author: JjPER CURIAM.

text:
    In re Carl W. CLEVELAND.
    No. 2004-B-0881.
    Supreme Court of Louisiana.
    Oct. 19, 2004.
    Charles B. Plattsmier, Chief Disciplinary Counsel, Counsel for Applicant.
    Dominic Scandurro, Jr., Carl W. Cleveland, Counsel for Respondent.
   ATTORNEY DISCIPLINARY PROCEEDINGS

JjPER CURIAM.

This disciplinary matter arises from formal charges filed by the Office of Disciplinary Counsel (“ODC”) against respondent, Carl W. Cleveland, an attorney licensed to practice law in Louisiana but currently on interim suspension.

UNDERLYING FACTS AND PROCEDURAL HISTORY

Respondent acted as the attorney for Fred Goodson and his family, the operators of a truck stop business in Slidell, Louisiana. In 1992, respondent assisted Mr. Goodson in the formation of Truck Stop Gaming, Ltd. (TSG), a limited partnership that operated video poker truck stops. Respondent also helped Mr. Good-son prepare and submit to the Louisiana State Police TSG’s application for a video poker license. The application required TSG to disclose full ownership information; persons or businesses who owned, or were intended to own, 5% or more of the video poker operation were required to provide detailed financial information and be found suitable by the State Police. TSG’s initial application identified Mr. Goodson’s adult children, Alex Goodson and Maria Good-son, as the sole beneficial owners of the partnership. In May 1992, the application was approved and TSG was issued a gaming license. TSG successfully submitted renewal applications in 1993, 1994, and 1995 which also listed no additional ownership interests.

li>By April 1995, respondent and Mr. Goodson had become concerned there would be substantial penalties owed to the Internal Revenue Service because no estimated tax payments had been made on the 1994 profits of TSG. On April 11, 1995, respondent telephoned Mr. Goodson with “a brain storm about how to solve the tax problem.” Respondent suggested to Mr. Goodson that

we need to take an amount that is roughly equal to the ... taxable income for the year and to cut two checks, back dating them to the last day of 1994. Um, one to either to you individually or to your management company for management services from the inception of the business.... I just want it to go where you get complete control of the funds and we will treat it as a deduction in 1994 to the partnership the Truck Stop Gaming, as income to you for 1995 and then to take roughly the other half of the income and pay it to this firm as an attorney’s fee deductible in 1994 and then what we’ll do is lend the money back, we’ll save enough to pay the taxes and since we don’t, we will be reporting it on our 95 returns we won’t have the penalties problem that would otherwise exist. We just gonna have to make estimated payments to cover it.

On April 13, 1995, the Goodson family’s CPA faxed a message to respondent informing him that the “final figure” for TSG’s 1994 taxable income was $1,351,956. On April 17, 1995, respondent prepared an invoice for “legal services” purportedly rendered by his law firm in the amount of $637,300. The invoice was backdated to December 15, 1994 to substantiate the “legal fees” to be shown as a deduction on the 1994 partnership tax return filed by TSG. Respondent also prepared an invoice for “management services” purportedly rendered by Mr. Goodson’s management company in the amount of $713,800. Like the invoice for legal services, the invoice for management services was backdated to December 15, 1994 to substantiate the “management fees” to be shown as a deduction on the 1994 partnership tax return filed by TSG. On July 12, 1995, TSG filed its 1994 partnership tax return with the |sIRS; the return was signed by Mr. Good-son and verified by a written declaration that it was made under the penalties of perjury.

On October 4, 1996, a federal grand jury returned a superseding indictment charging respondent and others with multiple counts of racketeering, mail fraud, conducting an illegal gambling enterprise, filing a false income tax return, money laundering, and conspiracy arising out of the establishment, licensing, and operation of TSG. In particular, the indictment alleged that respondent and Mr. Goodson committed mail fraud in obtaining and renewing TSG’s video poker licenses because the license applications fraudulently concealed the true ownership of TSG. The indictment further alleged that respondent and Mr. Goodson conspired to commit tax fraud to evade the taxes due on approximately $1.3 million of income earned by TSG in 1994.

Before trial, respondent moved to dismiss the mail fraud counts on the ground that an unissued state license does not constitute “property” within the meaning of 18 U.S.C. § 1341. The district court, Judge Sarah S. Vance presiding, denied the motion, concluding that licenses constitute property even before they are issued by the State. On June 27, 1997, a jury found respondent guilty of two counts of mail fraud (based on the mailings of the 1994 and 1995 TSG gaming license renewals), as well as money laundering, racketeering, and conspiracy counts predicated on the mail fraud. Respondent was also convicted of one count of tax conspiracy and one count |4of aiding and abetting the filing of a false tax return. On October 15, 1997, respondent was sentenced to serve 121 months in federal prison.

Among other arguments raised on appeal, respondent renewed his contention that an unissued state license is not property under the federal mail fraud statute. The United States Court of Appeals for the Fifth Circuit rejected this argument and affirmed respondent’s convictions and sentence on July 21, 1999. United States v. Cleveland, 182 F.3d 296 (5th Cir.1999). However, in a unanimous opinion rendered on November 7, 2000, the United States Supreme Court held that “ § 1341 requires the object of the fraud to be ‘property’ in the victim’s hands and ... a Louisiana video poker license in the State’s hands is not ‘property’ under § 1341.” Cleveland v. United States, 531 U.S. 12, 121 S.Ct. 365, 148 L.Ed.2d 221 (2000). Based on this reasoning, respondent’s mail fraud convictions were vacated and the case was remanded for further proceedings consistent with the Court’s opinion.

Following remand, and pursuant to an agreement between respondent and the Government, Judge Vance vacated respondent’s convictions and sentences on all of the mail fraud, money laundering, racketeering, and conspiracy counts. In turn, respondent agreed not to appeal or otherwise contest his convictions of tax conspiracy, a violation of 18 U.S.C. § 371, and aiding and abetting the filing of a Rfalse tax return, a violation of 26 U.S.C. § 7206(2). On February 14, 2001, Judge Vance fined respondent $10,000 and re-sentenced Mm to serve thirty months in prison on the tax counts, followed by an eighteen-month period of supervised release.

DISCIPLINARY PROCEEDINGS

On November 6, 1997, the ODC filed one count of formal charges against respondent arising out of his conviction. Respondent answered the formal charges and denied any misconduct. The disciplinary matter was then stayed pending the finality of respondent’s criminal conviction.

Formal Hearing

When this matter proceeded to a formal hearing on the merits on October 8, 2001, the ODC submitted documentary evidence in support of the formal charges, including respondent’s indictment, a minute entry in the criminal case reflecting the Injury’s verdict as to each count of the indictment, the decision of the United States Court of Appeals for the Fifth Circuit affirming respondent’s convictions and sentence, the decision of the United States Supreme Court vacating respondent’s mail fraud convictions, and the district court’s February 14, 2001 judgment and commitment order.

Respondent introduced several volumes of documentary evidence and testified on his own behalf. The documentary evidence included the briefs filed on respondent’s behalf in the Fifth Circuit Court of Appeals and the United States Supreme Court; the transcript of the April 27, 2000 hearing before Judge Vance on respondent’s motion for release, the court’s order granting the motion, and written reasons for judgment; the joint motion submitted by respondent and the Government disposing of the charges against respondent following the Supreme Court’s decision; a “no change” letter from the IRS concerning respondent’s tax liability for 1991, 1992, and 1993, accepting the returns for those years as filed; an assessment by the Federal Bureau of Prisons of respondent’s incarceration at the Federal Prison Camp in Pensacola, as well as various prison health and safety pamphlets that respondent rewrote during his incarceration; and hundreds of letters submitted to Judge Vance in anticipation of respondent’s sentencing, authored by respondent’s family, friends, clients, public figures, elected officials, and others, all attesting to respondent’s good character and reputation in the community.

