Iowa Supreme Court Attorney Disciplinary Board Vs. Thomas E. Lustgraaf

IN THE SUPREME COURT OF IOWA
No. 10–0425
Filed December 17, 2010
IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD,
Complainant,
vs.
THOMAS E. LUSTGRAAF,
Respondent.
On review of the report of the Grievance Commission of the
Supreme Court of Iowa.
Grievance commission recommends attorney receive a public
reprimand. ATTORNEY REPRIMANDED.
Charles L. Harrington and David J. Grace, Des Moines, for
complainant.
Thomas E. Lustgraaf of Lustgraaf Law Office, Council Bluffs,
pro se.

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TERNUS, Chief Justice.
This matter comes before us on the report of a division of the
Grievance Commission of the Supreme Court of Iowa. See Iowa Ct. R.
35.10. The Iowa Supreme Court Attorney Disciplinary Board alleged the
respondent, Thomas E. Lustgraaf, violated ethical rules by failing to file
income tax returns for four years. The grievance commission found
Lustgraaf violated our ethical rules and recommended a public
reprimand. Upon our respectful consideration of the findings of fact,
conclusions of law, and recommendation of the commission, we find
Lustgraaf engaged in ethical violations as a result of his negligent failure
to file tax returns, and therefore, we publicly reprimand him.
I. Standard of Review.
The supreme court reviews attorney disciplinary proceedings
de novo. Iowa Supreme Ct. Att’y Disciplinary Bd. v. Wagner, 768 N.W.2d
279, 281 (Iowa 2009). The commission’s findings and recommendations
are given respectful consideration, but we are not bound by them. Iowa
Supreme Ct. Att’y Disciplinary Bd. v. Casey, 761 N.W.2d 53, 55 (Iowa
2009). The board has the burden of proving attorney misconduct by a
convincing preponderance of the evidence. Iowa Supreme Ct. Att’y
Disciplinary Bd. v. Conrad, 723 N.W.2d 791, 792 (Iowa 2006). As
frequently stated, “ ‘This burden is less than proof beyond a reasonable
doubt, but more than the preponderance standard required in the usual
civil case.’ ” Id. (quoting Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct
v. Lett, 674 N.W.2d 139, 142 (Iowa 2004)). Upon proof of misconduct, we
may impose a lesser or greater sanction than that recommended by the
commission. Id.

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II. Factual Findings.
Lustgraaf was admitted to practice law in April of 2004.
Thereafter, he practiced primarily criminal law in Council Bluffs. On
September 3, 2009, the board filed a disciplinary complaint against
Lustgraaf alleging he had failed to file income tax returns for the years
2002 through 2007. The board alleged that Lustgraaf’s failure to file the
returns violated Iowa Rules of Professional Conduct 32:8.4(b) (“It is
professional misconduct for a lawyer to . . . commit a criminal act that
reflects adversely on the lawyer’s honesty, trustworthiness, or fitness as
a lawyer in other respects[.]”), 32:8.4(c) (“It is professional misconduct for
a lawyer to . . . engage in conduct involving dishonesty, fraud, deceit, or
misrepresentation[.]”), and 32:8.4(d) (“It is professional misconduct for a
lawyer to . . . engage in conduct that is prejudicial to the administration
of justice[.]”).1 The board subsequently dropped the charges for tax years
2002 and 2003 because Lustgraaf was not licensed as a lawyer in those
tax years.
The board contends Lustgraaf’s failure to file tax returns violated
26 U.S.C. §§ 6012(a)(1)(A), 6017, and 6072(a) (2000). Under 26 U.S.C.
§ 6017, an individual who has net earnings from self-employment
exceeding $400 must file an income tax return. Under 26 U.S.C.
§ 6072(a), a taxpayer is required to file tax returns based on a calendar
year by April 15 of the following year, unless an extension is obtained.
Schultz v. United States, 92 Fed. Cl. 213, 219 (Fed. Cl. 2010). 26 U.S.C.
§ 6012(a)(1)(A) makes it a criminal offense for a taxpayer who has earned
1The board also alleged a violation of rule 32:8.4(a) (“It is professional
misconduct for a lawyer to . . . violate . . . the Iowa Rules of Professional Conduct[.]”).
We do not consider a violation of this rule as a separate ethical infraction, Iowa
Supreme Ct. Att’y Disciplinary Bd. v. Templeton, 784 N.W.2d 761, 769 (Iowa 2010), and
so give it no further consideration.

