IN THE SUPREME COURT OF IOWA
No. 100 /06-0747
Filed November 17, 2006
IOWA SUPREME COURT ATTORNEY
DISCIPLINARY BOARD,
Complainant,
vs.
GARY D. IVERSEN,
Respondent.
On review of the report of the Grievance Commission.
Iowa Supreme Court Grievance Commission recommends a two-
year suspension of respondent’s license to practice law in this state.
LICENSE SUSPENDED.
Charles L. Harrington and David J. Grace, Des Moines, for
complainant.
Timothy J. Luce of Anfinson & Luce, Waterloo, for respondent.
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WIGGINS, Justice.
The Iowa Supreme Court Attorney Disciplinary Board filed a
complaint alleging Gary D. Iversen violated numerous rules of the Iowa
Code of Professional Responsibility for Lawyers by not filing federal or
state income tax returns for 1992 to 2001 and by not paying his Iowa
income taxes for 1996 and 1997. The Grievance Commission filed its
report finding the Board had proven the factual allegations of the
complaint as well as Iversen’s violations of the Code by a convincing
preponderance of the evidence. The Commission recommended we
suspend Iversen’s license to practice law indefinitely with no possibility
of reinstatement for two years. On our de novo review, we agree with the
Commission that the Board has proven by a convincing preponderance of
the evidence that Iversen’s conduct violated the Code. Accordingly, we
suspend Iversen’s license to practice law in this state indefinitely with no
possibility of reinstatement for one year.
I. Background Facts and Proceedings.
We admitted Iversen to the Iowa bar in 1977. He presently
maintains a law office in Waterloo, Iowa. His major areas of practice
include preparation of tax returns, real estate, and probate matters. On
December 1, 2005, the Board filed a complaint against Iversen alleging
various violations of the Iowa Code of Professional Responsibility for
Lawyers. The Board claimed: (1) as of February 18, 2003, Iversen had
not filed federal or state income tax returns for the years 1992 through
2001; (2) on or about May 1, 1997, Iversen failed to pay his Iowa income
tax for the year 1996; and (3) on or about May 1, 1998, Iversen failed to
pay his Iowa income tax for the year 1997.
In connection with these claims, the Board alleged Iversen violated
Iowa Code sections 422.25(5), 714.8(10), 714.10(1), and 714.11(1)
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(1997). The Board alleged in October 2003 Iversen pled guilty to the
crimes of fraudulent practice in the second degree in violation of Iowa
Code sections 422.25(5), 714.8(10), and 714.10 and fraudulent practice
in the third degree in violation of Iowa Code sections 422.25(5),
714.8(10), and 714.11. The Board further alleged the court granted
Iversen a deferred judgment and placed him on probation for sixty
months.
Accordingly, the Board charged Iversen with violating the following
provisions of the Iowa Code of Professional Responsibility for Lawyers:
DR 1-102(A)(3) (providing a lawyer shall not engage in illegal conduct
involving moral turpitude); DR 1-102(A)(4) (providing a lawyer shall not
engage in conduct involving dishonesty, fraud, deceit, or
misrepresentation); DR 1-102(A)(5) (providing a lawyer shall not engage
in conduct that is prejudicial to the administration of justice); and DR 1-
102(A)(6) (providing a lawyer shall not engage in any other conduct that
adversely reflects on the fitness to practice law). The Board noted it
intended to invoke issue preclusion in proving the allegations of the
complaint.
In his answer, Iversen admitted to not filing federal or state income
tax returns for 1992 to 2001 and to not paying his Iowa income taxes for
1996 and 1997. He also admitted to his guilty plea. In response to the
Board’s requests for admission, Iversen stated he had “no specific
knowledge as to inaccuracies in the minutes, but having not interviewed
the witnesses regarding the specifics, he [was] unable to admit whether
the facts [were] accurate.” Iversen further stated, however, that “the
deferred judgment granted in the [criminal case] was based on facts
similar to those set forth in the minutes” and he would not object to
them.
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At the hearing on the complaint, the Board and Iversen appeared
to agree the focus was not on Iversen’s conduct, but rather on the issue
of the appropriate sanction. In his testimony, Iversen admitted to not
filing his federal and state tax returns beginning in 1992, but stated he
has since filed them. He testified he made an estimated tax payment in
1993 for the year 1992. He further explained he is not sure he knows
why he did not file the 1992 returns, alluding to financial and marital
issues. Initially, Iversen chose not to file his earlier returns thinking he
would “catch up.” After he failed to file the first few returns, Iversen
stated by that point he felt he was in a hole that he could not get himself
out of financially and began to fear the tax authorities would destroy his
law practice.
