In re Petition for Disciplinary Action against Kristi D. McNeilly, a Minnesota Attorney, Registration No. 0341265. ...

• Court: Supreme Court of Minnesota
• Decided: April 2, 2025
• Docket: A220574
• Status: Published

Opinion

STATE OF MINNESOTA

IN SUPREME COURT

A22-0574

Original Jurisdiction Per Curiam

In re Petition for Disciplinary Action against Filed: April 2, 2025 Kristi D. McNeilly, a Minnesota Attorney, Office of Appellate Courts Registration No. 0341265. ________________________

Susan M. Humiston, Director, Binh T. Tuong, Deputy Director, Office of Lawyers Professional Responsibility, Saint Paul, Minnesota, for petitioner.

Kristi D. McNeilly, pro se, Woodbury, Minnesota, for respondent. ________________________

SYLLABUS

Absent any mitigating factors, disbarment is the appropriate discipline for an

attorney who is convicted of felony theft by swindle.

Disbarred.

Considered and decided by the court without oral argument.

OP IN IO N

PER CURIAM.

The Director of the Office of Lawyers Professional Responsibility (Director) filed

a petition for disciplinary action against respondent Kristi D. McNeilly. We appointed a

referee, the parties executed a stipulation of facts, and McNeilly waived her right to an

evidentiary hearing. The referee took the matter under advisement and ultimately found

1 that McNeilly committed a criminal act that reflected negatively on her honesty and

trustworthiness: She stole $15,000 from a client by telling the client that the money was

needed to bribe government officials to dismiss pending drug charges. The referee found

no mitigating factors. For this misconduct, the referee recommended that McNeilly

be disbarred. We agree. Based on McNeilly’s misconduct—and the absence of any

mitigating factors—we disbar McNeilly from the practice of law.

FACTS

McNeilly was admitted to practice law in Minnesota on October 29, 2004.

McNeilly most recently practiced law in Woodbury. McNeilly has been disciplined on two

prior occasions; she was publicly reprimanded and placed on probation for three years in

2015 and admonished in 2016.

McNeilly was criminally convicted of theft by swindle in 2022. 1 Following her

conviction, the Director filed a petition for disciplinary action against McNeilly based on

Rule 19(a), Rules on Lawyers Professional Responsibility (RLPR), which provides that

“[a] lawyer’s criminal conviction” is “conclusive evidence that the lawyer committed the

conduct for which the lawyer was convicted.” The petition alleged that McNeilly’s

criminal conviction was misconduct under Minnesota Rules of Professional Conduct

1 The facts underlying McNeilly’s conviction are detailed in our decision in State v. McNeilly, 6 N.W.3d 161, 170–75 (Minn. 2024).

2 8.4(b) 2 and (c). 3 We appointed a referee to hear the petition and to make and file findings

of fact, conclusions of law, and recommendations for discipline.

Because the parties executed a stipulation of facts and McNeilly waived her right to

a hearing, the referee based his findings on the stipulation and documentary evidence. We

summarize the referee’s findings as follows: In 2018, the Minnetonka Police Department

executed a search warrant at a home where M.A.W. and J.J.S. resided. The police found

illegal controlled substances during their search of the home. Following the search, and

before the State filed criminal charges against them, M.A.W. and J.J.S. met with McNeilly.

McNeilly agreed to represent M.A.W. for $20,000 and J.J.S. for $2,500. In May 2018,

M.A.W. paid $22,500 to McNeilly’s business account—not her trust account. 4

Months later, on November 5, 2018, McNeilly both called and texted M.A.W.,

stating that she needed to speak with him urgently. McNeilly claimed that a Minnetonka

detective and the prosecutor in M.A.W.’s case had asked to meet with her—in her words,

a “bad sign.” Hours later, at M.A.W.’s home, McNeilly told M.A.W. and J.J.S. that she

had been invited into the “back room” where esteemed attorneys had the privilege to meet

with authorities to make deals for clients that would not involve any charges. According

2 See Minn. R. Prof. Conduct 8.4(b) (“It is professional misconduct for a lawyer to . . . commit a criminal act that reflects adversely on the lawyer’s honesty, trustworthiness, or fitness as a lawyer in other respects[.]”). 3 See Minn. R. Prof. Conduct 8.4(c) (“It is professional misconduct for a lawyer to . . . engage in conduct involving dishonesty, fraud, deceit, or misrepresentation[.]”). 4 See Minn. R. Prof. Conduct 1.15 (requiring lawyers to deposit client funds into identifiable interest-bearing trust accounts).

