Office of Lawyer Regulation v. Michael A. Gral
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2007 WI 22 SUPREME COURT CASE NO.: OF WISCONSIN 2006AP1021-D COMPLETE TITLE: In the Matter of Disciplinary Proceedings Against Michael A. Gral, Attorney at Law: Office of Lawyer Regulation, Complainant, v. Michael A. Gral, Respondent. DISCIPLINARY PROCEEDINGS AGAINST GRAL OPINION FILED: SUBMITTED ON BRIEFS: ORAL ARGUMENT: SOURCE OF APPEAL: COURT: COUNTY: JUDGE: JUSTICES: CONCURRED: DISSENTED: NOT PARTICIPATING: ATTORNEYS: February 16, 2007 2007 WI 22 NOTICE This opinion is subject to further editing and modification. The final version will appear in the bound volume of the official reports. No. 2006AP1021-D STATE OF WISCONSIN : IN SUPREME COURT In the Matter of Disciplinary Proceedings Against Michael A. Gral, Attorney at Law: FILED Office of Lawyer Regulation, Complainant, FEB 16, 2007 v. A. John Voelker Acting Clerk of Supreme Court Michael A. Gral, Respondent. ATTORNEY disciplinary proceeding. Attorney's license suspended. ¶1 PER CURIAM. We review the recommendation of the referee, consistent with a stipulation entered into between the Office of Lawyer Regulation (OLR) and Attorney Michael Gral, pursuant 1 to SCR 22.14(2),1 that Attorney Gral's license SCR 22.14(2) states: Answer, no contest. (2) The respondent may by answer plead no contest to allegations of misconduct in the complaint. The referee shall make a determination of misconduct in respect to each allegation to which no contest is pleaded and for which the referee finds an adequate to No. 2006AP1021-D practice law in Wisconsin be suspended for a period of three years, effective February 27, 2006, which is the date this court summarily suspended Attorney Gral's license based on a federal criminal conviction for mail fraud. ¶2 We conclude that the referee's findings of fact are supported by satisfactory and convincing evidence. agree that the seriousness of Attorney Gral's We further professional misconduct warrants a three year suspension of his license to practice law in Wisconsin. In addition, we deem it appropriate that Attorney Gral pay the costs of this proceeding, which are $2228.10, as of August 28, 2006. ¶3 Attorney Wisconsin in 1985. Gral was admitted to practice law He has no prior disciplinary history. in From August 1994 through July 2004 he practiced law at Michael Best & Friedrich, LLC (MBF). In October 2005 Attorney Gral voluntarily advised the State Bar of Wisconsin that he was changing his membership status from active to inactive. ¶4 On December 14, 2005, the United States Attorney for the Eastern District of Wisconsin issued a one-count information against violation Attorney of 18 Gral, U.S.C. charging § 1341 him (2005). with mail fraud, On that same in date, Attorney Gral and the government filed a plea agreement in which factual basis in the record. In a subsequent disciplinary or reinstatement proceeding, it shall be conclusively presumed that the respondent engaged in the misconduct determined on the basis of a no contest plea. 2 No. Attorney Gral information. ¶5 that he agreed to plead guilty to 2006AP1021-D the one count Attorney Gral entered a plea the same day. On January 16, 2006, Attorney Gral advised the OLR agreed to a summary suspension of his law license pending the conclusion of disciplinary proceedings arising out of the federal mail fraud conviction. 27, 2006, this court summarily By order dated February suspended Attorney Gral's license. ¶6 Attorney On April 26, 2006, the OLR issued a complaint against Gral charging provides that it is a violation professional of SCR 20:8.4(b), misconduct for a which lawyer to "commit a criminal act that reflects adversely on the lawyer's honesty, trustworthiness respects." ¶7 or fitness as a lawyer in other Attorney Gral filed an answer to the complaint. On June 15, 2006, the federal court sentenced Attorney Gral to two years imprisonment, to be followed by three years of supervised release. The court also imposed a $50,000 fine to be paid within one year from Attorney Gral's release from prison. Attorney Gral paid the $50,000 fine on June 22, 2006. ¶8 In July 2006 the OLR and Attorney Gral entered into a stipulation by which Attorney Gral amended his answer to the OLR's complaint allegations and in the entered complaint a plea of pursuant "no to SCR contest" to 22.14(2). the The stipulation sets forth the background of the transactions that led to the federal mail fraud