Summary
The Supreme Court of Florida reviewed disciplinary proceedings against attorney Charles Behm for trust-account record violations and failure to file federal income tax returns or pay federal income taxes from 1999 through 2006. The court approved the referee’s findings of guilt, rejected Behm’s arguments that his legal-service earnings were not taxable income and that his conduct was undertaken in good faith, and held that the violations were deliberate and knowing. The court disapproved the recommended suspension and permanently disbarred Behm.
Topics
Practice areas
Questions Presented
- Whether the referee properly admitted and considered a North Carolina trial court order referencing Behm's taxable income.
- Whether the referee properly relied on the Bar's accounting expert's testimony concerning Behm's earnings and filing obligations.
- Whether competent, substantial evidence supported the finding that Behm earned sufficient taxable income to trigger duties to file federal income tax returns and pay federal income taxes.
- Whether Behm's asserted good-faith belief that his legal-service compensation was not taxable income precluded findings that he violated the Rules Regulating the Florida Bar.
- Whether criminal prosecution or an express finding of intent was required to discipline Behm for unlawful tax-related conduct and dishonesty.
- Whether the referee's recommended suspension was an appropriate sanction for Behm's cumulative and continuing misconduct.
Holdings
- The referee properly admitted and considered the North Carolina order because Bar disciplinary proceedings are quasi-judicial, technical rules of evidence do not strictly govern, and relevant evidence may include hearsay and judgments from civil proceedings.
- Money earned by a lawyer from practicing law constitutes gross income and may trigger the legal obligation to file federal income tax returns and pay federal income taxes.
- An attorney may not rely on a purported good-faith belief to avoid professional discipline when the asserted legal theory has been decisively rejected and is frivolous.
- Failure to file federal income tax returns and pay federal income taxes may support discipline under Rules 3-4.3 and 4-8.4(c), even when the lawyer has not been criminally charged or prosecuted.
- The intent element for a Rule 4-8.4(c) violation may be established by showing that the conduct was deliberate or knowing.
- Permanent disbarment was the appropriate sanction for Behm's cumulative, intentional, and unrepentant misconduct, including continued refusal to file tax returns or pay taxes and serious trust-account violations.
Key quotations
“"Here we have instances of undeniable accessions to wealth, clearly realized, and over which the taxpayers have complete dominion."” (145)
“It is completely unacceptable for a member of The Florida Bar to continue to assert legal theories that have been repeatedly rejected and discredited and to use them as an excuse for engaging in unlawful conduct.” (150)
“By his own voluntary actions, Behm has forfeited his privilege to practice law.” (151)
Factual background
Behm, a Florida lawyer, failed to maintain required trust-account records, including journals, reconciliations, client ledgers, deposit slips, and proper account designation, although there was no evidence that he misappropriated client funds. He also failed to file personal or business federal income tax returns or pay federal income taxes from 1999 through 2006 despite receiving compensation from legal practice and other taxable earnings. Behm asserted that compensation for his legal services was merely an exchange of his "life capital" and therefore was not taxable income, and he stated at oral argument that he intended to continue refusing to file returns or pay taxes unless shown a law that clearly required him to do so.
Procedural history
The Florida Bar filed a two-count disciplinary complaint alleging trust-account record violations and failure to file federal income tax returns or pay federal income taxes from 1999 through 2006. After rejecting a stipulated consent judgment, the Court remanded for further proceedings; the referee later filed an amended report recommending findings of guilt, a ninety-day suspension for trust-account violations, a ninety-one-day suspension followed by probation for tax misconduct, and costs. Behm petitioned for review, and the Supreme Court requested briefing and oral argument on whether it could impose a substantially greater sanction, including disbarment.