Attorney Grievance Commission v. Gore

HARRELL, Judge. I. James Grafton Gore was admitted to the Maryland Bar on 21 June 1984. He also is admitted to the Bars of Virginia, Pennsylvania, and the District of Columbia. The Attorney Grievance Commission (“the Commission”), acting through Bar Counsel, filed a petition for disciplinary or remedial action on 5 May 2003, based on Gore’s repeated failures to file sales tax returns or remit collected sales taxes regarding a restaurant he owned and managed in the District of Columbia. 1 The ⁴⁵⁹ Commission alleges that Gore violated Maryland Rules of Professional Conduct (“MRPC”) Rules 8.4(b), 2 8.4(c) 3 and 8.4(d). 4 Judge Michele Jaklitsch of the Circuit Court for Anne Arundel County, to whom we assigned this matter for hearing and factfinding, made the following findings of fact and conclusions of law (some footnotes omitted and others altered as to number): Findings of Fact and Conclusions of Law “Respondent was pro se.

Upon consideration of the parties’ memoranda, exhibits, witness testimony and arguments of both parties, this Court makes the following written statement of findings of fact and conclusions of law. ⁴⁶⁰ Findings of Fact “The Respondent, James G. Gore, Jr., was admitted as a member of the Maryland Bar on June 21, 1984. Respondent is also admitted to the Bars of Virginia, Pennsylvania and the District of Columbia. Respondent is on inactive status in Pennsylvania. He does not maintain an office for the practice of law. “On October 1, 1998, Respondent, who was President of Chinatown Restaurants, Inc. and Coco Loco Management, Inc., became the owner of Coco Loco restaurant in Washington, D.C. Respondent operated the restaurant through these corporations.

Coco Loco restaurant was already facing financial problems when the Respondent became the owner of the restaurant. The Respondent had knowledge of Coco Loco’s financial problems. As owner, Respondent was at the restaurant on a regular basis. “Respondent admitted that he was responsible for filing sales taxes, collected by Coco Loco restaurant, with the District of Columbia. Pursuant to D.C.Code Ann. § 47-2015(a) (1997 Repl.), sales tax returns are due on the twentieth day of each month.

The reporting period for each return is the preceding month. The Respondent complied with his obligation to collect taxes on the restaurant’s sales pursuant to D.C.Code Ann. § 47-2015(a) (1997 Repl.). However, the Respondent did not separate the sales tax money from the non-sales tax money when depositing money into the corporations’ bank accounts. “During the time the Respondent was an owner of Coco Loco restaurant, he failed to file timely tax returns for the months of October 1998, December 1998, the entire year of 1999 and the months of January, February, and March 2000. The October 1998 sales tax return, while filed late, did include a payment.

During this time, Respondent only filed the November 1998 return in a timely fashion with payment. Respondent did not pay any other sales taxes through March 2000, even though the restaurant collected sales taxes during this time period. ⁴⁶¹ “On April 25, 2000, the Respondent met with Edmond Wybaillie, a special agent with the Criminal Investigations Division of the D.C. Office of Tax & Revenue regarding his lack of filing and remittance of sales tax returns. During this meeting, Respondent had no explanation for his failure to file the returns and for his failure to pay the taxes. Respondent admitted during this conversation that he knew the sales tax money belonged to the District of Columbia and that his failure to remit the sales tax to the District of Columbia was wrong.

Respondent explained during the interview that all of the money owed to the District of Columbia was used to pay the restaurant’s debts and did not go for his personal use. “On or about April 27, 2000 the Respondent brought fifteen sales tax returns for the months of January 1999 through March 2000 to the D.C. Office of Tax and Revenue. The total due on these returns was $181,915.76. However, no payments were submitted with these returns. Over the next couple of months, Respondent paid $6,000 in payments, but no return had been paid in full. “On August 11, 2000, the Corporation Counsel for the District of Columbia charged Respondent with one count of tax fraud — failure to pay, and fifteen counts of tax fraud— failure to file sales tax returns.

These counts are for violations of D.C.Code Ann. § 47-2028(b) (1998 Repl.). “Between April 27, 2000 and June 4, 2001, Respondent did not file any more sales tax returns for Coco Loco Restaurant. On or about June 4, 2001, Respondent filed sales tax returns that were due for January 2001, February 2001, March 2001, and April 2001. With those four returns, Respondent submitted four checks in the full amount shown to be due on each of the returns. Those four checks totaled $47,986.19.

The bank on which these checks were drawn dishonored all of these checks for insufficient funds. 5 To ⁴⁶² date, this payment still has not been received by the District of Columbia Government. “On June 27, 2001, Respondent submitted sales tax returns for the months of May, June, July, August, September, October, November and December 2000. With those returns, Respondent submitted eight checks totaling $103,806.83, which represented the balance due on each return. All of these checks were dishonored for insufficient funds. The balance in the account from which these checks were written, for the entire month of June 2001, was at all times insufficient to pay even one of the checks the Respondent submitted. “At his deposition, Respondent testified that he believed the checks were good when written or that they would be good when presented to the bank.

