “an attorney’s knowledge may be inferred from the

circumstances.” Iowa Supreme Ct. Att’y Disciplinary Bd. v. Barry, 762

N.W.2d 129, 139 (Iowa 2009) (applying DR 7–102(A)(8) and noting “[t]he
definition of ‘knowingly’ contained in the Iowa Rules of Professional

Conduct is consistent with prior pronouncements of this court”). “An

ostrich-like, head-in-the-sand approach” does not “immunize attorneys

from an inference of actual knowledge.” Iowa Supreme Ct. Att’y

Disciplinary Bd. v. Hearity, 812 N.W.2d 614, 621 (Iowa 2012).

11The current rules do not contain an exact corollary to DR 7–102(A)(1), but its

spirit is reflected in the preamble to the Iowa Rules of Professional Conduct: “A lawyer
should use the law’s procedures only for legitimate purposes and not to harass or
intimidate others.” Iowa R. of Prof’l Conduct Preamble [5].
 25

Lacking direct evidence of Ouderkirk’s actual knowledge, the Board

asks us to infer knowledge from the circumstances. In the Board’s view,

the most telling circumstances are the “highly suspicious” timing of the

transactions and the language of paragraph 26. The Board points out

that when Ouderkirk drafted the revocable trust transfer documents, he

knew Rodney was transferring his ownership interests while retaining

responsibility for the debt and knew no consideration was exchanged.

The Board summarizes what Ouderkirk knew at the time he drafted the

Appleroon contract, stating Ouderkirk had

knowledge Heemstra had killed someone, knowledge that
Heemstra covered up that homicide, knowledge that
Heemstra and his wife had completed multiple previous real
estate transactions moving property in direct response to
threat of wrongful death lawsuit, and knowledge that only a
week before being asked to draft the Appleroon contract, the
Heemstras were asking about how to transfer their assets to
another entity such as an irrevocable trust or other business
entity, and had even brought in a proposed irrevocable trust.

The Board argues that paragraph 26 alone justifies a sanction from our

court. The Board finds it significant that the Lyon family was the only

creditor mentioned in the Appleroon contract, arguing paragraph 26

made it “clear that the Heemstras were specifically targeting the Lyon

family and attempting to prevent them from collecting any money for the

wrongful death of Tommy Lyon.” The Board asserts it was obvious that

helping the Heemstras convey their property would harass or maliciously

injure the estate because: (1) a reasonable attorney in Ouderkirk’s

position would have known the Heemstras intended to fraudulently

convey their property; (2) under the circumstances, Ouderkirk had a

duty to inquire into the Heemstras’ motives and who was behind the

Appleroon Irrevocable Trust; and (3) Ouderkirk’s failure to ask any

questions about the Appleroon transaction amounts to willful blindness.
 26

Ouderkirk denies knowing the Heemstras were fraudulently

conveying their property. His expert, attorney Greg Kenyon, testified that

the circumstances surrounding the transfers supported Ouderkirk’s

belief that they were not fraudulent. Kenyon has over thirty-five years of

experience practicing in the areas of collections, trusts, and bankruptcy.

Kenyon testified that the transfers to the Brisco Revocable Trust served a

legitimate purpose: the transfers consolidated the Heemstras’ property

under “one tent,” which would allow Berta to more easily manage the

farming operations.

Focusing on the Appleroon conveyance, Ouderkirk asserts he

should not have been expected to know the transfer was fraudulent

simply because it involved an irrevocable trust. Kenyon testified that a

sale to an irrevocable trust is not inherently suspicious and that nothing

on the face of the Appleroon contract indicated it was not an arms’ length

deal. Ouderkirk testified he believed the Heemstras’ representation that

they had found an unrelated, third-party, out-of-state, bona fide

purchaser for their land and that “[a]s a bona fide sale, by definition the

sale could not be fraudulent.” Kenyon highlighted that the contract

indicated the buyers were paying “apparently market value.” Kenyon

further testified that even if Ouderkirk would have discovered a member

of the Heemstra family was a trustee of Appleroon, this alone would not

make the contract fraudulent; because the terms of the contract led

Ouderkirk to believe consideration had been paid for the property, he

could reasonably believe the sale was bona fide. Ouderkirk argues he

cannot be held accountable for relying on the Heemstras’ representations

and not probing into who was behind the Appleroon Irrevocable Trust.

