ARDC Hearing Board Orders Suspension For Failure To Pay Income Taxes And Related Misconduct

The case is captioned Robert Kent Gray, 2016 PR 00045. This case is an example of carelessness magnified into an ARDC proceeding because an attorney did not file his income tax returns for several years and then was put in a terrible jam when his wife sought a divorce from him.

The Hearing Board found that Gray did not file income tax returns from 2010-14 and then lied about it when the issue arose in his divorce proceeding. The respondent took the Fifth Amendment in response to each question asked in his deposition.  The Hearing Board voted a one-year suspension. The Review Board also voted for a one-year suspension. The dissenting member of the panel would have given Gray a six-month suspension.

The facts are described as follows:

Respondent’s Conduct During His Divorce Proceedings
Per the allegations and charges in Count I of the amended complaint, during his divorce proceedings, Respondent repeatedly ignored the court’s order to produce his tax returns for 2010, 2011, and 2012, and to obtain transcripts of his tax returns for those years from the IRS. Moreover, he did not file federal or state tax returns or pay taxes for the years 2010 through 2014. He thus knowingly made three false statements – one in a pleading, one in a letter to opposing counsel, and one during a hearing – regarding his efforts to obtain transcripts of his tax returns, because he knew that no transcripts of his returns existed.

Respondent’s Unauthorized Practice of Law
Andrew Oliva, Registrar for the ARDC, testified by evidence deposition that Respondent did not timely register by January 1, 2015, and that, on March 10, 2015, he was removed from the Master Roll. Mr. Oliva testified that Respondent was sent multiple registration notices, by both mail and e-mail, and none of them was returned as undeliverable. Respondent became registered again on April 17, 2015. Between March 10 and April 17, while he was removed from the Master Roll, Respondent performed legal work for the Villages of Southern View and Illiopolis.

The Review Board rejected the challenge that Gray made to the Hearing Board’s finding. It held that (a) the Administrator was not required to obtain a judicial determination when Gray asserted the Fifth Amendment privilege; (b) the admission of an evidence deposition of the ARDC clerk was not an error, and (c) the Hearing Board was correct in finding that there ware aggravating factors.

The most interesting issue raised in the appeal is whether or not the Hearing Board was correct to sanction Gray for failing to sign an IRS form to release his tax returns. The Panel Discussion:

Respondent argues that the sanction that the Hearing Panel Chair imposed on him for not signing IRS Form 8821 – deeming the allegations and charges in Count I admitted – is not permitted by the ARDC Rules. He contends that the language of the sanction was “pulled” from Rule 236, regarding a failure to answer. He has not fully articulated his reasoning, but seems to argue that the sanction relieved the Administrator of the burden of proving his case and deprived Respondent of presenting exculpatory evidence, including his own testimony and the IRS transcripts, which would have defeated the Administrator’s burden of proof. Supreme Court Rule 219(c) and Commission Rule 260(e) provide that the Hearing Board may sanction a party’s unreasonable refusal to comply with requests for discovery or with orders entered by the Hearing Board. In re Spiezer, 00 SH 49 (Review Board, March 28, 2002), at 5, petition for leave to file exceptions allowed, M.R. 18161 (Sept. 19, 2002). This Board reviews the Hearing Board’s sanction decisions for abuse of discretion. Id.
A hearing panel chair can deem allegations admitted as a discovery sanction for an attorney’s willful failure to comply with a discovery order. See Id. (hearing panel chair struck respondent’s answer, deemed allegations of the complaint admitted, and barred respondent from testifying at hearing after respondent failed to comply with discovery orders); In re Duval, 2012PR00018 (Hearing Bd., June 12, 2014), approved and confirmed, M.R. 26849 (Sept. 12, 2014) (hearing panel chair entered order deeming allegations of complaint admitted after respondent refused to provide signed medical releases and other information to the Administrator).
Because Respondent did not comply with the order to sign the IRS form, and did not respond to the Administrator’s motion for sanctions, the Hearing Panel Chair did not abuse his discretion in granting the motion for sanctions and sanctioning Respondent for his willful failure to comply with the discovery order.
Respondent links the Hearing Panel Chair’s sanction order with the Administrator’s purported failure to follow the Zisook procedure, contending that the Administrator ignored the Zisook procedure but then filed a motion for sanctions against Respondent because he had not signed and produced IRS Form 8821, as to which he also asserted his Fifth-Amendment privilege. Respondent claims that, by deviating from the Zisook procedure but then “sidestepping” the required burden of proof by having the allegations deemed admitted, the Administrator avoided having to actually prove his case. For this reason, Respondent argues, the charges in Count I should be dismissed.
As noted above, the Administrator was not required to follow the procedure set forth in Zisook. Moreover, Respondent was not sanctioned for his invocation of the Fifth Amendment, but for his failure to comply with a discovery order. While he contends that he had a right under the Fifth Amendment not to sign IRS Form 8821, signing an authorization form that would allow a third party to produce documents is not the type of testimonial communication that the Fifth Amendment is intended to protect. See Fisher v. United States, 425 U.S. 391, 408, 96 S. Ct. 1569 (1976) (holding that defendants could not assert Fifth Amendment privilege to stop production of tax records in possession of attorneys and accountants because production of documents by a third party is not a testimonial communication). Consequently, Respondent could not avoid complying with the order to sign and produce Form 8821 by invoking the Fifth Amendment to [sic].

Opinion at 9-10.

This is a case where the lawyer was careless and then, due to the aggressive and contentious nature of his divorce, was placed in a terrible position.

I understand why he took the Fifth Amendment, but there may have been a better way to resolve this mess. There is no question that Gray was a competent attorney and was able to do his work. His carelessness and lack of attention to detail (in my opinion) was the reason for the harsh punishment.

Edward X. Clinton, Jr.

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