3 to McNeilly, this meant she had “made it” in her career. McNeilly also told M.A.W. that

he was facing 15 to 20 years in federal prison for his drug case.

McNeilly claimed that M.A.W. could avoid federal charges if he paid $35,000 to a

police union fund and worked as a confidential informant. McNeilly presented M.A.W.

with a copy of a confidential informant form. M.A.W. declined the offer and expressed

that he did not want to be an informant. McNeilly responded that if M.A.W. paid $50,000

to a police union fund, he could avoid charges without having to work as a confidential

informant. McNeilly told M.A.W. that he should pay McNeilly and then she would deliver

the money to the police union.

M.A.W. responded that he could pay McNeilly only $15,000 at that time but that he

could pay more later. McNeilly stated that she would have to check with the detective.

McNeilly went to M.A.W.’s garage, returned a few minutes later, and told M.A.W. that if

he could get the $15,000 before 6:00 p.m., he could pay the rest later. McNeilly then drove

M.A.W. to his bank. M.A.W. obtained a $15,000 cashier’s check, and McNeilly instructed

him to write “legal fees” on the memo line. McNeilly took the check and deposited it into

her business account.

Eventually, M.A.W. contacted and retained a new attorney. The new attorney

advised M.A.W. to request a refund, receipts for his payments, and his file from McNeilly.

The new attorney also contacted the authorities about the bribery scheme that M.A.W.

alleged McNeilly had facilitated. M.A.W. emailed McNeilly three times asking for a

refund. McNeilly refused his request each time.

4 The Minnetonka Police Department referred the investigation to the Burnsville

Police Department (BPD) and placed the Minnetonka detective on administrative leave.

BPD interviewed the Minnetonka detective, M.A.W., and J.J.S. BPD obtained a warrant

for McNeilly’s bank records, which showed that she deposited the $15,000 cashier’s check

from M.A.W. into her business account—not her trust account. McNeilly’s bank records

showed that she used the $15,000 to make several payments—including a mortgage

payment and payments to her credit card. McNeilly’s bank records did not reflect a

payment made to a police union. BPD also reviewed McNeilly’s phone records. The

phone records corroborated M.A.W.’s allegations that McNeilly called him on

November 5, 2018. The phone records did not, however, show any calls between McNeilly

and the Minnetonka detective.

In 2019, the State charged McNeilly with theft by swindle—a felony punishable by

up to 10 years in prison. See Minn. Stat. § 609.52, subd. 2(a)(4) (2024); Minn. Stat.

§ 609.52, subd. 3(2) (2024). In 2021, a jury found McNeilly guilty of the offense.

McNeilly appealed her conviction to the court of appeals, which affirmed. State v.

McNeilly, No. A22-0468, 2022 WL 17747792 (Minn. App. Dec. 19, 2022). We likewise

affirmed McNeilly’s conviction. State v. McNeilly, 6 N.W.3d 161 (Minn. 2024).

The Director filed a petition for discipline against McNeilly. McNeilly filed an

answer denying all misconduct. Pursuant to the parties’ stipulation, we stayed disciplinary

proceedings while McNeilly appealed her conviction, and we suspended McNeilly’s

license to practice law pending the outcome of the appeals. After we affirmed McNeilly’s

conviction, we directed the referee to proceed with the disciplinary proceedings.

5 On July 31, 2024, the parties executed and filed another stipulation (the July

Stipulation). In the July Stipulation, the parties agreed to certain facts, and McNeilly

waived certain rights, including: her right to submit findings of fact, conclusions of law, or

a brief to the referee; her right to present evidence or make arguments; and her right to have

a hearing on the petition before the referee. McNeilly admitted that her conviction for theft

by swindle is conclusive evidence that she committed the conduct underlying the

conviction and that that conduct violated Minnesota Rule of Professional Conduct 8.4(b).

See Rule 19(a), RLPR. McNeilly also admitted that her conduct supported disbarment.

Although McNeilly indicated that she wanted to make a record of alleged mitigating

factors, she acknowledged that she would not be filing any evidence in support of those

mitigating factors, and she waived her right to a hearing and to submit findings of fact,

conclusions, or a brief in support of the alleged mitigating factors.

