Filed October 11, 2007

In re David P. Schluckebier
Commission No. 06 CH 49

Synopsis of Hearing Board Report and Recommendation

Default Proceeding

NATURE OF THE CASE: 1) committing a criminal act that reflects adversely on the lawyer's honesty, trustworthiness, or fitness as a lawyer; 2) engaging in conduct which tends to defeat the administration of justice or bring the courts or legal profession into disrepute; 3) falsifying evidence; 4) making a statement of material fact or law to a third person which statement the lawyer knows or reasonably should know is false; 5) engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation; 6) engaging in conduct that is prejudicial to the administration of justice.

RULES DISCUSSED: 3.4(a)(2), 4.1(a), 8.4(a)(3), 8.4(a)(4) and 8.4(a)(5), of the Illinois Rules of Professional Conduct and Supreme Court Rule 770.

RECOMMENDATION: Disbarment.

DATE OF OPINION: October 11, 2007.

HEARING PANEL: John M. Steed, Chair and William M. Dickson.

ADMINISTRATOR'S COUNSEL: James A. Doppke, Jr.

BEFORE THE HEARING BOARD
OF THE
ILLINOIS ATTORNEY REGISTRATION
AND
DISCIPLINARY COMMISSION

In the Matter of:

David Phillip Schluckebier,

Attorney-Respondent,

No. 6217160

Commission No. 06 CH 49

REPORT AND RECOMMENDATION OF THE HEARING BOARD

DEFAULT PROCEEDING

INTRODUCTION

The hearing in this matter was held on March 23, 2007, at the offices of the Attorney Registration and Disciplinary Commission, Chicago, Illinois, before a Hearing Board Panel consisting of John M. Steed, Chair and William M. Dickson, lawyer member. James A. Doppke, Jr. represented the Administrator. Respondent, David Phillip Schluckebier, failed to appear for the hearing and was not represented by counsel.

PLEADINGS AND PRE-HEARING PROCEEDINGS

On August 15, 2006, the Administrator filed a two-count complaint against Respondent pursuant to Supreme Court Rule 753(b). Count I charged Respondent with knowingly acquiring funds that were the proceeds of criminal activity, a prostitution business run by his wife, while living in the Republic of Palau. Count II charged Respondent with providing false testimony at his wife's criminal trial.

On November 6, 2006, the Administrator obtained substitute service on the Respondent by serving a copy of the Complaint and other documents on the Clerk of the Illinois Supreme Court pursuant to Illinois Supreme Court Rule 765(b). In conformity with Rule 765(b) and

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Commission Rule 214(b), the Administrator also sent a copy of the complaint and other documents to Respondent at his registered address by regular and certified mail.

On December 13, 2006, after Respondent failed to file a response to the complaint, the Chair granted the Administrator's Motion to Deem the Allegations of the Complaint Admitted Pursuant to Commission Rule 236 and limited the evidence to be presented at hearing to matters of aggravation and mitigation. Respondent also failed to appear for a deposition or to produce relevant documents to the Administrator. Accordingly, on January 19, 2007, the Chair granted the Administrator's Motion to Bar Respondent from Testifying or Presenting any Evidence at Hearing.

THE EVIDENCE

The Administrator's Exhibits 1-2 were admitted into evidence. (Tr. 4-5, 10).

Count I

Between 1998 and 2004, Respondent lived in the Republic of Palau. In 2002, Respondent married Hong Kun Xue a/k/a Xue Hong Kun ("Xue"). Xue operated a restaurant that also included a massage parlor and a house of prostitution. From 2002 to 2004, Respondent was aware that Xue operated the restaurant as a prostitution business.

Between 2002 and 2004, Xue deposited a portion of the funds she received as a result of operating her prostitution business into a Palau bank account which she held jointly with Respondent ("joint account"). Respondent knew that a portion of the funds Xue deposited into the joint account were derived from her operation of a prostitution business. (Adm. Ex 1).

