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Wednesday, September 11, 2013

State of Ohio v. Anthony Kirkland, Case no. 2010-0854
Hamilton County Court of Common Pleas

James L. Gessler [sic] and Angeline O. Gessler [sic] v. City of Worthington Income Tax Board of Appeals and Steven R. Gandee [Molly Roberts], Finance Director, Case no. 2012-2105
Ohio Board of Tax Appeals

Disciplinary Counsel v. David Allen Streeter, Jr., Case no. 2013-0581
Cuyahoga County


Death Penalty

State of Ohio v. Anthony Kirkland, Case no. 2010-0854
Hamilton County Court of Common Pleas

Anthony Kirkland of Cincinnati has appealed his convictions and death sentence for the 2006 murders of Casonya Crawford, Mary Jo Newton, and Kimya Rolison and the 2009 murder of Esme Kenney.

Just before opening statements in the jury trial, Kirkland pleaded guilty to the charges related to the murders of Newton and Rolison. These homicides weren’t prosecuted as capital offenses. Kirkland was also convicted following the trial in the murders of teenagers Crawford and Kenney. These sentences included death penalty specifications.

At trial, the court allowed testimony about an earlier case involving Kirkland. Kylah Williams testified that Kirkland had solicited sex from her in 2007 when she was 13 years old. The defense objected to this testimony, but the court said it was admissible as long as no reference to Kirkland’s conviction in the case was made.

In his appeal to the Supreme Court, Kirkland’s attorneys have advanced 10 claims of legal and procedural error during his trial as grounds for the court to reverse his convictions and/or reduce his death sentence to a term of life imprisonment.

Among the errors claimed, Kirkland’s attorneys make three central arguments.

Arguing for the state, attorneys from the Hamilton County Prosecutor’s Office make several responses.

Contacts
Representing Anthony Kirkland: Herbert Freeman, 513.505.5062

Representing Hamilton County Prosecutor’s Office: William Breyer, 513.946.3244

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For the Purpose of Local Income Tax Liability, Does “Net Profits” Include Proceeds from Exercise of Stock Options?

James L. Gessler [sic] and Angeline O. Gessler [sic] v. City of Worthington Income Tax Board of Appeals and Steven R. Gandee [Molly Roberts], Finance Director, Case no. 2012-2105
Ohio Board of Tax Appeals

ISSUE: Did the Ohio Board of Tax Appeals err when it determined that the definition of “net profits” in the City of Worthington’s income tax ordinance exceeded the limitations imposed on the taxing authority of municipalities in Ohio Revised Code Chapter 718 and, in so doing, upheld a decision by the City of Worthington Income Tax Board of Appeals that denied a request for refund of taxes paid by a Worthington couple?

BACKGROUND:
Both parties in this case agree to the underlying facts that James and Angeline Gesler, residents of the City of Worthington since 1996, filed income tax returns with the city in 2005, 2006, and 2007 that included more than $2.9 million in income collected through the exercise of stock options provided to Mr. Gesler in compensation for work he did for clients in his business as a certified public accountant. The amount of tax paid on this income was about $60,000.

After paying this tax, Mr. Gesler reviewed the City of Worthington’s ordinances and determined that he and his wife had in fact not been required to report the stock option income on their return, and they filed a request for a refund plus interest. The request was denied by the city, and the Geslers appealed this decision to the City of Worthington Income Tax Board of Appeals. After a hearing and consideration of briefs from both sides, the board ruled against the Geslers, and they appealed to the Ohio Board of Tax Appeals, which upheld the decision to deny the Geslers a refund. They appealed to the Ohio Supreme Court.

A provision of the Worthington income tax law, Cod. Ord. 1701.15, imposes a 2 percent income tax on “the net profits earned on and after January 1, 2004, of all unincorporated businesses, professions or other activities conducted by residents of the City ….” The ordinance defines “net profit” as “for a taxpayer other than an individual, the adjusted federal taxable income and ‘net profit’ for a taxpayer who is an individual means the individual’s profit, other than amounts required to be reported on Schedule C, Schedule E, or Schedule F.” Since income from stock options is reported on Schedule C of the federal income tax form, Mr. Gesler reasoned that the city ordinance explicitally exempted this income from the definition of net profit and therefore was not subject to the income tax.

The Board of Tax Appeals ruled that Cod. Ord. 1701.15 was unlawful because it was “in direct contravention” with a provision of Ohio state law, R.C. 718.01(A)(7), and “the Ohio General Assembly’s expression must be deemed to govern the present situation.”

R.C. 718.01(A)(7) states “... no municipal corporation may tax or use as the base for determining the amount of the net profit ... an amount other than the net profit required to be reported by the taxpayer on schedule C ....”

Attorneys for the Geslers advance five arguments for why the lower tribunals that considered this matter were wrong and the City of Worthington should be ordered to grant the requested refund. Among their central arguments, they state that the effect of the Board of Tax Appeals’ ruling was to improperly exercise state authority to essentially expand a municipal income tax.