conviction. that when attorney at the transactions MBF. One of occurred, MBF's 3 The stipulation notes Attorney clients was Gral was Bielinski an Bros. No. 2006AP1021-D Builders, Inc. and related entities, which was owned by Frank and Harry Bielinski. Bielinski Bros. executive positions Attorney was Robert Gral's Brownell, including principal who serving contact served as in at various Bielinski's chief executive officer (CEO) for more than three years. ¶9 The stipulation states that Attorney Gral's guilty plea focused on two transactions, Harrison Lakes and Belize. Both transactions related to Georgetown Holdings, LLC, an entity in which Attorney Gral and Brownell were equal members, and entities in which Georgetown Holdings, LLC was the sole member. ¶10 The stipulation notes that on or about November 2001 Brownell and Attorney Gral formed Georgetown Holdings, LLC. At or about the same time they also formed Georgetown Ridgeview, LLC. Georgetown Holdings Ridgeview, LLC. was the sole member of Georgetown Georgetown Holdings and Georgetown Ridgeview were formed for the purpose of assisting the Bielinskis, who desired a like-kind exchange partner for the purchase and development of vacant land in Pewaukee for a new office building to be used as their corporate headquarters. Ultimately Georgetown did not purchase and develop the Pewaukee land. ¶11 On or about January 9, 2004, FHB Investments, LLC acquired a subdivision in Lincoln County, Wisconsin, known as Harrison Lakes. FHB was a joint venture of Frank and Harry Bielinski and Brownell. FHB paid $1,561,000 for Harrison Lakes. Some months after the acquisition, Brownell asked Attorney Gral whether Georgetown would have an interest in acquiring Harrison Lakes from FHB. Brownell advised 4 Attorney Gral that the No. Bielinskis were no project. longer Attorney Gral interested states in that 2006AP1021-D proceeding Brownell with him told the that Georgetown could assist the Bielinskis and "do a favor for Frank and Harry" by purchasing Harrison Lakes. Brownell later led Attorney Gral to believe that the Bielinskis did not know of FHB's acquisition of Harrison Lakes and that the Bielinskis possibly considered the project still under contract. ¶12 On or about July 16, 2004, Georgetown Investments, LLC purchased Harrison Lakes from FHB. Georgetown paid FHB the purchase price of $1,561,000. Attorney Gral states that prior to Lakes the transfer of Harrison from FHB to Georgetown Investments, LLC, Attorney Gral was aware that the Bielinskis had not authorized the purchase of the property by Brownell. Despite this knowledge, Attorney Bielinskis of Brownell's conduct. Gral did not notify the Attorney Gral believed that Brownell, as one of the three members of FHB, had the legal and actual authority to act on behalf of FHB and to speak for the Bielinskis. Attorney Gral states that while his actions were inappropriate, they had the effect of preventing a loss to FHB since Georgetown's purchase of Harrison Lakes from FHB in July 2004 was for the same price that FHB had paid for the property in January 2004. ¶13 In the Belize transaction, Brownell executed a contract in July 2002 to purchase a condominium unit located in Florida for $2,760,000. Between September 2002 and June 2003, Brownell provided three down payments toward the purchase price that totaled $828,000. The first two down payments, totaling 5 No. $552,000 accounts. were derived by Brownell from 2006AP1021-D Bielinski business The remaining balance of $276,000 was paid from a Brownell account. ¶14 Brownell had originally advised Attorney Gral that the Bielinskis were possible participants in the Belize transaction. In the spring of 2003 Brownell advised Attorney Gral that the Bielinskis would not be participating in this transaction. At that time Brownell and Attorney Gral decided to bring Georgetown into the deal. Brownell and Attorney Gral closed purchase of the Florida condominium on June 28, 2004. on the At some time prior to the closing Attorney Gral learned that the money provided by Brownell for the first two down payments came from Bielinski business entities. Attorney Gral asked Brownell whether the Bielinski entities had been repaid, and Brownell said they had been. ¶15 Attorney Gral did not contact either Frank or Harry Bielinski and did not confirm that they were aware their funds had been used for this purpose or whether they had been repaid. In fact, the Bielinskis were not aware of and had not approved the use of their funds, nor had they been repaid by Brownell. Attorney Gral admits that his acts were inappropriate since he did not contact the Bielinskis. However, Attorney Gral said he did not know that Brownell had improperly taken the $552,000 from the Bielinskis, and he said he had been assured by Brownell that the Bielinskis had been repaid. ¶16 Brownell Shortly after the closing of the Belize transaction, took $620,000, ostensibly 6 to partially reimburse No. himself for his earlier down payments for Belize. 