State
Bar Court of California
Hearing
Department
STIPULATION
RE FACTS, CONCLUSIONS OF LAW AND DISPOSITION AND ORDER APPROVING
ACTUAL SUSPENSION
Case Number(s): 07-O-12794
In the Matter of: Ray W. Sowards, Bar # 139952 (Respondent)
Counsel For The State Bar Susan Kagan, Bar # 214209
Counsel for Respondent: Douglas B. Allen, Bar # 99239
Submitted to: Settlement Judge State Bar Court Clerk’s
Office San Francisco
Filed: January 9, 2009
<<not>> checked. PREVIOUS STIPULATION REJECTED
Note: All information required by this form and any
additional information which cannot be provided in the space provided, must be
set forth in an attachment to this stipulation under specific headings, e.g.,
"Facts," "Dismissals," "Conclusions of Law,"
"Supporting Authority," etc.
A. Parties' Acknowledgments:
1. Respondent is a member of the State Bar of California,
admitted June 6, 1989.
2. The parties agree to be bound by the factual
stipulations contained herein even if conclusions of law or disposition are
rejected or changed by the Supreme Court.
3. All investigations or proceedings listed by case
number in the caption of this stipulation are entirely resolved by this
stipulation and are deemed consolidated. Dismissed charge(s)/count(s) are
listed under "Dismissals." The stipulation consists of 9 pages, not
including the order.
4. A statement of acts or omissions acknowledged by
Respondent as cause or causes for discipline is included under
"Facts."
5. Conclusions of law, drawn from and specifically
referring to the facts are also included under "Conclusions of Law".
6. The parties must include supporting authority for the
recommended level of discipline under the heading "Supporting
Authority."
7. No more than 30 days prior to the filing of this
stipulation, Respondent has been advised in writing of any pending
investigation/proceeding not resolved by this stipulation, except for criminal
investigations.
8. Payment of Disciplinary Costs-Respondent acknowledges
the provisions of Bus. & Prof. Code §§6086.10 & 6140.7. (Check one
option only):
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until costs are paid in full, Respondent will remain actually suspended from
the practice of law unless relief is obtained per rule 284, Rules of Procedure.
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costs to be paid in equal amounts prior to February 1 for the following
membership years: 2010 and 2011. (hardship, special circumstances or other good
cause per rule 284, Rules of Procedure.)
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checked. costs waived in part as set forth in a separate attachment entitled
"Partial Waiver of Costs".
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checked. costs entirely waived.
B. Aggravating
Circumstances [for definition, see Standards for Attorney Sanctions for
Professional Misconduct, standard 1.2(b)]. Facts supporting aggravating
circumstances are required.
<<not>>checked. (1) Prior record of discipline [see
standard 1.2(f)]
<<not>> checked. (a) State
Bar Court case # of prior case
<<not>>checked. (b) Date
prior discipline effective
<<not>>checked. (c) Rules
of Professional Conduct/ State Bar Act violations:
<<not>>checked. (d) Degree
of prior discipline
<<not>>checked. (e) If
Respondent has two or more incidents of prior discipline, use space provided
below.
<<not>> checked. (2) Dishonesty: Respondent's misconduct
was surrounded by or followed by bad faith, dishonesty, concealment,
overreaching or other violations of the State Bar Act or Rules of Professional
Conduct.
<<not>>checked. (3) Trust Violation: Trust funds or
property were involved and Respondent refused or was unable to account to the
client or person who was the object of the misconduct for improper conduct
toward said funds or property.
<<not>>checked. (4) Harm: Respondent's misconduct harmed
significantly a client, the public or the administration of justice.
<<not>> checked. (5) Indifference: Respondent demonstrated
indifference toward rectification of or atonement for the consequences of his
or her misconduct.
<<not>> checked. (6) Lack of Cooperation: Respondent
displayed a lack of candor and cooperation to victims of his/her misconduct or
to the State Bar during disciplinary investigation or proceedings.
<<not>>checked. (7) Multiple/Pattern of Misconduct:
Respondent's current misconduct evidences multiple acts of wrongdoing or
demonstrates a pattern of misconduct.
checked. (8) No aggravating circumstances are involved.