Moreover, Ouderkirk argues paragraph 26 did not make the

Appleroon conveyance illegitimate. He argues paragraph 26, standing
 27

alone, is not fraudulent or illegal because that paragraph was merely a

condition of sale and “[f]raud is predicated upon a transfer, not a

condition of sale.” Ouderkirk asserts that, if Appleroon was a bona fide

purchaser as he believed it to be, the transfer would not have been

fraudulent—regardless of paragraph 26. He further argues paragraph 26

served a legitimate purpose and was not intended merely to hinder or

delay the estate’s collection efforts. He states, “It would be entirely

expected that the buyer would want and demand that required payments

would be suspended rather than throw its money away if the underlying

mortgages were foreclosed upon.” In Kenyon’s view, paragraph 26 served

to disclose the Lyon family’s potential claim to the buyer “so that the

buyer would not have grounds to rescind the deal later on or to ask for

some further credit or something on the payments.” Kenyon pointed out

that paragraph 26 also contained a “hold harmless” provision, obligating

the Heemstras to defend the buyer from any claims against the property.

Ouderkirk highlights that paragraph 26 supported his belief that the

contract was arms’ length, as paragraph 26 would be unnecessary if the

contract was an inside deal and no consideration would be exchanged.

The commission stopped short of finding Ouderkirk had actual

knowledge that he was assisting the Heemstras to fraudulently convey

their property. It specifically found Ouderkirk did not knowingly assist

his clients in committing fraud. The commission therefore found the

Board failed to prove Ouderkirk violated any rule by drafting the

revocable trust transfer documents. The commission further found:

The record reasonably supports a finding that the
Heemstras were not candid with Ouderkirk concerning the
true nature of Appleroon. Ouderkirk cannot be subject to a
recommendation for sanction for what they failed to reveal to
him. We also credit Ouderkirk’s testimony that he would not
have proceeded with the Brisco-to-Appleroon transaction
 28
had he known the true facts underlying the Heemstras’
drafting request.

(Internal citations omitted.) Despite these findings, the commission
concluded the Heemstras’ fraudulent intent was apparent on the face of

paragraph 26 and therefore imputed the Heemstras’ intent to Ouderkirk.

The commission faulted Ouderkirk for failing to ask the Heemstras the

purpose of paragraph 26 or why they were conveying land to an

irrevocable trust.

On our de novo review of the record, we conclude the Board has

failed to prove by a convincing preponderance of the evidence that

Ouderkirk knew he was helping the Heemstras fraudulently convey their

property or that it was obvious. See Iowa Supreme Ct. Att’y Disciplinary

Bd. v. Olson, 807 N.W.2d 268, 283 (Iowa 2011) (finding Board failed to

meet its burden of proof).

We decline to infer knowledge from the circumstances here. The

Board makes much of the facts Ouderkirk knew at the time he drafted

the various documents for the Heemstras, arguing these facts should

have alerted him that the conveyances were fraudulent. But, there were

additional facts Ouderkirk knew that arguably justified his actions at the

time. He knew the Heemstras frequently bought and sold farmland, and

knew they were under financial pressure. He knew the Heemstras had

previously listed for sale the property conveyed to Appleroon. As

Rodney’s criminal defense lawyer, Ouderkirk knew Rodney had a self-

defense claim. When Ronda filed her wrongful-death suit on January 27,

2003, Ouderkirk knew she was a creditor with a claim under chapter

684—a disputed claim that would not be collectible until she received a

judgment awarding her damages. Ouderkirk knew the Heemstras were

heavily indebted to various secured lenders and that the lenders’ claims
 29

would have priority over a judgment for the estate. Ouderkirk knew

there was a meritorious argument that the attachments on the

Heemstras’ Warren County land were legally flawed, as the court of

appeals later confirmed. We note that the district court in the collection

litigation found the Heemstras liable for fraudulently conveying their

property based in large part on activities they undertook without

Ouderkirk’s assistance or knowledge. 12 Hindsight is twenty-twenty.

Lawyers are to be judged based on the information available to them at

the time of the challenged transaction.

