Board of Attorneys Professional Responsibility v. Jennings
Docket: No. 92AP3208-D
Court: Wisconsin Supreme Court; June 23, 2011; Wisconsin; State Supreme Court
The recommendation from Referee Christine Harris Taylor to deny David V. Jennings III's petition for reinstatement of his law license in Wisconsin is under review. While Jennings' employment history during his license revocation was deemed exemplary and he maintained legal competence, the referee found he did not meet the reinstatement standards outlined in SCR 22.29(4) and (4m). Concerns were raised regarding Jennings' moral character, understanding of bar standards, and his ability to practice law without harming the public interest or justice administration, as per SCR 22.29(4)(f) and (4)(g). Additionally, he had not fully made restitution to victims of his misconduct.
Despite adopting the undisputed findings of fact, the court disagreed with the referee's legal conclusions regarding Jennings' failure to meet all reinstatement criteria. The court determined that Jennings had, in fact, satisfied the necessary requirements for reinstatement but imposed conditions related to ongoing restitution obligations. Jennings is also directed to bear the costs of the reinstatement proceedings.
Background information reveals that Jennings, who was licensed in 1975, voluntarily revoked his license in December 1992 amid allegations of embezzlement totaling over $600,000 from two companies and his mother’s trust. His license was revoked in January 1993, and he was later convicted of federal embezzlement charges, serving 27 months in prison followed by supervised release, with an ordered restitution of $590,200.
In 1997, Attorney Jennings sold his Mequon property, with approximately $93,000 of the proceeds going to his father and late mother's estate, while $152,520 went to his former law firm, its malpractice insurer, and Development Specialists, Inc. (DSI) as partial restitution for his embezzlement. Jennings' parents received a higher percentage of repayment (43 cents on the dollar) compared to the others (28 cents on the dollar). In 1998, Jennings' probation was revoked due to non-payment of restitution, leading to five days in jail and a 35-month extension of his probation, from which he was discharged in October 2001. He was ordered to pay $39,760 to the Employee Stock Ownership Trust of Milwaukee Cheese (ESOT) and had a federal garnishment order requiring $120 payments per paycheck towards restitution, which reduced to $3,010 by October 2010.
While incarcerated, Jennings' wife sought maintenance support but did not file for divorce. In May 1993, he was ordered to pay $1,000 monthly in maintenance and $510 in child support, accruing approximately $10,000 in arrears during his imprisonment. In 1997, he and his wife stipulated to a new child support obligation of $460 per month and $1,040 monthly towards arrears. Jennings remained married and lived with his wife in Mequon while making these payments, which helped protect his income from creditors post-release.
From March 1995 to December 1999, Jennings worked as a store manager and credit manager at Heilig-Meyers Furniture Company, handling fiduciary duties related to cash and inventory. He was also licensed by the Wisconsin Commissioner of Insurance. After reinstating his Wisconsin Real Estate Broker's license in July 1997, he worked with three real estate firms. Jennings filed his first reinstatement petition in October 1999 but withdrew it after an investigation and public hearing. From January 2000 to 2010, he worked at the Furniture Clearance Center, managing fiduciary duties and human resources.
In September 2005, Attorney Jennings pled no contest to a first offense of operating while under the influence of alcohol in Ozaukee County. His driver's license was suspended in April 2006 due to unpaid forfeitures linked to this conviction, but it was reinstated after he paid the fine. Jennings filed a second reinstatement petition in November 2007, which was denied in March 2009. Although he took steps towards restitution, he still owed significant amounts to his former law firm and DSI, leading the court to express concern over his failure to ascertain the total debts owed.
On March 15, 2010, Jennings submitted a third reinstatement petition. The Office of Lawyer Regulation (OLR) expressed worries that Jennings prioritized his own and his family's interests over those he harmed through his misconduct, describing his actions as years of systematic theft that severely affected the victims and harmed the legal profession's reputation. Despite these concerns, the OLR would not actively oppose his reinstatement, noting Jennings' exemplary work history and frugal living since his misconduct, while emphasizing that he must demonstrate entitlement to reinstatement under specific Supreme Court Rules.
A public hearing was held on October 12, 2010, where Attorney Edward A. Hannan testified against reinstatement, arguing that Jennings' law license facilitated his criminal actions. Hannan noted that the thefts were uncovered through a third-party audit and criticized Jennings for complicating restitution efforts by securing a mortgage on his property. He contended that Jennings had attempted to mischaracterize his thefts and had failed to fully grasp the severity of his actions.
Conversely, Jennings presented three witnesses in support of his reinstatement. Attorney Steven M. Epstein testified to Jennings' acknowledgment of wrongdoing and expressed belief in his moral character. William A. Brandt, Jr., CEO of DSI, acknowledged the significant financial loss incurred due to Jennings' actions but stated he had moved on and supported Jennings' reintegration into society as a productive member.
