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In re Najim

Supreme Court of Kansas

December 1, 2017

In the Matter of Harry Louis Najim, Respondent.

         Original proceeding in discipline.

          Stanton A. Hazlett, Disciplinary Administrator, argued the cause and was on the brief for the petitioner.

          Craig Shultz, of Shultz Law Office, P.A., of Wichita, argued the cause and was on the brief for the respondent, and Harry Louis Najim, respondent, argued the cause pro se.

          PER CURIAM

         This is an original proceeding in discipline filed by the office of the Disciplinary Administrator against the respondent, Harry Louis Najim, of Wichita, an attorney admitted to the practice of law in Kansas in 1972. Pursuant to a plea agreement, respondent admitted that he provided legal services to an undercover agent who was engaged in a conspiracy to commit wire fraud and contraband cigarette trafficking. The undercover agent paid respondent $16, 500 in cash. But respondent did not notify his law firm so it could report the payment to the Financial Crimes Enforcement Network despite his knowing a report of that amount was required by law. Based on that Class D federal felony conviction for violating 31 U.S.C. § 5324(b)(1) (2012) (structuring transactions to evade reporting), a hearing panel of the Kansas Board for Discipline of Attorneys determined that respondent violated Rule 8.4(b) of the Kansas Rules of Professional Conduct (KRPC) (2017 Kan. S.Ct. R. 379) (commission of a criminal act reflecting adversely on the lawyer's honesty, trustworthiness, or fitness as a lawyer). The panel majority recommended a three-year suspension from the practice of law effective from the date of this court's decision.

         Respondent appeals the finding that he violated KRPC 8.4(b) and the recommended three-year suspension. We hold that respondent violated KRPC 8.4(b) and impose an indefinite suspension that is retroactive to his temporary suspension imposed on May 18, 2015.

         On May 16, 2016, the office of the Disciplinary Administrator filed a formal complaint against the respondent alleging violations of the KRPC. The respondent filed an answer on June 10, 2016. A hearing was held on the complaint before a panel of the Kansas Board for Discipline of Attorneys on September 29, 2016, where the respondent was personally present and represented by counsel.

         The hearing panel made the following findings of fact and conclusions of law, together with its recommendation to this court:

"Findings of Fact and Conclusions of Law
. . . .
"8. On August 13, 2013, a grand jury returned a 44-count indictment in the
United States District Court for the Western District of Missouri. The respondent was charged in counts 1 and 44 of the indictment with having violated 18 U.S.C. § 371 (conspiracy to commit offense or to defraud the United States), a Class D felony and 18 U.S.C. § 1956(h) (laundering of monetary instruments), a Class C felony. On August 14, 2013, the respondent, through counsel, reported the charges to the disciplinary administrator.
"9. On February 20, 2015, the respondent entered a guilty plea to violating
31 U.S.C. § 5324(b)(1), structuring a transaction to evade reporting, pursuant to a written plea agreement. The plea agreement provided, in pertinent part, as follows:
'Pursuant to Rule 11(c)(1)(B) of the Federal Rules of Criminal Procedure, the parties described below have entered into the following plea agreement:
'1. The Parties. The parties to this agreement are the United States Attorney's Office for the Western District of Missouri (otherwise referred to as "the Government" or "the United States"), represented by Tammy Dickinson, United States Attorney, and Paul S. Becker and Justin G. Davids, Assistant United States Attorneys, and the defendant, Harry Najim, represented by Craig Shultz and Michael Shultz.
'The defendant understands and agrees that this plea agreement is only between him and the United States Attorney for the Western District of Missouri and that it does not bind any other federal, state, or local prosecution authority or any other government agency, unless otherwise specified in this agreement.
'2. Defendant's Guilty Plea. The defendant agrees to waive
Indictment and plead guilty to Count One of an Information charging him with a violation of 31 U.S.C. § 5324(b)(1), that is, failure to file a report relating to currency in a nonfinancial trade or business. The information setting forth the charge is incorporated by reference herein. By entering into this plea agreement, the defendant admits that he committed this offense, and is in fact guilty of this offense.
'3. Factual Basis for Guilty Plea. The parties agree that the facts constituting the offense to which the defendant is pleading guilty are as follows:
'At all times relevant to this Information, defendant Harry Najim was a lawyer employed by the Adam Jones Law Firm in Wichita, Kansas. From March 2011 through January 2012, defendant Najim provided legal services for a person identified to him as "Bill Johnson." Bill Johnson was in fact a Special Agent with the Bureau of Alcohol, Tobacco and Firearms and Explosives working in an undercover capacity. Bill Johnson was engaged in selling large quantities of untaxed cigarettes to a group of individuals who transported the contraband cigarettes to retail outlets in New York State. Those individuals were engaged in a conspiracy to commit wire fraud and contraband cigarette trafficking in violation of 18 U.S.C. §§ 2342 and 1343.
'Defendant Najim provided legal services for Bill Johnson. On June 23, 2011, at the McCormick and Schmick's restaurant on the Country Club Plaza, Kansas City, Missouri, Bill Johnson paid defendant Najim $16, 500 in United States Currency for defendant Najim's legal services. Defendant knew the requirements of 31 U.S.C. § 5331 and the regulations implementing that statute which required the law firm to file a report with the Financial Crimes Enforcement Network upon receipt of more than $10, 000 in currency in a single transaction. Defendant Najim did not report the receipt of the $16, 500 currency to the Adams Jones Law Firm which caused it to fail to file a report with the Financial Crimes Enforcement Network within the time period required by the statute and implementing regulations.
'4. Use of Factual Admissions. The defendant acknowledges, understands and agrees that the admissions contained in Paragraph 3 and other portions of this plea agreement will be used for the purpose of determining his guilt and advisory sentencing range under the United States Sentencing Guidelines ("U.S.S.G."), including the calculation of the defendant's offense level in accordance with U.S.S.G. § 1B1.3(a)(2). The defendant acknowledges and understands that other uncharged related criminal activity may be considered as "relevant conduct" pursuant to U.S.S.G. § 1B1.3(a)(2) or part of the "offense of conviction" pursuant to U.S.S.G. § 1B1.2, and may be used by the Court in calculating the offense level for the charge to which he is pleading guilty.
'5. Statutory Penalties. Defendant understands that upon his plea of guilty to Count One of the Information charging him with causing the business to fail to file a report required under 31 U.S.C. § 5331, the maximum penalty the Court may impose is not more than five years imprisonment, three years of supervised release, a fine of not more than $250, 000; and a $100 mandatory special assessment which must be paid in full at the time of sentencing. The defendant further understands that this offense is a Class D Felony.'

         As part of the plea agreement, the parties requested that the court delay formally accepting the respondent's guilty plea for a period of two months. The court agreed and took the respondent's guilty plea under advisement. On April 20, 2015, the federal government filed a motion requesting that the court formally accept the respondent's guilty plea.

         "10. On May 12, 2015, the disciplinary administrator filed a motion with the Kansas Supreme Court for the temporary suspension of the respondent's license to practice law, based upon the respondent's felony conviction of structuring a transaction to evade reporting. On May 18, 2015, the Supreme Court entered an order of temporary suspension.

         "11. On September 30, 2015, the prosecutor filed a sentencing memorandum. The prosecutor's sentencing memorandum included:

'. . . The Presentence Investigation Report (PSR) found the defendant's base offense level was 6, and an eight-level increase because the value of the funds was greater than $70, 000. The PSR found that the value of the funds was $74, 500. (PSR ¶ 25.) The PSR assessed the following enhancements:
• A two-level increase because the defendant knew or believed that the funds were proceeds of unlawful activity, or were intended to promote unlawful activity. U.S.S.G. § 2S1.3(b)(1)(A);
• A two-level increase for obstruction of justice. U.S.S.G. § 3C1.1; and
• The PSR also recommended the defendant not receive a reduction for acceptance of responsibility based upon his conduct resulting in an enhancement for obstructing or impeding the ministration [sic] of justice. U.S.S.G. § 3E1.1, comment. (N.4).
'Therefore, the PSR found the defendant's offense level was 18, Criminal History Category I, resulting in a Guidelines range of 27 to 33 months.
'The defendant has filed extensive objections to the PSR's statement of his conduct in the charged offenses and the relevant conduct, the enhancements listed above, and the denial of a reduction for acceptance of responsibility. The Government does not believe that the defendant's conduct in giving money to co-defendant [C.S.] supports an enhancement for obstruction of justice. Therefore, consistent with the plea agreement, the Government believes that the defendant should be given a reduction for acceptance of responsibility. However, the defendant's comments during the plea hearing and the objections submitted to the PSR raises serious questions about whether the defendant has truly "accepted responsibility" for his role in the conspiracy. The Government will introduce evidence at the sentencing hearing which will clearly establish the defendant's conduct in the charged and relevant conduct which supports the enhancement that he knew the funds were proceeds of unlawful activity. U.S.S.G. § 2S1.3(b)(1)(A).
. . . .

         'SUMMARY OF THE CASE

         'Charged Conduct

         'The following is the agreed statement of facts from the plea agreement:

'At all times relevant to this Information, defendant Harry Najim was a lawyer employed by the Adam Jones Law Firm in Wichita, Kansas. From March 2011 through January 2012, defendant Najim provided legal services for a person identified to him as "Bill Johnson." Bill Johnson was in fact [] Special Agent [Williamson] with the Bureau of Alcohol, Tobacco and Firearms and Explosives working in an undercover capacity. Bill Johnson was engaged in selling large quantities of untaxed cigarettes to a group of individuals who transported the contraband cigarettes to retail outlets in New York State. Those individuals were engaged in a conspiracy to commit wire fraud and contraband cigarette trafficking in violation of 18 U.S.C. § 2342 and 1343.

         'Defendant Najim provided legal services for Bill Johnson. On June 23, 2011, at the McCormick and Schmick's restaurant on the Country Club Plaza, Kansas City, Missouri, Bill Johnson paid defendant Najim $16, 500 in United States Currency for defendant Najim's legal services. Defendant knew the requirements of 31 U.S.C. § 5331 and the regulations implementing that statute which required the law firm to file a report with the Financial Crimes Enforcement Network upon receipt of more than $10, 000 in currency in a single transaction. Defendant Najim did not report the receipt of the $16, 500 currency to the Adams Jones Law Firm which caused it to fail to file a report with the Financial Crimes Enforcement Network within the time period required by the statute and implementing regulations.

         'Relevant Conduct

         'During all times relevant to this conspiracy, [C.S.] and another person, [J.A.], owned and operated Cheap Tobacco Wholesale (hereinafter CTW), a business located in Independence, Missouri. CTW was a licensed tobacco wholesaler in Missouri. Neither [C.S.] nor CTW was a licensed New York tobacco wholesaler authorized to bring cigarettes into the state of New York. Defendant Harry Najim was [J.A.]'s attorney for many years.

         'New York State imposes excise taxes on all cigarettes sold in the state, unless expressly exempted by law or by private agreement between New York State and an Indian nation or tribe (either approved by the legislature or part of a stipulation and order approved by a federal court). Under New York State law, cigarettes can only be transported into the state by a limited number of state-licensed stamping agents (i.e. wholesalers). The New York Department of Taxation and Finance pre-collects the cigarette excise tax from these state-licensed stamping agents on cigarettes that are sold to retailers, but prior to their delivery to the retailers. This taxing scheme was upheld as specifically applicable against Indian nations on May 9, 2011, by the United States Court of Appeals for the Second Circuit in Oneida Nation of New York v. Cuomo, 645 F.3d 154 (2d Cir. 2011). Federal and New York State law require that tax stamps be affixed to cigarette packages-prior to their delivery to retailers-reflecting that the required state taxes have been paid. During the relevant time period, New York State imposed a cigarette excise tax of $4.35 per pack, or $43.50 per carton.

         'In New York State, only licensed wholesalers may purchase unstamped cigarettes. This is done either directly through the cigarette manufacturer or through other wholesalers. Under New York State law, it is the obligation of state-licensed stamping agents to prepay the excise tax and affix stamps on all cigarettes packs. Under New York ...


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