Ouderkirk trusted his clients’ representation that the transfers to

revocable trusts were needed to better manage their farming operation

and that the Appleroon sale was bona fide. The commission heard

Ouderkirk’s testimony and found he was credible, a finding with which

we agree. See Clarity, 838 N.W.2d at 659 (giving deference to

commission’s credibility determination). The ethical considerations to

the 2003 disciplinary rules encourage lawyers to trust their clients, see

Iowa Code of Prof’l Responsibility EC 7–3; 7–6, and Ouderkirk did so.

Based on what he knew at the time, Ouderkirk believed the

Heemstras had a colorable basis to proceed with the conveyances. In

judging whether a transaction is a fraudulent conveyance, courts look for

“badges of fraud,” including:

inadequacy of consideration, the transferor’s insolvency,
pendency or threat of third-party creditor litigation, secrecy
or concealment, departure from usual business methods,
reservation of benefits to the transferor, and the debtor’s
retention of the property.

12This includes the Heemstras’ further transfers to various corporate entities
and trusts and their assignments of rental proceeds to different trusts.
 30

Ralfs, 586 N.W.2d at 373. Iowa Code section 684.4(2) lists additional

factors, including whether the transfer was to an insider and whether the

debtor absconded. Iowa Code § 684.4(2); cf. Shirley, 485 N.W.2d at 472

(noting “although a ‘blood relationship’ is not per se a badge of fraud, it

may strengthen the inference arising from the circumstances, requiring

strict proof of consideration and fairness of the transaction”). For the

revocable trust transfers, even though they were to relatives, Rodney did

not abscond, and, to Ouderkirk’s knowledge, there was no insolvency, no

secrecy or concealment, and no departure from the Heemstras’ usual

business methods. For the Appleroon conveyance—which Ouderkirk

believed to be an arms’ length deal for consideration—the only “badge of

fraud” was the threat of third-party creditor litigation. The conveyances

therefore appeared legitimate. See Ralfs, 586 N.W.2d at 373 (“Ordinarily,

proof of more than one of these ‘badges’ will be necessary to warrant an

inference of fraud in a transaction.”). Though Ouderkirk recognized a

risk that a court might deem the Heemstras’ conveyances fraudulent, he

satisfied his duty by warning the Heemstras of that risk. See Iowa Code

of Prof’l Responsibility EC 7–3 (noting lawyers should provide clients with

“a professional opinion as to what the ultimate decisions of the courts

would likely be as to the applicable law”).

The Board concluded paragraph 26 justifies a sanction and the

commission also concluded paragraph 26 tips the scales against

Ouderkirk. We agree with Ouderkirk that paragraph 26 does not itself

justify a sanction. It was not paragraph 26 that made the Appleroon

conveyance fraudulent; it was the fact that it was not a bona fide sale.

Paragraph 26 is relevant only to the extent it provides circumstantial

evidence that Ouderkirk knew—or that it was obvious—the Appleroon

conveyance was fraudulent.
 31

We find Ouderkirk’s explanations for paragraph 26 credible.

Nothing in the language of paragraph 26 would alert Ouderkirk that

Appleroon was not a bona fide buyer. The fact that paragraph 26 may

have indicated the Heemstras’ desire to prevent the estate from collecting

its judgment does not render the paragraph useless. “It must . . . be

remembered that ordinarily a debtor may prefer one creditor over

another, ‘even if the debtor’s intentions . . . are spiteful and the action

will delay or prevent the nonpreferred creditor from obtaining payment.’ ”

Ralfs, 586 N.W.2d at 373 (quoting Benson, 537 N.W.2d at 757); see also

Shirley, 485 N.W.2d at 472 (“It is generally immaterial that other

creditors . . . may by the preference be delayed or wholly prevented from

obtaining payment, since this is the natural result of the preferential

transfer.”). We conclude paragraph 26 did not make it obvious that the

Appleroon transfer was a sham. Paragraph 26 fails to prove Ouderkirk’s

scienter.

This case is analogous to that of In re Mirabile. In Mirabile, the

Chief Disciplinary Counsel of Missouri charged two lawyers with filing a

fraudulent petition for legal separation and a sham stipulation in order

to help a husband and wife avoid a child support obligation to the

husband’s ex-wife. 975 S.W.2d at 937. In child support proceedings

with his ex-wife, the husband listed his monthly income at $7000. Id.