During this time, Title 17, Chapter 36, Section 3(3) of the Palau National Code provided that "the acquisition, possession, or control of property by any person who knows that the property constitutes the proceeds of a crime" constituted the offense of money laundering. Title

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 17 of the Palau National Code also defined prostitution as a crime. By holding the joint account with Xue, Respondent knowingly acquired, possessed, or controlled funds that constituted the proceeds of a crime in violation of the Palau National Code.

Count II

In 2004 Xue, was criminally charged with, inter alia, money laundering in a matter entitled Republic of Palau v. Hong Kun Xue, a/k/a Xue Hong Kun, (Supreme Court of the Republic of Palau, Trail Division, CR 04-244).Respondent was called to testify as a witness during Xue's criminal trial.

During his sworn testimony, Respondent testified that the funds he and Xue deposited into their joint account were derived from wedding gifts, his family and his salary. This testimony was false; Respondent knew that the funds that he and his wife deposited were the proceeds of her prostitution business. (Adm. Ex 1).

Evidence Offered in Aggravation

Respondent was licensed to practice law in the Republic of Palau and worked as an attorney for the Senate Legal Counsel Office. Following his wife's criminal trial, the Attorney Disciplinary Tribunal of Palau ("The Tribunal") conducted an investigation of Respondent. The disciplinary counsel issued a preliminary finding but recommended that Respondent be given an "extra opportunity to respond to the allegations that he was aware of his wife's prostitution business." Neither Respondent nor his attorney responded. (Adm. Ex. 2).

Accordingly, the disciplinary counsel brought a formal complaint against Respondent charging him with falsely testifying under oath, knowingly receiving proceeds of his wife's illegal business and attempting to conceal or disguise the illegal nature of the money from his wife's illegal business. Respondent neither responded to the complaint nor appeared at the

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disciplinary hearing. Thus, the allegations of the complaint were deemed admitted. The Tribunal found by clear and convincing evidence that Respondent testified falsely under oath, conduct which constitutes moral turpitude, dishonesty, or corruption.1 The Tribunal also noted that Respondent once thwarted a police sting on his wife's business. On a day that Respondent was present at the restaurant, under cover plain-clothes officers entered the restaurant in search of evidence of prostitution. Upon their arrival, Respondent discreetly conferred with his sister-in-law who then approached the officers to advise them that only regular massage services were available at the restaurant. (Adm. Ex. 2).

The Tribunal further found that Respondent knowingly received proceeds of his wife's illegal business; knew that Xue was running a prostitution business at the restaurant she owned and operated; and attempted to conceal or disguise the illegal nature of the source of the money from his wife's business. The Tribunal disbarred Respondent on January 9, 2006. (Adm. Ex. 2).

FINDINGS OF FACT AND CONCLUSIONS OF LAW

In attorney disciplinary proceedings, the Administrator must prove the alleged misconduct by clear and convincing evidence. Supreme Court Rule 753(c)(6); In re Ingersoll, 186 Ill.2d 163, 168, 710 N.E.2d 390 (1999). "Clear and convincing evidence is a standard of proof which, while less than the criminal standard of proof beyond a reasonable doubt, is greater than the civil standard of preponderance of the evidence." Cleary and Graham, Handbook of Illinois Evidence, sec. 301.6 (8th Ed. 2004). With the above principles in mind, we make the following findings.

COUNT I

In Count I, Respondent is charged with:

  1. committing a criminal act that reflects adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects, to wit, the crime of

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money laundering, in violation of Title 17, chapter 36, Section 3(3) of the Palau National Code, in violation of Rule 8.4(a)(3) of the Illinois Rules of Professional Conduct ("Rules");

  1. engaging in conduct which tends to defeat the administration of justice or bring the courts or legal profession into disrepute in violation of Supreme Court Rule 770.

As a result of Respondent's failure to file an answer to the Administrator's complaint and pursuant to the Chair's order of December 13, 2006, all factual allegations and disciplinary charges have been deemed admitted. However, given the unusual nature of the charges in this matter, we believe a brief explanation is required for our findings.