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sufficient income to require him to file a federal income tax return to fail
to do so.2 See United States v. Stierhoff, 549 F.3d 19, 25 (1st Cir. 2008);
see also United States v. Kahl, 583 F.2d 1351, 1355 (5th Cir. 1978)
(finding information properly notified defendant of alleged crime when it
specifically stated “that the earnings of the accused were sufficient to
require him to file a return and he failed to do so”).
At the disciplinary hearing, Lustgraaf testified he had innocently
and mistakenly believed that he had insufficient income to require the
filing of the returns. He testified he was unaware of the requirement to
file a return when self-employment income exceeds $400.3
Lustgraaf also presented the testimony of a certified public
accountant from whom he had sought tax advice since 1996. This
witness testified that he prepared tax returns for Lustgraaf in the years
preceding Lustgraaf’s law school years, but did not prepare any returns
while Lustgraaf attended law school because Lustgraaf did not have any
income during that time. The witness testified that, in each year
subsequent to Lustgraaf’s graduation from law school, Lustgraaf came to
the witness’s office to talk about Lustgraaf’s income tax situation. On
these occasions, the accountant would ask Lustgraaf whether Lustgraaf
was “going to have a tax liability.” Lustgraaf always responded that he
“put out more money than [he] took in,” and the accountant “never got
into specifics on those years.” The accountant testified that, if he had
thought Lustgraaf was required to file income tax returns in the years in
question, he would have told Lustgraaf to file.
2Other sections of the federal tax code provide for increased penalties when a
taxpayer’s failure to file is willful, but the board did not allege a violation of these
statutory provisions.
3Lustgraaf testified he did not take an income tax course in law school, and his
work as an attorney was limited to criminal cases.

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By the time of the hearing, Lustgraaf had filed all tax returns and
paid all required taxes. These returns showed that, in 2004, Lustgraaf’s
adjusted gross income was negative $6757. Although he owed no income
taxes, he owed the federal government $2 in self-employment tax.
Lustgraaf received a refund from the state of $16 in tax year 2004. In
2005, Lustgraaf’s adjusted gross income was negative $23,833. He owed
the federal government $93 in self-employment taxes and received a
refund of $12 from the state. In 2006, Lustgraaf’s federal adjusted gross
income was negative $21,571. He owed no income tax on this amount,
but did owe $1234 in self-employment tax. He received an $8 refund
from the state. Lustgraaf had net operating business losses in 2006 that
could be carried forward to 2007. These losses were sufficient to reduce
his 2007 adjusted gross income to zero. Because Lustgraaf had prepared
the 2007 return before he completed the return for 2006, he did not
claim the net operating loss for 2006 in 2007. (He has three years to file
an amended return.) Consequently, his tax returns for 2007 show an
adjusted gross income of $33,043. He owed no federal income tax on
this amount, but did owe $2339 in self-employment tax as well as
penalty and interest of $899.37 on the self-employment tax. The record
does not show whether taxes were owed to the state for the tax year
2007.
Lustgraaf was not charged with any criminal conduct by any
governmental entity. He has no prior record of discipline, and two local
attorneys testified that Lustgraaf had a good reputation in the legal
community of Council Bluffs. Lustgraaf also presented evidence of
significant pro bono work. It appears he fully cooperated with the
disciplinary authorities and did not attempt to shift the blame for his
conduct to anyone else.

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The commission found that Lustgraaf had not intended to defraud
the government when he failed to file tax returns and that he “incorrectly
assumed that he did not need to file income tax returns for the years
2004 through 2007.” Upon our review of the record and giving particular
weight to the commission’s assessments of the witnesses’ credibility, we
agree. See Iowa Supreme Ct. Att’y Disciplinary Bd. v. Marzen, 779
N.W.2d 757, 759 (Iowa 2010) (noting court gives particular weight to the
commission’s credibility findings although court is not bound by them).
While it is true one is presumed to know the law, as a factual matter,
Lustgraaf mistakenly believed he had no obligation to file tax returns
during the years in question. Lustgraaf’s conduct was certainly careless,
but we conclude it was not fraudulent.
III. Ethical Violations.
A. Rule 32:8.4(b): Criminal Conduct. Rule 32:8.4(b) prohibits
the commission of a criminal act that reflects adversely on the lawyer’s
honesty, trustworthiness, or fitness as a lawyer in other respects. A
lawyer may be found in violation of this rule, even though he has not
been charged or convicted of a crime. See Iowa Supreme Ct. Bd. of Prof’l
Ethics & Conduct v. Bell, 650 N.W.2d 648, 651–52 (Iowa 2002)
(discussing comparable DR 1–102(A)(3) of the Iowa Code of Professional
Responsibility for Lawyers and citing cases); Comm. on Prof’l Ethics &
Conduct v. Hall, 463 N.W.2d 30, 33, 35 (Iowa 1990) (holding respondent’s
commission of theft constituted violation of DR 1–102(A)(3), even though
respondent was not charged with or convicted of a crime). In this case,
Lustgraaf failed to file tax returns for years 2004 through 2007 by
April 15 of the following calendar year despite having sufficient income to
trigger the filing requirement. This evidence is sufficient to establish a
violation of 26 U.S.C. § 6012. In addition, we think Lustgraaf’s conduct

