Office of Lawyer Regulation v. James M. Schoenecker

2016 WI 27

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

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

DISCIPLINARY PROCEEDINGS AGAINST SCHOENECKER

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

SOURCE OF APPEAL:
COURT:
COUNTY:
JUDGE:

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

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

STATE OF WISCONSIN : IN SUPREME COURT

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

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

Respondent.

ATTORNEY disciplinary proceeding. Attorney's license

suspended.

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

Attorney Hannah C. Dugan, recommending that the court suspend

the Wisconsin law license of Attorney James M. Schoenecker for

professional misconduct for a period of one year, effective

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

referee also recommended that the court order Attorney

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

proceeding. The referee wrote the report following the entry of

a stipulation between Attorney Schoenecker and the OLR

concerning Attorney Schoenecker's dishonest business activities

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

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

recommendation, and thus our review proceeds under Supreme Court

Rule (SCR) 22.17(2).1

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

supported by satisfactory and convincing evidence. We also

agree with the referee's conclusions of law that Attorney

Schoenecker engaged in professional misconduct, and that the

seriousness of this misconduct warrants a one-year suspension of

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

referee in holding that, given the timing and seriousness of

Attorney Schoenecker's misconduct, the suspension of his law

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

1
SCR 22.17(2) provides:

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

2
No. 2015AP275-D

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

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

¶3 Attorney Schoenecker was licensed to practice law in

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

Schoenecker's law license for misconduct that included

attempting to defraud his client through law firm invoices;

engaging in a pattern of attempted and completed thefts from his

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

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

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

side. In re Disciplinary Proceedings Against Schoenecker, 2011

WI 76, 336 Wis. 2d 253, 804 N.W.2d 686. The three-year

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

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

remains suspended.

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

complaint in this case, which alleged that Attorney Schoenecker

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

3
No. 2015AP275-D

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

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

Schoenecker answered and denied all misconduct. In August 2015,

the OLR amended its complaint by dropping the unauthorized

practice of law charge, while maintaining the charge of engaging

in conduct involving dishonesty, fraud, deceit, or

misrepresentation. See SCR 20:8.4(c).

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

ultimately stipulated, that the misconduct in this case concerns

Attorney Schoenecker's involvement in a business partnership

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

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

partners, established a limited liability company named

GameMaster, LLC. Attorney Schoenecker drafted and filed the

organizing documents, including the Articles of Organization and

the Limited Liability Company Operating Agreement.

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

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

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

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No. 2015AP275-D

¶7 Attorney Schoenecker set up a business checking

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

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

well as withdraw funds. Attorney Schoenecker also had the bank

issue him an American Express corporate card to use for business

expenses.

¶8 Attorney Schoenecker did not immediately deposit

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

account. Instead, Attorney Schoenecker deposited the bulk of

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

¶9 The OLR conducted an investigation of the GameMaster,

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

through October 2013. The investigation revealed that:

(a) Attorney Schoenecker repeatedly charged personal

expenses to the company.

(b) Attorney Schoenecker repeatedly used company funds to

pay his own credit card bills.

(d) Attorney Schoenecker used the company debit card to

make ATM withdrawals at Potawatomi Casino.

(e) Attorney Schoenecker repeatedly charged personal

expenses to the company American Express card.

(f) Attorney Schoenecker undertook use of company funds

without preapproval from either of his business partners.

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

those expenses were charges to Potawatomi Casino, Apple iTunes,

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

gasoline, and other businesses, all without preapproval from his

partners.

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

filed a stipulation whereby Attorney Schoenecker withdrew his

answer to the original complaint and pled no contest to the

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

complaint. In so doing, Attorney Schoenecker agreed not to

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

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

capital contributions made by other members, withdrew excessive

funds from GameMaster, LLC, and charged personal expenses to

GameMaster, LLC, all without preapproval from his business

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

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

license suspension imposed retroactively to the date he became

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

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

the basis for the retroactive nature of the suspension.

¶11 The referee filed her report and recommendation on

December 3, 2015. The referee found that Attorney Schoenecker

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

amended complaint. The referee agreed with the parties that a

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

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

Schoenecker recommended a one-year suspension retroactive to

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

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

original complaint, February 10, 2015, so that Attorney

Schoenecker's earliest reinstatement date would be in February

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

justification for ordering a suspension to run retroactively——

that the misconduct occurred before or during the previous

disciplinary proceeding——is not present here, as Attorney

Schoenecker committed the misconduct here well after he was

suspended in 2011. However, the referee still proposed a

retroactively imposed suspension on the ground that the OLR did

not act with sufficient promptness in pursuing and resolving

this matter, which in turn delayed Attorney Schoenecker from

filing for reinstatement from his previous suspension.

