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Gustafson v. Board of Accountancy

Court of Appeals of Oregon

April 22, 2015

Kenneth GUSTAFSON, CPA, Petitioner,

Argued and Submitted December 6, 2013.

09116CNK. Board of Accountancy.

Roy Pulvers argued the cause for petitioner. With him on the briefs were Allison D. Rhodes, Benjamin P. O'Glasser, and Hinshaw & Culbertson, LLP.

Judy C. Lucas, Senior Assistant Attorney General, argued the cause for respondent. With her on the brief were Ellen F. Rosenblum, Attorney General, and Anna M. Joyce, Solicitor General.

Before Ortega, Presiding Judge, and Duncan, Judge, and DeVore, Judge.


Page 344

[270 Or.App. 448] ORTEGA, P. J.

Petitioner seeks judicial review of a final order of the Oregon Board of Accountancy that suspended petitioner's certified public accountant (CPA) license for two years and ordered petitioner to pay a civil penalty of $5,000 and the board's contested case costs of $31,768. In his first assignment of error, petitioner asks us to remand the board's order, asserting that the board's failure to provide petitioner or the administrative law judge (ALJ) with the board's prior unpublished orders in disciplinary cases constituted " unexplained procedural irregularities" that " impaired the fairness" of the board's proceedings. Alternatively, he contends that the board's actions were an abuse of discretion because, without adequate explanation, the board (1) failed to comply with its own rules regarding document production and (2) relied on " unpublished, unproduced, and unreferenced prior orders as its basis for rejecting the ALJ's Proposed Order." In his second assignment of error, petitioner argues that the board impermissibly assessed the costs of the contested case hearing against him. We reject petitioner's second assignment of error without further discussion, and, because we conclude that petitioner's first assignment is without merit, affirm.

We begin with the board's factual findings, which petitioner does not challenge. See Coffey v. Board of Geologist Examiners, 348 Or. 494, 496 n 1, 235 P.3d 678 (2010) (where the factual findings of the board are not challenged, those findings are the facts for the purposes of judicial review). Petitioner has been a CPA since 1985 and has never previously been disciplined by the board. In 2007, petitioner agreed to assist the Fowlers and their various mortgage brokerage companies[1] with income and payroll tax issues. At the time, the Fowlers' most pressing issue involved problems with payroll tax filings, including unfiled, misfiled, and late tax returns. Petitioner did not have a written fee agreement with the Fowlers, who experienced severe financial difficulties in late 2007 and early 2008. Those difficulties required a significant amount of accounting work so [270 Or.App. 449] that their corporate attorney could complete related legal work. However, the Fowlers failed to keep current in paying petitioner or their corporate attorney. The parties met in March 2008 to discuss business strategies associated with winding down one of the Fowlers' business entities and, at the end of that meeting, they discussed options for ensuring that petitioner and the Fowlers' attorney would be paid for past and future work. At that meeting, the Fowlers agreed to consider a proposal to execute lien documents in favor of petitioner and their attorney. However, shortly thereafter, the Fowlers rejected that proposal. At the time, the Fowlers were in dire financial straits and were waiting on an anticipated tax refund to pay off some of their many creditors.

In August 2009, petitioner received a refund check payable to the Fowlers from the Internal Revenue Service (IRS) for $103,632.12. Petitioner did not contact the Fowlers; instead, he had his staff negotiate the check without the Fowlers' signature and deposit it in his firm's bank account. Two weeks later, petitioner sent the Fowlers an invoice that reflected that he had " received"

Page 345

$65,778.57 for past-due amounts, and enclosed a check for the " overpayment" of $37,853.55. The Fowlers immediately e-mailed petitioner seeking clarification of the invoice. Petitioner informed them that he had received their refund and had " applied it against our bills." The Fowlers strenuously objected to petitioner's actions, asserting that they had never authorized him to receive and negotiate the refund check.

As a result of petitioner's actions, the Fowlers filed complaints with the IRS, the United States Attorney's Office, and the board. The U.S. Attorney declined to pursue criminal charges against petitioner, and the IRS issued a written reprimand after concluding that petitioner had violated IRS Circular 230 by endorsing and depositing the check.

The board, in response to the Fowlers' complaint and the board's initial investigation, issued a notice to petitioner proposing to suspend petitioner's CPA license for three years for professional misconduct under ORS 673.170(1)(f)[2] [270 Or.App. 450] and OAR 801-030-0020(1)(a), (b),[3] and assess a civil penalty of $5,000 and costs of the disciplinary proceeding. Petitioner requested a contested case hearing, and the board referred the hearing request ...

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