Missouri Supreme Court reviews discipline case against Kansas attorney

The Missouri Supreme Court is considering what discipline, if any, to impose on a Kansas attorney accused of violating the rules of professional responsibility.

The court heard oral arguments Dec. 10 in In Re: Mark W. Arensberg, a Kansas-based business law attorney accused of violating Rule 4-8.4(d), which prohibits conduct “prejudicial to the administration of justice.”

Arensberg was employed in 2010 by “the father” to create Missouri limited liability companies for a family to purchase businesses and real estate. The father had three beneficiaries, including his son. In 2017, the son filed for divorce in Jackson County, with the parties disputing whether the son’s LLC interests were marital assets. The LLCs were added to the case in 2018, and discovery showed the family trust or the father had loaned money to or paid expenses for the son. Documents prepared by Arensberg included a $900,000 promissory note drafted in 2019 with an effective date of Feb. 1, 2017; a security agreement backdated to 2019, with an effective date of Dec. 31, 2019, pledging the son’s LLC interest as collateral — which Arensberg advised could be considered a fraudulent conveyance — and a financing statement pledging ownership interests to the family trust. An April 2020 marital settlement agreement stated the son had not encumbered his business interests, though Arensberg later notified the parties that one LLC interest had been pledged. In mid-2020, Arensberg prepared default notices for loans between the family trust and LLCs based on the father’s representations. In 2021, the circuit court dissolved the marriage, addressing the credibility of the son and father and the timing of the loan documents.

The chief disciplinary counsel initiated disciplinary proceedings against Arensberg in July 2024. After a hearing, a disciplinary panel found his conduct violated Rule 4-8.4(d) and recommended a reprimand, which the parties accepted. The Supreme Court rejected the recommendation and ordered briefing and oral argument.

The chief disciplinary counsel was represented by Cheryl Nield of the chief disciplinary counsel’s office in Jefferson City, while Arensberg was represented by Daniel F. Church of Morrow Willnauer Church in Kansas City.

Nield argued that Arensberg knowingly acted to protect the father’s interests despite recognizing the risk that the documents could be considered fraudulent conveyances.

“More than once, when father asked respondent to prepare loan-related paperwork that protected the family, that protected the other siblings’ financial interest as against son’s wife, respondent noted the danger that these actions could be considered fraudulent conveyance against the backdrop of the son’s divorce,” Nield said. “Nonetheless, respondent drafted these documents.”

Nield said Arensberg’s conduct reflected poorly on the credibility of the father and son in the divorce proceedings.

Judge W. Brent Powell questioned why the Office of Chief Disciplinary Counsel stipulated that Arensberg’s conduct was negligent rather than knowing.

“I’m concerned that OCDC stipulated here and is advocating something different than was stipulated and the effect that may have on resolving disciplinary matters in the future,” Powell said.

Nield acknowledged a dispute over whether the conduct was negligent or knowing but said the parties agreed a reprimand was appropriate.

“Respondent lands there by arguing his conduct was negligent, in our brief we argued that his conduct was knowing, but given the mitigating factors in this case, we still would depart from the baseline sanction of suspension down to a reprimand,” she said. “Regardless, we’re landing at the same place.”

Church argued that Arensberg’s conduct amounted to negligent transactional lawyering rather than knowing misconduct, emphasizing that Arensberg repeatedly warned the father that the loan documents and security agreements could be viewed as fraudulent conveyances in the context of the divorce. Church said Arensberg advised his client of those risks before preparing the documents and relied on client representations in doing so, which he argued is permissible in transactional practice.

“What Mr. Arensberg did was he told (the father), ‘Look, you want me to prepare a security agreement, and this could be deemed a fraudulent conveyance, very likely could be a fraudulent conveyance,’” Church said, adding that Arensberg “alerted him of that very fact, just like what every good transactional lawyer would do.”

Church also argued that the divorce court’s later finding of fraudulent conveyance does not equate to attorney misconduct where the lawyer warned the client and acted for a legitimate purpose. He disputed claims that Arensberg misled the divorce court, pointing to his disclosure of the encumbrance to the wife’s attorney and the filing of UCC financing statements, which Church characterized as inconsistent with an intent to deceive.

“That is absolutely 1,000 degrees different than committing fraud on the court,” he said. “That is not evidence of fraud. It is the exact opposite.”

Church further contended that the divorce court’s findings regarding intent should not control the disciplinary analysis because Arensberg did not testify or otherwise explain his actions in that proceeding. He argued the trial court made credibility findings without that context and that the Supreme Court should instead rely on the stipulated facts developed during the disciplinary process.

“The court made assumptions as to what Mark did, not based upon what he did and why he did it,” Church said.

Church also stressed the parties’ stipulation that Arensberg’s conduct was negligent rather than knowing, arguing that the OCDC should be bound by the factual agreement it entered into after extensive investigation.

“When we enter into a stipulation, it’s binding,” Church said. “It’s what the parties agree to.”

In rebuttal, Nield argued that Arensberg’s disclosures and UCC filings came only after the encumbrances were in place and did not cure their effect on the divorce proceedings. She also cited findings describing the father’s efforts to financially pressure the son’s wife. Nield said that while the parties entered factual stipulations, the Supreme Court retains ultimate authority to determine whether the conduct was negligent or knowing and what discipline is appropriate.

The case is In Re: Mark W. Arensberg, Case No. SC101157.