Iversen acknowledged his conduct would not reflect the advice he
would give to his clients and that he was not as responsive to the state
as he should have been. He claimed he has not had any prior ethical
violations, has been attentive to the needs of his clients, and has
attempted to limit his work in view of his probable suspension. He
appears to have cooperated with the disciplinary authorities. Iversen
mentioned he was “obviously very embarrassed by pretty stupid
decisions and just lack of taking action” and expressed a desire to
practice law again. Witnesses who testified at Iversen’s sentencing
hearing opined that Iversen is a well-respected attorney.
The Commission found although Iversen was required to file both
federal and state income tax returns for the years 1992 through 2001, he
did not file such returns and paid no income taxes, except for one
estimated tax payment in 1993. The Commission further found Iversen
was charged in Black Hawk County with two counts of fraudulent
practice in the first degree (class “C” felonies) and two counts of tax
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evasion (class “D” felonies), and as a result of a plea agreement under
which two of the original counts were reduced and the other two counts
were dismissed, Iversen pled guilty to one count of fraudulent practice in
the second degree (a class “D” felony) and one count of fraudulent
practice in the third degree (an aggravated misdemeanor).
The Commission also found Iversen was granted a deferred
judgment with five years of supervised probation and was ordered to
make restitution to the state in the amount of $207,743.41.
Additionally, Iversen has not paid any of the approximate $180,000 to
$200,000 in back taxes which he owes to the federal government and
there is no payment plan to do so at this time. Finding the allegations of
the complaint were sufficiently proven in light of Iversen’s answer,
response to requests for admission, and testimony at the hearing, as well
as by issue preclusion under Iowa Court Rule 35.7(3), the Commission
concluded Iversen violated DR 1-102(A)(3), (4), (5), and (6).
The Commission noted the following mitigating factors: (1) Iversen
appears to be respected by his peers; (2) there is nothing in the record
showing his clients were harmed; (3) Iversen was cooperative in the
disciplinary process and acknowledged his misconduct; (4) Iversen
showed concern for his clients’ interests as he anticipated a suspension
of his license; (5) it appears Iversen does not have any previous ethical
violations; (6) Iversen expressed remorse and embarrassment; (7) Iversen
would like to pay his tax obligations (estimated to be between $300,000
and $400,000); (8) Iversen would like to resume the practice of law; and
(9) Iversen did not offer excuses or attempt to assign blame elsewhere,
nor does he attribute his misconduct to mental or physical conditions,
substance abuse, or gambling.
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The Commission noted the following aggravating factors: (1)
Iversen had no explanation for his conduct except for lack of money; (2)
he admitted he would have advised a client differently under the same
circumstances; (3) the misconduct continued for at least ten years during
which Iversen did not attempt to address the growing problem; (4)
Iversen did not take corrective action until his misconduct was
discovered by the tax authorities; (5) Iversen did not fully cooperate with
the tax authorities; (6) Iversen has held himself out to the public as an
attorney with special expertise in tax matters; therefore, his conduct
harms the public’s confidence in the tax system and legal profession; and
(7) Iversen managed to keep other personal financial obligations relatively
current while disregarding the income tax laws. The Commission
recommended Iversen receive a two-year suspension of his license to
practice law.
II. Scope of Review.
This court reviews attorney disciplinary proceedings de novo. Iowa
Supreme Ct. Att’y Disciplinary Bd. v. Walker, 712 N.W.2d 683, 684 (Iowa
2006). The Board must prove ethical violations by a convincing
preponderance of the evidence. Id. “Although we consider the
Commission’s factual findings and discipline recommendations, they do
not bind us.” Id. (citation omitted).
III. Analysis.
Under Iowa Court Rule 35.7(3), principles of issue preclusion may
be used in a lawyer disciplinary case where certain conditions exist.
These conditions include:
a. The issue has been resolved in a civil proceeding
that resulted in a final judgment, or in a criminal proceeding
that resulted in a finding of guilt, even if the Iowa Supreme
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Court Attorney Disciplinary Board was not a party to the
prior proceeding.
b. The burden of proof in the prior proceeding was
greater than a mere preponderance of the evidence.
c. The party seeking preclusive effect has given written
notice to the opposing party, not less than ten days prior to
the hearing, of the party’s intention to invoke issue
preclusion.
Iowa Ct. R. 35.7(3). These conditions have been met here, meaning
Iversen is barred from relitigating the issue of his criminal conduct in
this disciplinary action.