Hearing Committee Recommendation

Considering the evidence and testimony presented at the hearing, the committee made the following findings of fact:

|71. Respondent was convicted on June 27, 1997 in the United States District Court for the Eastern District of Louisiana of one RICO count, one count of RICO conspiracy, two counts of mail fraud, four counts of money laundering, one count of tax conspiracy, and one count of aiding and abetting the filing of a false tax return.
2. The United States Court of Appeals for the Fifth Circuit affirmed respondent’s conviction.
3. Respondent then appealed his conviction to the United States Supreme Court, which granted his writ of cer-tiorari.
4. The United States Supreme Court heard arguments in respondent’s case on October 10, 2000, and on November 7, 2000, rendered an order reversing respondent’s 18 U.S.C. § 1341 conviction and remanding the matter for further proceedings consistent with that Court’s opinion. In doing so, the Court did not reverse any of the jury’s factual findings which were made beyond a reasonable doubt in supporting respondent’s convictions. Rather, the Court concluded that § 1341 requires that the object of a fraud be “property” in the victim’s hands. The Supreme Court’s decision was that Louisiana’s video poker license in the State’s hands was not “property” for purposes of § 1341.
5.After the matter was remanded to the Court of Appeals, respondent, through counsel, successfully argued for and obtained an order remanding the matter back to the District Court. Thereafter, respondent, through counsel, held discussions with the United States Attorney’s Office and entered into a Joint Motion dated February 14, 2001, in which the United States Attorney’s Office agreed to dismiss other counts against respondent.
|86. Per the Joint Motion, respondent stood convicted of Counts 13 and 15 of the Indictment, which are the charges involving tax conspiracy and aiding and abetting the filing of a false tax return.
7. The Louisiana Supreme Court inter-imly suspended respondent pursuant to Supreme Court Rule XIX, § 19 effective October 31,1997.
8. Formal charges were filed against respondent on November 6, 1997 and alleged as the basis for prosecution his conviction of a serious crime pursuant to Louisiana Supreme Court Rule XIX, § 19(E). The formal charges were served on the respondent and his counsel via certified mail on November 10,1997. On November 25, 1997, respondent filed a “Peremptory Exception, Answer and Request for Hearing.” The Peremptory Exception was later dismissed by the hearing committee chair on March 2, 1998.
9. Respondent has no prior disciplinary record.
10. Respondent demonstrated a cooperative attitude toward the disciplinary proceedings.
11. As revealed by an examination of the numerous letters of recommendation submitted from respondent’s friends, family and members of the community, respondent enjoys a good reputation in the community.
12. As shown by the letter from Ruth B. Dunnavant, respondent’s prison case manager, he exhibited exemplary behavior while incarcerated. Further, while in prison, respondent authored numerous safety manuals, including those entitled “Admission and Orientation Manual” and the Appendix thereto, “Occupational Safety and Environmental Health/ Safety Standards and Responsibilities of Inmate Supervisors,” “Inmate Orderly Instruction Manual/ Specific Cleaning Procedures and Responsibilities,” “Basic Safety Precautions [ 9for Chain Saw Use,” and “Inmate Job Safety Manual/ Safety Starts With Education/ The Right to Know.”
13. Respondent has suffered the imposition of other penalties or sanctions. He served a prison term of thirty months and paid a fíne and a special assessment to the Government.
14. At the time of the misconduct, respondent had substantial experience in the practice of law, being admitted in 1966.
15. The testimony of respondent indicates that he has refused, at least in part, to acknowledge the wrongful nature of his misconduct. In respondent’s post-hearing memorandum, his counsel writes, “My client has not, and will not, admit moral wrong doing regardless of the technical effect of 18 U.S.C. section 371. Technical guilt is established on the record by the convictions. We submit that the mandate to this Committee to look beyond technical guilt to the underlying conduct is a recognition of the principal that should be applied in this case. Technical guilt is possible without moral failure.”

Based on these factual findings, the committee determined the ODC proved by clear and convincing evidence that respondent has been convicted of a serious crime. The committee found respondent intentionally violated duties owed to the public and to the profession, and that actual harm resulted, in the form of the deterioration of the public’s confidence in the legal profession when a lawyer chooses to engage in dishonest conduct. Under the ABA’s Standards for Imposing Lawyer Sanctions, and in light of the prior jurisprudence involving a lawyer’s act of conspiring to commit |ina crime or aiding and abetting in the commission of a crime, the baseline sanction for respondent’s misconduct is disbarment.

In aggravation, the committee recognized respondent’s substantial experience in the practice of law and his failure to acknowledge the wrongful nature of his conduct. The committee recognized the following mitigating factors are present in this case: absence of a prior disciplinary-record, cooperative attitude toward the disciplinary proceeding, character and reputation, and imposition of other penalties or sanctions. Ultimately, however, the committee concluded that these mitigating factors do not warrant a downward deviation from the baseline sanction of disbarment.

Based on this reasoning, the committee recommended that respondent be disbarred.

Respondent filed an objection to the severity of the sanction recommended by the hearing committee, asserting that the three-year suspension imposed in In re: Ferrouillet, 99-3434 (La.6/30/00), 764 So.2d 948, is appropriate in this case.

Disciplinary Board Recommendation

InThe disciplinary board concurred in the hearing committee’s factual findings and determined that respondent’s conduct constitutes a violation of Rule 8.4(b) of the Rules of Professional Conduct (commission of a criminal act reflecting adversely on the lawyer’s honesty, trustworthiness, or fitness as a lawyer). Respondent intentionally violated duties owed to the public and as a professional. His conviction serves to undermine the credibility and integrity of the legal profession, as lawyers are supposed to serve the law, not subvert it. Respondent’s “brain storm” to help his client, Fred Goodson, and his daughter, Maria Goodson, avoid IRS penalties on their video poker income from the prior tax year was an exercise in circumventing the tax laws, and resulted in a $14,000 tax loss to the United States Treasury. The baseline sanction is clearly disbarment.

The board found the record supports the aggravating factors of dishonest or selfish motive, refusal to acknowledge the wrongful nature of the conduct, and substantial experience in the practice of law. The following mitigating factors are present in this case: absence of a prior disciplinary record, character and reputation, and imposition of other penalties or sanctions.

The board rejected respondent’s reliance on In re: Ferrouillet, in which this court deviated downward from the baseline sanction of disbarment to impose a three-year suspension for a lawyer’s federal conviction involving money laundering of an illegal political campaign contribution. The board noted the federal district court’s declaration that Ferrouillet’s “conduct fell outside the ‘heartland’ of traditional money laundering cases.” The mitigating factors of lack of prior discipline, cooperative attitude, remorse, and character and reputation were present, and Ferrouillet did not Indirectly profit from his scheme nor did he cause harm to a client. By contrast, in the instant case, the federal district court enhanced respondent’s prison sentence from 8-14 months to 30 months. The board also found that respondent has demonstrated no remorse for his actions, which involved the practice of law in’giving advice to his clients, the Goodsons, and that respondent stood to gain monetarily from his misconduct.

Concluding that the mitigating factors do not outweigh the aggravating factors, and rioting the gravity of respondent’s misconduct, the board concluded that a downward departure from the baseline sanction is not warranted in this case. The board recommended that respondent be disbarred.

Respondent filed an objection to the disciplinary board’s recommendation. Accordingly, the case was docketed for oral argument pursuant to Supreme Court Rule XIX, § 11(G)(1)(b).

DISCUSSION

Bar disciplinary matters come within the original jurisdiction of this court. La. Const, art. V, § 5(B). When the disciplinary proceedings involve an attorney who has been convicted of a crime, the conviction is conclusive evidence of guilt and the sole issue presented is whether respondent’s crimes warrant discipline, and if so, the extent thereof. Supreme Court Rule XIX, § 19(E); In re: Boudreau, 02-0007 (La.4/12/02), 815 So.2d 76; Louisiana State Bar Ass’n v. Wilkinson, 562 So.2d 902 (La.1990). The discipline to be imposed depends on the seriousness of the offense and the extent of the aggravating and mitigating circumstances. Louisiana State Bar Ass’n v. Perez, 550 So.2d 188 (La.1989).

|13In the instant case, respondent has been convicted of one count of tax conspiracy and one count of aiding and abetting the filing of a false tax return, These crimes are felonies under federal law and clearly warrant serious discipline, The sole issue before the court is the appropriate measure of discipline to be imposed.

