IN THE SUPREME COURT OF IOWA
No. 13–1029
Filed November 22, 2013
IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD,
Complainant,
vs.
MARC R. ENGELMANN,
Respondent.
On review of the report of the Grievance Commission of the
Supreme Court of Iowa.
Grievance commission reports respondent committed ethical
violations and recommends suspension of his license to practice law.
LICENSE REVOKED.
Charles L. Harrington and Wendell J. Harms, Des Moines, for
complainant.
David R. Treimer, Davenport, for respondent.
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WATERMAN, Justice.
Marc R. Engelmann, an experienced real estate attorney, is serving
a three-year sentence in federal prison after a jury convicted him on nine
felony counts, alleging bank fraud, wire fraud, and conspiracy. His
convictions were affirmed on appeal. He represented a seller in nine real
estate transactions in which he submitted HUD-1 statements that falsely
overstated the sales prices in order to secure inflated mortgage loans.
The jury found he “act[ed] knowingly and with intent to deceive [the
lenders] for the purpose of causing some financial loss, loss of property
or property rights, or . . . detriment.” The lenders suffered losses of
$392,937.73, which Engelmann was ordered to pay in restitution.
Disciplinary proceedings were held in abeyance pending resolution of his
criminal appeal. His license to practice law has been under temporary
suspension.
The Iowa Supreme Court Attorney Disciplinary Board brought a
complaint against Engelmann, alleging he committed multiple violations
of the Iowa Rules of Professional Conduct during these nine transactions.
The Board recommended revocation, and Engelmann, through counsel,
offered to “surrender his license” if his convictions were affirmed. A
division of the Grievance Commission of the Supreme Court of Iowa
found Engelmann violated the rules as charged and, after considering his
temporary suspension and thirty-six-month prison sentence,
recommended an additional six-month disciplinary suspension. For the
reasons explained below, we revoke his license to practice law.
I. Scope of Review.
Our review of attorney disciplinary proceedings is de novo. Iowa
Ct. R. 35.11(1). The burden is on the Board to prove attorney
misconduct by a convincing preponderance of the evidence. Iowa
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Supreme Ct. Att’y Disciplinary Bd. v. Lickiss, 786 N.W.2d 860, 864 (Iowa
2010). “This burden is less than proof beyond a reasonable doubt, but
more than the preponderance standard required in the usual civil case.”
Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Lett, 674 N.W.2d 139,
142 (Iowa 2004). We respectfully consider the commission’s findings and
recommendations, but are not bound by them. Iowa Supreme Ct. Att’y
Disciplinary Bd. v. Rhinehart, 827 N.W.2d 169, 171 (Iowa 2013). If we
find a violation, we “may impose a lesser or greater sanction than the
discipline recommended by the grievance commission.” Iowa Ct. R.
35.11(1).
II. Background Facts and Proceedings.
Engelmann has been practicing law in the Quad Cities since
graduating from law school in 1976. He started with a general practice,
but became increasingly focused on real estate law. Several decades ago,
the Iowa Title Guaranty Division certified Engelmann to write title
guarantees and generate abstracts. Engelmann primarily represented
lenders, and this area of his practice thrived. He represented up to
twenty lenders in real estate closings, including Wells Fargo Bank, Valley
Bank, Quad City Bank, and First Central State Bank. Engelmann also
represented buyers and sellers. By 2006, eighty percent of his practice
was real estate related. In one two-month period that year, Engelmann
represented lenders at over fifty closings and represented buyers or
sellers at another fifty closings. By the time of the misconduct at issue,
he had practiced law for three decades with an unblemished record and
had closed thousands of real estate transactions for his clients.