Iversen pled guilty to the crimes of fraudulent practice in the
second degree (a class “D” felony) and fraudulent practice in the third
degree (an aggravated misdemeanor) in connection with his failure to pay
his taxes and file his returns. See Iowa Code §§ 422.25(5), 714.10,
714.11. The court ordered Iversen to pay $207,743.41 in restitution to
the state and gave him a deferred judgment and probation. Iversen also
owes an additional $180,000 to $200,000 to the federal government. In
sum, Iversen’s total tax liability is close to $400,000. Moreover, Iversen
admitted he did not file his income tax returns and failed to pay his
income taxes in his answer to the complaint, his answer to the requests
for admission, and his testimony at the hearing.
We have said where “ ‘a lawyer’s income exceeds the sum triggering
the tax return filing requirement, failure to file a tax return constitutes
misrepresentation of that income’ in violation of DR 1-102(A)(4).” Iowa
Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Runge, 588 N.W.2d 116,
118 (Iowa 1999) (citation omitted). Additionally, we have recognized this
sort of “ ‘misrepresentation is a deceitful offense involving moral
turpitude’ in violation of DR 1-102(A)(3).” Id. (citation omitted). “It is
also conduct prejudicial to the administration of justice in violation of
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DR 1-102(A)(5) and conduct that adversely reflects on the fitness to
practice law in violation of DR 1-102(A)(6).” Id. (citation omitted).
Accordingly, on our de novo review of the record we find the facts
as found by the Commission and conclude Iversen’s conduct violated DR
1-102(A)(3), (4), (5), and (6).
IV. Sanction.
Although Iversen is barred from relitigating his criminal conduct,
he is “permitted to present evidence of mitigating facts and
circumstances . . . concerning any sanction to be imposed.” Iowa
Supreme Ct. Bd. of Prof’l Ethics & Conduct v. D.J.I., 545 N.W.2d 866,
877 (Iowa 1996). The Commission recommended Iversen’s conduct
warrants a suspension of his license to practice law for two years;
however, “the matter of sanction is solely within the authority of this
court.” Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Sloan, 692
N.W.2d 831, 833 (Iowa 2005).
In determining the sanctions a lawyer must face as a result of his
or her misconduct, we have stated:
The goal of the Code of Professional Responsibility is “to
maintain public confidence in the legal profession as well as
to provide a policing mechanism for poor lawyering.” When
deciding on an appropriate sanction for an attorney’s
misconduct, we consider “the nature of the violations,
protection of the public, deterrence of similar misconduct by
others, the lawyer’s fitness to practice, and [the court’s] duty
to uphold the integrity of the profession in the eyes of the
public.” We also consider aggravating and mitigating
circumstances present in the disciplinary action.
Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Honken, 688 N.W.2d
812, 820 (Iowa 2004) (alteration in original) (citations omitted). In this
case, Iversen’s misconduct consisted of failing to file his income tax
returns and failing to pay his taxes.
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We have said “[i]t is as wrong for a lawyer to cheat the government
as it is for him to cheat a client.” Comm. on Prof’l Ethics & Conduct v.
Strack, 225 N.W.2d 905, 906 (Iowa 1975). “We have many times
repeated the principles which apply to disciplinary cases based on failure
to file tax returns on time. License suspensions have been imposed
ranging from sixty days to three years.” Comm. on Prof’l Ethics &
Conduct v. Baudino, 452 N.W.2d 455, 459 (Iowa 1990). Although we
adapt sanctions to the unique facts of each case, sanctions imposed in
other tax cases are helpful. Runge, 588 N.W.2d at 118.
An aggravating factor to consider in determining the proper
sanction is Iversen did not file his federal or state income tax returns for
the years 1992 through 2001, a period of almost ten years. We may view
such an “almost routine failure to file tax returns” as a pattern of
conduct justifying an increased sanction. See Comm. on Prof’l Ethics &
Conduct v. Cook, 409 N.W.2d 469, 469-70 (Iowa 1987). Nor can Iversen
“be credited with reporting his misconduct to the committee before the
investigation began.” See Comm. on Prof’l Ethics & Conduct v. Belay, 420
N.W.2d 783, 785 (Iowa 1988).
On the other hand, there may be some mitigating factors present
in this case. It is important to note that Iversen has not had any prior
ethical violations. See Comm. on Prof’l Ethics & Conduct v. Nadler, 467
N.W.2d 250, 254 (Iowa 1991) (stating prior disciplinary action taken
against a lawyer is considered in determining the proper discipline). It is
apparent from the record that Iversen is well respected as an attorney
and “we do not overlook an attorney’s devoted service to the profession.”
See Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Frerichs, 671
N.W.2d 470, 478 (Iowa 2003). Additionally, Iversen seems to have fully
cooperated with the Board and the Commission in the investigation of
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this matter. See Belay, 420 N.W.2d at 785. Although Iversen cannot
explain why he did not file his returns, he did make occasional
references to financial and marital issues. Nevertheless, “[o]ur profession
certainly cannot excuse misconduct on the basis of personal problems.”