The court found the husband’s true income was $16,250 and advised

him of the court’s intention to increase his monthly child support

obligation from $500 to $2080. Id. The next day, the lawyers entered a

stipulation whereby the husband would separate from his wife and pay

her $7000 in maintenance and child support. Id. at 937–38.
 32

Citing the attorneys’ testimony that “they believed [their clients’]

separation was real,” 13 the Missouri Supreme Court found the chief

disciplinary counsel had failed to prove an ethical violation by a

preponderance of the evidence. Id. at 940. The court declined to infer

the lawyers knew the husband and wife intended to separate for the

purpose of avoiding the husband’s prior child support obligation, stating,

“On the key issue, the respondents and their clients testified consistently

and adamantly that the clients truly desired a legal separation.” Id. The

court recognized that the “inability to pay debts as they become due” is a

badge of fraud and emphasized that the husband-client “was solvent at

all relevant times.” Id. (internal quotation marks omitted). The Mirabile

court additionally noted that the lawyers discussed the child support

proceedings with the judge who accepted the separation stipulation,

which demonstrated the attorneys “did not perpetuate a fraud” on the

court. Id.

Mirabile is similar to this case in three key aspects. First,

Ouderkirk, like the lawyers in that case, testified that he believed his

clients’ representations. Second, the lawyers in both cases believed the

challenged transactions left the client solvent. Because the transfer to

Appleroon was made for “apparently market value,” Ouderkirk had no

reason to believe the transfer left the Heemstras insolvent, just as the

lawyers in Mirabile believed the marital separation left their client with

13Three judges concurred in part and dissented in part. Those judges
“reluctantly” concluded that the evidence was insufficient to prove one of the two
lawyers knew of the husband and wife’s “ulterior motive.” Mirabile, 975 S.W.2d at 944
(Holstein, J., concurring in part and dissenting in part). The dissenters concluded the
other lawyer had knowledge of the clients’ fraudulent intent based on the presence of
several badges of fraud. Id. at 942–43. We note that the fact finders in Mirabile found
the testimony of the two lawyers and the clients incredible and the majority disregarded
this finding. Id. at 939–40 (majority opinion). Here, the commission’s credibility
findings support our conclusion.
 33

enough income to satisfy his prior child support obligation. Finally,

there was no concealment; the child support proceedings in Mirabile were

disclosed to the judge who accepted the separation stipulation, and the

Heemstras’ conveyances were publicly recorded.

For those reasons, we conclude the Board has failed to prove by a

convincing preponderance of the evidence that Ouderkirk violated DR 7–

102(A)(1).

B. DR 1–102(A)(4) & DR 7–102(A)(7). We next consider rules

DR 1–102(A)(4) and DR 7–102(A)(7) together because they both prohibit

fraudulent behavior and require scienter. DR 1–102(A)(4) provides, “A

lawyer shall not . . . [e]ngage in conduct involving dishonesty, fraud,

deceit, or misrepresentation.” 14 Iowa Code of Prof’l Responsibility DR 1–

102(A)(4). Though the text of DR 1–102(A)(4) does not contain a scienter

requirement, we have held the same language in Iowa Rule of

Professional Conduct 32:8.4(c) “requires something more than

negligence.” Iowa Supreme Ct. Att’y Disciplinary Bd. v. Netti, 797 N.W.2d

591, 605 (Iowa 2011) (interpreting Iowa Rule of Professional Conduct

32:8.4(c), which contains the same operative language as DR 1–

102(A)(4)); see also Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v.
Smith, 569 N.W.2d 499, 501 (Iowa 1997) (noting the “key question” under

DR 1–102(A)(4) “is whether the effect of the lawyer’s conduct is ‘to

mislead rather than to inform’ ” (quoting Comm. on Prof’l Ethics &

Conduct v. Baudino, 452 N.W.2d 455, 458 (Iowa 1990))). Thus, we look

to whether an attorney made a “knowing misrepresentation.” Netti, 797

N.W.2d at 605. DR 7–102(A)(7) further proscribes “[c]ounsel[ing] or

assist[ing] a client in conduct that the lawyer knows to be illegal or

14The current version of this rule is found at Iowa Rule of Professional Conduct
32:8.4(c).
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fraudulent.” 15 Iowa Code of Prof’l Responsibility DR 7–102(A)(7)

(emphasis added). As set forth above, we conclude the Board has failed

to prove by a convincing preponderance of the evidence that Ouderkirk

knew the transactions he helped complete were fraudulent. Accordingly,

we conclude Ouderkirk did not violate DR 1–102(A)(4) and DR 7–

102(A)(7).

