Third Time No Charm

A tax conviction has led to an attorney’s third order of disbarment by the Tennessee Supreme Court

Mr. Threadgill purchased a boat in 1985 with the proceeds of a particularly successful case and operated it as a charter on the east coast. The Internal Revenue Service (“IRS”) determined that Mr. Threadgill had not paid appropriate taxes on the income generated by the boat. According to the Sixth Circuit Court of Appeals’ opinion affirming Mr. Threadgill’s conviction, which was admitted as an exhibit to the final hearing,

From 1985 to 2004, Threadgill failed to pay $1,437,176 in income taxes owed to the United States Government. During this time period, Threadgill enjoyed a successful, and, at times, lucrative legal career. Threadgill’s tax problems began in October 1986 when he reported a total tax liability of $156,680.84 for the 1985 tax year and failed to pay the balance owed. Although he paid the balance in full in June 1987, the IRS conducted an audit of Threadgill’s tax return for 1985 and determined that he owed additional taxes. His tax liability increased throughout the 1990s and early 2000s. During that time period, the IRS placed a lien on Threadgill’s property, and issued numerous “Collection Due Process Notice of Intent to Levy” letters to Threadgill. As his tax liability continued to increase, Threadgill made multiple offers of compromise to the IRS in an effort to settle his tax liability for significantly lower amounts than owed. The IRS rejected Threadgill’s offers, except for one which he withdrew.

United States v. Threadgill, 572 F. App’x 372, 375 (6th Cir. 2014). The Sixth Circuit summarized the affirmative acts of tax evasion at the beginning of its opinion:

With his personal bank account potentially subject to levy by the IRS, Threadgill paid for a variety of personal expenses—including college and private school tuition, country club dues, and travel expenses—out of bank accounts for his law firm and several nominee trusts. Further, Threadgill titled various assets in the names of nominee trusts and used those trusts to conduct real estate transactions in a purported effort to conceal those assets from the IRS. After rejecting Threadgill’s numerous offers to compromise his tax liability, the IRS initiated a multi-year investigation into Threadgill’s finances. Based on the results of that investigation, the Government charged him in a single-count indictment with attempting to evade or defeat the payment of a tax in violation of 26 U.S.C. § 7201.

Also

The Board presented evidence at the hearing of this matter regarding six sanctions against Mr. Threadgill by the Supreme Court of Tennessee. Such sanctions were as follows:
a. 1994 – private informal admonition;
b. 2000 – private informal admonition;
c. 2009 – one year suspension;
d. 2010 – informal admonition;
e. 2012 – disbarment; and
f. 2012 – second disbarment.

The sanctions set forth above were based, in part, on findings of plagiarism, misappropriation of monies belonging to a client or third-party, and charging an unreasonable fee.

He testified in the disciplinary hearing that, as the saying goes, it was Obama’s fault

When the IRS began a criminal investigation, Mr. Threadgill said that an IRS attorney in Washington, D.C., reviewed his case, closed the file, and destroyed his records. Mr. Threadgill further stated that when a new presidential administration came into office, his file was reopened and he was indicted. He said that his attorney would not let him testify at his trial, but if he had testified, he would have explained that the situation with the real estate was simply good estate planning.

And contended he was beyond the court’s jurisdiction

Mr. Threadgill’s first argument is that the Panel did not have jurisdiction to hear his case because he had been disbarred twice before his conviction. He admitted at his hearing, however, that the conduct underlying the conviction occurred prior to his first disbarment. The Board responds that the Tennessee Supreme Court has jurisdiction over all lawyers admitted to the bar in the state and that the Panel’s jurisdiction was derived from the Supreme Court’s jurisdiction via its order initiating disciplinary proceedings.

The court

the actual crime was committed many years prior to his conviction and during the time period that he was a practicing attorney. His conviction is considered proof that the crime was committed. See Tenn. Sup. Ct. R. 9, § 14.3 (pre-2014). His argument is without merit.

Strike three

While this is Mr. Threadgill’s third disbarment, it is wholly unrelated to the previous two disbarments and thus not a sequential disbarment. Mr. Threadgill has provided no other basis for this Court to order his disbarment to be imposed retroactively.

While we have some sympathy for Mr. Threadgill’s age and his family’s situation, this was a serious offense in a long line of egregious misconduct. In addition, we are concerned by Mr. Threadgill’s failure to show any remorse for his criminal conduct, his continual blame-shifting and excuses, and his continued desire to provide legal advice. We therefore conclude that his disbarment should not be retroactive.

(Mike Frisch)