Additional aggravating circumstances:
C. Mitigating Circumstances [see standard 1.2(e)]. Facts supporting
mitigating circumstances are required.
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(1) No Prior Discipline: Respondent has no prior record of discipline over
many years of practice coupled with present misconduct which is not deemed
serious. Respondent has no prior record of discipline since being admitted to
the State Bar of California in 1991.
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(2) No Harm: Respondent did not harm the client or person who was the
object of the misconduct. No client was harmed by Respondent’s misconduct and
no client funds were in Respondent’s trust account at the time of his
misconduct.
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(3) Candor/Cooperation: Respondent displayed spontaneous
candor and cooperation with the victims of his/her misconduct and to the State
Bar during disciplinary investigation and proceedings. Respondent candidly
replied to the State Bar’s inquiries and fully cooperated during its
investigation and proceeding. See page 8.
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(4) Remorse: Respondent promptly took objective steps spontaneously
demonstrating remorse and recognition of the wrongdoing, which steps were
designed to timely atone for any consequences of his/her misconduct.
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checked. (5) Restitution: Respondent paid $ on in restitution to without
the threat or force of disciplinary, civil or criminal proceedings.
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checked. (6) Delay: These disciplinary proceedings were excessively
delayed. The delay is not attributable to Respondent and the delay prejudiced
him/her.
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checked. (7) Good Faith: Respondent acted in good faith.
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(8) Emotional/Physical Difficulties: At the time of the
stipulated act or acts of professional misconduct Respondent suffered extreme
emotional difficulties or physical disabilities which expert testimony would
establish was directly responsible for the misconduct. The difficulties or
disabilities were not the product of any illegal conduct by the member, such as
illegal drug or substance abuse, and Respondent no longer suffers from such
difficulties or disabilities. See page 8.
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(9) Severe Financial Stress: At the time of the misconduct, Respondent
suffered from severe financial stress which resulted from circumstances not
reasonably foreseeable or which were beyond his/her control and which were
directly responsible for the misconduct.
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(10) Family Problems: At the time of the misconduct, Respondent suffered
extreme difficulties in his/her personal life which were other than emotional
or physical in nature. In 2006, Respondent experienced family problems that
contributed to his stress.
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(11) Good Character: Respondent's good character is attested to by a wide
range of references in the legal and general communities who are aware of the
full extent of his/her misconduct.
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checked. (12) Rehabilitation: Considerable time has passed since the acts of
professional misconduct occurred followed by convincing proof of subsequent
rehabilitation.
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checked. (13) No mitigating circumstances are involved.
Additional
mitigating circumstances:
No Prior
Discipline: Respondent has no prior record of discipline over many years of
practice. See page 8.
D.
Discipline:
checked. (1) Stayed Suspension:
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(a) Respondent must be suspended from the practice of law for a period of two
(2) years.
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checked. i. and until Respondent shows proof satisfactory to the State Bar
Court of rehabilitation and present fitness to practice and present learning
and ability in the law pursuant to standard 1.4(c)(ii) Standards for Attorney
Sanctions for Professional Misconduct.
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checked. ii. and until Respondent pays restitution as set forth in the
Financial Conditions form attached to this stipulation.
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checked. iii. and until Respondent does the following: .
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(b) The above-referenced suspension is stayed.
checked. (2) Probation: Respondent must be placed on probation for a
period of two (2) years, which will commence upon the effective date of the
Supreme Court order in this matter. (See rule 9.18, California Rules of Court.)
checked. (3) Actual Suspension:
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(a) Respondent must be actually suspended from the practice of law in the State
of California for a period of six (6) months.
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i. and until Respondent shows proof satisfactory to the State Bar Court of
rehabilitation and present fitness to practice and present learning and ability
in the law pursuant to standard 1.4(c)(ii), Standards for Attorney Sanctions
for Professional Misconduct
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checked. ii. and until Respondent pays restitution as set forth in the
Financial Conditions form attached to this stipulation.
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checked. iii. and until Respondent does the following:
E. Additional Conditions of Probation:
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checked. (1) If Respondent is actually suspended for two years or more, he/she
must remain actually suspended until he/she proves to the State Bar Court
his/her rehabilitation, fitness to practice, and learning and ability in the
general law, pursuant to standard 1.4(c)(ii), Standards for Attorney Sanctions
for Professional Misconduct.