At the time the checks were submitted, the balance in the account was $87.28. At trial the Respondent testified that the restaurant obtained a loan from which the checks could have been paid, but he produced no evidence of a loan. Additionally, this same account had a history of overdrafts. 6 “On November 16, 2001, the District of Columbia filed a second set of charges against Respondent. He was charged with twelve counts of willful failure to file sales tax returns for the period of April 1, 2000 through March 31, 2001 in violation of D.C.Code Ann. § 47-2028(b) (1997 Repl:).

He was also charged with twelve counts of willful failure to pay sales tax monies due for the same time period in violation of D.C.Code Ann. § 47-2028(b) (1997 Repl.). However, on December 13, 2001, the Respondent pled guilty in D.C. Superior Court to two lesser amended charges of non-willful ⁴⁶³ failure to file tax returns in violation of D.C.Code Ann., § 47-2028(a) (1997 Repl.), one on behalf of himself and one on behalf of the corporation. The rest of the charges were nol prossed. “Although the Respondent pled guilty to the lesser amended charge of non-willful failure to file tax returns, the Court finds by clear and convincing evidence that Mr. Gore knew he was obligated to file sales tax returns and remit payments and for a period of three years he consciously continued to collect the sales tax but did not file returns or remit payment to the D.C. Government. “On February 28, 2002, the Superior Court of the District of Columbia sentenced Respondent to six months in jail, on each count, to run concurrently, with all but 45 days suspended. The Respondent was placed on three years of supervised probation and was ordered to pay restitution of $885,848.00 for back taxes, penalties and interests.

Standard “At a hearing on a petition filed by the Attorney Grievance Commission (“AGC”) under Md. Rule 16-757(b), the AGC has the burden of proving by clear and convincing evidence, the averments of the petition. The Respondent, under Md. Rule 16-757(b), has the burden of proving an affirmative defense or a matter of mitigation or extenuation by a preponderance of the evidence. Conclusions of Law “The Respondent has been charged with violating Maryland Rules of Professional Conduct 8.4(b), 8.4(c), and 8.4(d). This court finds that the Respondent violated Maryland Rules of Professional Conduct 8.4(b), 8.4(c), and 8.4(d).

While the incident involving these violations occurred in the District of Columbia, the Respondent is subject to the disciplinary authority of the State of Maryland. See, Maryland Rules of Professional Conduct Rule 8.5(a). ⁴⁶⁴ 84(b) “The Respondent admits to violating Rule 8.4(b) of the Maryland Rules of Professional Conduct (“MRPC”) in his response to the Attorney Grievance Commission’s Petition for Disciplinary or Remedial Measures and also in his testimony before this Court. Mr. Gore pled guilty on December 13, 2001 to two counts of non-willful failure to file sales tax returns[ 7 ] in violation of D.C.Code Ann. § 47-2028(a) (1997 Repl.). “The charges brought against Mr. Gore stemmed from his failure to timely file and pay sales tax returns on behalf of the restaurant Coco Loco for the period of October 1998 through March 2000 (with the exception of November 1998). In April 2000, Mr. Gore acknowledged that his practice of not filing the sales tax returns was wrong, yet he continued not to pay or file sales tax returns for another year.

Mr. Gore ultimately pled guilty to two lessor counts of non-willful failure to file sales tax returns in violation of D.C.Code Ann. § 47-2028(a) (1997 Repl.) and was sentenced in D.C. Superior Court to six months on each count, to run concurrent, with all but 45 days suspended and he has to pay $885,848 for back taxes, penalties, and interest. This reflects on the Respondent’s honesty, trustworthiness, and fitness to practice law. For all of these reasons, the Court finds by clear and convincing evidence that Mr. Gore violated Rule 8.4(b). 84(c) “Mr. Gore denies that he violated MRPC 8.4(c), however, this Court finds that Mr. Gore did violate MRPC 8.4(c). In April 2000, Mr. Gore knew that he was under a criminal investigation for failing to file and pay sales taxes on the restaurant Coco Loco.

Yet, Mr. Gore still failed to file any sales tax returns or pay sales taxes for Coco Loco between ⁴⁶⁵ April 27, 2000 and June 4, 2001. When Mr. Gore did file these tax returns and submit four checks totaling $47,986.19 on or about June 4, 2001, the bank dishonored all four of Mr. Gore’s checks since the balance from which money could be drawn from the account was only $1,086.06. Then, on June 27, 2001, Mr. Gore again submitted eight separate tax returns and checks for eight months in the year 2000. All eight of these checks were also dishonored for insufficient funds. “While Mr. Gore pled guilty in his criminal matter to non-willful failure to file sales tax returns, the Court finds by clear and convincing evidence that Mr. Gore did willfully fail to file and remit sales tax returns to the District of Columbia.

