Office of Lawyer Regulation v. Sarah E.K. Laux

2015 WI 59

SUPREME COURT OF WISCONSIN
CASE NO.: 2014AP974-D
COMPLETE TITLE: In the Matter of Disciplinary Proceedings
Against
Sarah E. K. Laux, Attorney at Law:

Office of Lawyer Regulation,
Complainant,
v.
Sarah E.K. Laux,
Respondent.

DISCIPLINARY PROCEEDINGS AGAINST LAUX

OPINION FILED: June 24, 2015
SUBMITTED ON BRIEFS:
ORAL ARGUMENT:

SOURCE OF APPEAL:
COURT:
COUNTY:
JUDGE:

JUSTICES:
CONCURRED:
DISSENTED:
NOT PARTICIPATING: ROGGENSACK, C.J. did not participate.

ATTORNEYS:
 2015 WI 59
NOTICE
This opinion is subject to further
editing and modification. The final
version will appear in the bound
volume of the official reports.
No. 2014AP974-D

STATE OF WISCONSIN : IN SUPREME COURT

In the Matter of Disciplinary Proceedings
Against Sarah E. K. Laux, Attorney at Law:

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

Respondent.

ATTORNEY disciplinary proceeding. Attorney's license
revoked.

¶1 PER CURIAM. Pending before the court is a report and
recommendation filed on April 23, 2015, by Referee Richard C.
Ninneman. The report recommends that this court accept Attorney
Sarah E.K. Laux's petition for consensual license revocation,
order her to pay restitution, and revoke her license to practice
law in Wisconsin. Attorney Laux is the subject of a
disciplinary proceeding alleging that she committed 23 counts of
misconduct in four client matters. She is also the subject of
 No. 2014AP974-D

28 additional pending Office of Lawyer Regulation (OLR)
grievance matters that have not yet been fully investigated by
the OLR.
¶2 We wholly agree that both revocation and restitution
are appropriate, and we also direct Attorney Laux to pay the
costs of this proceeding, which are $4,144.99 as of May 12,
2015.
¶3 Attorney Laux was admitted to practice law in
Wisconsin on May 17, 2004. She resides in Mequon. She has not
previously been disciplined.
¶4 On April 30, 2014, the OLR filed a complaint against
Attorney Laux, alleging six counts of misconduct in a single

client matter and requesting revocation and restitution.
Attorney Laux retained counsel and filed an answer and, on
September 4, 2014, following substitution of the originally
appointed referee, Referee Ninneman was appointed. On
October 27, 2014, the OLR filed an amended complaint, this time
alleging 23 counts of misconduct involving four different client
matters.1
1
We take judicial notice of the fact that on December 2,
2014, a federal grand jury returned a 33-count indictment
charging Attorney Laux with two counts of bank fraud, nine
counts of wire fraud, one count of mail fraud, 20 counts of
money laundering, and one count of filing a false tax return.
The indictment charges Attorney Laux with defrauding four
different clients to whom Attorney Laux provided trust and
estate advice and to whose funds Attorney Laux gained access
through her solo-practice law firm. According to the
indictment, Attorney Laux defrauded those clients out of more
than $2.2 million in funds that Attorney Laux then converted to
her own use. The matter is pending.

2
 No. 2014AP974-D

¶5 On March 27, 2015, Attorney Laux filed a petition for
consensual license revocation pursuant to Supreme Court Rule
(SCR) 22.19.2 In her petition, she acknowledges that she cannot
successfully defend herself against the allegations in the

2
SCR 22.19 provides:

(1) An attorney who is the subject of an
investigation for possible misconduct or the
respondent in a proceeding may file with the supreme
court a petition for the revocation by consent or his
or her license to practice law.

(2) The petition shall state that the petitioner
cannot successfully defend against the allegations of
misconduct.

(3) If a complaint has not been filed, the
petition shall be filed in the supreme court and shall
include the director's summary of the misconduct
allegations being investigated. Within 20 days after
the date of filing of the petition, the director shall
file in the supreme court a recommendation on the
petition. Upon a showing of good cause, the supreme
court may extend the time for filing a recommendation.

(4) If a complaint has been filed, the petition
shall be filed in the supreme court and served on the
director and on the referee to whom the proceeding has
been assigned. Within 20 days after the filing of the
petition, the director shall file in the supreme court
a response in support of or in opposition to the
petition and serve a copy on the referee. Upon a
showing of good cause, the supreme court may extend
the time for filing a response. The referee shall
file a report and recommendation on the petition in
the supreme court within 30 days after receipt of the
director's response.

(5)The supreme court shall grant the petition and
revoke the petitioner's license to practice law or
deny the petition and remand the matter to the
director or to the referee for further proceedings.

3
 No. 2014AP974-D

amended complaint, which is attached to her petition as Appendix
A. She also acknowledges that she cannot successfully defend
herself against the pending grievances, a summary of which is
attached to her petition as Appendix B.
¶6 On March 30, 2015, the OLR filed a recommendation
supporting Attorney Laux's SCR 22.19 petition. The referee
issued a report on April 23, 2015, recommending revocation and
restitution. No appeal has been filed in this matter, so our
review proceeds pursuant to SCR 22.17(2).
¶7 We revoke Attorney Laux's Wisconsin law license
effective the date of this order. The scope of Attorney Laux's
misconduct is staggering.