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reflects adversely on his fitness as a lawyer. Iowa Supreme Ct. Att’y
Disciplinary Bd. v. Fields, 790 N.W.2d 791, 796 (Iowa 2010). Therefore,
we agree with the commission that Lustgraaf violated rule 32:8.4(b).
B. Rule 32:8.4(c): Misrepresentation. We have stated that a
lawyer makes a misrepresentation in violation of our ethical rules when
his income exceeds the sums requiring the filing of a tax return and he
fails to file a return. Id. at 795; Iowa Supreme Ct. Att’y Disciplinary Bd. v.
Iversen, 723 N.W.2d 806, 810 (Iowa 2006). In the cases in which we
have found the existence of a misrepresentation, the respondent had
willfully failed to file returns, had committed a fraudulent practice, or
had made a false statement. See, e.g., Fields, 790 N.W.2d at 797
(attorney pleaded guilty to two counts of fraudulent practice in the
second degree); Iversen, 723 N.W.2d at 809–10 (attorney pleaded guilty to
crime of fraudulent practice); Comm. on Prof’l Ethics & Conduct v.
Humphreys, 524 N.W.2d 396, 397 (Iowa 1994) (jury convicted respondent
in federal court of willful tax evasion); Comm. on Prof’l Ethics & Conduct
v. Clauss, 445 N.W.2d 758, 760 (Iowa 1989) (respondent provided false
answers about federal and state income tax filings on client security
questionnaires). These cases are consistent with the general rule that
“misrepresentation requires intent to deceive to support an ethical
violation.” Iowa Supreme Ct. Att’y Disciplinary Bd. v. Sobel, 779 N.W.2d
782, 787 (Iowa 2010).
In the instant action, however, the board did not allege or present
any evidence that Lustgraaf’s failure to file the returns was willful, done
with an intent to defraud, or otherwise deceitful. Nor did the board
present evidence that Lustgraaf made any false statements in connection
with his failure to file tax returns. Lustgraaf mistakenly believed he was
not required to file returns, making his failure to file negligent. We hold

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this evidence does not support a finding that Lustgraaf engaged in
misrepresentation, and therefore, the board failed to prove that Lustgraaf
violated rule 32:8.4(c).
C. Rule 32:8.4(d): Conduct Prejudicial to the Administration
of Justice. We hold that Lustgraaf’s mistaken belief that he was not
required to file tax returns does not constitute conduct prejudicial to the
administration of justice. “ ‘Whether conduct is prejudicial to the
administration of justice is not subject to a precise test.’ ” Iowa Supreme
Ct. Att’y Disciplinary Bd. v. Monroe, 784 N.W.2d 784, 788 (Iowa 2010)
(quoting Iowa Supreme Ct. Att’y Disciplinary Bd. v. Buchanan, 757
N.W.2d 251, 255 (Iowa 2008)). “Generally, acts that have been deemed
prejudicial to the administration of justice have ‘hampered the efficient
and proper operation of the courts or of ancillary systems upon which
the courts rely.’ ” Iowa Supreme Ct. Att’y Disciplinary Bd. v. Borth, 728
N.W.2d 205, 211 (Iowa 2007) (quoting Iowa Supreme Ct. Bd. of Prof’l
Ethics & Conduct v. Steffes, 588 N.W.2d 121, 123 (Iowa 1999)); accord
Monroe, 784 N.W.2d at 788. “Examples of conduct prejudicial to the
administration of justice include paying an adverse expert witness for
information regarding an opponent’s case preparation, demanding a
release in a civil action as a condition of dismissing criminal charges,
and knowingly making false or reckless charges against a judicial
officer.” Iowa Supreme Ct. Att’y Disciplinary Bd. v. Templeton, 784
N.W.2d 761, 768 (Iowa 2010). The mere commission of a criminal act
will not constitute a violation of rule 32:8.4(d) unless that conduct
somehow impedes the operation of the justice system. Id.
The record does not establish that Lustgraaf’s failure to file his
personal income tax returns prejudiced the administration of justice.
There was no evidence Lustgraaf’s actions affected any particular court