Engelmann was among the many casualties of the market crash in
2008, after purchasers of real estate sold by his clients defaulted on nine
mortgage loans he helped obtain through fraud. On May 17, 2011,
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federal prosecutors filed a nine-count felony criminal indictment against
him, alleging one count of conspiracy to commit bank fraud or wire
fraud, two counts of bank fraud, and six counts of wire fraud. He pled
not guilty, and his case proceeded to a jury trial. The federal district
court summarized the evidence presented at trial:
Defendant is an attorney in the Quad Cities area and
represented James Laures (Laures) in the mortgage closings
of at least nine residential properties. The transactions
involved Laures as seller and Robert Herdrich (Herdrich) and
Darryl Hanneken (Hanneken) as buyers. The parties agreed
upon the purchase price for each property, but also agreed
to list on the loan documents an inflated price of between
$30,000 and $35,000 more than the actual purchase price
for each property. The various lenders then loaned Herdrich
and Hanneken money for the transaction based on the
inflated price listed on the loan documents. Laures received
the inflated price for each sale and then returned
approximately $30,000 for each property to Herdrich and
Hanneken after each closing as a “kickback.”
Defendant admits he knew about the two different
prices and that Laures returned money to the buyers.
Defendant also knew that the inflated price was not being
listed on the HUD–1 forms that were submitted to the
lenders. Government witnesses testified that Defendant
never disclosed the inflated price or the kickbacks to the
lenders or the closing company, Excel Title. Defendant’s
assistant, Cathy Gockel, testified that Defendant instructed
her not to disclose the inflated price or kickbacks to Excel
Title. FBI Special Agents Jeff Huber (SA Huber) and Jim
McMillan (SA McMillan) testified that Defendant admitted
during an interview that the lenders did not know about the
inflated price or the kickbacks. Defendant, however, testified
that Excel Title was aware of the dual prices and kickbacks
because Defendant had disclosed that information to Excel
Title and believed that Excel Title would have informed the
lenders of this information, and, therefore, he had no intent
to defraud.
United States v. Engelmann, 827 F. Supp. 2d 985, 987 (S.D. Iowa 2011),
vacated in part, 701 F.3d 874 (8th Cir. 2012), aff’d after remand, 720
F.3d 1005 (8th Cir. 2013). Engelmann charged a $350 fee for each of the
nine closings, a volume discount from his standard $400 fee. There is no
5
evidence or claim he otherwise personally benefited financially from these
transactions.
On September 13, 2011, the jury convicted Engelmann on all nine
counts. The jury rejected Engelmann’s defense that he acted in good
faith and had no intent to defraud because the lenders’ agent was aware
of the true sale prices and the kickbacks. To convict on each count, the
jury instructions required the jury to find Engelmann possessed an
“intent to defraud”1 defined as follows:
1As taken from the jury instructions in Engelmann’s case, the elements of
conspiracy to commit bank fraud or wire fraud are:
(1) . . . [t]wo or more persons reached an agreement or came to an
understanding to commit bank fraud or wire fraud;
(2) The defendant voluntarily and intentionally joined in the
agreement or understanding, either at the time it was first
reached or at some later time while it was still in effect;
(3) At the time the defendant joined in the agreement or
understanding, he knew the purpose of the agreement or
understanding; and
(4) While the agreement or understanding was in effect, a person or
persons who had joined in the agreement knowingly did one or
more overt acts for the purpose of carrying out or carrying
forward the agreement or understanding.
The jury was instructed the elements of bank fraud are:
(1) The defendant knowingly executed, attempted to execute, or
participated in a scheme to defraud a financial institution to
obtain monies, funds and assets owned by and under the custody
and control of a financial institution by means of material false
and fraudulent pretenses, representations, and promises[;]
(2) The defendant did so with intent to defraud; and
(3) The financial institution was insured by the United States
Government.
The jury was instructed the elements of wire fraud are:
(1) The defendant voluntarily and intentionally devised or made up a
scheme to defraud another out of money or property, or
participated in a scheme to defraud with knowledge of its
fraudulent nature, or devised or participated in a scheme to
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[T]o act knowingly and with the intent to deceive someone for
the purpose of causing some financial loss or loss of property
or property rights to another or bringing about some
financial gain to oneself or another to the detriment of a
third party.
On January 26, 2012, the federal court sentenced Engelmann to thirty-
six months in prison and ordered him to pay $392,937.73 in restitution.