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(2) During the probation period, Respondent must comply with the
provisions of the State Bar Act and Rules of Professional Conduct.
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(3) Within ten (10) days of any change, Respondent must report
to the Membership Records Office of the State Bar and to the Office of
Probation of the State Bar of California ("Office of Probation"), all
changes of information, including current office address and telephone number,
or other address for State Bar purposes, as prescribed by section 6002.1 of the
Business and Professions Code.
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(4) Within thirty (30) days from the effective date of
discipline, Respondent must contact the Office of Probation and schedule a
meeting with Respondent's assigned probation deputy to discuss these terms and
conditions of probation. Upon the direction of the Office of Probation,
Respondent must meet with the probation deputy either in-person or by
telephone. During the period of probation, Respondent must promptly meet with
the probation deputy as directed and upon request.
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(5) Respondent must submit written quarterly reports to the
Office of Probation on each January 10,
April 10, July 10, and October 10 of the period of probation. Under penalty of perjury, Respondent must
state whether Respondent has complied with the State Bar Act, the Rules of
Professional Conduct, and all conditions of probation during the preceding
calendar quarter. Respondent must also state whether there are any proceedings
pending against him or her in the State Bar Court and if so, the case number
and current status of that proceeding. If the first report would cover less
than 30 days, that report must be submitted on the next quarter date, and cover
the extended period.
In addition to all quarterly reports, a final report, containing the same
information, is due no earlier than twenty (20) days before the last day of the
period of probation and no later than the last day of probation.
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checked. (6) Respondent must be assigned a probation monitor. Respondent must
promptly review the terms and conditions of probation with the probation
monitor to establish a manner and schedule of compliance. During the period of
probation, Respondent must furnish to the monitor such reports as may be
requested, in addition to the quarterly reports required to be submitted to the
Office of Probation. Respondent must cooperate fully with the probation
monitor.
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(7) Subject to assertion of applicable privileges, Respondent
must answer fully, promptly and truthfully any inquiries of the Office of
Probation and any probation monitor assigned under these conditions which are
directed to Respondent personally or in writing relating to whether Respondent
is complying or has complied with the probation conditions.
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(8) Within one (1) year of the effective date of the discipline
herein, Respondent must provide to the Office of Probation satisfactory proof
of attendance at a session of the Ethics School, and passage of the test given
at the end of that session.
<<not checked>> No Ethics School recommended. Reason:
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checked. (9) Respondent must comply with all conditions of probation imposed in
the underlying criminal matter and must so declare under penalty of perjury in
conjunction with any quarterly report to be filed with the Office of Probation.
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(10) The following conditions are attached hereto and incorporated:
<<not>> checked. Substance
Abuse Conditions.
<<not>>checked. Law Office
Management Conditions.
<<not>>checked. Medical
Conditions.
<<not>>checked. Financial
Conditions.
F. Other Conditions Negotiated by the Parties:
checked. (1) Multistate Professional Responsibility
Examination: Respondent must provide proof of passage of the Multistate
Professional Responsibility Examination ("MPRE"), administered by the
National Conference of Bar Examiners, to the Office of Probation during the
period of actual suspension or within one year, whichever period is longer.
Failure to pass the MPRE results in actual suspension without further hearing
until passage. But see rule 9.10(b), California Rules of Court, and rule 321
(a)(1) & (c), Rules of Procedure.
<<not>> checked. No MPRE recommended. Reason:
checked. (2) Rule 9.20, California Rules of Court:
Respondent must comply with the requirements of rule 9.20, California Rules of
Court, and perform the acts specified in subdivisions (a) and (c) of that rule
within 30 and 40 calendar days, respectively, after the effective date of the
Supreme Court's Order in this matter.
<<not>> checked. (3) Conditional Rule 9.20,
California Rules of Court: If Respondent remains actually suspended for 90
days or more, he/she must comply with the requirements of rule 9.20, California
Rules of Court, and perform the acts specified in subdivisions (a) and (c) of
that rule within 120 and 130 calendar days, respectively, after the effective
date of the Supreme Court's Order in this matter.