Matter of H.F. and M.F.
¶8 The first six counts of misconduct alleged in the
OLR's amended complaint involve Attorney Laux's representation
of H.F. and M.F., a married couple who, in 2012, retained
Attorney Laux for estate planning. At the time, the clients
held over two million dollars in investments in a Wells Fargo
Advisor Account. Attorney Laux recommended that the clients
sell their investments and purchase a series of annuities from
Phoenix Life Insurance Company (Phoenix) and American Equity
(American). In late 2012, following Attorney Laux's
recommendation, the clients retained a broker and $2,337,365.27
was transferred from the clients' Wells Fargo Advisor Account
into a brokerage account.
¶9 Attorney Laux subsequently created an entity called
HMFF Investments, LLC (HMFF), for which Attorney Laux was the
4
 No. 2014AP974-D

registered agent. Attorney Laux informed the clients that HMFF
would be the owner of the Phoenix and American annuities. On
January 3, 2013, Attorney Laux had the clients sign a third-
party check request for a cash withdrawal from their brokerage
account in the amount of $2,184,125.30, payable to HMFF. In
late January 2013, without the clients' knowledge or
authorization, Attorney Laux deposited the $2,184,125.30 into a
U.S. Bank checking account and money market account, in the name
of HMFF. Attorney Laux was the sole signatory.
¶10 In February 2013, Attorney Laux withdrew $64,125.30 at
the clients' request to make gifts to family members. At some
point, $195,000 was withdrawn to pay the clients' taxes.

¶11 On February 6, 2013, Attorney Laux provided the
clients with a Proposed Annuity Policy Memorandum (Memorandum)
which recommended a list of nine annuities in the sum of
$2,120,000.
¶12 In March 5, 2013, Attorney Laux made two $250,000
withdrawals from the U.S. Bank checking account. Attorney Laux
used this money for her own personal or business purposes.
¶13 In April 2013, H.F. passed away. On June 7, 2013,
Attorney Laux met with M.F. and her son, Mark, regarding the
purchase of annuities listed in the February 6, 2013 Memorandum.
At the meeting, Attorney Laux made several misrepresentations,
including that: (1) she had purchased three $250,000 annuity

contracts for M.F. in March, April, and May 2013, totaling
$750,000, and the contracts were locked in a safe in her office;
(2) after the clients' stock portfolio was liquidated, funds of
5
 No. 2014AP974-D

about $2,100,000 were transferred from the brokerage account to
two annuity companies, Phoenix and American, and the companies
were holding the funds in a bank account until the annuities
were purchased as per the Memorandum; (3) the annuities would
not "kick in" until 12 months after purchase and a lock or hold
would be placed on the accounts during that time, so they would
not be available to M.F.; and (4) M.F. would not be able to
access her account until the lock or hold period was over.
Attorney Laux also falsely stated that the Phoenix policy paid
an eight percent bonus.
¶14 After the meeting, M.F.'s son contacted Phoenix and
American. Both companies informed him that they do not hold

customer funds in an account or bank until the purchase of
annuities and do not deny access to customers. M.F.'s son
subsequently called Attorney Laux and demanded to see the three
annuity contracts.
¶15 The next day, Attorney Laux met with M.F. and her son
and again falsely informed them that she had purchased annuities
for M.F.; she provided them with three false Contract
Specification documents with certain policy numbers. Attorney
Laux also falsely informed M.F. and her son that the
$2,184,125.30 had been deposited into a U.S. Bank Account in the
name of the clients, under HMFF, using the funds from the stock
portfolio liquidation.

¶16 After the June 8 meeting, Mark learned that the policy
numbers existed but were not in M.F.'s name; Attorney Laux was
the agent of record. Mark also learned from U.S. Bank that his
6
 No. 2014AP974-D

parents did not hold any accounts with U.S. Bank; Attorney Laux
was the holder of the HMFF account at U.S. Bank.
¶17 On June 11, 2013, Mark contacted Attorney Laux and
directed she not purchase any annuities in his mother's name
until things were cleared up. Attorney Laux agreed to a meeting
at M.F.'s home. There, Attorney Laux informed M.F. and her son
that she had, without M.F.'s knowledge or permission, taken
hundreds of thousands of dollars from the HMFF account, which
she used for her own personal and business expenses. Attorney
Laux admitted that she began making withdrawals to herself from
the clients' account beginning in March 2013 and that she had
committed fraud. Attorney Laux also admitted that she did not

purchase $750,000 in annuities for M.F., contrary to her
previous statements. Attorney Laux provided M.F. with five U.S.
Bank cashier's checks, all dated June 11, 2013, as follows:
$250,000 to Phoenix; $250,000 to Phoenix; $250,000 to American;
$250,000 to American; and $90,827.21 to American. Attorney Laux
also falsely informed M.F. that the purchase of a Phoenix
annuity in the amount of $250,000 was in progress and could not
be stopped.
¶18 The next morning, just prior to another meeting with
M.F. and her son, Attorney Laux went to a U.S. Bank location and
withdrew $84,172.79 from the checking account. She then went to
another U.S. Bank location and withdrew $822.23 in cash from the