Attorney Emile H. Banks, Jr. testified about Attorney Jennings' unsolicited expressions of remorse regarding his past actions and inability to repay former colleagues who incurred losses due to his misconduct. Several letters from individuals, including Attorneys J. Dennis Thornton, William G. Ladewig, and Michael J. Donovan, were presented, praising Jennings' moral character, rehabilitation, and deserving of reinstatement. They highlighted his understanding of his past errors, trustworthiness, and professional competence. H.R. Waters, president of the former Porters of Racine, noted Jennings' transparency about his license revocation and his exemplary performance as a manager, emphasizing his ethical dealings and respect from colleagues. Other supporters, including Sara Johnsen and Deborah Graupner, echoed similar sentiments about Jennings' integrity and professionalism.
In his own testimony, Jennings claimed that aside from the thefts in 1992, he had no other allegations of misconduct. He defended his actions regarding a mortgage for his parents, asserting that creditors could have legally challenged it if needed. Jennings also stated that his child support payments complied with guidelines, discussed his managerial success in handling finances at the furniture store, and acknowledged a past traffic citation for operating while intoxicated, attributing his delayed fine payment to unintentional oversight. He has resolved tax issues with the Wisconsin Department of Revenue through a compromise and installment payments. Referee Taylor’s report, filed on December 8, 2010, recognized Jennings' witnesses as testifying to his intelligence, work ethic, and capacity for high-quality legal service, alongside their acknowledgment of his remorse for past misconduct.
Attorney Jennings demonstrated a strong employment history, excelling as a manager at a furniture store, and complied with the terms of his revocation order, fulfilling many requirements for reinstatement under SCRs 22.29(4) and 22.31(1). He has consistently made payments related to previous reinstatement costs and maintained legal competence through educational activities recognized by the Board of Bar Examiners. Despite his documented past misconduct, no evidence was presented by the Office of Lawyer Regulation (OLR) or other witnesses to suggest his conduct has been anything but exemplary since his 2008 reinstatement petition.
However, the referee found that Jennings failed to demonstrate an adequate understanding and attitude towards the standards expected of attorneys, indicating he did not show remorse for his past actions. His testimony regarding legitimate claims from a 1992 mortgage reflected an unacceptable attitude. The referee noted that Jennings' lack of remorse and his past misconduct, particularly in client representation, undermined his trustworthiness.
Furthermore, Jennings' continued support payments to his former wife raised concerns about his financial integrity, as these payments could be construed as diverting funds from his clients and former law firm, impacting his recommendation for reinstatement. Additionally, Jennings had not fully reimbursed all victims of his misconduct, owing $397,680 plus interest to his former firm, despite a partner indicating that much of this debt might be forgiven. The referee concluded that Jennings did not meet the burden of proving he is fit to practice law and aid in the administration of justice.
Attorney Jennings' sister, the trustee of their mother's estate, has ceased pursuing restitution for the remaining amounts owed. Referee Taylor noted the seriousness of Jennings' professional misconduct, which led to his license revocation, and pointed out Jennings' failure to explain his non-payment of court-ordered restitution from October 1997 to March 1998, resulting in a three-year probation extension. The referee recommended denying Jennings' reinstatement and imposing costs along with ongoing restitution obligations.
In his appeal, Jennings argues that he has not been able to demonstrate the necessary evidence for reinstatement as required by SCR 22.29(4)(f), (g), and (4m), asserting that these are legal conclusions warranting de novo review. He acknowledges his past misconduct involving client and trust funds, expressing continuous contrition and cooperation throughout the process. Jennings cites support from three witnesses regarding his character and remorse, as well as numerous letters from acquaintances advocating for his reinstatement.
He contends that his failure to admit wrongdoing regarding a 1992 mortgage should not impede reinstatement, points to a 1997 settlement that facilitated $250,000 in restitution, and argues that his ongoing payments, which have reduced his debt to $3,010, should be considered. While he has not made direct payments to his former law firm since 1997, he claims to have proposed settlements and designated the firm as a beneficiary on a life insurance policy.
Jennings references cases where other attorneys were reinstated without completing their restitution obligations, arguing for similar treatment. In response, the Office of Lawyer Regulation (OLR) initially did not oppose Jennings' reinstatement but later contended that he has not met his burden, emphasizing the seriousness of his past misconduct and suggesting that Jennings' demeanor indicated a lack of remorse. The OLR argues that the referee's conclusions regarding Jennings' credibility deserve deference on appeal.
The Office of Lawyer Regulation (OLR) argues that Attorney Jennings' cited cases should be distinguished, highlighting that in Taylor, no dishonesty was found, while in George, ethical standards were upheld. The OLR urges the court to accept the referee's recommendation to deny Jennings' reinstatement. Jennings' misconduct is described as reprehensible, leading to professional discipline and criminal prosecution. The referee expressed concern regarding Jennings' character, attitude, and understanding of ethics due to insufficient remorse and incomplete restitution.
