Reversal Of Fortune

A criminal tax conviction for failure to pay state income tax over an extended period warrants a two-year suspension from practice, according to a decision of the New York Appellate Division for the Second Judicial Department.

The respondent asks that this matter be referred back to the Grievance Committee for issuance of a private reprimand, or, in the alternative, for the imposition of a public censure, in view of the following mitigating factors: (1) the respondent’s personal and financial problems suffered during the relevant period (loss of $400,000 annual salary after having amassed significant debt, and before he could build up a new practice); (2) the aberrational nature of the misconduct; (3) his acceptance of full responsibility for his misconduct and full cooperation with the investigation; (4) his payment of full restitution; (5) his sincere remorse; (6) the lack of any harm to any client; (7) the respondent’s pro bono and charitable activities in the community; (8) the respondent’s general reputation in the community as an ethical and honest attorney; and (9) his unblemished disciplinary record. According to the respondent, his failure to file “resulted from an actual inability to pay and was not motivated by dishonesty or a desire to accumulate wealth.”

Notwithstanding the aforementioned mitigating factors advanced by the respondent, we find that a suspension from the practice of law is warranted in view of the pattern of avoidance engaged in by the respondent and the protracted period of 10 years during which he did not file state personal tax returns (see Matter of Gamliel, 122 AD3d 125Matter of Burns, 242 AD2d 49; Matter of Barnes, 241 AD2d 13). While the respondent did suffer a sudden reversal of fortune when he lost his partnership position at a law firm, the respondent attempted to maintain his lifestyle, including running a horse farm, which not only was not profitable, but required him to use personal income to help cover the expenses required to keep the farm running. The respondent made a calculated decision to pay his federal taxes, but not his state taxes, based on his stated belief that the Internal Revenue Service was the more aggressive tax entity. Although the respondent claimed that he was putting aside savings to pay his overdue taxes, and, indeed, had saved enough money, the respondent continued his pattern of avoidance until he learned that he was under investigation by the taxing authorities.

The East Hampton Star had a story on the charges. (Mike Frisch)