money market fund. This zeroed out both accounts.
¶19 That same day, Attorney Laux, M.F., and M.F.'s son met
at a U.S. Bank branch location, cancelled the five bank checks
7
 No. 2014AP974-D

written out to Phoenix and American, and obtained a cashier's
check in the amount of $1,090,827.21, made payable to the HMFF
Transitional Trust and M.F.
¶20 A couple days later, Attorney Laux forwarded an
application, with M.F.'s signature, for a $250,000 Phoenix
annuity for M.F. On June 18, 2013, a Needs Assessment was faxed
to Phoenix with changes initialed "MF." M.F. denies that her
signature is on the annuity application or that she initialed
the Needs Assessment.
¶21 On June 12, 2013, M.F.'s son alerted the Milwaukee
office of the Federal Bureau of Investigation of Attorney Laux's
conduct. Attorney Laux was criminally charged and the matter

remains pending as of the date of this decision. Mark also
filed a grievance against Attorney Laux with the OLR.3
¶22 In her petition, Attorney Laux does not contest, for
purposes of this disciplinary proceeding, that she converted
$584,995.02 from M.F. and H.F. for her own personal and business
purposes.

3
On August 14, 2013, Mark filed a complaint against
Attorney Laux on his mother's behalf with the Wisconsin Office
of the Commissioner of Insurance (OCI). Attorney Laux,
asserting her Fifth Amendment privilege against self-
incrimination, did not participate in the OCI proceedings.
Attorney Laux's insurance license was revoked and she was
ordered to pay restitution to M.F. in the amount of $584,995.02,
as well as a forfeiture of $32,000 to the State of Wisconsin and
an additional restitutionary forfeiture of $600,000 to the State
of Wisconsin. To date, Attorney Laux has apparently not
provided the ordered restitution to M.F.

8
 No. 2014AP974-D

¶23 Attorney Laux does not contest that she engaged in the
following misconduct:
• By transferring $2,184,125.03 of her clients' money into
the HMFF account at U.S. Bank, an account over which she
had sole control, without the clients' consent or
authorization, Attorney Laux violated SCR 20:1.15(j)(l).4
• On March 5, 2013, by making two $250,000 withdrawals of
the clients' funds from an HMFF checking account to
herself via cashier's checks, Attorney Laux violated
SCR 20:1.15(j)(1) and SCR 20:8.4(c).5
• On June 12, 2013, by appearing at a U.S. Bank branch in
Greendale, Wisconsin and withdrawing for personal

enrichment $84,172.79 (via cashier's check) of the
client's funds from an HMFF checking account, zeroing out
the account, Attorney Laux violated SCR 20:1.15(j)(1) and
SCR 20:8.4(c).
• On June 12, 2013, by making a cash withdrawal of $822.23
of the client's funds for personal enrichment from an
HMFF money market account at a U.S. Bank branch in

4
SCR 20:1.15(j)(1) provides that "[a] lawyer shall hold in
trust, separate from the lawyer's own funds or property, those
funds or that property of clients or 3rd parties that are in the
lawyer's possession when acting in a fiduciary capacity that
directly arises in the course of, or as a result of, a lawyer-
client relationship or by appointment of a court."
5
SCR 20:8.4(c) provides that it is professional misconduct
for a lawyer to "engage in conduct involving dishonesty, fraud,
deceit or misrepresentation."

9
 No. 2014AP974-D

Mequon, Wisconsin, zeroing out the account, Attorney Laux
violated SCR 20:1.15(j)(1) and SCR 20:8.4(c).
• By making multiple representations to her client
regarding her purchase of annuities on the client's
behalf, when at the time no annuities had been purchased,
Attorney Laux violated SCR 20:8.4(c).
• By submitting forged documents to purchase annuities on
behalf of M.F. a few days after she confessed her fraud
to M.F. and M.F.'s son, Attorney Laux violated
SCR 20:8.4(c).
Matter of R.F. and Y.F.
¶24 The amended complaint also alleges eight counts of

misconduct committed in connection with Attorney Laux's
representation of R.F. and Y.F.
¶25 In 2009 or 2010, Attorney Laux purchased Family
Foundation of Midwest (FFM), an estate planning company that
used targeted mailing to invite certain people to free
educational seminars about estate planning. Attorney Laux had
prepared documents for FFM clients and given educational
presentations at monthly seminars. Attorney Laux renamed the
company Family Foundation Planning (FFP) and represented FFP as
a nonprofit organization. FFP referred its legal work to
Attorney Laux's own law firm, Laux Law LLC (Laux Law).
¶26 In 2010, R.F. and Y.F. attended a FFP seminar, then
met with Attorney Laux to discuss their estate planning needs.
The clients entered into a one-year "Patronship Agreement" with
FFP for a fee of $4,250. The agreement entitled the clients to
10
 No. 2014AP974-D

basic and advanced estate planning documents, as well as other
benefits, to be prepared by licensed attorneys retained by FFP.
There was no written fee agreement explaining the basis or the
rate of Laux Law's legal fees. Attorney Laux did not have an
IOLTA account and did not deposit the clients' advance fees in
trust.
¶27 Attorney Laux made a number of errors preparing estate
planning documents for R.F. and Y.F. She repeatedly
miscalculated the percentages of the estate that various
beneficiaries were to receive. The trust documents drafted by
Attorney Laux contained many significant drafting errors,
including failing to properly identify the scholarship fund