2006AP1021-D Thus, besides not repaying $552,000 to Bielinski, Brownell took the $620,000 for his own use. Attorney Gral paid the $552,000 to the Bielinskis on January 18, 2006, through the clerk of court, from his personal account. ¶17 The stipulation states that in the Harrison Lakes and Belize transactions, in reliance on Brownell's representations and his legal and apparent authority to act, properties were transferred to Georgetown, an entity in which Attorney Gral had an interest. certain Attorney Gral admits that when he became aware of facts in the transactions relating to Bielinski, he failed to confirm the information with Frank or Harry Bielinski. Attorney Gral's actions had the effect of placing his own did not financial interests ahead of his clients' interests. ¶18 The stipulation states that Attorney Gral improperly take funds from the Bielinskis, did not intend to take funds from them, and did not know that funds had been improperly taken. The stipulation states that in both transactions Brownell was the one who improperly took the funds from the Bielinskis, and Brownell failed to advise Attorney Gral that the funds had been improperly taken. ¶19 the In a sentencing memorandum filed by the government in federal wrongdoing court action, generally the government involves 'sins of said that, omission.'" "Gral's The government also said that "Gral did not directly obtain money from the Bielinskis," and that "Brownell was the instigator of 7 No. the overall fraud against the Bielinskis," 2006AP1021-D and that "many aspects of Brownell's fraud did not involve Gral." ¶20 The timeframe, stipulation Attorney Gral provides was not that during aware that the pertinent Brownell had a criminal record, and Attorney Gral says he learned of Brownell's criminal record during the government's criminal investigation. Attorney Gral says that through the years he observed that the Bielinskis, members of their management team, and people in the business community generally business person. viewed Brownell as a respected Attorney Gral says he had been advised and observed that Brownell had a history of strong performance with the Bielinski introduced to business. the Attorney Bielinskis and Gral says when in July Brownell he was of 2000 Brownell had been with the Bielinskis for almost five years in various management positions, and it appeared to Attorney Gral that the Bielinskis relied heavily on Brownell in the management of their businesses and that Brownell had the Bielinskis' trust and confidence. Bielinskis Attorney treated Gral Brownell as says an it appeared equal with that respect the to executive decision making and management of their businesses. ¶21 Gral The stipulation states that it appeared to Attorney that Bielinskis projects, Brownell since and it had they a were appeared special partners to relationship with Attorney Gral with Brownell that it in the other was not unusual for Brownell to have roles in addition to his management position with Bielinski. 8 No. ¶22 Attorney Georgetown relating from to Bielinski, Gral the says he made Bielinskis, the development Attorney Gral and of a believed no effort besides new the to the office 2006AP1021-D conceal transaction building Bielinskis for wanted to engage in other transactions with Georgetown, based on Attorney Gral's discussions Brownell's signed with statements operating the to Bielinskis Attorney agreements Gral. with and also The based Bielinskis Georgetown for two on had other projects. ¶23 Prior to the federal court's imposition of sentence in the criminal matter, Attorney Gral entered into a resolution with Bielinski and MBF. agreed to pay As part of the resolution Attorney Gral $4,489,533. The resolution covered amounts claimed as criminal restitution as well as other claims that could possibly be made in a non-criminal context. paid $1,200,000 to Bielinski on June 23, 2006. Attorney Gral In order to make this payment Attorney