Respondent does not seriously dispute that the applicable baseline sanction is disbarment. However, like the respondent in In re: Ferrouillet, 99-3434 (La.6/30/00), 764 So.2d 948, he argues that the mitigating factors present warrant a downward deviation to a three-year suspension. We agree.

The record indicates that respondent has no prior disciplinary record in more than thirty years of practice. He has demonstrated a cooperative attitude during these proceedings and is remorseful for the harm caused by his conviction. Respondent also has an excellent reputation in the legal community and in the community at large. In our view, however, the most significant factor to be considered in mitigation is the penalty that has already been imposed upon respondent in the form of a federal prison sentence of thirty months. As United States District Judge Sarah Vance remarked during a hearing on respondent’s motion for release, this lengthy sentence “is a very high sentence for a tax fraud with a $14,000 loss.” This fact, considered together with all of the mitigating circumstances, is sufficiently compelling to warrant a downward deviation from the baseline sanction. Accordingly, we conclude the appropriate sanction for respondent’s misconduct in this case is a three-year suspension from the practice of law.

DECREE

Upon review of the findings and recom-mendations of the hearing committee and disciplinary board, and considering the record, briefs, and oral argument, it is _Jj|Ordered that Carl W. Cleveland, Louisi-ana Bar Roll number 4189, be suspended from the practice of law in Louisiana for a period of three years. This suspension shall be retroactive to October 31, 1997, the date of respondent’s interim suspension. All costs and expenses in the matter are assessed against respondent in accordance with Supreme Court Rule XIX, § 10.1, with legal interest to commence thirty days from the date of finality of this court’s judgment until paid.

      . In re: Cleveland, 97-2274 (La.10/31/97), 700 So.2d 1263.

      . According to the Government, respondent and Fred Goodson were the true owners of TSG, not Alex and Maria Goodson. The Government alleged that respondent and Fred Goodson fraudulently concealed their ownership interests because they had tax and financial problems that would have made it difficult for them to bear the scrutiny of the suitability investigation conducted by the Louisiana State Police.

      . The mail fraud statute proscribes the use of the mails in furtherance of "any scheme or artifice to defraud, or for obtaining ... property by means of false or fraudulent pretenses, representations, or promises, ...” [emphasis added]

      .18 U.S.C. § 371 provides:
      If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined under this title or imprisoned not more than five years, or both.
      If, however, the offense, the commission of which is the object of the conspiracy, is a misdemeanor only, the punishment for such conspiracy shall not exceed the maximum punishment provided for such misdemean- or.

      . 26 U.S.C. § 7206 provides in pertinent part as follows:
      Any person who—
      (2) Aid or assistance. Willfully aids or assists in, or procures, counsels, or advises the preparation or presentation under, or in connection with any matter arising under, the internal revenue laws, of a return, affidavit, claim, or other document, which is fraudulent or is false as to any material matter, whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to present such return, affidavit, claim, or document; ... shall be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 3 years, or both, together with the costs of prosecution.

      . Respondent had originally been denied bail pending appeal and had served 28 months in prison when the United States Supreme Court granted certiorari in his case. Thereafter, the district court granted respondent’s motion to be released from prison pending the completion of the appeal process. In light of the time respondent had already served in prison, and considering his accumulated good time, he was not required to serve any additional time in prison following re-sentencing.

      . Standard 5.11 suggests that disbarment is generally appropriate when a lawyer engages in serious criminal conduct, a necessary element of which includes misrepresentation or fraud, or attempts or conspires or solicits another to commit such conduct.

      . The committee noted the following cases: In re: Palmer, 02-1780 (La.12/4/02), 835 So.2d 410 (attorney's conduct in creating and submitting fraudulent material to insurance regulators to further an insurance scheme warranted disbarment; attorney pleaded guilty to engaging in conspiracy to commit an offense in violation of 18 U.S.C. § 371); In re: Nevitte, 02-1962 (La.9/30/02), 827 So.2d 1135 (attorney disbarred based upon his conviction of conspiracy to commit bank fraud and mail fraud; mitigating factors present included absence of prior disciplinary record and the imposition of other penalties or sanctions, but aggravating factors of dishonest or selfish motive, failure to admit the wrongful nature of the conduct, and substantial experience in the practice of law were present); In re: Schneider, 97-2457 (La.1/30/98), 707 So.2d 38 (attorney disbarred for conviction of mail fraud, conspiracy to commit mail fraud, intentionally submitting false statements to a banking institution, and willfully making and subscribing a false tax return in connection with Charter Title Company); and In re: King, 94-0686 (La.11/30/94), 646 So.2d 326 (attorney disbarred for conviction of mail fraud in connection with creating fraudulent bank documents specifically designed to mislead regulatory officials concerning the financial state of Champion Insurance Company).

      . The district court considered the case outside the traditional sentencing guidelines because the case did not involve drug dealers or organized crime. Ordinarily, Ferrouillet would have faced 41-51 months in prison under the sentencing guidelines; however, because the case fell outside the "heartland” of money laundering cases, Ferrouillet was fined $10,000 and sentenced to serve one year in a halfway house, followed by five years of supervised probation.


source: Caselaw Access Project

author: | .PER CURIAM.

license: Public Domain

text:
    In re Neil P. LEVITH.
    No. 2004-B-0827.
    Supreme Court of Louisiana.
    Oct. 19, 2004.
   ATTORNEY DISCIPLINARY PROCEEDINGS

| .PER CURIAM.

This disciplinary matter arises from formal charges filed by the Office of Disciplinary Counsel (“ODC”) against respondent, Neil P. Levith, an attorney licensed to practice law in Louisiana.

UNDERLYING FACTS

The underlying facts of this matter are not in dispute, having been stipulated to by the parties. These stipulations may be summarized as follows:

Respondent’s law practice is primarily confined to handling residential real estate transactions. When he handled a closing involving a sale or refinancing, respondent deposited the funds he received into his trust account, then disbursed the funds to the appropriate parties. Typically, respondent did not immediately withdraw his attorney’s fees from the trust account, in an attempt to ensure that sufficient funds were in the account to cover any checks from third parties which were subsequently dishonored.

In April 2000, respondent’s title insurance underwriter, First American Title Insurance Company (“First American”), conducted a routine audit of respondent’s trust account and discovered drafts and checks drawn on the trust account payable to casinos, in violation of the Insurance Code. First American immediately terminated| ¡.respondent's Agency Agreement and reported its findings to the Louisiana Department of Insurance (“Department”), which conducted its own audit. The examiners found that in 1999 and 2000, twenty-two drafts and checks totaling $20,500 were drawn on respondent’s trust account payable to casinos in Las Vegas, New Orleans, and Biloxi.

By order of the Department dated April 18, 2000, respondent’s insurance license was summarily suspended and he was ordered to cease and desist from the solicitation or sale of any insurance coverage in the State of Louisiana. At the conclusion of the Department’s examination, respondent agreed to pay a $5,000 fine, and he agreed that any further violations of the Insurance Code will be cause for the revocation of his insurance license. Thereafter, the Department rescinded its summary suspension and cease and desist order effective June 22, 2000.

The Department forwarded the documents relating to its examination to the ODC, which in turn requested an audit of respondent’s trust account by its audit consultant, Ronald White. Mr. White determined that respondent left his own funds in the trust account with funds belonging to others, and he determined that the casino transactions resulted in eight instances of conversion of client and third-party funds in the amount of $5,571.67. Respondent and the ODC have stipulated that this conversion would not have occurred but for the posting of some drafts to the trust account by Paris Las Vegas Casino and Harrah’s New Orleans Casino. The parties further stipulated that all shortfalls have been repaid and that no third parties were actually harmed as a result of respondent’s actions. Finally, the parties stipulated that respondent has taken remedial steps to prevent a recurrence of this type of activity in |3the future, including the establishment of a new trust account and the implementation of an accounting program that allows only computer-generated checks requiring two signatures. This program also results in zero balancing of each transaction, and a three-way reconciliation of the trust account. Since the program was implemented, respondent has had no exceptions on the audits of his trust account by his title insurance underwriter.