established in memory of the clients' daughter. Attorney Laux
also created a "Transition Trust" for these clients, a document
which potentially placed the clients in a devastating financial
position, depriving them of all their assets. She was difficult
to reach and sent legal documents to the wrong recipients.
Eventually, R.F. and Y.F. terminated Attorney Laux's
representation and retained another attorney to redo their
estate plan.
¶28 During the OLR's ensuing investigation into Attorney
Laux's conduct, Attorney Laux told the district committee that
she used vague terms in the estate documents because the clients
did not know the name of the organization to which they wanted

to leave their property and other entities were not yet
established. This was not true. Attorney Laux also failed to
produce documents requested by the OLR.
11
 No. 2014AP974-D

¶29 Attorney Laux does not contest that she engaged in the
following misconduct in this matter:
• By entering into a business entity known as FFP that
provided estate planning and other legal services to
clients, where the entity held itself out as a not-for-
profit corporation and the partners in the entity were
nonlawyers, Attorney Laux violated SCR 20:5.4(b).6
• Having received legal fees in excess of $1,000, including
advanced fees, by failing to enter into a written fee
agreement that clearly explained the basis of her fees,
Attorney Laux violated SCR 20:1.5(b)(1) and (2).7

6
SCR 20:5.4(b) provides that "[a] lawyer shall not form a
partnership with a nonlawyer if any of the activities of the
partnership consist of the practice of law."
7
SCR 20:1.5(b)(1) and (2) provide:

(1) The scope of the representation and the basis
or rate of the fee and expenses for which the client
will be responsible shall be communicated to the
client in writing, before or within a reasonable time
after commencing the representation, except when the
lawyer will charge a regularly represented client on
the same basis or rate as in the past. If it is
reasonably foreseeable that the total cost of
representation to the client, including attorney's
fees, will be $1000 or less, the communication may be
oral or in writing. Any changes in the basis or rate
of the fee or expenses shall also be communicated in
writing to the client.

(2) If the total cost of representation to the
client, including attorney's fees, is more than $1000,
the purpose and effect of any retainer or advance fee
that is paid to the lawyer shall be communicated in
writing.

12
 No. 2014AP974-D

• By failing to hold advance fees in a trust account,
without complying with the requirements of
SCR 20:1.15(b)(4m), Attorney Laux violated
SCR 20:1.15(b)(4).8
• By failing to properly draft estate documents and by
failing to provide appropriate estate planning advice,
while holding herself out as an estate expert, Attorney
Laux violated SCR 20:1.1.9
• By preparing a Transition Trust for the clients and by
failing to explain the consequences of such a trust,
which was outside the purposes for which the clients
hired her, Attorney Laux violated SCR 20:1.2(a).10

8
SCR 20:1.15(b)(4) provides that, "[e]xcept as provided in
par. (4m), unearned fees and advanced payments of fees shall be
held in trust until earned by the lawyer, and withdrawn pursuant
to sub. (g). Funds advanced by a client or 3rd party for
payment of costs shall be held in trust until the costs are
incurred."
9
SCR 20:1.1 provides that "[a] lawyer shall provide
competent representation to a client. Competent representation
requires the legal knowledge, skill, thoroughness and
preparation reasonably necessary for the representation."
10
SCR 20:1.2(a) provides:

Subject to pars. (c) and (d), a lawyer shall
abide by a client's decisions concerning the
objectives of representation and, as required by SCR
20:1.4, shall consult with the client as to the means
by which they are to be pursued. A lawyer may take
such action on behalf of the client as is impliedly
authorized to carry out the representation. A lawyer
shall abide by a client's decision whether to settle a
matter. In a criminal case or any proceeding that
could result in deprivation of liberty, the lawyer
(continued)
13
 No. 2014AP974-D

• By failing to provide promised revisions or proposed
language changes to documents related to the clients'
desire to leave property to a not-for-profit corporation,
Attorney Laux violated SCR 20:1.3.11
• By failing to communicate with her clients, including
failing to keep the clients informed and failing to
respond to their reasonable requests for information,
Attorney Laux violated SCR 20:1.4(a)(3) and (4).12
• By making inconsistent statements to the OLR's district
committee investigators and by failing to produce
requested documents to the OLR, Attorney Laux violated
SCR 22.03(6),13 enforced via SCR 20:8.4(h).14

shall abide by the client's decision, after
consultation with the lawyer, as to a plea to be
entered, whether to waive jury trial and whether the
client will testify.
11
SCR 20:1.3 provides that "[a] lawyer shall act with
reasonable diligence and promptness in representing a client."
12
SCR 20:1.4(a)(3) and (4) provide that a lawyer shall
"keep the client reasonably informed about the status of the
matter" and "promptly comply with reasonable requests by the
client for information."
13
SCR 22.03(6) provides that, "[i]n the course of the
investigation, the respondent's wilful failure to provide
relevant information, to answer questions fully, or to furnish
documents and the respondent's misrepresentation in a disclosure
are misconduct, regardless of the merits of the matters asserted
in the grievance."