Gral liquidated a large portion of his retirement account and received a loan from his father. For future payments and interest, Attorney Gral will liquidate his share of real estate holdings. This real estate is held in entities in which Attorney Gral does not hold the controlling interest and/or entities which Attorney Gral's voluntary are efforts cooperation of his co-owners. not to liquid, attempt necessitating to obtain the Many of the funds that Attorney Gral used for resolution could be utilized only because of his efforts, including his retirement account, certain marital assets, the funds from his father, and the liquidation of entity 9 No. 2006AP1021-D protected assets where his co-owners are not required to sell assets or purchase Attorney Gral's interest. ¶24 The stipulation provides that when the federal investigation began in the summer of 2004 the government was concerned that completion, Attorney Stern, assets real predominantly the estate would be Gral, through real estate a Georgetown. Attorney held by the ventures dissipated. his in On attorneys, attorney, Stern to various his own retained serve retained Georgetown's third-party manager. Georgetown as Ogden & entities, stages of initiative, Benjamin counsel Company S. for as Although Attorney Gral is an owner of Georgetown, he relinquished legal control of Georgetown to Ogden. Ogden's role as manager of the Georgetown entities is to oversee the business affairs and properties of the Georgetown entities. ¶25 as Attorney Gral's efforts in retaining Stern and Ogden third-party counsel and advisor avoided the government's seizure of the Georgetown properties, preserved the value of those properties, and provided a vehicle to obtain independent management and analysis of Georgetown's finances. Because of the nature of Georgetown's ownership structure, an independent manager was necessary to run the business and to avoid deadlock situations between the two owners, Attorney Gral and Brownell. Throughout the process, Attorney Gral played and continues to play a key role for the third-party attorney and manager. Attorney Gral took the leading role in forming the third-party arrangement and paid most of the attorneys' fees and other costs 10 No. associated attorney with and establishing manager. Stern Attorney and Gral as Ogden 2006AP1021-D third-party continued to fund the capital needs of the Georgetown entities, and from September 2004 through June 15, 2006, he contributed over $850,000 to meet Georgetown's funding needs. ¶26 Attorney Gral paid obligations when Georgetown. Brownell Attorney Brownell's stopped Gral's share meeting financial of his support Georgetown's obligations of to Georgetown enabled Georgetown to fulfill its loan obligations and avoid losses by the lending institution. The stipulation states that Attorney Gral was always available to the third-party attorney and manager as a resource for information about the properties, and Attorney Gral responded to their inquiries expeditiously and cooperated fully with them. Attorney Stern described Attorney Gral's actions as being "exemplary." As a result of Attorney Gral's work, the assets of the Georgetown entities have been and are being preserved in an independent and efficient manner. ¶27 The stipulation points out that various mitigating factors, as set forth by the American Bar Association Center for Professional Responsibility, are present in this case. Those mitigating factors include the fact that Attorney Gral did not convert any client funds to his own use, did not intend to convert any client funds to his own use, and did not know of any such conversion. In the Harrison Lakes transaction, Attorney Gral believed that Georgetown's purchase of Harrison Lakes from FHB would prevent a loss to FHB. In the Belize transaction, Attorney Gral did not know that Brownell had improperly taken 11 No. 2006AP1021-D funds from the Bielinskis and Attorney Gral had been assured by Brownell that the Bielinskis had been repaid. ¶28 Additional mitigating factors mentioned in the stipulation are that Attorney Gral's acts were primarily acts of omission in that he failed to confirm and/or disclose certain acts or representations of Brownell, who was Bielinski's CEO and Attorney Gral's principal client contact. on Brownell's actual and apparent Attorney Gral relied authority to act based in large part on Attorney Gral's observations of the relationship between Brownell and the Bielinskis. The