Respondent is charged with committing a criminal act, money laundering, in violation of the Palau National Code. The Palau National Code defines the offense of money laundering as "the acquisition, possession, or control of property by any person who knows that the property constitutes the proceeds of a crime." The Palau National Code also criminalizes prostitution.

It is undisputed that Respondent knew that his wife operated a house of prostitution and that the money he and his wife deposited in their joint bank account derived from this criminal activity. As prostitution is a crime in Palau, we find that the Administrator has demonstrated by clear and convincing evidence that Respondent engaged in the criminal act of money laundering as defined by the Palau National Code

The fact that Respondent was neither criminally prosecuted for nor criminally convicted of money laundering is irrelevant to our finding. A finding of misconduct may be based upon an attorney's commission of a criminal act even if the attorney was not charged with or convicted of the crime as long as the criminal conduct is proved by clear and convincing evidence. In re Rolley, 121 Ill.2d 222, 223, 520 N.E.2d 302 (1988); In re Pennock, 06 SH 06, M.R. 21442 (March 19, 2997). Moreover, Respondent was found to have committed the criminal act of money laundering by the Supreme Court of the Republic of Palau, Disciplinary Tribunal.

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Consequently, we find Respondent violated Rule 8.4(a)(3) of the Illinois Rules of Professional Conduct.

We also find that by committing the crime of money laundering, Respondent has engaged in conduct that brings the legal profession into disrepute in violation of Supreme Court Rule 770. It is well established that an attorney's commission of a criminal act, even one that does not involve moral turpitude, constitutes misconduct that reflects adversely on the attorney's fitness as a lawyer and tends to bring the legal profession into disrepute. In re Scarnavack, 108 Ill.2d 456, 460-61, 485 N.E.2d 1 (1985).

COUNT II

In Count II of its complaint, Respondent is charged with:

  1. falsifying evidence in violation of Rule 3.4(a)(2) of the Rules;

  2. making a statement of material fact or law to a third person which statement the lawyer knows or reasonably should know is false, in violation of Rule 4.1(a) of the Rules;

  3. engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation, in violation of Rule 8.4(a)(5);

  4. engaging in conduct that is prejudicial to the administration of justice, in violation of Rule 8.4(a)(5); and

  5. engaging in conduct which tends to defeat the administration of justice or bring the courts or legal profession into disrepute in violation of Supreme Court Rule 770.

Based upon the Chair's prior orders and the evidence presented at the hearing, we find that Respondent's false testimony during his wife's criminal trial violated Rules 8.4(a)(4), 8.4(a)(5) and Supreme Court Rule 770. However, we find no violation of Rule 4.1.(a). By its plain language, Rule 4.1(a) prohibits certain conduct by an attorney in the course of representing a client. Here, Respondent did lie under oath in court, but it was not in the course of representing a client. Accordingly, we recommend this charge be dismissed.

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RECOMMENDATION

The purpose of the attorney disciplinary system is not to punish an attorney for misconduct. Rather, the goal is to protect the public, maintain the integrity of the legal profession, and safeguard the administration of justice. In re Spak, 188 Ill.2d 53, 67, 719 N.E.2d 747 (1999). In determining the appropriate sanction, the nature of the misconduct, the aggravating and mitigating factors, the deterrent value of the sanction, and whether the sanction will help preserve public confidence in the legal profession are to be considered. In re Gorecki, 208 Ill.2d 350, 360-61, 802 N.E.2d 1194 (2003). Although each disciplinary case "is unique and must be resolved in light of its own facts and circumstances," the sanction imposed should be "consistent with those imposed in other cases involving comparable misconduct." In re Howard, 188 Ill.2d 423, 440, 721 N.E.2d 1126 (1999); In re Chandler, 161 Ill.2d 459, 472, 641 N.E.2d 473 (1994).