Engelmann moved for a new trial, contending a witness violated the
sequestration order during trial and a jury instruction on his good-faith
defense was erroneous. The district court denied his motion. Id. at 993.
Engelmann appealed.
On March 20, while Engelmann’s appeal was pending, the Board
filed a complaint, alleging Engelmann violated Iowa Rules of Professional
Conduct 32:1.2(d), 32:1.16(a)(1), 32:4.1(a), 32:4.1(b), and 32:8.4(b). The
Board also alleged that Engelmann’s felony convictions met the
requirements for revocation or suspension under Iowa Code section
602.10122(1). The Board gave notice pursuant to Iowa Court Rule
35.7(3)(c) of its intent to invoke issue preclusion on all matters resolved
in Engelmann’s criminal trial.
Engelmann requested that the Board hold the disciplinary
proceedings in abeyance until the Eighth Circuit issued its decision on
his appeal. Engelmann filed denials to the paragraphs in the Board’s
complaint that alleged he made false representations, intentionally
concealed facts, knew of the fraudulent nature of the transactions, or
committed any of the charged crimes. He also denied that issue
________________________
obtain money or property by means of material false
representations or promises;
(2) The defendant did so with the intent to defraud; and
(3) The defendant used, or caused to be used, the interstate wire
facilities in furtherance of, or in an attempt to carry out, some
essential step of the scheme.
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preclusion should apply in the grievance commission proceedings and
denied that he committed the alleged rule violations. His motion to hold
the proceedings in abeyance, however, stated that if he “is unsuccessful
in his appeal to the 8th Circuit, he will acquiesce in the suspension of
his license without the necessity of the discovery and hearing process.”
The Board agreed to postpone Engelmann’s hearing. Engelmann
consented to the temporary suspension of his license. That suspension
has remained in effect since June 20, 2012. The disciplinary hearing
before the commission took place on December 4. Engelmann’s counsel
again asked the commission to delay issuing its report until the Eighth
Circuit ruled on Engelmann’s appeal. His counsel stated on the record,
“[I]f the conviction stands, Mr. Engelmann will surrender his license.”
Engelmann did not testify at the hearing, but his testimony from the
criminal trial was introduced as an exhibit. The Board’s attorney urged
the commission to recommend revocation of his license.
On December 19, 2012, the Eighth Circuit remanded Engelmann’s
case for an evidentiary hearing concerning the alleged sequestration
order violation. United States v. Engelmann, 701 F.3d 874, 875 (8th Cir.
2012). Engelmann again asked the commission to hold the proceedings
in abeyance, and the commission granted this motion. After an
evidentiary hearing, the district court denied his motion for new trial.
This ruling was upheld on appeal. United States v. Engelmann, 720 F.3d
1005, 1008 (8th Cir. 2013).
On June 27, 2013, the commission filed its report, finding
Engelmann violated all five rules as charged. The commission
recommended an additional six-month disciplinary suspension in light of
Engelmann’s three-year prison sentence. Engelmann filed no
subsequent response regarding the appropriate sanction.
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III. Review of Ethical Violations.
The underlying misconduct is similar to but more egregious than
that in Iowa Supreme Court Attorney Disciplinary Board v. Bieber, 824
N.W.2d 514 (Iowa 2012). Engelmann and Bieber each represented
sellers in real estate closings that led to criminal charges. Engelmann,
827 F. Supp. 2d at 987; Bieber, 824 N.W.2d at 516–17. Their respective
clients each sold property to the same buyers, Robert Herdrich and
Darryl Hanneken. Engelmann, 827 F. Supp. 2d at 987; Bieber, 824
N.W.2d at 516. Engelmann and Bieber played the same role in the real
estate transactions. Engelmann, 827 F. Supp. 2d at 987; Bieber, 824
N.W.2d at 517. Bieber and Engelmann each prepared HUD-1 forms and
other documents that reflected a higher selling price than the price
actually agreed on by the parties and concealed the existence of cash
kickbacks to the buyers. Id. Bieber pled guilty to misprision of a felony
for a single transaction and was sentenced to three years of probation
and ordered to pay $37,969.99 in restitution, which he paid in full.