DISCIPLINARY PROCEEDINGS

Following its investigation, the ODC filed one count of formal charges against respondent, alleging that his conduct violated Rules 1.15(a)(b)(c) (safekeeping property of clients or third persons) and 8.4(a) (violation of the Rules of Professional Conduct) of the Rules of Professional Conduct. Respondent answered the formal charges and admitted the factual allegations therein, but denied any intentional misconduct. Specifically, respondent denied that he intentionally commingled client funds with his own funds or intentionally converted client funds; rather, respondent suggested that nothing “other than a technical, and unintentional conversion of fiduciary funds occurred as a result of the actions complained of.”

Formal Hearing

This matter proceeded to a formal hearing before the hearing committee. The parties submitted joint stipulations of fact and agreed to the introduction of various exhibits. Respondent testified on his own behalf, explaining that with respect to his accounting procedures, he generally left several thousand dollars of earned fees in his trust account in order to protect his clients and third parties. Respondent cleared the account of his fees every 30 to 45 days, when he wrote a check to the title insurance 14company for its fees. Respondent did not regard this practice as improper because his intent was to make sure there was always enough money in the account. Nevertheless, after the problems surfaced with the trust account, respondent now zero balances the account and issues himself a check for his fees in each transaction, which he then deposits into his operating account.

Turning to the issue of his gambling habits, respondent testified that he and his wife have enjoyed going to casinos since the 1980’s. Respondent initially established a line of credit at the Desert Inn Casino in Las Vegas, which would permit him to gamble and then send him a bill to be paid within thirty days. When respondent received the bill from the casino, he testified that he “picked up the checkbook with the most fees in it, and I paid it out of that checkbook.” Respondent emphasized that the casino bills were never paid from funds belonging to his clients or third parties, although he acknowledged that he should have taken his fees out of the trust account and put them into his operating account, then paid the casino bills from that account.

In 1999, respondent’s host at the Desert Inn Casino, Ana Basa, moved to the Paris Casino. At Ms. Basa’s invitation, respondent went to the Paris Casino in late October 1999 and opened a $10,000 credit line. On November 1, 1999, Ms. Basa passed respondent’s markers directly into his trust account. Respondent testified that he was surprised to learn of this transaction, because he was accustomed to receiving a bill from the casino. However, he explained that instead of sending a bill, the Paris Casino “just took the markers and used them as checks, directly depositing them.” Respondent telephoned Ms. Basa and told her “that can’t be done.” Ms. Basa apologized for the mistake and assured respondent it would not happen again. Nevertheless, when respondent and his wife spent New Year’s Eve 2000 at the Paris Casino, Ms. Basa also sent those markers through the trust account. Respondent | ¡^stated that because he had previously paid the Desert Inn with a trust account check, he assumed Ms. Basa had transferred the account number to the Paris Casino when she moved there. Respondent later learned that Harrah’s New Orleans Casino (“Harrah’s”) had access to the account number as well, and that Har-rah’s also passed his markers through the account instead of sending a bill. According to respondent, he has since canceled all of his casino credit lines and has not gambled since January 2003.

Michal Marcyn, a representative of Har-rah’s, testified that a casino in Las Vegas supplied Harrah’s with respondent’s trust account number. When respondent did not pay his markers before departing Har-rah’s, the casino processed the markers by drafting the trust account. Mr. Marcyn also confirmed that respondent’s account with Harrah’s is inactive.

Michael Brubaker, a nationally certified gambling counselor, testified that respondent was referred to him in January 2003 by Bill Leary of the Lawyers Assistance Program. Following an assessment, Mr. Brubaker concluded respondent is either a problem gambler or a social gambler, but that he is not a compulsive or pathological gambler. Respondent was initially reluctant to seek treatment for his gambling problem, but he has committed to stop gambling and has agreed to participate in a one-year treatment program. Mr. Bru-baker testified that respondent will likely be successful in overcoming his gambling problem if he completes the treatment program; however, Mr. Brubaker recommended that as a “support system,” respondent should be “mandated to continue with recovery with me, ... [or] be connected with the Lawyer’s Assistance Program” for a period of two to five years.

Kathy Sutton is a Louisiana-licensed attorney who works as an auditor for Commonwealth Land Title Insurance Company (“Commonwealth”), respondent’s | (¡current underwriter. Ms. Sutton is responsible for performing quality assurance audits, including escrow accounting reviews, on Commonwealth’s title insurance agents in Louisiana, Mississippi, and Alabama. Ms. Sutton has uncovered no “red flags” in the four such audits she has performed on respondent since he began issuing title insurance policies for Commonwealth in mid-2000.

Hearing Committee Recommendation

At the conclusion of the hearing, the hearing committee filed its report with the disciplinary board. The committee determined that respondent testified in a sincere and truthful manner. Although it recognized respondent’s trust accounting practices were improper, it did not believe he intended to convert client funds.

In determining a sanction, the committee concluded that a fully-deferred suspension was appropriate under these facts, noting that an actual suspension would impair respondent’s ability to make a living. Accordingly, the committee recommended that respondent be suspended from the practice of law for one year and one day, fully deferred, subject to a five-year period of supervised probation with specified conditions.

The ODC filed an objection to the hearing committee’s report and recommendation.

Disciplinary Board Recommendation

Following its review of the record, the disciplinary board found that the stipulated facts are not manifestly erroneous. The board also made additional factual 17findings relating to respondent’s trust account and the manner in which it was handled. Based on the stipulated facts, as supplemented, the board determined respondent violated Rules 1.15(a), 1.15(c), and 8.4(a) of the Rules of Professional Conduct. The board found respondent did not violate Rule 1.15(b).

In addressing sanctions, the board observed that respondent knowingly violated duties owed to his clients and to a third party, First American Title Insurance Company. Although the board found respondent had no intent to cause harm, it noted he knowingly put his trust account in jeopardy by paying his gaming debts out of the account and by permitting casinos access to the account. Under these circumstances, the board determined the potential for harm was significant. Citing Standard 4.12 of the ABA’s Standards for Imposing Lawyer Sanctions, the board concluded the baseline sanction for such misconduct is a suspension from the practice of law.

As aggravating factors, the board found a pattern of misconduct (eight months of gambling withdrawals from the trust account) and substantial experience in the practice of law (admitted 1975). In mitigation, the board acknowledged the absence of a prior disciplinary record, a cooperative attitude toward the disciplinary proceedings, and the imposition of other penalties or sanctions, in the form of a six-week suspension of respondent’s insurance license and a $5,000 fine imposed by the Department of Insurance.

Considering these factors, the board recommended that respondent be suspended from the practice of law for one year and one day, with six months | ^deferred, followed by a five-year period of probation subject to the conditions recommended by the hearing committee.

Both respondent and the ODC filed objections to the disciplinary board’s recommendation. Accordingly, the case was docketed for oral argument pursuant to Supreme Court Rule XIX, § 11(G)(1)(b).

DISCUSSION

Bar disciplinary matters come within the original jurisdiction of this court. La. Const, art. V, § 5(B). Consequently, we act as triers of fact and conduct an independent review of the record to determine whether the alleged misconduct has been proven by clear and convincing evidence. In re: Quaid, 94-1316 (La.11/30/94), 646 So.2d 343; Louisiana State Bar Ass’n v. Boutall, 597 So.2d 444 (La.1992).

As previously noted, the parties have largely stipulated to the facts of this case. Based on our review of the record, we find these stipulations are not clearly wrong. Accordingly, we conclude that respondent violated Rules 1.15(a), 1.15(c), and 8.4(a) of the Rules of Professional Conduct when he commingled his own funds with client and third-party funds held in his trust account and converted client and third-party funds on eight occasions, totaling $5,571.67.