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proceeding or any ancillary system supportive of any court proceeding.
Consequently, Lustgraaf’s behavior, even if criminal, is not the sort of
conduct that prejudices the administration of justice within the meaning
of rule 32:8.4(d).
IV. Sanctions.
“ ‘There is no standard sanction for a particular type of
misconduct, and though prior cases can be instructive, we ultimately
determine an appropriate sanction based on the particular
circumstances of each case.’ ” Wagner, 768 N.W.2d at 287 (quoting Iowa
Supreme Ct. Att’y Disciplinary Bd. v. Earley, 729 N.W.2d 437, 443 (Iowa
2007)); accord Casey, 761 N.W.2d at 61. In tailoring a sanction to the
specific circumstances of a particular case,
“we consider the nature of the violations, the attorney’s
fitness to continue in the practice of law, the protection of
society from those unfit to practice law, the need to uphold
public confidence in the justice system, deterrence,
maintenance of the reputation of the bar as a whole, and any
aggravating or mitigating circumstances.”
Casey, 761 N.W.2d at 61 (quoting Iowa Supreme Ct. Att’y Disciplinary Bd.
v. Ireland, 748 N.W.2d 498, 502 (Iowa 2008)); accord Wagner, 768
N.W.2d at 287.
In prior reported disciplinary cases involving failure to file tax
returns, we have imposed suspensions ranging from sixty days to three
years.4 Iversen, 723 N.W.2d at 810; Iowa Supreme Ct. Bd. of Prof’l Ethics
4In Iowa Supreme Court Attorney Disciplinary Board v. Johnston, 732 N.W.2d 448
(Iowa 2007), we noted the respondent’s prior disciplinary history included a public
reprimand in 1991 for failing to file state and federal income tax returns for five years.
732 N.W.2d at 450. Because this reprimand was not the subject of a disciplinary
opinion rendered by this court, we assume the public reprimand was issued by the
board in accordance with its authority under Iowa law. See 16 Gregory C. Sisk &
Mark S. Cady, Iowa Practice Series: Lawyer and Judicial Ethics § 2.6(a), at 47 (2010)
(noting under Iowa Court Rules effective prior to July 2005, the “Board . . . had the
authority to issue a public reprimand that became final if not objected to by the

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& Conduct v. Doughty, 588 N.W.2d 119, 120 (Iowa 1999) (citing cases);
Comm. on Prof’l Ethics & Conduct v. Crawford, 351 N.W.2d 530, 531–32
(Iowa 1984) (citing cases). In our prior cases imposing a suspension for
failing to file tax returns, the attorney engaged in a willful failure to file, a
fraudulent practice, or other more serious misconduct involving issues of
dishonesty. See, e.g., Iversen, 723 N.W.2d at 809 (noting attorney had
pled guilty to crime of fraudulent practice in the second degree); Iowa
Supreme Ct. Bd. of Prof’l Ethics & Conduct v. O’Brien, 690 N.W.2d 57, 57
(Iowa 2004) (stating respondent had been convicted of fraudulent
practices in the third degree); Humphreys, 524 N.W.2d at 397 (noting
respondent had been convicted of willful tax evasion); Clauss, 445
N.W.2d at 760 (stating attorney had falsely stated on client security
questionnaires that he had filed his tax returns); Crawford, 351 N.W.2d
at 532 (rejecting commission’s finding that respondent’s failure to file
was negligent, holding instead that attorney’s conduct was willful). An
element of dishonesty is lacking in the instant action in which the board
proved only Lustgraaf’s negligence. Lustgraaf’s less culpable state of
mind in failing to comply with the requirement to file income tax returns
is a significant distinguishing fact from our prior cases.
In addition to the fact that Lustgraaf’s conduct did not involve an
element of dishonesty, other mitigating factors are present. Lustgraaf
has a good reputation in the legal community of Council Bluffs and has
performed pro bono work. See Monroe, 784 N.W.2d at 791 (viewing pro
bono work as a mitigating factor); Iversen, 723 N.W.2d at 811
(considering as mitigating factor that respondent was well respected in
legal community). He has no prior record of discipline. See Monroe, 784
lawyer”). We do not know the circumstances that motivated the board to reprimand the
respondent rather than to seek a suspension of his license.

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N.W.2d at 791 (noting respondent’s prior ethical practice in determining
appropriate sanction); Iversen, 723 N.W.2d at 811 (noting absence of
prior ethical infractions as a mitigating circumstance).
Because Lustgraaf’s misconduct is qualitatively less severe than
the misconduct of the attorneys in our prior cases dealing with a failure
to file tax returns, we conclude that the imposition of a suspension is not
warranted here. See generally Iversen, 723 N.W.2d at 810 (noting
sanctions are adapted “to the unique facts of each case”). Nevertheless,
discipline is necessary to deter lawyers from similar misconduct.
Therefore, we concur in the commission’s recommendation that a public
reprimand be issued.
V. Disposition.
We publicly reprimand Thomas E. Lustgraaf for his ethical
violations and tax the costs of this proceeding against him.
ATTORNEY REPRIMANDED.

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