Per Curiam
`
`
`Filed: March 2, 2006
`Office of Appellate Courts
`
`STATE OF MINNESOTA
`
`IN SUPREME COURT
`
`C7-97-1350
`
`
`Original Jurisdiction
`
`In Re Petition for Disciplinary Action
`against William C. Pugh, a Minnesota
`Attorney, Registration No. 195261.
`
`S Y L L A B U S
`
`
`
`Disbarment is the appropriate disciplinary sanction for an attorney who was
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`convicted of 32 felony counts related to the misappropriation of funds entrusted to his
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`real estate closing business.
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`Heard, considered, and decided by the court en banc.
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`O P I N I O N
`
`PER CURIAM.
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`William C. Pugh was admitted to the practice of law in Minnesota on October 28,
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`1988. On July 25, 1997, the Director of the Office of Lawyers Professional
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`Responsibility filed a petition for disciplinary action seeking to have Pugh disbarred
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`based on Pugh’s misappropriation of over $1 million from a real estate closing company
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`he owned. As a result of his misappropriation, Pugh was indicted in federal court on 34
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`felony counts, including mail fraud, wire fraud, interstate transportation of money
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`obtained by fraud, money laundering, concealment of material facts, and causing the
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`unlawful act of another. A jury found Pugh guilty of 33 of the counts in the indictment.
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`
`
`1
`
`
`
`
`Filed: March 2, 2006
`Office of Appellate Courts
`
`STATE OF MINNESOTA
`
`IN SUPREME COURT
`
`C7-97-1350
`
`
`Original Jurisdiction
`
`In Re Petition for Disciplinary Action
`against William C. Pugh, a Minnesota
`Attorney, Registration No. 195261.
`
`S Y L L A B U S
`
`
`
`Disbarment is the appropriate disciplinary sanction for an attorney who was
`
`convicted of 32 felony counts related to the misappropriation of funds entrusted to his
`
`real estate closing business.
`
`Heard, considered, and decided by the court en banc.
`
`O P I N I O N
`
`PER CURIAM.
`
`William C. Pugh was admitted to the practice of law in Minnesota on October 28,
`
`1988. On July 25, 1997, the Director of the Office of Lawyers Professional
`
`Responsibility filed a petition for disciplinary action seeking to have Pugh disbarred
`
`based on Pugh’s misappropriation of over $1 million from a real estate closing company
`
`he owned. As a result of his misappropriation, Pugh was indicted in federal court on 34
`
`felony counts, including mail fraud, wire fraud, interstate transportation of money
`
`obtained by fraud, money laundering, concealment of material facts, and causing the
`
`unlawful act of another. A jury found Pugh guilty of 33 of the counts in the indictment.
`
`
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`1
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`In addition to the director filing the petition for disciplinary action on July 25, the director
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`and Pugh entered into a stipulation suspending Pugh from the practice of law. The
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`stipulation provided that Pugh was not required to file an answer to the petition until
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`appellate review of his criminal conviction was completed. Pursuant to the stipulation,
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`we suspended Pugh from the practice of law and extended the time for Pugh to file his
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`answer until appellate review of his conviction was completed.
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`Pugh’s appeal of his convictions was unsuccessful and, in 2003, the director
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`moved this court to appoint a referee for a hearing. The Honorable Norbert P. Smith was
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`appointed as referee, and a hearing was held on July 12, 2005. At the hearing, the
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`director requested Pugh’s disbarment for violating Minn. R. Prof. Conduct 8.4(b) and (c).
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`Neither the director nor Pugh called witnesses.
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`The referee found that Pugh owned and operated Sierra Title Company, a real
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`estate closing company. Sierra Title Company held funds and insurance premiums that
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`belonged to buyers and sellers of real estate, lenders, and a title insurer. The funds were
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`to be distributed as part of real estate closings. Pugh misappropriated over $1 million of
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`these funds, which he used to finance his business interests and to enhance his personal
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`lifestyle.1
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`Pugh was ultimately indicted on 34 felony counts. On June 30, 1997, a jury found
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`Pugh guilty of 33 of the charged counts.2 He was sentenced to 78 months’ imprisonment
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`
`1
`Pugh’s indictment indicates that he misappropriated funds from approximately
`November 1990 until approximately January 1994.
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` 2
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`
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`The last charge was dismissed by the prosecution.