“There is no Codified City of Worthington ordinance imposing tax on Schedule C income,” they write in their merit brief. “Therefore, Schedule C income cannot be subjected to City of Worthington municipal income tax. Claims that the City of Worthington’s ordinance imposing tax violates the General Assembly’s statutory uniformity requirements for municipal taxes cannot serve as a mechanism to broaden the municipal tax beyond the plain terms of the ordinance. The Ohio Constitution reserves the power to impose municipal taxes to municipal legislative bodies. The General Assembly’s power extends no further than ‘limiting’ or ‘restricting’ municipal exercises of legislative power. The City of Worthington did not invoke its legislative power under the Worthington City Charter to enact an ordinance that would reach Schedule C income of individuals. Thus, there was no exercise of municipal taxing authority for the General Assembly to ‘limit’ or ‘restrict’ as to that income. R.C. 718. 01 does not indicate in any fashion that the General Assembly intended for it to act as a de facto municipal ordinance to impose tax where no municipal ordinance attempts to impose tax.”

Attorneys for the City of Worthington Income Tax Board of Appeals argue: “This Court should affirm the decision of the [Board of Tax Appeals (BTA)] because it was reasonable, lawful and in accordance with this Court’s precedent ….”

“In this case, the BTA found that R.C. 718.01(G)(1) provides that for a taxpayer operating as a sole proprietorship, no municipal corporation may tax an amount other than the net profit required to be reported by the taxpayer on Schedule C or Schedule F and that R.C. 718.01(A)(7) in turn defines net profit for an individual as that individual's profit required to be reported on Schedule C, Schedule E or Schedule F,” attorneys for the City of Worthington argue in their merit brief. “The consequence of this ruling is that although Worthington adopted a contrary definition of ‘net profit’ in Codified Ord. 1701.15 that encompasses only net profits ‘other than amounts required to be reported on schedule C, schedule E, or Schedule F,’ the definitions provided in R.C. 718.01(G)(1) and R.C. 718.01(A)(7) must apply to Worthington’s tax levied on net profits in Codified Ord. 1703.01(c)(1).”

Contacts
Representing James Gessler and Angeline Gessler: David Froling, 614.464.3022

Representing the City of Worthington Income Tax Board of Appeals: Andrew Michael Ferris, 614.462.4787

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Attorney Discipline

Disciplinary Counsel v. David Allen Streeter, Jr., Case no. 2013-0581
Cuyahoga County

The Board of Commissioners on Grievances & Discipline has recommended that North Olmsted attorney David Streeter, Jr., be suspended from the practice of law for two years, all fully stayed on conditions, for violations of the Rules of Professional Conduct.

While running Statewide Title Agency, Streeter conducted real estate closings for Ohio properties. The closings required that funds from third parties be held in Statewide’s escrow account and then disbursed based on closing instructions. The board found that Streeter misappropriated more than $230,000 in proceeds from the closings during nine months in 2010.

Both the Disciplinary Counsel and Streeter’s attorneys recommended to the board panel reviewing this matter that Streeter receive a two-year suspension with 18 months stayed with conditions. Before the full board considered this case, however, the Ohio Supreme Court decided Disciplinary Counsel v. Edwards (2012), which the panel said was very similar to the facts and findings in Streeter’s situation. In Edwards, the court approved a two-year suspension, fully stayed on conditions. The panel said, and the full board agreed, that it couldn’t recommend a sentence that conflicted with Edwards, so it proposed a fully stayed suspension with several conditions, including continued participation in the Ohio Lawyers Assistance Program (OLAP) and individual therapy.

The Office of Disciplinary Counsel, which prosecuted the complaint against Streeter before the board, has filed objections to the board’s recommended sanction. They argue that their recommendation of a six-month actual suspension doesn’t conflict with Edwards and, regardless, the Supreme Court isn’t bound in this case by its sanction in Edwards.

While acknowledging similarities between Edwards and this case, the Disciplinary Counsel notes several differences – Streeter misappropriated three times more money than Edwards; unlike Edwards, Streeter actively tried to conceal his misdeeds; and Streeter didn’t self-report his misconduct, whereas Edwards quickly disclosed his misappropriation of funds to the Disciplinary Counsel. While there are mitigating factors in this case, counsel argues that the Edwards case had “the optimal level of mitigation,” so it is the exception rather than the standard for misappropriation cases. They assert that Streeter poses a greater threat to the public, which justifies an actual suspension, and they ask the court to overrule the board’s recommendation and adopt the two-year suspension with 18 months stayed on conditions.

Streeter’s attorneys respond that the differences between this case and Edwards are “inconsequential and unpersuasive.” They state that the more-than-$60,000 Edwards misappropriated was used to pay personal and business expenses. Most of the funds Streeter misappropriated, they assert, went to pay back each previous misappropriation, while about $75,000 covered personal and business expenses – a similar amount to Edwards. They argue that both attorneys disclosed their misappropriations only after receiving an inquiry from the Disciplinary Counsel’s office.

In addition, Streeter’s attorneys assert that several mitigating factors support a fully stayed suspension – Streeter suffers from depression and anxiety disorders, has no prior disciplinary record, cooperated throughout the disciplinary process, and has a positive reputation in the community. They also note that he has repaid the funds and has actively and successfully participated in OLAP and individual therapy.

Contacts
Representing the Office of Disciplinary Counsel: Jonathan Coughlan, 614.461.0256

Representing David Streeter, Jr.: Richard Koblentz, 216.621.3012

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These informal previews are prepared by the Supreme Court's Office of Public Information to provide the news media and other interested persons with a brief overview of the legal issues and arguments advanced by the parties in upcoming cases scheduled for oral argument. The previews are not part of the case record, and are not considered by the Court during its deliberations.

Parties interested in receiving additional information are encouraged to review the case file available in the Supreme Court Clerk's Office (614.387.9530), or to contact counsel of record.