14
 No. 2014AP974-D

Matter of S.C.
¶30 The amended complaint also alleges three counts of
misconduct pertaining to Attorney Laux's representation of S.C.
¶31 In August 2007, S.C. was placed in a nursing home due
to her declining physical and mental health. Her sister-in-law
had a general power of attorney for S.C. While in the nursing
home, S.C. was contacted by a representative of FFM to do some
estate planning. Attorney Laux met with S.C. at the nursing
home. At that time, S.C.'s estate had a value of approximately
$500,000. There were four beneficiaries to the estate,
including J.C., the client's brother.
¶32 On August 9, 2007, S.C. signed a membership agreement

with FFM for estate planning documents and paid FFM a total fee
of $3,000. There was no written fee agreement. Attorney Laux
drafted a trust document for S.C., relying on a spreadsheet and
information gathered and prepared by a FFM representative.
Attorney Laux also initially set up a LLC, which was never
funded or closed. In addition, Attorney Laux recommended
advanced estate planning in the form of a Transition Trust to
protect S.C.'s assets. In 2008, when Attorney Laux left her
previous firm, Kitzke & Associates, and formed Laux Law, S.C.

14
SCR 20:8.4(h) provides that it is professional misconduct
for a lawyer to "fail to cooperate in the investigation of a
grievance filed with the office of lawyer regulation as required
by SCR 21.15(4), SCR 22.001(9)(b), SCR 22.03(2), SCR 22.03(6),
or SCR 22.04(1)."

15
 No. 2014AP974-D

apparently became a client of Laux Law without her specific
consent and without documentation.
¶33 In August 2008, a Transition Trust was drafted by
Attorney Laux and signed by S.C. At the time the Transition
Trust was signed, there were questions about S.C.'s competence.
In November 2011, S.C. passed away. At the time, her estate was
worth approximately $100,000.
¶34 On June 18, 2012, Attorney Laux sent a letter to the
Trust beneficiaries, including J.C., attaching a Trust Receipt
and Release requesting that J.C. "accept and approve the
attached accounting of receipts and disbursements for the Trust"
in order to receive his share of the Trust proceeds. However,

no accounting was attached to the letter.
¶35 Frustrated by Attorney Laux's lack of response to his
requests for an accounting, J.C. contacted another attorney. In
August 2012, Attorney Laux sent the new attorney a letter,
enclosing a spreadsheet of expenses incurred at the time of
S.C.'s death. In October 2012, Attorney Laux sent the attorney
bank statements from November 2011 through July 2012. Attorney
Laux did not, however, provide an accounting relating to the
time period prior to S.C.'s death.
¶36 J.C. eventually filed a grievance with the OLR against
Attorney Laux. During the ensuing grievance investigation,
Attorney Laux failed to produce requested documents and made

misrepresentations to the OLR's district committee members.
¶37 Attorney Laux does not contest that she engaged in the
following misconduct in this matter:
16
 No. 2014AP974-D

• By entering into a business entity known as FFP that
provided estate planning and other legal services to
clients, where the entity held itself out as a not-for-
profit corporation and the partners in the entity were
nonlawyers, Attorney Laux violated SCR 20:5.4(b).
• By failing to hold advance fees in a trust account,
without complying with any of the requirements of
SCR 20:1.15(b)(4m), Attorney Laux violated
SCR 20:1.15(b)(4).
• By making inconsistent statements to the OLR's district
committee investigators and by failing to produce
requested documents to the OLR, Attorney Laux violated

SCR 22.03(6), enforced via SCR 20:8.4(h).
Matter of A.C. and J.C.
¶38 The amended complaint also alleges six counts of
misconduct committed in connection with Attorney Laux's
representation of A.C. and J.C.
¶39 In late fall 2007, A.C. and J.C. responded to a FFM
advertisement for a free luncheon near West Bend, Wisconsin.
J.C. was beginning to exhibit signs of dementia and the couple
sought assistance protecting their assets. On November 13,
2007, A.C. and J.C. entered into a membership agreement with FFM
and paid $1,600 for basic estate planning. No fee agreement was
executed.
¶40 On January 8, 2008, A.C. and J.C. signed forms and
documents including a marital property agreement, a family
trust, last wills and testaments, and powers of attorney.
17
 No. 2014AP974-D

¶41 In 2008, when Attorney Laux formed Laux Law, A.C. and
J.C. apparently became clients of Laux Law without their
specific consent and without documentation.
¶42 As J.C.'s health worsened, A.C. consulted with
Attorney Laux and FFM and was told she now needed advanced
estate planning. On June 3, 2009, A.C., using a power of
attorney for her husband, entered into another membership
agreement with FFM for a payment of $3,500. There was no
written fee agreement. Attorney Laux also charged the clients
additional sums for work Attorney Laux purportedly performed
during the representation. Attorney Laux has not produced to
the clients or to the OLR either a fee agreement or any billing

records for her work.
¶43 In June 2009, J.C. was diagnosed with Alzheimer's
disease and placed in a private assisted living facility.
Attorney Laux had A.C. sign numerous documents transferring the
clients' assets between themselves and then into the a
Transition Trust, utilizing a "Spousal Refusal."
¶44 It is not disputed here that "Spousal Impoverishment"
would have been the preferable option given the size of the
clients' estate, which was under $300,000, and their limited
annual income. Spousal Impoverishment would have allowed A.C.
to retain her husband's income and most, if not all, of the
couple's assets. Under Spousal Refusal, A.C. was unable to

collect her husband's social security checks. A.C. also signed
a document which explained the difference between Spousal