Bieber, 824 N.W.2d at 516. We found that Bieber had violated Iowa
Rules of Professional Conduct 32:1.2(d), 32:1.16(a)(1), 32:4.1(a),
32:4.1(b), and 32:8.4(b)—the same rules the Board alleges Engelmann
violated. Id. at 518–21. We address each rule in turn.
A. Rule 32:4.1. The commission found Engelmann violated rule
32:4.1(a) and (b). We agree. Rule 32:4.1(a) states, “In the course of
representing a client, a lawyer shall not knowingly . . . make a false
statement of material fact or law to a third person.” Iowa R. Prof’l
Conduct 32:4.1(a). Rule 32:4.1(b) provides, “In the course of
representing a client, a lawyer shall not knowingly . . . fail to disclose a
material fact to a third person when disclosure is necessary to avoid
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assisting a criminal or fraudulent act by a client, unless disclosure is
prohibited by rule 32:1.6.” Id. r. 32:4.1(b).
Engelmann argued at trial that he did not make a false statement
of material fact or fail to disclose a material fact. He maintained that he
believed it was legitimate for Laures, Herdrich, and Hanneken to
structure their contract with a cash refund to the buyers, although he
admitted this was an unusual practice. He testified it was his belief that
the closing company knew of the dual pricing structure and informed the
lenders. He argued his misconduct was not criminal because the
properties were independently appraised for the lenders and they relied
on the appraised values, not the sales prices. Engelmann further argued
he did not have the requisite intent for the conspiracy, bank fraud, or
wire fraud convictions because he had a good-faith belief that the
transactions were legal.
Engelmann’s trial testimony that he informed the closing agent of
the true sales prices was contradicted by his own assistant, who testified
that he “instructed her not to disclose the inflated price or kickbacks” to
the closing agent. Engelmann, 827 F. Supp. 2d at 987. FBI agents
testified that Engelmann “admitted during an interview that the lenders
did not know about the inflated price or the kickbacks.” Id. And,
regardless of whether Engelmann believed the lenders knew of the cash-
back agreement, any good-faith belief does not excuse his false
statements on the HUD-1 settlement statements and closing statements.
See Bieber, 824 N.W.2d at 520. We further find that the false sales
prices were material. Engelmann never testified that he believed the
buyers were going to use the cash refund to improve the properties. In
contrast, Bieber gave uncontroverted testimony that he and his client
believed the additional loan proceeds obtained from the lender would be
10
used by the buyers to improve the property that secured the bank loan.
Id. at 518, 525 n.8. Engelmann, an experienced real estate attorney who
had represented many lenders, knew or should have known the lenders
would rely in part on the stated selling prices on the HUD documents.
The federal jury verdict required a finding that Engelmann made
material false and fraudulent representations with an intent to defraud.
The commission correctly applied issue preclusion. See Iowa Supreme
Ct. Att’y Disciplinary Bd. v. Stowers, 823 N.W.2d 1, 7–8 (Iowa 2012)
(discussing issue preclusion in disciplinary cases). The jury rejected
Engelmann’s defense. Based on the verdict affirmed on appeal, we do
the same. We find Engelmann violated rules 32:4.1(a) and (b) by
misrepresenting the true sales prices and by failing to disclose to the
lenders the cash kickbacks and the inaccuracy of stated sales prices.
B. Rules 32:1.2(d) and 32:1.16(a)(1). Rule 32:1.2(d) prohibits a
lawyer from assisting a client “in conduct that the lawyer knows is
criminal or fraudulent.” Iowa R. Prof’l Conduct 32:1.2(d). Rule
32:1.16(a)(1) provides guidance to a lawyer confronted with a situation in
which the lawyer’s assistance will facilitate illegality. It states that “a
lawyer shall not represent a client or, where representation has
commenced, shall withdraw from the representation of a client if . . . the
representation will result in violation of the Iowa Rules of Professional
Conduct or other law.” Id. r. 32:1.16(a)(1).