On September 25, 2024, the referee issued his findings of fact, conclusions of law,

and recommendation for discipline. The referee incorporated the parties’ July Stipulation

into his findings. The referee concluded that McNeilly’s criminal conviction is conclusive

evidence that she violated Minnesota Rule of Professional Conduct 8.4(b); McNeilly’s

conduct harmed both the public and the legal profession by undermining public confidence

in the honesty and integrity of lawyers; there were no mitigating factors; and no evidence

militates against disbarment as the presumptive sanction for McNeilly. 5

5 Although the Director’s petition alleged that McNeilly’s criminal conduct violated Minnesota Rules of Professional Conduct 8.4(b) and (c), the referee did not address

6 The referee then considered whether there was evidence of aggravating factors and

concluded that there were four: (1) McNeilly’s lack of remorse; (2) the fact that her

criminal conduct was perpetrated against a client; (3) the harm that her conduct, in falsely

implying that she could influence the prosecutor and the police, did to the public’s view of

the legal profession and the judicial system; and (4) her two instances of prior discipline.

Accordingly, the referee recommended that McNeilly be disbarred.

Neither party challenged the referee’s findings of fact, conclusions of law, and

recommendation for discipline. The Director filed a brief asking this court to adopt the

referee’s recommendation and disbar McNeilly. McNeilly did not file a brief in this court. 6

ANALYSIS

Because McNeilly failed to file a brief to this court, the referee’s findings of fact

and conclusions of law are deemed conclusive. In re Udeani, 945 N.W.2d 389, 396

(Minn. 2020) (“[I]f a party . . . fails to file a brief, he or she has essentially failed to allege

that the referee committed clear error.”). 7 As a result, the only issue before us is the

appropriate discipline for McNeilly.

Rule 8.4(c) in its findings and conclusions. We address only McNeilly’s violation of Rule 8.4(b). 6 Oral argument on this matter was originally scheduled for February 6, 2025. On January 9, 2025, the Director notified this court that McNeilly requested that oral argument be waived. The Director did not object to McNeilly’s request. We granted McNeilly’s request and cancelled oral argument. 7 A referee’s findings and conclusions are deemed conclusive when neither party orders a transcript of the proceeding. Rule 14(e), RLPR. In this case, the parties executed a stipulation, and McNeilly waived her right to an evidentiary hearing. The parties did not,

7 The purpose of professional discipline “is not to punish the attorney but rather to

protect the public, to protect the judicial system, and to deter future misconduct by the

disciplined attorney as well as by other attorneys.” In re Rebeau, 787 N.W.2d 168, 173

(Minn. 2010). And although we place “great weight” on the referee’s recommendation,

we retain responsibility for determining the appropriate sanction. Id.

To determine the appropriate discipline for an attorney, we consider four

factors: (1) the nature of the misconduct; (2) the cumulative weight of the violations;

(3) the harm to the public; and (4) the harm to the legal profession. In re Kleyman,

960 N.W.2d 566, 572 (Minn. 2021). We also consider aggravating and mitigating

circumstances. Id. And although we impose discipline case by case, we look to similar

cases for guidance and to ensure consistent discipline. In re Capistrant, 905 N.W.2d 617,

620 (Minn. 2018).

We first consider the nature of McNeilly’s misconduct—stealing $15,000 from a

client, which resulted in a felony conviction for theft by swindle. “[T]he presumptive

discipline for a felony conviction is disbarment, particularly where the criminal conduct

occurs (as in this case) within the practice of law.” In re Andrade, 736 N.W.2d 603, 605

(Minn. 2007). That said, “[w]e will not automatically disbar attorneys convicted of

felonies . . . and will consider the circumstances surrounding the criminal act to determine

however, enter into a stipulation for discipline or to any certain conclusions. And because there was no evidentiary hearing, there was no transcript for McNeilly to request. As noted above, however, because McNeilly failed to file a brief, she has failed to allege that the referee committed clear error. Udeani, 945 N.W.2d at 396.

8 if any discipline short of disbarment is appropriate.” In re Strunk, 945 N.W.2d 379, 387

(Minn. 2020).

