The Internal Revenue Service said Tuesday that its Office of Professional Responsibility has prevailed in seeking the disbarment of David O. Christensen after he was convicted of theft for misappropriating funds as the conservator of his daughter’s trust account.
Christensen’s CPA licenses in Washington and Oregon had been revoked previously as a result of his conviction.
In a final agency decision, the IRS administrative law judge declined to grant a request by Christensen to continue in a limited practice as a tax return preparer, and instead, disbarred him from all practice before the IRS. The judge found that Christensen’s conviction for theft, along with the revocation of his CPA licenses, constituted disreputable conduct under Circular 230. Christensen had argued that he should be permitted to continue to prepare tax returns because his theft conviction resulted from a family matter that had nothing to do with his tax preparation practice before the IRS.
“OPR strives to protect the integrity of the tax system from unscrupulous and incompetent practitioners regardless of how those traits become known,” said OPR director Karen L. Hawkins in a statement.
Agreeing with OPR’s proposed sanction, the administrative law judge held that the seriousness of Christensen’s offense warranted disbarment from practicing before the IRS finding, that the “respondent has displayed a lack of integrity, including in his testimony at trial, in attempting to distinguish his professional actions from his ‘father-daughter’ relationship.”
Christensen is therefore prohibited from any practice, including tax preparation, before the IRS for a five-year period.
Background of the Case
Upon his mother’s death, Christensen’s younger brother held a life interest in their mother’s Jennie’s estate trust. Once his brother died, any remaining amount of the trust money was supposed to go to Christensen’s daughter and his younger brother’s son. At one time, Christensen was a beneficiary along with his brother in his mother’s will, but his mother rescinded the original will and left her estate to his brother.
One year after his mother’s passing in 2001, only about $230,000 remained of the $650,000 trust assets and so Christensen hired an attorney to challenge the trust because he was concerned nothing would be left for his daughter. He brought a civil suit against his brother in which both he and his daughter were named as complainants, with Christensen listed as guardian ad litem for his daughter. Christensen brought the suit in his personal capacity, in part because he claimed that his mother owed him approximately $22,000 when she passed away because he had borrowed $8,000 from her and secured that loan with $30,000 worth of stock.
On Dec. 2, 2004, Christensen obtained a $90,000 settlement related to the trust on behalf of his daughter. On Dec. 7, 2004, he placed $75,000 of the $90,000 settlement into his personal Ameritrade account and subsequently lost approximately $14,000 of that money in trading activity.
When the settlement check was issued, Christensen “roughly estimated” his expenditures as reimbursement for the costs of obtaining the settlement and immediately kept $15,000 of the settlement funds. He admitted that he worked on the trust issue in his office and paid people to help him accumulate all the accounting records and receipts but could not recall how exactly he paid them. He said he believed he paid them with cash or with a personal check. In an accounting filed in the Superior Court of Washington, Christensen stated that as of May 24, 2006, only $23,637.54 remained for distribution to his daughter. He asserted that he did not “waste” any of his daughter’s money related to the trust and that the accounting he filed detailed his expenditures incurred on behalf of his daughter to obtain the settlement.
Christensen pled guilty in Washington State Superior Court to one count of first degree theft and agreed to pay restitution in connection with his handling of the settlement funds. As a result of his plea, he was sentenced to partial confinement of 20 days on a work crew and 20 days of work/educational release and was ordered to pay the restitution amount of $500 for the victim assessment, $200 in court costs, a $500 fine, and a $100 felony DNA collection.
“Respondent’s conduct in handling his daughter’s money from the trust was criminal, egregious, and reflected extremely poor judgment,” wrote Judge Parlen L. McKenna. “To be sure, the circumstances surrounding respondent’s actions were related to a family dispute, both on the front end with his younger brother and on the back end with his daughter over the proceeds from the settlement related to that trust. In each instance, one can appreciate that respondent might not have conducted himself as he normally would absent these particular family circumstances. As such, the overall circumstances might suggest some slight mitigation. However, read in the overall context, these particular circumstances do not excuse his conduct or indicate a sanction less than disbarment.”