18
 No. 2014AP974-D

Refusal and Spousal Impoverishment. However, Attorney Laux did
not explain the differences to A.C.
¶45 Because Attorney Laux elected Spousal Refusal, J.C.
had a difficult time having his application for Medicaid and
Title 19 accepted, making the clients ineligible for Medicare
and financially responsible for all of J.C.'s care at the
assisted living facility. On June 15, 2010, J.C. was moved to a
state institution. In an effort to "undo" the severe monetary
predicament that A.C. was placed in due to Attorney Laux's
decision to use Spousal Refusal, another attorney assumed
responsibility for the case and unsuccessfully attempted to have
the initial Medicare disqualification ruling overturned on

appeal.
¶46 While attempting to get J.C. accepted on Title 19 and
Medicaid, the couple's assets were depleting at a rate of $9,000
per month for J.C.'s care. The couple's assets eventually
dwindled down to $100,000. After A.C. paid for residential care
from June 2010 through August 2010, Attorney Laux advised A.C.
to stop paying the care facility because her husband would be
eligible for Title 19 and benefits would take effect
retroactively.
¶47 However, Title 19 benefits were not available to J.C.
until February 2011. Consequently, the couple was responsible
for $50,000 worth of unpaid medical bills, plus interest and

penalties. Attorney Laux did not attempt to negotiate with the
care facility, and instead recommended that the couple pay the
entire amount due. During Attorney Laux's representation, A.C.
19
 No. 2014AP974-D

only spoke to Attorney Laux on two or three occasions, and she
had a difficult time getting Attorney Laux to respond to her.
There were lengthy periods of time during which the clients
received no communication or status updates. Eventually, the
clients terminated their relationship with Attorney Laux and
hired another attorney to represent them. The new attorney
negotiated a settlement with the care facility so that the
clients would only have to pay the outstanding bills, and the
interest and penalties were waived.
¶48 During the ensuing OLR grievance investigation,
Attorney Laux failed to produce certain documents, despite
repeated requests. During the course of the investigation,

Attorney Laux made misrepresentations to the OLR's district
committee members, including, but not limited to,
misrepresentations related to her reasoning for choosing Spousal
Refusal, that A.C. and J.C. were not clients of Laux Law, and
misrepresentations related to her conversations with the
clients.
¶49 Attorney Laux does not contest that she engaged in the
following misconduct in this matter:
• By entering into a business entity known as FFP that
provided estate planning and other legal services to
clients, where the entity held itself out as a not-for-
profit corporation and the partners in the entity were
nonlawyers, Attorney Laux violated SCR 20:5.4(b).
• By failing to execute a written fee agreement with her
clients, where her attorneys fees totaled at least $4,100
20
 No. 2014AP974-D

and advanced fees exceeded $1,000, Attorney Laux violated
SCR 20:1.5(b)(1) and (2).
• By failing to communicate with her clients, including
failing to respond to reasonable requests for
information, Attorney Laux violated SCR 20:1.4(a)(3) and
(4).
• By failing to provide appropriate information regarding
applying for a Spousal Refusal as part of her clients'
estate plan, while holding herself out as an expert in
estate planning, Attorney Laux violated SCR 20:1.1.
• By failing to explain the difference between Spousal
Impoverishment and Spousal Refusal and failing to explain

the benefits and detriments of either estate planning
action, Attorney Laux violated SCR 20:1.4(b).15
• By making inconsistent statements to the OLR's district
committee investigators and by failing to produce
requested documents to the OLR, Attorney Laux violated
SCR 22.03(6), enforced via SCR 20:8.4(h).
Pending Grievances
¶50 In addition, when Attorney Laux filed her petition for
consensual license revocation, the OLR was investigating 28
additional allegations of misconduct.

15
SCR 20:1.4(b) provides that "[a] lawyer shall explain a
matter to the extent reasonably necessary to permit the client
to make informed decisions regarding the representation."

21
 No. 2014AP974-D

¶51 Several attorneys who worked with Attorney Laux filed
grievances, including attorneys of Associated Bank, who alleged
that Attorney Laux failed to account for funds, sent them false
bank statements, drafted documents that were personally
advantageous to Attorney Laux without securing a conflict
waiver, and misappropriated funds. A recent law graduate who
worked briefly for Attorney Laux also expressed concern, in
writing, about Attorney Laux's practices.
¶52 The pending grievances are numerous. They include an
allegation that Attorney Laux misappropriated $1,654,140.72 from
a client in the matter of the C.V.J. Trust. This misconduct
lead to a lawsuit in Milwaukee County in which the plaintiffs

allege that Attorney Laux engaged in conversion, theft, fraud,
misrepresentation, breach of fiduciary duty, breach of contract,
unjust enrichment, negligence, fraudulent transfers, and
conspiracy.
¶53 Several clients have alleged that they paid Attorney
Laux to prepare a transition trust or revocable trust and later
learned that the documents she prepared did not meet their
objectives and, indeed, would or did cause them serious
financial problems.
¶54 Other clients allege that Attorney Laux provided them
incorrect legal guidance, failed to follow through on promised
legal work, and failed to purchase annuities, as promised; many

also indicate that Attorney Laux was difficult to reach. All
told, the pending grievances involve possible violations of the
following supreme court rules: 20:1.1 (23 matters), 20:1.2(a)
22
 No. 2014AP974-D