C. DR 1–102(A)(5). DR 1–102(A)(5) provides, “[a] lawyer shall not

. . . [e]ngage in conduct that is prejudicial to the administration of

justice.” Id. DR 1–102(A)(5). This rule is worded identically to Iowa Rule

of Professional Conduct 32:8.4(d). “An attorney’s conduct is prejudicial

to the administration of justice when it violates the well-understood

norms and conventions of the practice of law such that it hampers the

efficient and proper operation of the courts or of ancillary systems upon

which the courts rely.” Rhinehart, 827 N.W.2d at 180 (internal quotation

marks omitted).

The commission found Ouderkirk did not violate DR 1–102(A)(5).

We agree. The Board, relying on Iowa Supreme Ct. Attorney Disciplinary

Board v. Stowers, 823 N.W.2d 1 (Iowa 2012), argues Ouderkirk’s conduct

was prejudicial to the administration of justice because the conveyances

forced the Lyon estate to pursue costly litigation in order to unwind the

transactions and collect on its judgment. In Stowers, an attorney

violated a protective order by sending threatening emails to persons

represented by counsel, conduct we found constituted extortion. 823

15Iowa Rule of Professional Conduct 32:1.2(d) contains this language, stating:
A lawyer shall not counsel a client to engage, or assist a client, in
conduct that the lawyer knows is criminal or fraudulent, but a lawyer
may discuss the legal consequences of any proposed course of conduct
with a client and may counsel or assist a client to make a good faith
effort to determine the validity, scope, meaning, or application of the law.
 35

N.W.2d at 4–7, 14. We concluded this conduct violated rules 32:3.4(c),

32:4.2(a), and 32:8.4(b). 16 Id. at 7–14. We also concluded Stowers’s

conduct was prejudicial to the administration of justice, in violation of

rule 32:8.4(d), because it “triggered a series of unnecessary court

proceedings.” Id. at 15.

In contrast, we have concluded the Board failed to prove

Ouderkirk’s conduct violated any disciplinary rule. We have never found

an attorney’s conduct to be prejudicial to the administration of justice

without an underlying violation of some other disciplinary rule. Cf. Iowa

Supreme Ct. Att’y Disciplinary Bd. v. Rasmussen, 823 N.W.2d 404, 410

(Iowa 2012) (finding lawyer who exercised self-help remedy of

repossession did not violate rules 32:8.4(c), 32:4.1(a), 32:4.2(a),

32:8.4(b), or 32:8.4(d) because such action was legally permissible—

though unadvisable). Fundamentally, it was the Heemstras’

misrepresentations that triggered the lengthy court proceedings to

unwind their fraudulent transactions, not Ouderkirk’s conduct. The

Board provided no expert testimony that Ouderkirk’s role in the

transactions violated “the well-understood norms and conventions of the

practice of law.” See Rhinehart, 827 N.W.2d at 180 (internal quotation

marks omitted). We conclude the Board failed to prove by a convincing

preponderance of the evidence that Ouderkirk’s conduct violated DR 1–

102(A)(5).

16See Iowa R. Prof’l Conduct 32:3.4(c) (“knowingly disobey[ing] an obligation
under the rules of a tribunal”); id. r. 32:4.2(a) (“communicat[ing] about the subject of
the representation with a person the lawyer knows to be represented by another lawyer
in the matter”); id. r. 32:8.4(b) (“criminal act that reflects adversely on the lawyer’s
honesty, trustworthiness, or fitness as a lawyer”).
 36

V. Conclusion.

We conclude the Board has failed to prove by a convincing

preponderance of the evidence that Ouderkirk violated Iowa Code of

Professional Responsibility DR 7–102(A)(1), DR 1–102(A)(4), DR 7–

102(A)(7), or DR 1–102(A)(5). Accordingly, we dismiss with prejudice the

Board’s complaint against him.

COMPLAINT DISMISSED.

All justices concur except Cady, C.J., who takes no part.