In re Vanderveen, ___ P3d ___, 2009 WL 2048333 (Wa. Sup. Ct. 2009)

Brief Summary
The Washington Supreme Court disbarred an attorney who pled guilty to violations of 31 USC §§ 5331(a) and 5332 as a result of failing to report the receipt of $20,000 in cash for representing a client.

Complete Summary
Attorney Mark Vanderveen was asked by attorney James White to represent Wesley Cornett, a person who was then being investigated by the FBI for participation in a major drug ring. At the time, White represented Robert Kiesling, one of the top participants in the drug ring and Cornett's supplier. White also informed Vanderveen that Cornett's "friends or associates" would pay Cornett's legal fees.

White arranged for two $10,000 cash payments to Vanderveen. The first payment was left in a paper bag in judicial chambers at a municipal court at which both White and Vanderveen served as part-time judges. The second was delivered to Vanderveen in a parking lot outside of a bank.

Vanderveen did not report either of these cash receipts on IRS Form 8300. Also, he did not enter the receipt of these funds on the books and records of his law practice. Instead, he kept the funds in a safe at his home. After he was caught, Vanderveen pleaded guilty to violations of 31 USC §§ 5331(a) and 5332. In essence, § 5331(a) requires persons, including lawyers, to report such cash receipts and § 5332 makes it a felony for an individual to willfully not report.

The court held that Vanderveen's guilty plea precluded him from denying in the disciplinary proceeding that his conduct was intentional because that was the required mental state applicable to these crimes under Ratzlaf v. United States, 510 US 135 (1994). Vanderveen had not filed a so-called Alford plea, in accordance with North Carolina v. Alford, 400 US 25 (1970), in which he could have protested the mental state required as a part of the plea. In addition, evidence did not exist that Vanderveen had not understood his plea agreement. However, the court found that other evidence in the record also established that Vanderveen's conduct was intentional.

The court further found that Vanderveen had violated the prohibition in Washington RPC 8.4(b) against criminal acts which reflect adversely on a lawyer's fitness to practice. The court also found that Vanderveen had violated “dishonesty” prong of RPC  8.4(c), which generally prohibits “conduct involving dishonesty, fraud, deceit or misrepresentation,” on the ground that Vanderveen's conduct constituted “dishonesty” since it  reflected untrustworthiness and a lack of integrity.

The court held that disbarment was the appropriate sanction. It held that the criminal punishment meted out to Vanderveen as a result of the guilty plea did not constitute a mitigating factor as a sanction already imposed upon him because, in the court's view, criminal sanctions serve a different purpose than disciplinary sanctions. The court also held that the judicial sanction against Vanderveen (who, as noted, had also been a part-time municipal court judge) was not a mitigating factor; that he had not proved a good reputation in the community; and that the adverse publicity to his family and to him was insufficient to constitute a mitigating factor. The court also found relevant to its analysis the fact that Vanderveen had been disloyal to his client Cornett by helping attorney White investigate certain of Garnett’s actions for the benefit of White and White’s client, Kiesling.

The solo dissent by Justice Sanders focused primarily on two issues. One was that, by and large, prior Washington disciplinary cases involving failures to file income tax returns had almost always resulted in far less severe sanctions than disbarment. The other was that prior Washington “dishonesty” cases generally required an affirmative finding of fraud, misrepresentation or concealment when there was a duty to speak that, in the dissent's view, was not present here.

Significance of Case
IRS Form 8300s must be filed by criminal defense lawyers who receive sufficient cash as well as by their civil counterparts. This opinion should serve as a warning that the failure to file these forms can have substantial disciplinary consequences. It is also possible to assert, however, that the court's decision was influenced at least to some degree by the fact that Vanderveen was also extraordinarily disloyal to his client.

This alert has been prepared by Hinshaw & Culbertson LLP to provide information on recent legal developments of interest to our readers. It is not intended to provide legal advice for a specific situation or to create an attorney-client relationship.

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