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`
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`2
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`
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`and was ordered to pay $1,245,000.00 in restitution to Commonwealth Land Title
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`Insurance Co. On direct appeal, the United States Court of Appeals for the Eighth Circuit
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`affirmed 32 of Pugh’s convictions. United States v. Pugh, 151 F.3d 799, 800 (8th Cir.
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`1998). Finally, in 2003, the Eighth Circuit remanded the case to a magistrate judge for a
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`hearing regarding the issue of the amount of restitution Pugh owed. United States v.
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`Pugh, 75 Fed. App’x 546, 547 (8th Cir. 2003). In doing so, the court emphasized that the
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`“hearing will not be an opportunity for Pugh to challenge the validity of the underlying
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`conviction or restitution obligation.” Id.
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`The referee further found that Pugh’s argument that “his actions were common
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`business practice * * * is an improper attempt to re-litigate the underlying conviction in
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`disregard of Rule 19, Rules on Lawyers Professional Responsibility (RLPR).” The
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`referee concluded that Pugh engaged in misconduct in violation of Minn. R. Prof.
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`Conduct 8.4(b) and (c) by committing criminal acts that reflect adversely on a lawyer’s
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`honesty, trustworthiness, and fitness as a lawyer. Therefore, the referee recommended
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`that Pugh be disbarred from the practice of law and pay $900 in costs plus disbursements.
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`Neither the director nor Pugh disputes the referee’s findings and conclusions.
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`Moreover, Pugh admits that he committed the acts underlying his convictions.3
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`Therefore, the only issue presented in this case is the appropriate discipline. In
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`considering a petition for disciplinary action, we have the ultimate responsibility for
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`
`3
`While Pugh ordered a transcript of the referee hearing, with the result that the
`referee’s findings and conclusions are not deemed conclusive under Rule 14(e), RLPR,
`he has not challenged any of the referee’s findings of fact or conclusions of law in these
`proceedings.
`
`
`
`3
`
`
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`determining the appropriate sanction. In re Oberhauser, 679 N.W.2d 153, 159 (Minn.
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`2004). “The purposes of disciplinary sanctions for professional misconduct are to protect
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`the public, to protect the judicial system, and to deter future misconduct by the
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`disciplined attorney as well as by other attorneys.” Id. (citing In re Daffer, 344 N.W.2d
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`382, 385 (Minn. 1984)).
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`We consider four factors in determining the appropriate sanction: (1) the nature of
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`the misconduct; (2) the cumulative weight of the violations of the rules of professional
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`conduct; (3) the harm to the public; and (4) the harm to the legal profession. Id.
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`Appropriate sanctions are determined on a case-by-case basis after considering both
`
`aggravating and mitigating circumstances. In re Wentzell, 656 N.W.2d 402, 408 (Minn.
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`2003). We look to similar cases for guidance in setting the proper discipline. In re
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`Thedens, 557 N.W.2d 344, 347 (Minn. 1997).
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`Generally, felony convictions warrant “disbarment, unless significant mitigating
`
`factors exist.” In re Anderley, 481 N.W.2d 366, 369 (Minn. 1992). The ABA Standards
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`for Imposing Lawyer Sanctions state that disbarment is appropriate when “a lawyer
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`engages in serious criminal conduct, a necessary element of which includes * * *
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`misrepresentation, fraud, extortion, misappropriation, or theft.” ABA Standards for
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`Imposing Lawyer Sanctions, Rule 5.11 (a) (1992). Pugh was convicted of mail and wire
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`fraud, interstate and foreign transportation of money obtained by fraud, money
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`laundering, and fraudulent concealment of material facts. Therefore, under the ABA
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`Standards, disbarment would be an appropriate sanction.
`
`
`
`4
`
`
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`In cases similar to this one, we have disbarred attorneys convicted of mail fraud
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`and money laundering. See, e.g., In re Perez, 688 N.W.2d 562, 565, 569 (Minn. 2004)
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`(disbarring attorney convicted of felony mail fraud related to his practice of law);
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`Oberhauser, 679 N.W.2d at 154-55 (disbarring attorney based on conviction of money
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`laundering); In re Klane, 659 N.W.2d 701, 701 (Minn. 2003) (disbarring attorney who
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`committed felony mail fraud in representing a trust); In re Koss, 611 N.W.2d 14, 14-15
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`(Minn. 2000) (disbarring attorney convicted of felony mail fraud and racketeering);
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`Anderley, 481 N.W.2d at 368, 370 (disbarring attorney based on a conviction of mail
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`fraud); In re Kraemer, 361 N.W.2d 402, 403 (Minn. 1985) (disbarring attorney for
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`convictions of interstate transportation of stolen goods, mail fraud, conspiracy, and theft).