Having found professional misconduct, we now turn to a discussion of an appropriate sanction. In considering that issue, we are mindful that the purpose of disciplinary proceedings is not primarily to punish the lawyer, but rather to maintain the appropriate standards of professional conduct, to preserve the integrity of the legal profession, and to deter other lawyers from engaging in violations of the standards of 19the profession. In re: Vaughan, 00-1892 (La.10/27/00), 772 So.2d 87; In re: Lain, 00-0148 (La.5/26/00), 760 So.2d 1152; Louisiana State Bar Ass’n v. Levy, 400 So.2d 1355 (La.1981). The discipline to be imposed depends upon the facts of each case and the seriousness of the offenses involved, considered in light of any aggravating and mitigating circumstances. In re: Redd, 95-1472 (La.9/15/95), 660 So.2d 839; Louisiana State Bar Ass’n v. Whittington, 459 So.2d 520 (La.1984).

A review of this court’s jurisprudence reveals that we have consistently treated conversion of client funds as one of the most serious professional transgressions a lawyer can commit. We have routinely imposed disbarment or even permanent disbarment in cases of egregious conversion. Of course, we recognize that not all instances of conversion warrant such severe sanctions. In Louisiana State Bar Ass’n v. Hinrichs, 486 So.2d 116 (La.1986), we explained that the determination of an appropriate sanction in conversion cases often turns on several factors, including the lawyer’s state of mind. Typically, we have imposed the most severe sanctions in cases where the lawyer acts in bad faith and intends a result inconsistent with his or her clients’ interests. By contrast, we have imposed more lenient sanctions in cases in which the lawyer’s conversion results from negligence, without any intent to cause harm to his or her clients.

In the instant ease, we are convinced that respondent’s conversion was a product of negligence. Respondent’s testimony, which the hearing committee found to be credible, reveals that he never intended to place his clients’ funds at risk. Instead, the conversion resulted from an unusual chain of events in which a casino debited his trust account directly, rather than sending him a bill as it had done in the past.

I min making this finding, we in no way absolve respondent of responsibility for his acts. Respondent’s initial payment of his gambling debts from his trust account gave the casinos access to his trust account number and set in motion the course of events which ultimately led to the conversion. Unquestionably, respondent should never have used his trust account to pay personal debts (even though he was using his personal funds and not client funds) and should have taken measures to prevent the casinos from having access to this account after he first learned there was a problem. Respondent’s conduct falls far below the high standard of care this court requires of attorneys who have control over funds belonging to others and created a great potential for client harm.

However, in the final analysis, we must conclude respondent’s actions were negligent rather than intentional. Thus, the baseline sanction for this misconduct is a suspension from the practice of law in the range of twelve to eighteen months.

Numerous mitigating factors are present, including respondent’s lack of any pri- or disciplinary record during his nearly thirty years of practice, his cooperative attitude during these proceedings, and the imposition of other penalties and sanctions. We further recognize that respondent, on his own initiative, has taken steps to completely stop gambling and by all accounts has been successful in doing so.

Considering all the unique facts of this case, we conclude the appropriate sanction for respondent’s misconduct is a suspension from the practice of law for a period of one year and one day. In light of the significant mitigating factors, we will defer all but thirty days of this suspension and place respondent on supervised probation for a period of one year, during which respondent’s trust account shall be audited on quarterly basis and he shall continue counseling with Mr. Brubaker or a similar counselor approved by the Lawyers Assistance Program. Any violation of |nthese conditions or other misconduct during the probationary period may be grounds for making the deferred portion of the suspension executory or imposing additional discipline, as appropriate.

DECREE

Upon review of the findings and recommendations of the hearing committee and disciplinary board, and considering the record, briefs, and oral argument, it is ordered that Neil P. Levith, Louisiana Bar Roll number 8681, be suspended from the practice of law in Louisiana for a period of one year and one day. It is further ordered that all but thirty days of this suspension shall be deferred and respondent shall be placed on supervised probation for a period of one year, subject to the following conditions: (1) at respondent’s expense, his trust account shall be audited on a quarterly basis during the period of probation by a qualified independent auditor; and (2) he shall continue counseling with Michael Brubaker or a similar counselor approved by the Lawyers Assistance Program. Any violation of these conditions or other misconduct during the probationary period may be grounds for making the deferred portion of the suspension execu-tory, or imposing additional discipline, as appropriate. All costs and expenses in the matter are assessed against respondent in accordance with Supreme Court Rule XIX, § 10.1, with legal interest to commence thirty days from the date of finality of this court’s judgment until paid.

JOHNSON, J., would suspend for six months.

VICTORY, J., dissents and would follow the Board’s recommendation.

      . From June 1, 1999 through February 29, 2000, respondent handled approximately 270 real estate closings through his trust account.

      . It was respondent’s intention that some drafts would be posted to his operating account, rather than his trust account; however, respondent had provided one of the casinos with the account number for his trust account, which was then passed along to other casinos via a shared data bank. Letters of apology from Paris Las Vegas Casino and Harrah’s New Orleans Casino were introduced into evidence at the formal hearing.

      . Both, the hearing committee and the disciplinary board recommended that respondent be placed on probation for a period of five years. However, Supreme Court Rule XIX, § 10(A)(3) limits a probationary period to two years.

      . Standard 4.12 provides suspension is appropriate “when a lawyer knows or should know that he is dealing improperly with client property and causes injury or potential injury to a client.”

      .One board member dissented and would adopt the hearing committee's recommendation of a fully deferred suspension; another board member dissented and would recommend a three-year suspension.


author: |-WALTER J. ROTHSCHILD, Judge.

text:
    STATE of Louisiana v. Shawn HOUSLEY.
    No. 04-KA-347.
    Court of Appeal of Louisiana, Fifth Circuit.
    Sept. 28, 2004.
    John M. Crum, Jr., District Attorney, Rodney A. Brignac, Assistant District Attorney, LaPlace, LA, for State of Louisiana.
    Jennifer L. Pate, Baton Rouge, LA, for Defendant/Appellant.

      Panel composed of Judges SUSAN M. CHEHARDY, CLARENCE E. McMANUS and WALTER J. ROTHSCHILD.
   |-WALTER J. ROTHSCHILD, Judge.

On August 14, 2000, a St. John the Baptist Parish Grand Jury returned an indictment charging defendant, Shawn Housley, with distribution of cocaine in violation of LSA-R.S. 40:967(A)(1). Defendant was arraigned on October 16, 2000 and pled not guilty. On February 27 and 28, 2002, the case was tried before a twelve-person jury which found defendant guilty of the lesser included responsive verdict of attempted distribution of cocaine.

Defendant’s motion for new trial was denied on April 4, 2002. The trial court sentenced defendant on May 8, 2002 to imprisonment at hard labor for two and one-half years “without benefit.” On June 5, 2002, the trial court granted defendant’s motion to reconsider sentence and resen-tenced defendant to imprisonment at hard labor for two and one-half years, eighteen months suspended, one year to be served “without benefit,” and eighteen months probation following | ?the service of the one year. Defendant filed a motion for appeal on June 14, 2002 that was granted.

On March 6, 2002, defendant filed a motion for post-verdict judgment of acquittal. On August 22, 2002, defendant filed with this Court a motion to remand the case to the district court so that the district court could rule upon the motion for post-verdict judgment of acquittal. On March 24, 2004, the district court filed into the record a judgment denying defendant’s motion for post-verdict judgment of acquittal.

A “Conditions of Probation” form was filed into the record on February 19, 2008. On July 18, 2003, a motion and order for hearing to revoke probation was filed. On August 25, 2003, the trial court read aloud the conditions of probation to defendant.

FACTS

St. John the Baptist Parish Sheriffs Office Detective Sergeant Troy Hidalgo testified that he supervised police officers from other agencies assigned to his office in an undercover investigation of high crime areas of St. John Parish in an effort to target street level dealers who were distributing illegal narcotics.