At all times, Mr. Gore knew that he was obligated to file and pay sales tax returns to the District of Columbia. However, he continued for a span of three years to fail to fulfill these obligations. In this proceeding, this failure is seen as willful. “The Court finds that Mr. Gore’s failure to file the appropriate sales tax returns and remit payments when due, and then to send checks when there were insufficient funds to cover the checks violates MRPC 8.4(c). See, e.g., Attorney Grievance Comm’n v. Angst, 369 Md. 404, 416 [, 800 A.2d 747 ] (2002) (attorney’s failure to withhold employee’s state income taxes and to pay the appropriate amounts owed to the Comptroller from March 1998 through May 31, 2001 as well as his failure to file the appropriate returns when due violated 8.4(b), (c), and (d)); Attorney Grievance Comm’n v. Atkinson, 357 Md. 646 [, 745 A.2d 1086 ] (2000) (Attorney knew she had failed to file tax returns and failed to act to remedy the situation, which was, at best, dishonest). “Angst involved a case where the Respondent filed Maryland withholding tax returns late, failed to file tax returns, and failed to pay trust fund income taxes withheld from employees’ wages.

The Court, in Angst , found that the ‘Respondent’s failure to fulfill his statutory obligations as an employer to withhold employees’ state income taxes and to ⁴⁶⁶ pay the appropriate amounts owed to the Comptroller from March 1998 through May 31, 2001 as well as his failure to file the appropriate returns when due violated Rules 8.4(b)(c) and (d).’ 369 Md. 404, 416 [, 800 A.2d 747 ] (2002). “In Atkinson , the Respondent failed to file joint state and federal income tax returns for the years 1988 to 1996. In 1994, the Respondent went to the I.R.S. and received several pamphlets. However, she still failed to file tax returns with this new found information. With each passing year her tax arrearages grew to the point where she could not afford to pay the back taxes.

However, she was aware of her legal obligation to file the tax returns. In 1997, the I.R.S. contacted the Respondent regarding her failure to file and pay tax returns. The Respondent owed approximately $93,000 in back taxes and had made one payment of about $15,546 toward the balance. In Atkinson , the Court stated that the “willful failure to file timely income tax returns also violates Rule 8.4(c) ...” 357 Md. 646, 650 [, 745 A.2d 1086 ] (2000).

The Court found that Respondent knew that she failed to file tax returns when she went to the I.R.S. office in 1994 and that once she received information on how to resolve the situation, she then again failed to act. Id. “Similarly, in the present case, Mr. Gore was well aware that he owed a fiduciary duty to the District of Columbia to file sales tax returns and remit the monies that were collected from patrons of the restaurant. When approached by agents of the District of Columbia in April 2000, Mr. Gore acknowledged that his practice of not filing the sales tax returns was wrong, yet he continued not to pay taxes or file sales tax returns for another year. When he did finally remit filings and checks, it was drawn on an account which had insufficient funds to cover the arrearage. “For these reasons, the Court finds that Mr. Gore did willfully fail to file sales tax returns and remit payments, and this is an act that reflects conduct involving dishonesty, fraud, deceit, or misrepresentation in violation of Rule 8.4(c). ⁴⁶⁷ 8.4(d) “The Court finds there is clear and convincing evidence that Mr. Gore violated MRPC 8.4(d).

Mr. Gore has already admitted to violating MRPC 8.4(b) and pled guilty to charges of non-willful failure to file sales tax returns. The failure of an attorney to remit sales tax returns and payments is similar to the cases involving an attorney’s failure to file income tax returns. This conduct, in its very nature, is prejudicial to the administration of justice. See, e.g.

Attorney Grievance Comm’n v. Walman, 280 Md. 453, 462 [, 374 A.2d 354 ] (1977) (An attorney failed to file income tax returns for a number of years which represented conduct prejudicial to the administration of justice); Attorney Grievance Comm’n v. Atkinson, 357 Md. 646 [, 745 A.2d 1086 ] (2000) (The crime of wilfully and knowingly failing to file a federal income tax return represents conduct prejudicial to the administration of justice.) “Mr. Gore knew that he was not filing sales tax returns for his business. This reflects negatively on the legal profession and he is setting a bad example for the public at large. An attorney must uphold the law and administer justice. Mitigation “The Respondent would like the Court of Appeals to consider several factors when ultimately deciding sanctions.

Respondent states that he has had no prior discipline in Maryland. Bar Counsel has neither confirmed nor denied this assertion. Respondent seeks mitigation in his sanction since he has been cooperative with Bar Counsel and has stipulated to the evidence. Furthermore, the Respondent admits that he made a terrible business mistake for which he has already been punished.

He also explains that this incident had no connection to the practice of law. Conclusion “Wherefore, it is the 20th day of October 2003, found by the Circuit Court of Anne Arundel County, for the reasons ⁴⁶⁸ set forth herein, that the Respondent, James G. Gore, Jr., had violated Maryland Code of Professional Responsibility § 8.4(b), (c), and (d).” Neither Gore nor the Commission filed any exceptions to the hearing judge’s findings of fact or conclusions of