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

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

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

Disciplinary Proceedings Against Eisenberg, 2004 WI 14, ¶5, 269

Wis. 2d 43, 675 N.W.2d 747. The court may impose whatever

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

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

¶44, 261 Wis. 2d 45, 660 N.W.2d 686.

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

agree with the referee's conclusion of law that Attorney

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

repeated misuse of GameMaster, LLC business funds clearly

involved deceit and misrepresentation in violation of that rule.

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

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

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

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

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

other things, retaining client fees to which he was not

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

requests for information, and failing to file income tax returns

for several years. In re Disciplinary Proceedings Against

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

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

disciplinary decision, this court found that Attorney Cotter had

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

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

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

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

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

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

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

8
No. 2015AP275-D

¶15 The present case bears enough similarities to Cotter

that we find its principles should apply here. Both Attorney

Cotter and Attorney Schoenecker had previously received lengthy

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

After receiving these suspensions, and before being reinstated

from these suspensions, both Attorney Cotter and Attorney

Schoenecker engaged in additional dishonest behavior unrelated

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

application for a driver's license; Attorney Schoenecker misused

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

By their actions, both lawyers displayed behaviors that

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

suspension for such behavior was within the range of

reasonableness for Attorney Cotter, and the same holds true for

Attorney Schoenecker.

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

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

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

stipulation and the referee's recommendation, Attorney

Schoenecker's earliest reinstatement date (August 2015 and

February 2016, respectively) would precede the release date of

this decision. We are convinced that Attorney Schoenecker's

present misconduct, when viewed together with his previous

misconduct, warrants a sanction that does more than permit him

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

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

retroactive suspension is generally not favored in the absence

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

compelling circumstance here. See In re Disciplinary

Proceedings Against Boyd, 2009 WI 59, ¶34, 318 Wis. 2d 281, 767

N.W.2d 226. Importantly, this is not a case where the present

misconduct occurred before or at the same time as the respondent

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

equitable for the new license suspension to be made retroactive

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

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

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

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

(1994).

¶18 Rather, Attorney Schoenecker dishonestly handled

business funds well after his 2011 suspension for what we

described as "a disturbing series of illegal and dishonest

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

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

warned Attorney Schoenecker that, in order to practice law again

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

understanding of and attitude toward the standards that are

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

act in conformity with those standards." Id. Attorney

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

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

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

¶19 In his filings with the referee, Attorney Schoenecker

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

'time served'" because he has postponed petitioning for

reinstatement while the OLR investigated and litigated this

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

Attorney Schoenecker's assertion that the pendency of the

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

him to petition for reinstatement after his earlier suspension

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

that the instant action took longer to resolve than he would

have preferred. But Attorney Schoenecker cannot properly demand

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

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

11
No. 2015AP275-D

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

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

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

standards of the profession. Thus, we conclude that Attorney

Schoenecker's one-year suspension should be prospective,

commencing from the date of this decision.

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

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

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

stated in its original complaint and reduced the recommended

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

and Attorney Schoenecker agree with this recommendation.

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

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

appropriate. In exercising our discretion regarding the

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

12
No. 2015AP275-D

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

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

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

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

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

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

22.24(1m).8

¶22 Applying these factors, we observe that SCRs

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

8
SCR 22.24(1m) provides as follows:

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

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

(b) The nature of the misconduct.

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

(e) Prior discipline, if any.

(f) Other relevant circumstances.

13
No. 2015AP275-D

costs. The original complaint alleged two counts of misconduct

and sought revocation of Attorney Schoenecker's license to

practice law. Consistent with the parties' stipulation, the

referee concluded, and we agree, that Attorney Schoenecker

committed one count of misconduct, warranting a one-year

suspension. These facts suggest that Attorney Schoenecker's

misconduct, while serious, was of a lesser nature than

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

Attorney Schoenecker was cooperative with the disciplinary

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

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

is that Attorney Schoenecker has once before received a lengthy

disciplinary suspension. Another is that there is no evidence

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

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

those charges were unreasonable or unnecessary.

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

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

mathematical formula, but is based on our thorough consideration

14
No. 2015AP275-D

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

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

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

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

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

year, effective the date of this order.

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

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

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

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

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

provisions of SCR 22.26 concerning the duties of a person whose

license to practice law in Wisconsin has been suspended.

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

15
No. 2015AP275-D.ssa

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

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

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

in her "Supplementary Statement of Fees."

¶30 I am authorized to state that Justice ANN WALSH

BRADLEY joins this opinion.

1
No. 2015AP275-D.ssa