Legal Ethics

Lawyer founded fake church to funnel money while saying he couldn't pay sanctions, judge says

A federal judge says a Minneapolis lawyer enjoyed restaurant meals, liquor and tanning while claiming he couldn’t afford to pay $80,000 in sanctions and attorney fees imposed for making frivolous arguments in a suit against banks.

U.S. District Judge Patrick Schiltz held lawyer William Butler in civil contempt on Tuesday, the Minneapolis Star Tribune reports. “Far from making a good-faith attempt to pay the sanctions,” Schiltz said, “Butler has openly flouted them—and used his defiance as a marketing tool to attract new clients.”

Schiltz said Butler created the Church of Jesus Christ and Latter Day Austrian Economists, which funnels money from his law firm to pay his living expenses, and he had an average monthly gross income of more than $64,000 between February 2012 and October 2013. His net income, according to a stipulation in a March 2013 divorce settlement, was $6,000 to $7,200 a month.

For a portion of August 2013, while under a court order to pay sanctions, Butler spent $1,500 on restaurant meals, liquor, and yoga, according to Schiltz’s opinion (PDF). In September 2013, he spent more than $1,700 on restaurant meals, liquor, yoga, tanning, and kettlebell equipment.

“Butler seems to believe that he is free to ignore court-imposed sanctions,” Schiltz wrote, “unless, at some time in the future, he has purchased whatever he feels like purchasing and paid whatever expenses he feels like paying, and then discovers that he has left over in his bank account the full amount of the sanctions, or something close to it.”

Schiltz said he imposed the sanctions in August 2013 after finding Butler had engaged in “extraordinarily egregious and brazen” misconduct. According to Schiltz, the misconduct included frivolous arguments in a case against banking and mortgage defendants, misrepresentations to the court, and “brazen delay tactics and judge-shopping.” Schiltz said Butler also had made a “cottage industry of filing frivolous show-me-the-note claims,” which is an argument that the holder of a mortgage cannot foreclose on that mortgage unless it also holds the promissory note secured by the mortgage.

Schiltz said Butler was recently suspended from practice before the 8th U.S. Circuit Court of Appeals for failing to pay hundreds of thousands of dollars in sanctions imposed by other judges, creating an automatic suspension in the District of Minnesota. Schiltz said the court would monitor whether the suspension spurs good-faith efforts to pay and will revisit possible incarceration if no money is paid. Schiltz also said he would refer the matter to the U.S. Attorney for possible investigation.

Butler did not respond to the newspaper’s request for comment.

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