<<not>> checked. (4) Credit for Interim Suspension
[conviction referral cases only]: Respondent will be credited for the period
of his/her interim suspension toward the stipulated period of actual
suspension. Date of commencement of interim suspension:
<<not>> checked. (5) Other Conditions:
Attachment
language begins here (if any):
FACTS
AND CONCLUSIONS OF LAW
Facts
1.
Respondent willfully underreported his income by $58,057 in his 1995 United
States Joint Income Tax Return filed on behalf of himself and his wife.
2.
Respondent fraudulently underreported his income by $128,000 in his 1996 United
States Joint Income Tax Return filed on behalf of himself and his wife. in
addition, respondent fraudulently reported that his wife had a Schedule C
consulting business. In truth and in fact, respondent’s wife had no such
business.
3.
Respondent fraudulently underreported his income by $50,345 in his 1997 United
States Joint Income Tax Return filed on behalf of himself and his wife.
4.
On March 18, 1999, the Internal Revenue Service ("IRS") issued a
statutory notice of deficiency regarding respondent and his wife’s 1995 Joint
Income Tax Return based on its determination that respondent underreported his
income. The IRS assessed a penalty of $19,738.
5.
On May 28, 1999, respondent, on behalf of his wife and himself, filed a
petition contesting the notice of deficiency for the 1995 taxable year in the
matter, Ray W. and Marilyn S. Sowards v. Commissioner of Internal Revenue, U.S.
Tax Court Case No. 10025-99.
6.
On July 26, 2000, the IRS issued a statutory notice of deficiency regarding
respondent and his wife’s 1996 and 1997 Joint Income Tax Returns based on its
determination that respondent underreported his income in 1996 and 1997. The
IRS assessed penalties of $42,918.73 and $16,496.67, respectively.
7.
On October 30, 2000, respondent, on behalf of himself and his wife, filed a
petition contesting the notice of deficiency for the 1996 and 1997 taxable
years, in the matter, Ray W. and Marilyn S. Sowards v. Commissioner of Internal
Revenue, U.S. Tax Court Case No. 11144-00.
8.
On December 10, 2003, a trial was held in U.S. Tax Court Case Nos. 10025-99 and
11144-00. At trial, respondent falsely testified about his income in 1995, 1996
and 1997. Specifically, respondent falsely testified about his wife’s alleged
consulting business, the creation of an alleged trust and payments related to
an alleged business loan.
9.
On June 19, 2003, the U. S. Tax Court issued a decision wherein it determined
by clear and convincing evidence that respondent fraudulently underreported his
income in 1995, 1996 and 1997, which resulted in underpayments for 1996 and
1997. The Court also determined respondent’s testimony at trial regarding his
wife’s alleged consulting business, the creation of an alleged trust and
payments related to an alleged business loan to be false.
Conclusions
of Law
By
fraudulently underreporting income in his 1995, 1996 and 1997 Joint Income Tax
Returns which resulted in underpayments for 1996 and 1997, by fraudulently
reporting that his wife had a Schedule C consulting business on his 1996 Joint
Income Tax Return, and by falsely testifying at trial regarding his wife’s
consulting business, the creation of an alleged trust and payments related to
an alleged business loan, respondent committed acts involving moral turpitude,
dishonesty, or corruption in willful violation of section 6106 of the Business
and Professions Code.
PENDING
PROCEEDINGS
The
disclosure date referred to on page two, paragraph A (7) was December 4, 2008.
STATE
BAR ETHICS SCHOOL
Because
respondent has agreed to attend State Bar Ethics School as part of this
stipulation, respondent may receive Minimum Continuing Legal Education credit
upon the satisfactory completion of State Bar Ethics School.
FACTS
SUPPORTING AGGRAVATING AND MITIGATING CIRCUMSTANCES
AGGRAVATING
CIRCUMSTANCES
There
are no aggravating circumstances in this matter.
MITIGATING
CIRCUMSTANCES
Standard
1.2(e)(i). Respondent has been in practice since June 6, 1989. He has no prior
record of discipline.