stipulation notes that unlike Brownell, Attorney Gral converted no Bielinski funds to his own personal use, was not aware of any such conversion, and took steps to remedy the conversion of funds by Brownell. ¶29 The significant stipulation steps government's to preserve investigation those assets. notes that Attorney Georgetown's and he is Gral assets continuing during to took the preserve On his own initiative and largely at his own individual expense, Attorney Gral retained a third-party counsel and real independent activities. estate advisors management and to provide analysis of a vehicle Georgetown's for the business Attorney Gral entered into resolutions with third parties in which he agreed to pay a total of $4,489,533. A substantial portion of those funds would not have been able to be obtained by third parties since they involved Attorney Gral's retirement account, certain marital assets, funds father, and the liquidation of entity-protected assets. 12 from his No. ¶30 The cooperated stipulation with the also government's notes that prosecution 2006AP1021-D Attorney of the Gral criminal case, promptly admitted wrongdoing, and entered a guilty plea. Attorney Gral also cooperated with the OLR's prosecution of the disciplinary complaint. disciplinary record. criminal justice consequences, Attorney Gral has no prior criminal or He received a severe sanction through the system, and suffered has expressed significant sincere collateral remorse and responsibility for his wrongdoing. ¶31 their The OLR and Attorney Gral stipulated that based on stipulated findings of fact, the referee could enter conclusions of law stating that Attorney Gral's conduct violated SCR 20:8.4(b) in that he committed a criminal act that reflects adversely on his honesty, trustworthiness or fitness as a lawyer in other approve respects. The the stipulation parties and file requested a report that the finding referee facts and misconduct consistent with the stipulation and recommending that Attorney Gral's license to practice law be suspended for three years, effective February 27, 2006, which was the date of the summary suspension. ¶32 On August 6, 2006, the referee issued his findings of fact, conclusions of law and recommendation in which he adopted the parties' stipulated findings of fact; found that the OLR had proven by violated clear SCR and convincing 20:8.4(b); and evidence recommended that that Attorney Attorney Gral Gral's license to practice law be suspended for three years commencing 13 No. February 27, 2006. No appeal was filed from 2006AP1021-D the referee's report and recommendation. ¶33 unless This court will adopt a referee's findings of fact they are clearly reviewed de novo. erroneous. Conclusions of law are See In re Disciplinary Proceedings Against Eisenberg, 2004 WI 14, ¶5, 269 Wis. 2d 43, 675 N.W.2d 747. The court may impose whatever sanction it sees fit regardless of the referee's recommendation. See In re Disciplinary Proceedings Against Widule, 2003 WI 34, ¶44, 261 Wis. 2d 45, 660 N.W.2d 686. ¶34 We adopt the referee's findings of fact and conclusions of law and determine that a three-year suspension is the appropriate misconduct. discipline for Attorney Gral's professional The actions that led to his federal mail fraud conviction are serious failings that warrant a significant level of discipline. We further agree with the referee that the suspension should be retroactive to February 27, 2006, the date in which the court summarily suspended Attorney Gral's license. We also agree that Attorney Gral should pay the full costs of the proceeding. ¶35 IT IS ORDERED that the license of Michael A. Gral to practice law in Wisconsin is suspended for a period of three years, effective February 27, 2006. ¶36 IT IS FURTHER ORDERED that Michael A. Gral comply with the provisions of SCR 22.26 concerning the duties of a person whose license to practice law in Wisconsin has been suspended, if he has not already done so. 14 No. ¶37 of this 2006AP1021-D IT IS FURTHER ORDERED that within 60 days of the date order Michael A. Gral pay to Regulation the costs of this proceeding. the Office of Lawyer If the costs are not paid within the time specified, and absent a showing to this court of his inability to pay the costs within that time, the license of Michael A. Gral to practice law in Wisconsin shall remain suspended until further order of this court. 15 No. 1 2006AP1021-D
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