See Cook, 409 N.W.2d at 470.
Another mitigating consideration is that Iversen acknowledged his
misconduct and does not attempt to shift the blame for his actions
elsewhere. See Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v.
Fleming, 602 N.W.2d 340, 342 (Iowa 1999). It is also significant Iversen’s
actions do not appear to have caused harm to others. See Honken, 688
N.W.2d at 821. Finally, we have recognized that many of our tax
violation cases involve false certifications on annual questionnaires to
the client security commission, which is a separate ethical violation. See
Belay, 420 N.W.2d at 784-85. Thus, when there is not an issue of false
certification, “the sanction imposed should logically be less severe.” Id.
We note the outcome of Iversen’s criminal prosecution does not
affect our determination of the appropriate sanction. See Comm. on Prof’l
Ethics & Conduct v. Cody, 412 N.W.2d 637, 641 (Iowa 1987) (noting a
distinction between the appropriate punishment for a crime and the
appropriate sanction for an attorney’s misconduct, and basing the
appropriate sanction, in part, on the concerns of “[the attorney]’s fitness
to practice law, the need to deter others from similar conduct, and our
assurance to the public that the courts will maintain the ethics of our
profession”).
In an attorney discipline case where the attorney willfully and
knowingly failed to file state and federal income tax returns “in a
consistent pattern spanning eight years,” resulting in a criminal
conviction for failing to file a required federal return, we stated:
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Obedience to the law symbolizes respect for law. To
the extent those licensed to operate the law’s machinery
knowingly and repeatedly violate essential statutes, there
inexorably follows an intensified loss of lay persons’ respect
for law. This we can neither condone nor tolerate.
Comm. on Prof’l Ethics & Conduct v. Bromwell, 221 N.W.2d 777, 778-79
(Iowa 1974). As to the gravity of the offense, we noted while there was no
proof that the attorney’s motive was to defraud the state or federal
government of tax revenues, “one who is familiar with income tax laws
and whose gross income exceeds the sum which triggers the filing
requirement impliedly misrepresents that income when he willfully elects
not to file.” Id. at 780. In that case, we found “there [was] an element of
deceit involved which, coupled with a deliberate election to violate
statutes which [are the] foundation [of] the economic structure of our
government, impels the conclusion [that the attorney] has committed an
offense involving moral turpitude.” Id.
Considering the nature of the violations, protection of the public,
deterrence of similar misconduct by others, the lawyer’s fitness to
practice, our duty to uphold the integrity of the profession in the eyes of
the public, aggravating circumstances, mitigating circumstances, and
our survey of other disciplinary cases, we believe attorney misconduct
similar to Iversen’s tends to warrant a sanction less than that
recommended by the Commission. See, e.g., Iowa Supreme Ct. Bd. of
Prof’l Ethics & Conduct v. Wickey, 619 N.W.2d 319, 321 (Iowa 2000)
(imposing a six-month suspension for an attorney’s failure to timely file
his Iowa income tax returns for four years and his failure to pay Iowa
income taxes); Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v.
Doughty, 588 N.W.2d 119, 119-20 (Iowa 1999) (imposing an eighteen-
month suspension for an attorney’s failure to file state and federal
income tax returns for ten years which resulted in federal misdemeanor
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convictions); Comm. on Prof’l Ethics & Conduct v. Munsinger, 264 N.W.2d
731, 732 (Iowa 1978) (imposing a one-year suspension for an attorney’s
willful and knowing failure to file state income tax returns for eleven
years which resulted in criminal convictions; the court noted the
attorney made a false report to the client security and attorney
disciplinary commission); Comm. on Prof’l Ethics & Conduct v. Kelly, 250
N.W.2d 388, 388-89 (Iowa 1976) (imposing a one-year suspension for an
attorney’s failure to file state and federal income tax returns for six years
which resulted in criminal convictions for failure to file and pay state
income taxes). Accordingly, the appropriate sanction is to suspend
Iversen’s license to practice law for one year.
V. Disposition.
In light of the above facts and circumstances surrounding Iversen’s
conduct, we suspend Iversen’s license to practice law in this state
indefinitely with no possibility of reinstatement for one year. Upon any
application for reinstatement, Iversen must establish he has not
practiced law during the suspension period and he has in all ways
complied with the requirements of Iowa Court Rule 35.13. Iversen must
also comply with the notification requirements of Iowa Court Rule 35.21.
Finally, the costs of this action are taxed against Iversen pursuant to
Iowa Court Rule 35.25.
LICENSE SUSPENDED.
All justices concur except Hecht, J., who takes no part.