Standard
1.2(e)(iv). Respondent represents that he suffered from extreme problems in his
personal life which expert testimony would establish were directly responsible
for the misconduct and have since been resolved. From 1994 through 1997,
respondent suffered extreme family problems in relation to a dissolution of
marriage. He has since recovered from these problems.
Standard
1.2(e)(v). Respondent displayed spontaneous candor and cooperation to the State
Bar during the investigation.
SUPPORTING
AUTHORITY
Standard
2.3 requires an actual suspension or disbarment for a respondent that has
committed an act of moral turpitude.
The
proper level of discipline for respondent’s fraudulent underreporting of income
to the IRS is a period of actual suspension. (See, e.g., In re Chira (1986) 42
Cal.3d 904) [one year stayed suspension for a single incident of backdating
documents which resulted in a conviction for tax fraud; 24 years’
discipline-free practice]; In re Chernick (1989) 49 Cal.3d 467 [one year actual
suspension for a single incident of backdating in a tax shelter scheme which
resulted in a conviction for tax fraud; 20 years’ discipline-free practice].)
Although respondent was not convicted of tax fraud, his fraudulent
underreporting of income in three separate tax returns and false testimony
about his alleged income during those years evidence the commission of multiple
acts of moral turpitude. Based on the foregoing, and in view of the mitigation
and lack of aggravating circumstances in this matter, a six-month actual
suspension is appropriate.
SIGNATURE OF THE PARTIES
Case Number(s): 07-O-12794
In the Matter of: Ray W. Sowards
By their
signatures below, the parties and their counsel, as applicable, signify their
agreement with each of the recitation and each of the terms and conditions of
this Stipulation Re Facts, Conclusions of Law and Disposition.
Signed by:
Respondent: Ray
W. Sowards
Date: 12-9-08
Respondent’s
Counsel: Douglas B. Allen, Esq.
Date: 12-9-08
Deputy Trial
Counsel: Susan I. Kagan
Date: 12/11/08
ORDER
Case Number(s): 07-O-12794
In the Matter of: Ray W. Sowards
Finding the
stipulation to be fair to the parties and that it adequately protects the
public, IT IS ORDERED that the requested dismissal of counts/charges, if any is
GRANTED without prejudice, and:
checked.
The stipulated facts and disposition are APPROVED and the DISCIPLINE
RECOMMENDED to the Supreme Court.
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checked. The stipulated facts and disposition are APPROVED AS MODIFIED as set
forth below, and the DISCIPLINE IS RECOMMENDED to the Supreme Court.
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checked. All Hearing dates are vacated.
The parties
are bound by the stipulation as approved unless: 1) a motion to withdraw or
modify the stipulation, filed within 15 days after service of this order, is
granted; or 2) this court modifies or further modifies the approved
stipulation. (See rule 135(b), Rules of Procedure.) The effective date of this
disposition is the effective date of the Supreme Court order herein, normally
30 days after the file date. (See rule 9.18(a), California Rules of Court.)
Signed by:
Judge of the
State Bar Court: Lucy Armendariz
Date: Jan. 6,
2009
CERTIFICATE
OF SERVICE
[Rule 62(b), Rules Proc.; Code Civ.
Proc., § 1013a(4)]
I am a Case
Administrator of the State Bar Court of California. I am over the age of
eighteen and not a party to the within proceeding. Pursuant to standard court
practice, in the City and County of San Francisco, on January 9, 2009, I
deposited a true copy of the following document(s):
STIPULATION
RE FACTS, CONCLUSIONS OF LAW AND DISPOSITION AND ORDER APPROVING
in a sealed
envelope for collection and mailing on that date as follows:
checked.
by first-class mail, with postage thereon fully prepaid, through the United
States Postal Service at San Francisco, California, addressed as follows:
DOUGLAS
BLANCHARD ALLEN
BURNETT
BURNETT & ALLEN
333
W SAN CARLOS ST 8FL
SAN
JOSE, CA 95110
checked.
by interoffice mail through a facility regularly maintained by the State Bar of
California addressed as follows:
SUSAN
KAGAN, Enforcement, San Francisco
I hereby
certify that the foregoing is true and correct. Executed in San Francisco,
California, on January 9, 2009.
Signed by:
Laine Silber
Case
Administrator
State Bar
Court