Sharpe Practices

The Iowa Supreme Court has revoked an attorney’s license.

As executor of an estate

First, Haack’s last will and testament devised 5% of her estate to the  St. Paul Lutheran Church Endowment Fund (the Church), where Haack had been a member for 55 years. The intended gift was approximately $100,000, but the Church never received notice of the probate proceeding or its intended bequest. The Church only learned of the possibility of an intended bequest about three years after the estate was opened when a friend of the decedent inquired about it to the Church. Ultimately, the Church never received any money from the estate. A resolution concerning the intended bequest was reached between the Church and Sharpe on October 23, 2023.

Prior to the resolution, Sharpe took several steps to hide the bequest from the Church. A $100,000 check from the client trust account was written for the Church but never delivered. Additionally, when [decedent’s niece] McConnell checked on distributions in July 2019, Sharpe claimed there were not enough funds for the $100,000 devise to the Church, which was not true. Sharpe also hid the bequest from the probate court. The first and final report by the executor was filed on August 26 and did not list the Church as a beneficiary or include a waiver from the Church. The Church was included, however, in the amended report and inventory filed with the probate court on the same day and was included in the report and inventory sent to other beneficiaries. Lastly, in January 2021, a certified public accountant (CPA) enlisted by Sharpe to help with the estate again inquired about the Church’s gift and Sharpe did not respond.

Issue with estate taxes

The estate was closed on August 27 without any estate taxes being filed. Sharpe once again contacted [accountant] Linn on September 1 and did not receive a response. Linn passed away on February 7, 2020, without having filed any taxes for the Haack estate.

In early 2021, Sharpe hired a CPA to file the estate taxes. The delay in filing resulted in the Iowa Department of Revenue assessing approximately $51,000 in penalties and interest on the estate.1 In total, the estate owed $244,187.70 in taxes. In February, Sharpe paid $224,983.54 to the State of Iowa Treasurer out of the client trust account, and McConnell personally paid the remaining $19,204.16 without reimbursement from Sharpe. On August 12, 2022, the Iowa Department of Revenue certified that the Iowa inheritance tax  was paid in full—almost three years after the estate closed.

Attorney’s fees

Sharpe made a total of twenty transfers to her firm ranging from $1,000 to $15,000. In total, the amount transferred from the estate was $65,290.71 more than the awarded attorney fees. Sharpe used these funds for personal expenses.

As Sharpe transferred excess funds to herself, she concealed her actions from McConnell. On March 1, 2021, Sharpe informed McConnell that there was no money left in the estate, so McConnell could not be reimbursed for an expense. Sharpe further claimed, “I have not been paid my entire fee because I was worried there wouldn’t be enough money for taxes.” At the time of that message, Sharpe had already overpaid herself by $54,290.71. When McConnell went to collect the estate’s file on August 31, Sharpe produced two client ledgers that omitted all attorney fees claimed by Sharpe between August 28, 2019, and January 9, 2020, which totaled $91,500. Ultimately, when the estate taxes were finally paid, the Haack account had a negative balance because of Sharpe’s excessive withdrawals.

There were trust account issues in other matters.

Sanction

Although there is no standard sanction for attorney disciplinary cases, we have repeatedly held that converting client funds without a colorable future claim will result in revocation of the attorney’s license…

This case is an egregious example of converting client funds in violation of our professional rules. Sharpe converted $65,290.71 for her own personal use and has presented no evidence of a colorable future claim to the funds. It does not matter that her firm later reimbursed part of the funds to the client trust account or that Sharpe eventually settled with the Church concerning its bequest…

Further, we need not consider mitigating and aggravating factors when an attorney has converted client funds with no colorable future claim. Kozlik, 943 N.W.2d at 600. Still, it should be noted that Sharpe’s actions resulted in multiple rule violations, caused client and third-party harm, and her lack of cooperation with the Board prolonged the commission’s proceedings.

(Mike Frisch)