Our inquiry on this issue is “fact intensive, and considers numerous factors,

including the nature of the criminal conduct, whether the felony was directly related to the

practice of law, and whether the crime would seriously diminish public confidence in the

profession.” Id. We have ordered lesser sanctions than disbarment when the criminal

conduct was not directly related to the practice of law and when there were substantial

mitigating circumstances. In re Ginsberg, 690 N.W.2d 539, 555–56 (Minn. 2004); In re

Daffer, 344 N.W.2d 382, 385 (Minn. 1984). Here, McNeilly’s criminal conduct was

directly related to her practice of law. Her victim was her client. And there are no

mitigating circumstances.

The severity of McNeilly’s conduct is compounded by the fact that she

misappropriated $15,000. Misappropriation occurs when “funds are not kept in trust and

are used for a purpose other than one specified by the client.” In re Brooks, 696 N.W.2d

84, 88 (Minn. 2005). We have repeatedly stated that disbarment is the appropriate

discipline for misappropriation of client funds without mitigating factors. In re Rhodes,

740 N.W.2d 574, 579 (Minn. 2007); In re Lee, 3 N.W.3d 278, 284 (Minn. 2024). And

“[a]ttorneys who have not been disbarred for convictions for theft, fraud, or embezzlement

have presented substantial mitigating factors.” In re Brost, 850 N.W.2d 699, 705

(Minn. 2014) (emphasis added). As noted above, there are no mitigating factors here. And

McNeilly’s conduct went beyond the ordinary circumstances of misappropriation from a

client—as reflected by her felony conviction for theft by swindle.

9 Because McNeilly’s actions included misappropriation, resulted in a felony

conviction, and undermined public confidence in the honesty and integrity of lawyers, the

nature of her misconduct weighs heavily in favor of a severe sanction.

Next, we consider “the cumulative weight of all of the professional misconduct in

determining the appropriate sanction.” Rhodes, 740 N.W.2d at 580. “We distinguish

between a brief lapse in judgment or a single, isolated incident and multiple instances of

misconduct occurring over a substantial amount of time,” the latter of which warrants

greater discipline. In re Igbanugo, 989 N.W.2d 310, 329–30 (Minn. 2023) (citation

omitted) (internal quotation marks omitted). In this case, McNeilly’s conduct took place

over about a week and relates to one client. Although this was more than a brief lapse in

judgment, this conduct does not establish an extended pattern warranting more severe

discipline. See In re Majors, 973 N.W.2d 621, 629 (Minn. 2022).

We also measure harm to the public based on the number of persons harmed and the

extent of their injuries. In re Coleman, 793 N.W.2d 296, 308 (Minn. 2011). The referee

concluded that McNeilly harmed one client, M.A.W., who lost $15,000. McNeilly’s

conduct also harmed a non-client and led to a Minnetonka detective being placed on leave

pending an investigation. See In re Bradley, 7 N.W.3d 604, 609 (Minn. 2024) (considering

harm to non-client members of the public). This factor weighs in favor of a severe sanction.

Finally, we consider the harm to the legal profession. Misappropriation of client

funds “is a breach of trust that reflects poorly on the entire legal profession and erodes the

public’s confidence in lawyers.” In re Rooney, 709 N.W.2d 263, 270 (Minn. 2006). The

premise of McNeilly’s conduct—her assertion that she would bribe a police officer in

10 exchange for leniency—only further impugns the reputation of the legal profession. This

factor weighs heavily in favor of severe sanction.

The referee found no mitigating factors, and McNeilly failed to allege any, as she

failed to file a brief to this court. Although the referee found several aggravating factors,

we need not consider them under these circumstances. In the absence of any mitigating

factors, the commission of a felony and the misappropriation of client funds warrants

disbarment. Andrade, 736 N.W.2d at 605; see also In re Perez, 688 N.W.2d 562, 567

(Minn. 2004) (“We view felony convictions as serious misconduct, and we have disbarred

lawyers convicted of a felony absent significant mitigating factors.”); Lee, 3 N.W.3d at 284

(“In the absence of any mitigating factors, misappropriation of client funds warrants

disbarment.”). Accordingly, we conclude that the appropriate discipline for McNeilly is

disbarment.

CONCLUSION

For the foregoing reasons, respondent Kristi D. McNeilly is disbarred from the

practice of law in the State of Minnesota, effective on the date of this opinion. Respondent

must comply with Rule 26, RLPR (requiring notice to clients, opposing counsel, and

tribunals), and must pay $900 in costs under Rule 24(a), RLPR.