(two matters), 20:1.3 (19 matters), 20:1.4(a) and/or (b) (19
matters), 20:1.5(a)16 (16 matters), 20:1.7(a)17 (two matters),

16
SCR 20:1.5(a) provides:

A lawyer shall not make an agreement for, charge,
or collect an unreasonable fee or an unreasonable
amount for expenses. The factors to be considered in
determining the reasonableness of a fee include the
following:

(1) the time and labor required, the novelty and
difficulty of the questions involved, and the skill
requisite to perform the legal service properly;

(2) the likelihood, if apparent to the client,
that the acceptance of the particular employment will
preclude other employment by the lawyer;

(3) the fee customarily charged in the locality
for similar legal services;

(4) the amount involved and the results obtained;

(5) the time limitations imposed by the client or
by the circumstances;

(6) the nature and length of the professional
relationship with the client;

(7) the experience, reputation, and ability of
the lawyer or lawyers performing the services; and

(8) whether the fee is fixed or contingent.
17
SCR 20:1.7(a) provides:

Except as provided in par. (b), a lawyer shall
not represent a client if the representation involves
a concurrent conflict of interest. A concurrent
conflict of interest exists if:

(1) the representation of one client will be
directly adverse to another client; or

(continued)
23
 No. 2014AP974-D

20:1.8(a)18 (two matters), 20:1.15 (four matters), 20:1.16(d)19
(two matters), 20:8.4(b)20 (two matters), and 20:8.4(c) (26
matters).

(2) there is a significant risk that the
representation of one or more clients will be
materially limited by the lawyer's responsibilities to
another client, a former client or a third person or
by a personal interest of the lawyer.
18
SCR 20:1.8(a) provides:

A lawyer shall not enter into a business
transaction with a client or knowingly acquire an
ownership, possessory, security or other pecuniary
interest adverse to a client unless:

(1) the transaction and terms on which the lawyer
acquires the interest are fair and reasonable to the
client and are fully disclosed and transmitted in
writing in a manner that can be reasonably understood
by the client;

(2) the client is advised in writing of the
desirability of seeking and is given a reasonable
opportunity to seek the advice of independent legal
counsel on the transaction; and

(3) the client gives informed consent, in a
writing signed by the client, to the essential terms
of the transaction and the lawyer's role in the
transaction, including whether the lawyer is
representing the client in the transaction.
19
SCR 20:1.16(d) provides:

Upon termination of representation, a lawyer
shall take steps to the extent reasonably practicable
to protect a client's interests, such as giving
reasonable notice to the client, allowing time for
employment of other counsel, surrendering papers and
property to which the client is entitled and refunding
any advance payment of fee or expense that has not
been earned or incurred. The lawyer may retain papers
(continued)
24
 No. 2014AP974-D

¶55 When reviewing a report and recommendation in an
attorney disciplinary proceeding, we affirm a referee's findings
of fact unless they are found to be clearly erroneous. In re
Disciplinary Proceedings Against Inglimo, 2007 WI 126, ¶5,
305 Wis. 2d 71, 740 N.W.2d 125. We review the referee's
conclusions of law, however, on a de novo basis. Id. We
determine the appropriate level of discipline given the
particular facts of each case, independent of the referee's
recommendation, but benefitting from it. In re Disciplinary
Proceedings Against Widule, 2003 WI 34, ¶44, 261 Wis. 2d 45,
660 N.W.2d 686.
¶56 Attorney Laux's petition for consensual revocation

states that she cannot successfully defend against the
allegations of professional misconduct set forth in both the
amended complaint and the summary of the matters being
investigated. Her petition asserts that she is seeking
consensual revocation freely, voluntarily, and knowingly and
that restitution should be imposed. She states that she
understands she is giving up her right to contest the OLR's
allegations. She has counsel in this matter. The OLR supports
Attorney Laux's petition. The referee determined, based on

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

25
 No. 2014AP974-D

Attorney Laux's petition and the OLR's response, by clear,
satisfactory, and convincing evidence, that Attorney Laux has
engaged in very serious misconduct, and he recommends that we
accept the petition, order restitution, and revoke Attorney
Laux's license to practice law.
¶57 Attorney Laux's misconduct is egregious and warrants
the severest level of discipline that we impose, namely, the
revocation of her license to practice law in Wisconsin.
Anything less than a revocation of her license to practice law
would unduly depreciate the seriousness of her misconduct. We
agree with the referee's recommendation that we accept Attorney
Laux's petition for consensual license revocation.