Engelmann testified at trial that Laures had signed a contract to
sell his properties to Herdrich and Hanneken before retaining Engelmann
on the matter. This does not change the fact that Engelmann assisted
the parties in executing their fraudulent contract by preparing the
inaccurate forms and representing Laures at the closings. Comment 10
to rule 32:1.2(d) addresses this situation:
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When the client’s course of action has already begun and is
continuing, the lawyer’s responsibility is especially delicate.
The lawyer is required to avoid assisting the client, for
example, by drafting or delivering documents that the lawyer
knows are fraudulent or by suggesting how the wrongdoing
might be concealed. A lawyer may not continue assisting a
client in conduct that the lawyer originally supposed was
legally proper but then discovers is criminal or fraudulent.
The lawyer must, therefore, withdraw from the
representation of the client in the matter.
Id. r. 32:1.2(d) cmt. 10.
Engelmann knew the true sales prices of the properties were less
than stated on the HUD-1 forms. He also knew the buyers were
receiving loans that exceeded the actual sales prices. As an experienced
real estate lawyer, Engelmann knew or should have known that such a
contract was not aboveboard. He helped the parties complete their
fraudulent transaction by preparing documents that misrepresented the
facts of the transaction, deceiving the lenders. The jury’s finding that
Engelmann was guilty of bank fraud and wire fraud establishes that he
“knowingly did one or more overt acts for the purpose of carrying out” the
fraud. We apply issue preclusion to find that Engelmann knowingly
assisted his client in defrauding the buyers’ lender, in violation of rule
32:1.2(d). See Bieber, 824 N.W.2d at 517–18.
Engelmann should have declined to represent Laures in the
transactions in the first instance. And, he should have withdrawn his
representation before making misrepresentations. Engelmann had
ample opportunity to withdraw. In fact, he had nine opportunities. But,
instead of withdrawing, Engelmann continued to represent Laures in
nine separate closings, misrepresenting the true price of the property in
each transaction. We find Engelmann violated rule 32:1.16(a)(1).
C. Rule 32:8.4(b). Finally, the commission found Engelmann
violated rule 32:8.4(b), which makes it “professional misconduct for a
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lawyer to . . . commit a criminal act that reflects adversely on the
lawyer’s honesty, trustworthiness, or fitness as a lawyer in other
respects.” Iowa R. Prof’l Conduct 32:8.4(b). A criminal act does not
necessarily violate this rule. Rather, “ ‘[t]here must be some rational
connection other than the criminality of the act between the conduct and
the actor’s fitness to practice law.’ ” Iowa Supreme Ct. Att’y Disciplinary
Bd. v. Weaver, 812 N.W.2d 4, 11 (Iowa 2012) (quoting Iowa Supreme Ct.
Att’y Disciplinary Bd. v. Templeton, 784 N.W.2d 761, 767 (Iowa 2010)).
We weigh a number of factors to determine if a criminal act constitutes a
violation of rule 32:8.4(b), including
“the lawyer’s mental state; the extent to which the act
demonstrates disrespect for the law or law enforcement; the
presence or absence of a victim; the extent of actual or
potential injury to a victim; and the presence or absence of a
pattern of criminal conduct.”
Id. (quoting Templeton, 784 N.W.2d at 767).
As we recognized in Bieber, there is more than a “rational
connection” when a lawyer’s criminal behavior actually involves actions
undertaken by the lawyer in the course of representing a client. 824
N.W.2d at 520. The jury’s verdict establishes Engelmann possessed the
intent to defraud. Engelmann’s crime was not a victimless one: the
extent of the harm was quite great, as reflected by the restitution order of
$392,937.73. Finally, there is a pattern of criminal conduct in this case.
There were nine separate closings and thus nine opportunities for
Engelmann to disclose the true sales price. It is axiomatic that
fraudulent behavior reflects adversely on a lawyer’s honesty,
trustworthiness, and fitness as a lawyer. We agree with the
commission’s finding that Engelmann violated rule 32:8.4(b).