The court defers to the referee's credibility assessments and does not overturn fact findings unless clearly erroneous, while reviewing legal conclusions de novo. Jennings' claims, particularly regarding his 1992 mortgage and family court payments, are deemed unpersuasive. However, the court ultimately agrees to grant Jennings' reinstatement petition, recognizing significant progress in meeting reinstatement criteria over the past 15 years. He has made consistent monthly restitution payments and has earned trust and respect in his professional roles.
The record indicates Jennings has held responsible managerial positions for over 15 years, performing his fiduciary duties admirably and maintaining support from numerous individuals who attest to his competence, integrity, and ethical behavior. Letters in support of his reinstatement emphasize that he has paid for his past misconduct, is trustworthy, and has rebuilt his life, underscoring his potential as a valuable asset to the legal profession.
Attorney Jennings acknowledges the seriousness of his past misconduct and has shown some learning from his actions over nearly 19 years since his voluntary revocation. However, concerns remain regarding his lack of remorse and empathy expressed during the public hearing, as highlighted by both the referee and the Office of Lawyer Regulation (OLR). The referee raised valid points about Jennings' ongoing obligations to his former law firm, insurance carrier, and DSI, which have seen no progress since 1997. Testimony opposing Jennings' reinstatement, particularly from Attorney Hannan, further complicates his case.
The findings of the referee, which are not challenged as clearly erroneous, indicate that Jennings did not demonstrate remorse to his embezzlement victims during the reinstatement hearing. Although the absence of remorse and full restitution does not automatically preclude reinstatement, these factors are critical to the evaluation process. Jennings' appellate arguments fail to address key differences in cases where reinstatement was granted despite incomplete restitution, such as the Gilbert case, which conditioned reinstatement on continuing restitution, and the Gral case, where the attorney actively worked toward making payments.
While Jennings claims a lack of financial resources to fulfill additional restitution payments, no evidence contradicts this assertion. Nevertheless, this situation does not exempt him from his obligation to pay restitution. As a result, he is ordered to demonstrate continued accountability for his past actions. To reinstate his law license in Wisconsin, Jennings must maintain current restitution payments to ESOT and address restitution obligations to his former law firm, the malpractice insurer, and DSI.
Specific conditions set for Jennings include:
1. Ongoing compliance with restitution payments to ESOT until fully paid or modified.
2. Disclosure of his financial status to the OLR annually and within 30 days of reinstatement.
3. Engagement with OLR representatives to develop a repayment plan for $397,680 owed to his former law firm and others within 60 days of reinstatement.
4. Maintenance of a life insurance policy benefiting members of his former law firm until all obligations are settled, with proof of compliance required within 30 days.
5. Full cooperation with any court-appointed review of his situation.
Attorney Jennings is required to meet with an OLR representative within 60 days to discuss payment terms for costs related to his disciplinary proceedings, acknowledging the likelihood that full repayment to his former law firm, malpractice insurer, DSI, and family may not occur. The court emphasizes the importance of Jennings making a continued effort toward restitution to reflect his understanding of ethical standards. His petition for reinstatement is granted, with costs awarded to OLR amounting to $5,465.39, and his law license is conditionally reinstated, effective immediately. Compliance with this order's conditions, including Continuing Legal Education requirements, is mandatory; failure to comply may result in suspension until further court order.
The dissenting opinion by Judge Prosser outlines the criteria Jennings must demonstrate under SCR 22.29(4) and (4m) for reinstatement, including his desire to reinstate, non-practice during suspension, compliance with all orders, maintenance of legal competence, exemplary conduct, proper understanding of ethical standards, and full compliance with SCR 22.26. Additionally, Jennings must provide details regarding his business activities during suspension, restitution efforts, and evidence of moral character and public interest alignment as required by SCR 22.31(1). DSI is identified as a company involved in restructuring and fiduciary services related to bankruptcy courts.
A civil judgment of $550,200 against Attorney Jennings, secured by Milwaukee Cheese and Sheboygan Sausage, was transferred to his former law firm, its malpractice insurer, and DSI as part of a settlement. After partial restitution from the sale of his real estate, Jennings still owes $397,680, plus interest. Evidence indicates Jennings had various residences post-2001, but the referee's findings regarding his residence with his wife remain unchallenged on appeal. Jennings is actively seeking employment following the closure of his store. Attorney Hannan, who has held significant positions within the state bar and was a partner in Jennings' former firm, claimed Jennings encumbered his property to hinder restitution, referencing Valley Bank v. Jennings. Under SCR 22.31(1), Jennings must prove his qualifications for license reinstatement by clear and convincing evidence. The Office of Lawyer Regulation (OLR) has filed costs of $5,465.39, which Jennings has not contested. The resolution of Jennings' debt to his mother's trust is left to him and his family.