¶58 We now consider restitution. The referee's
recommendations for restitution are consistent with the amended
complaint, Attorney Laux's petition, and the OLR's response. We
order Attorney Laux to pay $584,995.02 in restitution to M.F.,
less $150,000 paid to M.F. by the Wisconsin Lawyers' Fund for
Client Protection (Fund),21 and she shall also pay restitution to

21
Attorney Laux's petition for consensual license
revocation at paragraph 7 states that she should be ordered to
make the appropriate restitution in the amount of "$398,995.02
to [M.F.] ($584,995.02 - $150,000 paid by the Fund), less any
funds already provided by me to [M.F.] in restitution." This
does not add up. $584,995.02 - $150,000.00 = $434,995.02. This
appears to be a math error that is repeated in the referee's
report. The record reflects that M.F. is entitled to
restitution in the amount of $584,995.02 and to the extent the
Fund has paid M.F. a portion of her losses, Attorney Laux should
reimburse the Fund.

26
 No. 2014AP974-D

the Fund for the $150,000 attributable to the Fund's approval
and payment on M.F.'s claim.
¶59 The referee further recommends that we order
restitution in seven of the 28 grievances under investigation at
the time of the petition: $4,000 to R.R. and C.R.; $1,500 to
T.M.; $22,420 to D.B.; $4,000 to R.B. and J.B.; $2,100 to M.B.;
$3,500 to R.G. and S.G.; and 4,000 to K.S. and L.C.S.
¶60 The OLR has advised the court that it does not seek
restitution in a number of the client matters implicated in this
proceeding.22 Although the recommended restitution in this case
exceeds the staggering sum of $590,000, it is readily apparent
that Attorney Laux has failed to account for significantly more

money from a number of other clients who were victimized by her
egregious misconduct.
¶61 Two of the grievances are also part of a criminal
proceeding pending against Attorney Laux in federal court. If
Attorney Laux is ordered to pay restitution by the U.S. District
Court in the criminal proceeding, Attorney Laux will be directed
to pay that restitution amount.
¶62 In several matters, however, the OLR advises this
court that its investigation to date has not revealed a

22
The OLR's policy is to seek restitution only under the
following circumstances: (1) there is a reasonably ascertainable
amount; (2) the funds to be restored were in the respondent
lawyer's direct control; (3) the funds to be restored do not
constitute incidental or consequential damages; and (4) the
grievant's or respondent's rights in a collateral proceeding
will not likely be prejudiced.

27
 No. 2014AP974-D

reasonably ascertainable amount, if any, of restitution to seek.
In other cases, the OLR indicates that Attorney Laux performed
some work and, again, the OLR's investigation to date does not
provide a reasonably ascertainable amount, if any, of
restitution to seek.
¶63 It is imperative that we revoke Attorney Laux's law
license now, so we will accede to the OLR's restitution
recommendations. However, we emphasize that, prior to any
reinstatement of Attorney Laux's Wisconsin law license, we will
revisit the issue of restitution. See SCR 22.29(4m) (any
attorney petitioning for reinstatement from a disciplinary
suspension of six months or more is required to allege and

demonstrate that the attorney "has made restitution to or
settled all claims of persons injured or harmed by [the
attorney's] misconduct . . . or, if not, the [attorney's]
explanation of the failure or inability to do so").
¶64 Indeed, Attorney Laux, herself, acknowledges in her
petition that, should she ever seek reinstatement, as a
condition of any future reinstatement, pursuant to
SCR 22.29(4m), she must prove that she has made full restitution
to and settled all claims of persons harmed by the alleged
misconduct, including that she has satisfied any restitution
ordered as a result of any civil or criminal charges filed
against her.
¶65 Finally, we further determine that Attorney Laux
should be required to pay the full costs of this proceeding.
SCR 22.24(1m).
28
 No. 2014AP974-D

¶66 IT IS ORDERED that the license of Sarah E.K. Laux to
practice law in Wisconsin is revoked, effective the date of this
order.
¶67 IT IS FURTHER ORDERED that Sarah E.K. Laux make
restitution in the following amounts and client matters:
• $584,995.02, less $150,000 paid by the Wisconsin Lawyers'
Fund for Client Protection, to M.F.
• $150,000 to the Wisconsin Lawyers' Fund for Client
Protection, attributable to the Fund's payment on M.F.'s
claim
• $4,000 to R.R. and C.R.
• $1,500 to T.M.

• $22,420 to D.B.
• $4,000 to R.B. and J.B.
• $2,100 to M.B.
• $3,500 to R.G. and S.G.
• $4,000 to K.S. and L.C.S.
¶68 IT IS FURTHER ORDERED that Sarah E.K. Laux shall pay
restitution consistent with any final monetary order or judgment
issued in any civil or criminal case filed against her in
connection with the misconduct alleged herein.
¶69 IT IS FURTHER ORDERED that within 60 days of the date
of this order, Sarah E.K. Laux shall pay to the Office of Lawyer
Regulation the costs of this proceeding.
¶70 IT IS FURTHER ORDERED that the restitution specified
above is to be completed prior to paying costs to the Office of
Lawyer Regulation.
29
 No. 2014AP974-D

¶71 IT IS FURTHER ORDERED that, to the extent she has not
already done so, Sarah E.K. Laux shall comply with the
provisions of SCR 22.26 concerning the duties of a person whose
license to practice law in Wisconsin has been revoked.
¶72 PATIENCE DRAKE ROGGENSACK, C.J., did not participate.

30
 No. 2014AP974-D

1