In this matter, the Administrator has recommended disbarment. In support of this recommendation the Administrator relies on: In re Borrasso, 00 CH 19, M.R.17628 (September 21, 2001); In re Biagini, 05 CH 90, M.R. 21058 (September 21, 2006); and In re Romanek, 02 CH 61, M.R. 19253 (March 12, 2004).

In Borrasso, the attorney began a personal relationship with a former client, Sandra Lopez. Subsequently, Lopez and a co-offender committed a home invasion. The attorney repeatedly threatened and attempted to intimidate the co-offender and her family to prevent her from implicating Lopez to the police. The attorney then purchased airline tickets and arranged for Lopez to leave the country. The attorney also failed to participate in his disciplinary proceedings. In recommending disbarment, the Hearing Board reasoned that the attorney's "egregious conduct overwhelmingly demonstrates his absence of good moral character and his

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lack of fitness to practice law." Borrasso, 00 CH 19 at page 12-13. The board further added that, "[t]he fact that the Respondent has never previously been disciplined pales in comparison to his reprehensible and morally repugnant conduct in this case." Borrasso, 00 CH 19 at page 13. The Supreme Court agreed with the Hearing Board's recommendation and ordered disbarment. In re Borrasso, 00 CH 19, M.R.17628 (September 21, 2001).

In Biagini, the attorney made false statements of material fact to a tribunal and committed a criminal act by making false reports concerning his assets in a bankruptcy petition. He also failed to participate in his disciplinary proceedings. Even though the attorney had no prior disciplinary record, he was disbarred. Similarly, in Romanek, the attorney was disbarred for making false statements to family members and to a friend to obtain loans and failing to appear in court on a charge of driving while intoxicated. Like the Respondent in this matter, the attorney failed to participate in his disciplinary proceedings.

We find these cases instructive and agree with the recommendation of disbarment. "Any act which evidences a want of personal honesty or integrity may be sufficient to warrant disbarment." In re Vavrik, 117 Ill.2d 408, 412, 512 N.E.2d 1226 (1987). Respondent's criminal conduct and false testimony, although not in the discharge of his professional duties, indicate a complete disregard for personal integrity and honesty that strikes at the heart of an attorney's duties of trust and loyalty. "An attorney's misconduct falling outside his professional capacity cannot simply be ignored to the detriment of the public." In re Vavrik, 117 Ill.2d 408, 417; In re Biagini, 05 CH 90.

In aggravation, we give significant weight to Respondent's failure to participate in these disciplinary proceedings. This failure to cooperate and participate is a reflection of Respondent's lack of respect for both the disciplinary process and his obligations to comply with the

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requirements of the profession. In re Biagini, 05 CH 90. An attorney's lack of cooperation at his or her disciplinary proceeding demonstrates a complete want of professional responsibility, an indifference towards or even contempt for disciplinary procedures and a disregard for the authority and process of the Attorney Registration and Disciplinary Commission. In re Brody, 65 Ill.2d 152,156, 357 N.E.2d 498 (1976); In re Harshman, 05 SH 93, M.R. 21232 (January 12, 2007). Respondent also failed to participate in the attorney disciplinary proceedings against him in Palau. This pattern of complete indifference and disdain for the disciplinary rules of the legal profession demonstrates he is either unable or unwilling to comply with the professional requirements of the legal profession. In re Brody, 65 Ill.2d at 156; In re Harshman, 05 SH 93.

We note in mitigation that Respondent has no prior disciplinary record. However, Respondent's prior good conduct is insufficient to outweigh the severity of his misconduct. See In re Lewis, 138 Ill.2d 310, 562 N.E.2d 198 (1990).

We are charged with the responsibility of preserving the integrity of the legal profession and protecting the public. Given the severity of the misconduct and Respondent's failure to participate or appear, we recommend that Respondent be disbarred.

Date Entered: October 11, 2007

John M. Steed, Chair, with William Dickson concurring.

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1
The Republic of Palau's Disciplinary Rules and Procedures adopted the American Bar Association Model Rules of Professional Conduct.