Det. Hidalgo testified that, on July 27, 2000, defendant was arrested as a result of that undercover operation. He explained that he monitored the transaction over the radio as it occurred to ensure the safety of the undercover agent and to corroborate that a transaction occurred. Det. Hidalgo testified that the transaction was videotaped, and he identified State’s Exhibit 2 as the videotape of the transaction. The videotape was shown to the jury.

The videotape, dated July 27, 2000 at approximately 4:30 p.m., shows a vehicle driving down the street. The vehicle subsequently turns into a parking lot in front of a building. The vehicle backs up and turns around. As it does so, a black male with a towel over the back and sides of his head is seen standing next to |4a fence. An unknown male voice says “twenty,” and the black male motions with his arm for the man to go to the side of the building. The vehicle drives around the back of the building where the black male with the towel over his head is waiting. A white male in the vehicle subsequently exits the vehicle and walks over to the black male. The two men then walk away from the vehicle where they stand close together for a few seconds. The conversation between the two men cannot be heard, nor can the exchange of money or drugs be seen. The black male walks off to the right, and the white male returns to the vehicle.

Terrebonne Parish Narcotics Task Force Agent Greg Doiron testified that, on July 27, 2000, at 4:33 p.m., he purchased crack cocaine for $20 from an individual later identified as defendant. Agent Doi-ron explained that it was his third buy on that day, and that the videotape accurately portrayed the transaction. Agent Doiron positively identified defendant in court.

St. James Parish Sheriffs Office Deputy David Hackley testified that, on the day in question, he was in a vehicle with Agents Doiron and Melodi Cantrelle at West Second and Weegie’s Bar when he observed a black male later identified as defendant come up to the window of the vehicle. Deputy Hackley testified that Agent Doi-ron talked to defendant who instructed him to step out of the vehicle. Agent Doiron exited the vehicle and met with the black male several yards away where he purchased $20 worth of crack cocaine and returned to the vehicle. Deputy Hackley admitted he could not see an exchange. He positively identified defendant in court.

Terrebonne Parish Sheriffs Office Agent Melodi Cantrelle testified at trial, and her testimony largely corroborated that of Agent Doiron and Deputy Hackley.

St. John the Baptist Parish Sheriffs Office Lieutenant Clarence Gray testified that, during his years of being on the street crimes task force, he had come to know defendant, and that he and defendant had grown up in the same area of |fiLaPlace. Lt. Gray testified that, on August 7, 2000, he was shown a videotape by Det. Hidalgo, and that he was able to identify defendant as the individual who was selling drugs on the videotape.

Esther Fleming, who was qualified as an expert in the field of drug analysis, tested the substance contained in State’s Exhibit 1 and found that it contained cocaine.

Defendant admitted that the individual seen in the videotape was him. He recalled talking to a man in a pickup truck and walking away from the truck with that individual. Defendant explained that while they were walking, defendant asked the man if he was a narcotics agent, and that the man said he was not. Defendant testified that after the man said he was not a narcotics agent, that defendant walked off and that the man just turned around and walked off back to his truck. Defendant denied selling cocaine to that individual or taking $20 from him.

ASSIGNMENT OF ERROR NUMBER ONE

The evidence was insufficient to support the verdict.

DISCUSSION

Defendant argues that the evidence was legally insufficient to support the verdict of attempted distribution of cocaine. Specifically, defendant contends that there was no evidence to show that he had the intent to sell cocaine to the officer. He points out that the jury clearly did not believe Agent Doiron’s testimony regarding the events that transpired behind the bar. He asserts that if the jury believed that the cocaine introduced into evidence came from him, the verdict would have been guilty as charged. Defendant argues that, once Agent Doiron’s testimony was eliminated as untrue, the only possible verdict would have been not guilty, because defendant’s version of events was the only one left.

pin determining a challenge to the sufficiency of the evidence, the reviewing court must decide whether, viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found that the state proved the essential elements of the crime beyond a reasonable doubt. Jackson v. Virginia, 443 U.S. 307, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979); State v. Mitchell, 99-3342 (La.10/17/00), 772 So.2d 78, 82.

In cases involving circumstantial evidence, LSA-R.S. 15:438 mandates that “assuming every fact to be proved that the evidence tends to prove, in order to convict, it must exclude every reasonable hypothesis of innocence.” In State v. Mitchell, 772 So.2d at 83, the Louisiana Supreme Court discussed appellate review of such cases:

On appeal, the reviewing court “does not determine whether another possible hypothesis suggested by a defendant could afford an exculpatory explanation of the events.” ... Rather, the court must evaluate the evidence in a light most favorable to the state and determine whether the possible alternative hypothesis is sufficiently reasonable that a rational juror could not have found proof of guilt beyond a reasonable doubt....

(Citations omitted; emphasis as found in the original).

Defendant was charged with distribution of cocaine but convicted of attempted distribution of cocaine in violation of LSA-R.S. 40:967(A)(1) and 14:27. LSA-R.S. 40:967 provides that it shall be unlawful for any person “knowingly or intentionally ... [t]o ... distribute, or dispense, ... a controlled dangerous substance ... classified in Schedule II[.]” Cocaine and its derivatives are listed in Schedule II. LSA-R.S. 40:964. A defendant is guilty of distribution of cocaine when he transfers possession or control of cocaine to his intended recipients. State v. Cummings, 95-1377 (La.2/28/96), 668 So.2d 1132; See, LSA-R.S. 40:961(14).

An attempt is defined in LSA-R.S. 14:27 as follows:

A. Any person who, having a specific intent to commit a 17crime, does or omits an act for the purpose of and tending directly toward the accomplishing of his object is guilty of an attempt to commit the offense intended; and it shall be immaterial whether, under the circumstances, he would have actually accomplished his purpose.
B. (1) Mere preparation to commit a crime shall not be sufficient to constitute an attempt[.] ...
C. An attempt is a separate but lesser grade of the intended crime; and any person may be convicted of an attempt to commit a crime, although it appears on the trial that the crime intended or attempted was actually perpetrated by such person in pursuance of such attempt.

LSA-R.S. 14:10(1) defines specific intent, as follows: “Specific criminal intent is that state of mind which exists when the circumstances indicate that the offender actively desired the prescribed criminal consequences to follow his act or failure to act.”

Although specific intent may be proven by direct evidence, such as by statements of the accused, it is a question of fact and may be inferred from the circumstances surrounding the offense and the conduct of the defendant. State v. Williams, 01-1650 (La.11/1/02), 831 So.2d 835, 849.

Thus, to be found guilty of attempted distribution of cocaine, a defendant must have a specific intent to distribute cocaine and do or omit an act for the purpose of and tending directly toward the accomplishing of his object.

In the instant case, the state introduced evidence to show that defendant distributed cocaine to an undercover officer. Defendant introduced evidence to show that he did not sell cocaine to the undercover officer, but rather walked away from the officer after the officer told him he was not a narcotics agent.

Because the jury found defendant guilty of the lesser included offense of attempted distribution of cocaine, it apparently believed that defendant attempted |Rto distribute cocaine to the officer but changed his mind, and that the officer was mistaken when he testified that he purchased cocaine from defendant.

A determination of the weight of evidence is a question of fact, resting solely with the trier of fact who may accept or reject, in whole or in part, the testimony of any witnesses. State v. Silman, 95-0154 (La.11/27/95), 663 So.2d 27, 35. A reviewing court may impinge on the fact-finding function of the jury only to the extent necessary to assure that the defendant has received due process of law. State v. Bordenave, 95-2328 (La.4/26/96), 678 So.2d 19, 20 (quoting Jackson, 443 U.S. at 319, 99 S.Ct. at 2789). It is not the function of an appellate court to assess credibility or reweigh the evidence. Appellate review for minimal constitutional sufficiency of evidence is a limited one restricted by the standard developed in Jackson. State v. Rosiere, 488 So.2d 965, 968 (La.1986) (and the cases cited therein).