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IV. Consideration of Appropriate Sanction.
We now consider the appropriate sanction for Engelmann’s rule
violations. In crafting a sanction,
we consider the nature of the violations, the attorney’s
fitness to continue in the practice of law, the protection of
society from those unfit to practice law, the need to uphold
public confidence in the justice system, deterrence,
maintenance of the reputation of the bar as a whole, and any
aggravating or mitigating circumstances.
Iowa Supreme Ct. Att’y Disciplinary Bd. v. Boles, 808 N.W.2d 431, 441
(Iowa 2012) (citation and internal quotation marks omitted). For similar
but less egregious misconduct, we suspended Bieber’s license for six
months. Bieber, 824 N.W.2d at 528. Engelmann, like Bieber, had no
prior disciplinary or criminal record. But, we conclude Engelmann is
significantly more culpable than Bieber.
First, their convictions are not the same: Bieber pled to one count
based on a single transaction, id. at 516–17, whereas Engelmann was
convicted of nine felonies based on nine transactions. Bieber pled guilty
to misprision of a felony, a federal felony. See 18 U.S.C. §§ 4, 3559(a)(5)
(2006); Bieber, 824 N.W.2d at 516. The elements of this crime are:
“1) the principal committed and completed the alleged felony;
2) defendant had full knowledge of that fact; 3) defendant
failed to notify the authorities; and 4) defendant took steps
to conceal the crime.”
Bieber, 824 N.W.2d at 516 n.2 (quoting United States v. Cefalu, 85 F.3d
964, 969 (2d Cir. 1996)). Looking to parallel state law crimes confirms
that Engelmann’s offenses are much more serious than Bieber’s. Iowa
does not have a precise counterpart to the federal crime of misprision of
a felony, but the state law crimes of accessory after the fact,
compounding a felony, and obstructing prosecution are similar. Iowa
Code §§ 703.3, 720.1, 719.3. All three of these crimes are aggravated
14
misdemeanors under Iowa law. See id. By contrast, Engelmann’s federal
felonies line up with first-degree fraud, a class “C” felony under Iowa
law.2 Id. § 714.9. The consequences of Engelmann’s misrepresentations
were also substantially more severe than those in Bieber in terms of both
pecuniary losses and sentencing. The federal district court ordered
Bieber to pay $37,969.99 in restitution to the lender and sentenced him
to three years of probation, which was within the federal sentencing
guidelines for his crime. 824 N.W.2d at 516. By the time of his
disciplinary hearing, Bieber had fully paid his restitution. Id. at 518. In
contrast, the court ordered Engelmann to pay $392,937.73 in restitution
and sentenced him to thirty-six months in prison. The record does not
show any amount of restitution has been paid to date.
Moreover, Engelmann was a sophisticated real estate attorney,
while Bieber did “some real estate work” in the course of his general civil
practice. Id. “ ‘[T]he law takes account of a lawyer’s legal training and
experience in assessing his or her state of mind.’ ” Iowa Supreme Ct.
Att’y Disciplinary Bd. v. Barry, 762 N.W.2d 129, 139 (Iowa 2009) (quoting
1 Geoffrey C. Hazard Jr. & W. William Hodes, The Law of Lawyering
§ 1.23, at 1–46 (3d ed. 2005-2 Supp.)). We expect an attorney who
specializes in a particular field to be more aware and responsible. See
2The Iowa Code structure penalizing fraud increases the severity of the
punishment as the value of the property involved increases. See Iowa Code §§ 714.9–
.13 (2013). The highest degree of fraud is reserved for crimes involving property valued
at more than $10,000. Id. § 714.9. Iowa Code section 524.1607 criminalizes
knowingly mak[ing] or caus[ing] to be made, directly or indirectly, any
false statement in writing . . . with the intent that such statement shall
be relied upon by a financial institution, a mortgage banker, a mortgage
broker, or any other entity licensed by the banking division for the
purpose of procuring the delivery of property, the payment of cash or the
receipt of credit in any form, for the benefit of such person or of any
other person in which such person is interested or for whom such person
is acting.
