Vinton lawyer’s license revoked for misuse of client money

DES MOINES — The Iowa Supreme Court Friday revoked a Vinton lawyer’s law license for misappropriation of client funds, which the court found was an “intentional act of theft,” not a technical violation.

John Karl Fischer received his law license in 1979 and has been practicing in Vinton since 2014. He mostly handled legal issues of trusts and estates, probate, real estate and tax.

The court’s Attorney Disciplinary Board charged Fischer last year with violating rules of professional conduct, including misappropriation of client funds. The court’s Grievance Commission found Fischer violated multiple rules of professional conduct and recommended revocation of his license.

According to the ruling, Fischer in the past has been disciplined or faced violations. In 2012, he received a private admonishment for improper collection of fees. He also received a public reprimand in 2018 for lack of diligence and failure to communicate with his clients.

He also was audited in 2010, 2015 and 2019, and each showed Fischer and his staff failed to maintain proper records of his client trust accounts, the ruling states. Some had negative balances.

Under the court’s review in this recent case, Fischer was the lawyer for two brothers who owned a business that built spec homes. In 2011, high winds damaged the roof of a home they built and sold. The homeowner’s insurance company filed a lawsuit against the brothers but they agreed to a $15,000 settlement in 2014.

Each brother agreed to pay half of settlement and their share of lawyer fees, the ruling states. One brother paid Fischer $9,200 and told Fischer to pay $7,500 to the insurance company and for Fischer to keep $1,700 for attorney fees.

Fischer, however, sent the insurance company $6,198 and used the rest to cover the other brother’s lawyer fees but didn’t tell his clients what he did.

The insurance company never cashed that check and then Fischer withdrew and spent that amount for himself, according to the ruling.

One of the brothers, during testimony at the grievance commission hearing, said he never told Fischer to use his payment in that way.

Fischer argued that the brother was responsible for the entire bill because he was president of the company, but then admitted to misapplying the money because he “was mad,” according to the ruling.

In May 2016, the insurance company filed a motion to enforce the settlement and the district court granted it, ordering the brothers to pay $15,000 before a certain date. Fischer never told his clients of the motion. About four years later in 2020, one of the brothers sold his home and was surprised to learn there was a judgment lien against the property for the $15,000 judgment — plus interest and fees.

That brother had to pay the $17,900 balance at closing for the original settlement and interests, the complaint states.

When Fischer was confronted by his client, he paid the $6,198 in several installments and in the last payment he included a note, saying this covered the “insurance check misplaced and allegedly uncashed” by the insurance company.

A lawyer for the insurance company testified during Fischer’s grievance commission hearing that his office shredded the check that Fischer sent.

According to the ruling, Fischer never repaid the brother, who had the lien, $1,302, which he owed.

Fischer argument that his actions were unintentional and due to poor record-keeping “do not square with the facts,” Associate Justice Thomas Waterman stated in the ruling.

Fischer intentionally converted $1,302 after receiving payment from his client because he “was mad.” Then, later he kept the $6,198 for himself after he learned the insurance company didn’t cash the check.

For over three years Fischer didn’t inform his clients about the court’s enforcement of the settlement and the judgment, Waterman wrote. Fischer’s misappropriation caused additional costs for the clients and had no justification to use the $7,500 for anything other than the settlement.

The court concluded this was an intentional act of theft and warranted a revocation of Fischer’s license. Under the rules, Fischer “may apply for readmission” of his license after five years.

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