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`We have also disbarred an attorney who misappropriated real estate sale proceeds
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`received as a real estate closer. In re Ploetz, 556 N.W.2d 916, 916 (Minn. 1996).
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`
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`Here, Pugh argues that he should be subject to discipline short of disbarment,
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`raising as mitigation the argument that the actions on his part that resulted in his
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`convictions were condoned and accepted in the title industry at the time he committed
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`them, that he did not intend to commit a crime, and that he was only convicted of the
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`felonies because certain witnesses lied during his trial. As part of his argument, Pugh
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`points out that he has not been the subject of previous complaints “that have warranted
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`action from the Director.” He also emphasizes that his felonious conduct did not take
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`place in his practice of law. The director, in arguing that Pugh should be disbarred, notes
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`that Pugh’s claimed mitigating factors are merely an attempt to use this proceeding to
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`relitigate his underlying convictions.
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`
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`5
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`
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`While we will consider mitigating factors in determining the appropriate
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`discipline, “[a] lawyer’s criminal conviction in any American jurisdiction * * * is * * *
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`conclusive evidence that the lawyer committed the conduct for which the lawyer was
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`convicted.” Rule 19(a), RLPR. Because a conviction is conclusive evidence, we will not
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`allow an attorney to relitigate the underlying facts of the conviction. In re Dvorak, 554
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`N.W.2d 399, 402 (Minn. 1996).
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`Pugh’s mitigation arguments fail. They fail because they do nothing more than
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`attempt to explain why he should not have been convicted for his actions. In essence, the
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`arguments are nothing more than an impermissible attempt to relitigate his underlying
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`convictions. Further, with respect to his argument that his conviction arose out of a
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`common business practice, we note that the fact that criminal activity may have been a
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`common business practice does not affect Pugh’s obligation to conduct himself according
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`to the law and the ethical standards of the legal profession. As for Pugh’s argument that
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`he did not intend to commit a crime, it is enough to note that “when the criminal conduct
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`includes a specific state of mind, the conviction is conclusive evidence that the lawyer
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`acted with that state of mind.” Oberhauser, 679 N.W.2d at 159. Here, either intent,
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`knowledge, or willfulness is an element of each offense for which Pugh was convicted.
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`18 U.S.C. § 2 (2000) (causing the act of another); 18 U.S.C. § 1001 (2000) (concealment
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`of material fact); 18 U.S.C. §§ 1341, 1343 (2000) (mail and wire fraud); 18 U.S.C.
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`§§ 1956 (a)(1)(B)(i), 1957 (2000) (money laundering); 18 U.S.C. § 2314 (2000)
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`(interstate and foreign transportation of property obtained by fraud). Therefore, the jury’s
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`
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`6
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`
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`guilty verdicts are conclusive evidence that, in misappropriating the money, Pugh acted
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`with the requisite criminal intent.
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`To the extent that Pugh suggests that his disciplinary sanction should be lighter
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`because his misconduct did not involve the practice of law, that suggestion also fails. We
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`have held in the past that a lawyer’s ethical obligations are not limited to actions
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`occurring in the practice of law, but extend to business dealings unconnected with the
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`practice of law. In re Peters, 428 N.W.2d 375, 380 (Minn. 1988).
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`Finally, while we consider an attorney’s lack of previous discipline to be a
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`mitigating factor when determining the appropriate sanction, lack of previous discipline
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`alone will not mitigate severe misconduct. See In re Olsen, 487 N.W.2d 871, 875 (Minn.
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`1992) (disbarring attorney for misappropriation of client funds when lack of prior
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`discipline was sole mitigating factor). The record before us establishes that Pugh’s
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`misconduct was not only serious, but continued over a period of more than three years,
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`and resulted in the misappropriation of over $1 million from multiple clients of his real
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`estate closing company. There being no other mitigating factors, Pugh’s lack of previous
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`discipline does not mitigate the misconduct here. Given the seriousness of Pugh’s
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`misconduct and the absence of mitigation, we conclude that disbarment is the appropriate
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`disciplinary sanction.
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`Therefore, we order that William C. Pugh be, and hereby is, disbarred.
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`
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`7
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