15
Iowa Supreme Ct. Att’y Disciplinary Bd. v. Weaver, 750 N.W.2d 71, 92
(Iowa 2008) (finding “considerable professional experience” to be an
aggravating factor).
But, most important is the difference in their states of mind. In
Bieber, we noted “there is no evidence that Bieber knew the buyers were
walking away with someone else’s money.” 824 N.W.2d at 523. Rather,
“Bieber understood the excess funds provided by the lender would be
spent on repairs to improve the property in which the lender had a
security interest.” Id. at 525 n.8. Specifically,
Bieber asserted that both he and his client Woods believed
the $55,000 rebate would actually go toward needed repairs
and improvements to the property. By their account, which
no one disputed, Bieber and Woods were unaware the
buyers intended simply to pocket the difference between the
$108,500 they had borrowed and the $100,000 net they had
transferred to Woods.
Id. at 518. We stated, “Bieber did not convert funds himself or knowingly
assist a client in doing so. . . . While [his] conduct is reprehensible, we
do not think it is the same as outright theft of another person’s money.”
Id. at 523 (emphasis added). Engelmann offered no comparable
testimony in his own defense.
The same day we decided Bieber, we filed our decision in Iowa
Supreme Court Attorney Disciplinary Board v. Wheeler, another case in
which the attorney obtained a real estate mortgage through fraud. 824
N.W.2d 505, 508 (Iowa 2012). Specifically, attorney Ronald Wheeler
agreed to serve as a straw man to obtain a loan to purchase a residence
for his client. Id. Wheeler falsely stated on the loan application that he
was the purchaser who would reside in the home. Id. Wheeler
substantially overstated his assets and income and failed to disclose he
financed the down payment. Id. His client moved into the home but
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later failed to make payments, and after the real estate market crashed,
Wheeler ultimately defaulted on the loan. Id. at 509. He filed for
bankruptcy and pled guilty to making a false statement to a financial
institution. Id. He was sentenced to probation and ordered to pay
restitution. Id. Wheeler’s state of mind was central to our decision to
impose a six-month suspension rather than revoke his license:
Wheeler intended to misrepresent the bank by filing false
financial documents. Yet, his intent was to obtain a loan
from the bank, not for the bank to suffer a loss. The
misrepresentation was for the purpose of obtaining the loan,
which Wheeler was contractually obligated to repay. He
believed his client would eventually refinance the house and
pay off the loan to the bank. He also believed the bank was
protected from loss by the mortgage on the home.
Id. at 512. Wheeler, like Bieber, offered evidence in mitigation, including
his cooperation with the board’s investigation, his reputation in the legal
community, voluntary community service, remorse over the conduct at
issue, and acknowledgment of wrongdoing. Id. at 513; see Bieber, 824
N.W.2d at 527–28 (discussing his mitigating factors). We imposed the
same six-month suspension as in Bieber, stating:
Wheeler’s act of knowingly making a false statement to
a financial institution is inexcusable and cannot be undone.
But, we do not believe Wheeler intended to misappropriate
funds or aid Blessman in misappropriating funds. In this
respect, this case involves similar underlying conduct to the
Bieber case and many of the same mitigating factors. Upon
our review, we agree with the commission’s recommended
sanction of a six-month suspension here. That is the same
sanction we impose in Bieber.
Wheeler, 824 N.W.2d at 513.
By contrast, each of Engelmann’s nine convictions required the
jury to find he acted
knowingly and with the intent to deceive someone for the
purpose of causing some financial loss or loss of property or
17
property rights to another or bringing about some financial
gain to oneself or another to the detriment of a third party.
In light of this definition of “intent to defraud,” the jury necessarily
concluded beyond a reasonable doubt that Engelmann intended to cause
the lenders financial harm. The jury that heard all the evidence is better
positioned than our court to assess Engelmann’s intent, when the only
evidence he presented to the Board on that issue was a transcript of his
own federal trial testimony. See Iowa Supreme Ct. Att’y Disciplinary Bd.
v. Clarity, 838 N.W.2d 648, 659 (Iowa 2013) (discussing our deference to
credibility findings of fact finders who heard live testimony).