We find that the evidence introduced at trial supports the jury’s verdict of attempted distribution of cocaine. Defendant’s actions of wearing a towel over his head in the middle of summer in what appeared to be an attempt to hide his identity, walking up to the window of the vehicle, motioning for the man in the vehicle to go around to the back of the building after the man asks for a “twenty,” and asking the man whether he was a narcotics agent, is sufficient circumstantial evidence to show that defendant intended to sell cocaine to the undercover officer but changed his mind. Additionally, the evidence indicates that the incident occurred in a high crime area known for drug trafficking, because Det. Hidalgo testified that those were the locations he was targeting in his undercover investigation.

Although Agent Doiron testified that defendant sold him cocaine for $20, and the cocaine was introduced into evidence, the jury could have reasonably concluded that the agent was mistaken when he testified that he purchased cocaine Rfrom defendant, because of the other buys he had made that day. Even if the jury thought the officer was mistaken about purchasing cocaine from defendant, as was stated previously, the jury is free to accept or reject in whole or in part, the testimony of any witness, contrary to defendant’s assertions that the jury had to completely believe either defendant’s version or the officer’s version of events. State v. Silman, supra. Apparently, the jury in this case chose to accept in part the testimony of the officers and defendant, which it was free to do.

Viewing the evidence in the light most favorable to the prosecution, we find that any rational trier of fact could have concluded beyond a reasonable doubt that defendant was guilty of attempted distribution of cocaine.

This assignment is without merit.

Defendant mentions at the end of his brief under the heading entitled “Conclusion” that he established by a preponderance of the evidence that he was entrapped into committing the offense and, as such, the jury’s verdict was contrary to the law and the evidence and the conviction should be reversed. However, defendant’s brief contains no argument in support of this assignment. Assignments of error that are neither briefed nor argued are considered abandoned on appeal. Uniform Rules Courts of Appeal, Rule 2-12.4; State v. Blank, 01-564 (La.App. 5 Cir. 11/27/01), 804 So.2d 132, 139. We will therefore not address this issue on appeal.

ERROR PATENT DISCUSSION

The record was reviewed for errors patent, according to LSA-C.Cr.P. art. 920: State v. Oliveaux, 312 So.2d 337 (La.1975); State v. Weiland, 556 So.2d 175 (La.App. 5 Cir.1990). We find no errors patent which require corrective action.

DECREE

Accordingly, for the reasons assigned herein, the conviction and sentence of defendant, Shawn Housley, are affirmed.

AFFIRMED.


author: I,SULLIVAN, Judge.

text:
    Darrell REGAN v. EUNICE SUPERETTE, INC.
    No. 04-227.
    Court of Appeal of Louisiana, Third Circuit.
    Sept. 29, 2004.
    Rehearing Denied Nov. 17, 2004.

      Michael B. Miller, Miller & Miller, Crowley, LA, for Plaintiff/Appellee/Appel-lant, Darrell Regan.
    Christopher R. Philipp, Attorney at Law, Lafayette, LA, for DefendanVAppel-lant/Appellee, Eunice Superette, Inc.
    Court composed of JOHN D. SAUNDERS, MICHAEL G. SULLIVAN, and ELIZABETH A. PICKETT, Judges.
   I,SULLIVAN, Judge.

In this workers’ compensation matter, Darrell Regan and Eunice Superette, Inc. appeal factual findings and awards made by the Workers’ Compensation Judge (WCJ). For the following reasons, we affirm in part, reverse in part, and remand.

Facts

The facts of this matter are essentially undisputed, and we adopt the facts as outlined by the WCJ.

Regan was employed with the employer, Eunice Superette, Inc., “The Super-ette[,]” making sausage and boudin. Regan managed the Superette’s smokehouse. His job duties included loading and unloading trucks with boxes of meat, putting the boxes of meat on racks, taking the boxes off the racks, loading them into a cart to bring to the grinder, then grinding, mixing and stuffing the meat. Another co-worker who sometimes helped in the smokehouse was Willie Burson, the owner’s nephew.
On February 23, 2001, the claimant was stuffing sausage. [Easton] Rollins [,another Superette employee who worked in the smokehouse,] was also in the smokehouse, cutting meat. Willie Burson came in the smokehouse and slapped the claimant on the back of the neck as a practical joke. Burson testified that this joke was done so often they gave it a name, “giving a red neck.” Burson demonstrated the slap at trial, and it was a good, hard slap. Burson testified that on this particular day Re-gan said he was hurting, so Burson “stopped it right there.”
A couple of days later Regan reported an accident to the employer. An employer report of injury/illness, form 1007, was completed on February 28. Regan told the employer that he injured himself “loading a delivery truck [and] picked up a 90 lb. hindquarter & hurt his shoulder.” Regan gave a similar history to all of his treating physicians. He was found to have a herniated cervical disc, and eventually surgery was performed. He was released to light duty December 11, 2001 by his treating physician, Dr. Ricardo R. Leoni. A vocational counselor was assigned to work with the claimant, and benefits were terminated in March 2002 based upon a light duty job offer by the Superette.
The employer had filed a disputed claim form 1008 in February 2002 to compel the claimant to attend a medical examination. In March of that year, the employer filed a motion to compel cooperation with vocation rehabilitation. In May the claimant filed a disputed claim form 1 i.1008 due to the termination of benefits and requesting penalties and attorney fees. The claims were later consolidated.
The claimant was deposed on October 8, 2002. At the deposition the claimant disclosed for the first time the true nature of the accident. The employer subsequently amended its pretrial questionnaire to set forth the “horseplay” exclusion per La.R.S. 23:1031(D), and later amended to allege that the claimant had violated La.R.S. 23:1208 by misrepresenting the manner in which the accident occurred.

Additional facts pertinent to specific assignments of error are set out in the context of the discussion of each assignment of error.

After trial of the matter, the WCJ rendered judgment in favor of Mr. Regan, awarding him supplemental earnings benefits (SEB) as of March 18, 2002, the date the Superette discontinued those benefits. The WCJ also determined that Mr. Regan was not engaged in horseplay at the time he was injured and, therefore, not excluded from receiving benefits, and that Mr. Regan’s initial description of how he was injured, while incorrect, did not merit forfeiture of his benefits. The WCJ denied Mr. Regan’s request for penalties and attorney fees as a result of the Superette’s discontinuation of his benefits on March 17, 2002, and did not award attorney fees for the Superette’s failure to reimburse Mr. Regan for mileage requested on April 8, 2003.

The Superette assigns three errors: 1) the WCJ erred when it reinstated Mr. Regan’s SEB; 2) the WCJ erred when it did not find that Mr. Regan’s injury was caused by his engaging in horseplay which arose out of his employment with the Su-perette; and 3) the WCJ erred when it concluded that Mr. Regan did not willfully make a false statement or representation for the purpose of obtaining benefits or defeating its horseplay defense in violation of La.R.S. 23:1208. Mr. Regan assigns two errors: 1) the WCJ’s denial of attorney fees for the Superette’s arbitrary and | ¡¡capricious failure to pay Mr. Regan’s weekly compensation benefits after March 18, 2002 and 2) the WCJ’s failure to award penalties and attorney fees for the Super-ette’s failure to pay mileage requested on April 8, 2003.

Discussion

Supplemental Earning Benefits

The Superette argues that Mr. Regan refused to return to work when it had a position available for him which was within the physical restrictions established by his treating physician. Randall Moore, owner of the Superette, and a vocational rehabilitation counselor testified that the position made available for Mr. Regan to return to work in March 2002 was a light duty position as required by Dr. Leoni. This light duty position was the same position Mr. Regan had with the Superette before he was injured; however, a helper was to do 'all the lifting over the twenty-five pound maximum weight restriction established by Dr. Leoni.

