Oregon
Facts:
Client M and his ex-wife C faced Federal charges for tax avoidance. As they were going through a dissolution, M and C hired different attorneys to protect their respective interests.
Lawyer A was hired by M in June 1995.
Lawyer A Represented the M in the Federal Tax matter for the tax years, 88-94.
Lawyer A Procured a plea bargain and M went to prison for Tax fraud in 1999.
In June 1995, M had real estate assets in the amount of approximately three million dollars, (per divorcee decree): 1 house worth $850,000, and 1 commercial building/ carpet business worth $1.2 million, plus personal property and $700,000.00 cash from a sale of a second residence in Newport Beach, Calif. All real estate parcels were un-encumbered, i.e. no mortgages or liens.
Lawyer A placed a lien on all Real Estate, owned by M, to secure legal fees in Aug. 1995 for $1,000,000.00, even when that amount wasn't owed yet.
Lawyer A called the lien a mortgage. (not a retainer)
Lawyer A knew his client would owe back taxes plus penalties,interest, etcetera of approximately $ 900,000. + to the IRS/ Oregon State, for the tax years 88-94.
Lawyer A knew his lien was going to be superior to IRS's, because he put his in place in 1995 (prior to indictment, plea bargain & tax liabilities settlement) when he was hired..
M sold house for $825,000 in 2002.
Lawyer A filed a satisfaction of lien, JUST for the house. M received all funds at escrow.
Lawyer A left the $1,000,000 lien on commercial building.
In 2002-2003, IRS contacted M for payment. M refused to pay claims no money.
The IRS placed a Tax lien on the commercial building in 2003 for $970,000.00. State of Oregon placed a lien on the building for $190,000.00, in 2004.
Lawyer A knew his client M's assets would be seized and sold, to satisfy tax liabilities, if his lien was completely removed.
Questions:
1. Is it ethical for Lawyer A to continue to leave an inflated lien amount to help shield his clients assets ?
2. If client sells the commercial property, would it be ethical for funds to go to
Lawyer A and then released to client or clients present wife (who was put on title, January 17, 2001,. right after the tax settlement), thus helping M to avoid paying off tax liens?
3.Is it ethical to give the IRS and State of Oregon the impression that the building is encumbered to the full value, thus forcing the IRS/STATE, to make an offer in compromise?
My Conclusion:
It appears:
Lawyer A is aiding and abetting Client and Client's present wife, to commit fraud against the Federal Government and The State of Oregon, by not removing lien, or revising the lien amount, when it is reasonable to believe that fees should have or would have been paid or partially paid in 2002, after house was sold.
It is un-reasonable to believe that:
Client still owes Lawyer A $1,000,000.00 in fees, (or ever did owe that much) which is why he leaves the lien on.
Lawyer A wouldn't have M sell property, to satisfy his debt, before the IRS does.
Client M is hoping, by appearing to be in full debt, that the IRS/ State, will look to his ex-wife to pay the tax debt, as she was a co-signer on the taxes on some of those years.
Your Opinion is most respected.
Thank you for your time,
Sincerely yours,
Concerned Party
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Facts:
Client M and his ex-wife C faced Federal charges for tax avoidance. As they were going through a dissolution, M and C hired different attorneys to protect their respective interests.
Lawyer A was hired by M in June 1995.
Lawyer A Represented the M in the Federal Tax matter for the tax years, 88-94.
Lawyer A Procured a plea bargain and M went to prison for Tax fraud in 1999.
In June 1995, M had real estate assets in the amount of approximately three million dollars, (per divorcee decree): 1 house worth $850,000, and 1 commercial building/ carpet business worth $1.2 million, plus personal property and $700,000.00 cash from a sale of a second residence in Newport Beach, Calif. All real estate parcels were un-encumbered, i.e. no mortgages or liens.
Lawyer A placed a lien on all Real Estate, owned by M, to secure legal fees in Aug. 1995 for $1,000,000.00, even when that amount wasn't owed yet.
Lawyer A called the lien a mortgage. (not a retainer)
Lawyer A knew his client would owe back taxes plus penalties,interest, etcetera of approximately $ 900,000. + to the IRS/ Oregon State, for the tax years 88-94.
Lawyer A knew his lien was going to be superior to IRS's, because he put his in place in 1995 (prior to indictment, plea bargain & tax liabilities settlement) when he was hired..
M sold house for $825,000 in 2002.
Lawyer A filed a satisfaction of lien, JUST for the house. M received all funds at escrow.
Lawyer A left the $1,000,000 lien on commercial building.
In 2002-2003, IRS contacted M for payment. M refused to pay claims no money.
The IRS placed a Tax lien on the commercial building in 2003 for $970,000.00. State of Oregon placed a lien on the building for $190,000.00, in 2004.
Lawyer A knew his client M's assets would be seized and sold, to satisfy tax liabilities, if his lien was completely removed.
Questions:
1. Is it ethical for Lawyer A to continue to leave an inflated lien amount to help shield his clients assets ?
2. If client sells the commercial property, would it be ethical for funds to go to
Lawyer A and then released to client or clients present wife (who was put on title, January 17, 2001,. right after the tax settlement), thus helping M to avoid paying off tax liens?
3.Is it ethical to give the IRS and State of Oregon the impression that the building is encumbered to the full value, thus forcing the IRS/STATE, to make an offer in compromise?
My Conclusion:
It appears:
Lawyer A is aiding and abetting Client and Client's present wife, to commit fraud against the Federal Government and The State of Oregon, by not removing lien, or revising the lien amount, when it is reasonable to believe that fees should have or would have been paid or partially paid in 2002, after house was sold.
It is un-reasonable to believe that:
Client still owes Lawyer A $1,000,000.00 in fees, (or ever did owe that much) which is why he leaves the lien on.
Lawyer A wouldn't have M sell property, to satisfy his debt, before the IRS does.
Client M is hoping, by appearing to be in full debt, that the IRS/ State, will look to his ex-wife to pay the tax debt, as she was a co-signer on the taxes on some of those years.
Your Opinion is most respected.
Thank you for your time,
Sincerely yours,
Concerned Party
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