We have revoked the licenses of other Iowa lawyers who assisted
clients in defrauding financial institutions out of money. See, e.g., Iowa
Supreme Ct. Att’y Disciplinary Bd. v. Nelsen, 807 N.W.2d 259, 261 (Iowa
2011) (revoking license of attorney who aided and abetted his client in
defrauding a bank); Comm. on Prof’l Ethics & Conduct v. Austin, 427
N.W.2d 465, 466 (Iowa 1988) (revoking license of attorney convicted of
conspiracy to misapply bank funds). Engelmann collected only his $350
fee for each closing. He did not personally convert any funds or
otherwise benefit financially from the fraud. But, his misconduct
resulted in large financial losses by the lenders. Similarly, in Nelsen, we
revoked the license of the lawyer who improperly diverted at least
$141,335 to his client’s secret account to avoid a court-appointed
receivership, even though the lawyer personally did not profit from the
conversion. 807 N.W.2d at 266–67. We have also revoked the licenses of
attorneys convicted of felony financial fraud crimes. See Iowa Supreme
Ct. Bd. of Prof’l Ethics & Conduct v. Vinyard, 656 N.W.2d 127, 128–31
(Iowa 2003) (revoking license of attorney convicted of mail fraud and
money laundering; collecting revocation cases).
18
Other states have revoked the licenses of attorneys convicted of
wire fraud or bank fraud against financial institutions under similar
circumstances. See, e.g., People v. Sichta, 948 P.2d 1018, 1019–20 (Colo.
1997) (disbarring attorney convicted of wire fraud); In re Brewster, 587
A.2d 1067, 1071 (Del. 1991) (disbarring attorney convicted of bank
fraud); Watkins v. Miss. Bar, 589 So. 2d 660, 661, 666 (Miss. 1991)
(finding automatic disbarment appropriate when lawyer was convicted of
“multiple felony counts of financial institution fraud and false statements
to influence actions of a federally insured financial institution”); cf. In re
Vaughn, 585 S.E.2d 881 (Ga. 2003) (accepting attorney’s voluntary
surrender of license when attorney made false statements on HUD
documents). The Louisiana Supreme Court permanently disbarred an
attorney who was convicted of making false statements on an application
for HUD mortgage financing, sentenced to eighteen months in prison,
and ordered to pay $686,565.55 in restitution. In re O’Keefe, 46 So. 3d
1240, 1241, 1244 (La. 2010). The Massachusetts Supreme Court
disbarred an attorney who was convicted of four counts of making false
statements to a lender, five counts of mail fraud, and two counts of wire
fraud. In re Kennedy, 697 N.E.2d 538, 539 (Mass. 1998). The attorney
in that case made false statements on HUD documents for clients and
fabricated income tax returns overstating his income in order to secure
an inflated mortgage for himself. Id. at 539–40. The court stated that
“[a]lthough Kennedy apparently received only $110 in legal fees for his
services to clients in the transactions involved here, he benefited by
retaining his clients.” Id. at 541.
Engelmann acknowledged the seriousness of his misconduct by
stating through counsel at the grievance commission hearing that he
would surrender his license if his convictions were affirmed. His
19
convictions indeed were affirmed. He subsequently has made no further
argument or submission as to the appropriate sanction. The Board
recommended revocation. The commission’s recommended six-month
suspension took into account Engelmann’s three-year prison sentence
and accompanying temporary suspension. We give careful consideration
to the parties’ positions and commission’s recommendation in making
our own determination as to the sanction to impose. We conclude his
license to practice law should be revoked.
V. Disposition.
For the reasons stated in this opinion, the license of the
respondent, Marc R. Engelmann, is revoked. We assess costs to the
respondent as provided in Iowa Court Rule 35.27(1).
LICENSE REVOKED.