Mr. Regan testified that, when he reported to work on March 17, 2002, he was informed that he would be performing his old job. He further testified that he was not told that his job was being modified and that he would not have to lift the heavy loads he lifted before his injury. Bobby Taylor, the Superette’s plant manager, testified that he met with Mr. Regan the day he went to the store to return to work and that he informed Mr. Regan he would not have to lift heavy loads as he did before his injury. However, Mr. Taylor testified in his deposition that he told Mr. Regan that his job “would have been basically what he was doing before.” When questioned in his deposition whether there would have been any difference between Mr. Regan’s duties at that time and his duties before he was injured, Mr. Taylor stated, “I don’t really know of any difference.” Further, he agreed that Mr. Regan was told that he would 14be doing the same work he did before his injury, explaining that he did not want Mr. Regan to feel that he was being demoted.

It is undisputed that Mr. Regan’s job duties before his injury required heavy lifting and that without modification of his position, it did not meet the physical restrictions established by Dr. Leoni. Mr. Taylor’s deposition testimony justifies Mr. Regan’s refusal to return to work in March 2002. This assignment is without merit.

Horseplay

In its second assignment of error, the Superette complains that the WCJ erred in determining that Mr. Regan’s injury was not the result of his engaging in horseplay. La. R.S. 23:1031(D) provides:

An injury by accident shall not be considered as having arisen out of the employment and is thereby not covered by the provisions of this Chapter if the injured employee was engaged in horseplay at the time of the injury.

The testimony of Mr. Regan, Mr. Rollins, and Mr. Burson was that Mr. Regan was not engaged in horseplay when he was injured. They all testified that Mr. Regan did not know Mr. Burson was going to hit him, and Mr. Burson testified that he “snuck up on” Mr. Regan. Even though there was a history of horseplay among these employees, the evidence supports the WCJ’s conclusion that Mr. Regan was not engaged in horseplay when he was injured and is, therefore, not excluded from coverage of the workers’ compensation act. See Kirby v. M.L. Smith, Jr., Inc., 30,841 (La. App. 2 Cir. 8/19/98), 716 So.2d 933, writ denied, 98-2450 (La.11/25/98), 729 So.2d 566.

| ¿False Statements or Misrepresentations

Lastly, the Superette argues that the WCJ erred in finding that it did not meet its burden of proving that Mr. Regan forfeited his benefits because he violated La.R.S. 23:1208. The WCJ determined that “Regan did make willful misrepresentations to his employer and his doctors when he told them he was injured by a side of beef.” However, the WCJ did not find “with a sufficient degree of probability that the misrepresentations were made to obtain workers’ compensation benefits.” Mr. Regan, Mr. Rollins, and Mr. Burson all testified that Mr. Regan reported a different version of how he was injured to protect Mr. Burson from being penalized for engaging in horseplay.

Forfeiture of benefits under La. R.S. 23:1208 is a harsh remedy which must be strictly construed. Smith v. Quarles Drilling Co., 99-171 (La.App. 3 Cir. 6/2/99), 741 So.2d 829, writ denied, 99-1949 (La.10/8/99), 751 So.2d 227. Whether or not an employee has forfeited his right to benefits under La.R.S. 23:1208 is a question of fact, which will not be reversed on appeal in the absence of manifest error. Id.

La.R.S. 23:1208, in part, provides:

A. It shall be unlawful for any person, for the purpose of obtaining or defeating any benefit or payment under the provisions of this Chapter, either for himself or for any other person, to willfully make a false statement or representation.
E. Any employee violating this Section shall, upon determination by workers’ compensation judge, forfeit any right to compensation benefits under this Chapter.

In Flintroy v. Scott Cummins Salvage, 36,857, p. 12 (La.App. 2 Cir. 3/10/03), 839 So.2d 1231, 1238, writ denied, 03-1068 (La.6/6/03), 845 So.2d 1093 (citations omitted), the court explained the application of La.R.S. 23:1208 as follows:

RLa.R.S. 23:1208 authorizes forfeiture of benefits upon proof that (1) there is a false statement or representation; (2) it is willfully made; and (3) it is made for the purpose of obtaining or defeating any benefit or payment. The statute applies to any false statement or misrepresentation made willfully by a claimant for the purpose of obtaining benefits. All of these requirements must be present before a claimant can be penalized. Because this statute is penal in nature, it must be strictly construed, both in its substantive ambit and in its penalty provisions.

The WCJ found that Mr. Regan’s explanation for his failure to report the truth about how his accident happened “plausible.” In light of the testimony of Mr. Rollins and Mr. Burson, we cannot say that the WCJ’s conclusion on this issue is clearly wrong. This assignment is without merit.

Penalties and Attorney Fees

Mr. Regan assigns as error the WCJ’s failure to award penalties and attorney fees for the Superette’s failure to pay mileage he requested on April 8, 2003. During Mr. Regan’s testimony, his attorney introduced a copy of the April 8, 2003 letter containing his request for mileage at issue. At that time, the WCJ and defense counsel noted the exhibit was not being received in evidence for penalties and attorney fees; counsel for Mr. Regan did not dispute this statement. At the conclusion of Mr. Regan’s testimony, counsel for Mr. Regan stated:

MR. MILLER: And, Judge, since there’s no penalty and attorney’s fee issues, I’m not going to introduce my affidavit. So I think that’s all I have.

The following exchange then occurred:

MR. MILLER: Judge, it may be a little easier to do the three together. It won’t take very long to do any of them. You [will have] already decided the case.
JUDGE [MORROW]: Right.
MR. MILLER: It won’t be very difficult. You want to do that, Chris?
|7MR. PHILIPP: Yeah.
JUDGE MORROW: Well, reserve them all. Reserving all penalty and attorney’s fee issues.

Mr. Miller, Mr. Regan’s attorney, then rested.

In light of the reservation of penalty and attorney fee issues, we find no error with the WCJ’s failure to award penalties and attorney fees for the Superette’s failure to pay the mileage reimbursement as requested on April 8, 2002.

Even though the issue of penalties and attorney fees was reserved, the WCJ denied Mr. Regan’s request for attorney fees for the Superette’s discontinuation of his benefits when he failed to return to work in March 2002. At that time, La.R.S. 28:1201.2 provided, in part:

Any employer or insurer who at any time discontinues payment of claims due and arising under this Chapter, when such discontinuance is found to be arbitrary, capricious, or without probable cause, shall be subject to the payment of all reasonable attorney fees for the prosecution and collection of such claims.

An act is arbitrary and capricious when it is done willfully and without consideration of the facts and circumstances presented, or it is one based on an unfounded motivation. Strother v. Guinn Oilfield Servs., L.L.C., 03-1310 (La.App. 3 Cir. 3/3/04), 867 So.2d 113. A determination of whether the discontinuance of benefits was arbitrary or capricious must consider the facts known to the employer at the time the benefits were discontinued. Whiddon v. Livingston Parish Council, 00-1349 (La.App. 1 Cir. 9/28/01), 809 So.2d 421, writ denied, 01-2893 (La.1/25/02), 807 So.2d 837. Facts learned subsequent to the discontinuance cannot serve as justification of the discontinuance. Id.

As previously discussed, Mr. Regan’s failure to return to work on March 18, 2002, was reasonable because the job description given to him by Mr. Taylor was for |sheavy work, not light work as prescribed by Dr. Leoni. Accordingly, the Superette’s discontinuance of Mr. Regan’s indemnity benefits was arbitrary, capricious, or without probable cause.

The WCJ held that, even though the Superette did not learn about the potential horseplay defense until eighteen months after it discontinued Mr. Regan’s benefits, it reasonably controverted his claim for attorney fees under this section. This conclusion was manifestly erroneous, and it is reversed.

The record does not contain the information necessary to determine an appropriate amount for attorney fees; therefore, we remand this matter to the WCJ for the award of attorney fees. The issue of penalties and attorney fees regarding the reimbursement of mileage can be tried at the same time.

Disposition

The WCJ’s reinstatement of benefits in favor of Mr. Regan is affirmed. The WCJ’s denial of attorney fees for the Su-perette’s discontinuance of Mr. Regan’s benefits is reversed, and this matter is remanded for determination of an award of attorney fees, as well as whether Mr. Re-gan is entitled to attorney fees and penalties for his mileage reimbursement claim. All costs of this appeal are assessed to Eunice Superette, Inc.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.