No. 30 M.D. Appeal Docket 1984, Appeal from the Order of the Commonwealth Court of Pennsylvania of August 8, 1983 at No. 874 C.D. 1982,
Nix, C.j., and Larsen, McDermott, Hutchinson, Zappala and Papadakos, JJ. Nix C.j., concurs in the result. Flaherty, J., did not participate in the consideration and decision of this case. Papadakos, J., filed a dissenting opinion.
The sole issue in this appeal is whether appellant, the State Board of Examiners of Public Accountants, is barred by the equitable doctrine of estoppel by laches from instituting disciplinary proceedings against appellee Harold Weinberg for professional misconduct occurring in 1974. We hold that, under the circumstances of this case, laches does not operate to bar such disciplinary proceedings.
Appellee is a public accountant certified by the State Board of Examiners of Public Accountants (the Board) pursuant to the C.P.A. Law, Act of May 26, 1947, P.L. 318, §§ 1-16.2, as amended, 63 P.S. §§ 9.1-9.16(b) (Purdon's 1968). In 1974, appellee handled the account of Southside AMC-Jeep, Inc. (Southside) as a partner in the accounting firm of Winderman, Stein and Weinberg.
In the spring of 1974, appellee met with an agent of the Internal Revenue Service (IRS) to discuss an audit of Southside's 1973 corporate income tax return which appellee had prepared. The agent indicated that Southside owed additional tax liability for 1973 but made an offer to accept a bribe of $1,500 in return for a "no-change" audit. In July, 1974, appellee related this offer to the owners of Southside and advised them that, in his opinion, it would be cheaper to pay the bribe than to risk the additional tax liability. Appellee did not conduct an independent review of the 1973 tax return or of the IRS audit to determine the exact amount of any additional tax liability.
The owners of Southside gave appellee an envelope containing $1,500. Appellee removed $500 from the envelope and appropriated this money for his personal use. On August 22, 1974, appellee delivered the remaining $1,000 to the IRS agent who then recommended a no-change audit as promised.
In early 1975, appellee, through an attorney, voluntarily contacted the IRS and confessed his misdeeds of the previous year. At the request of the IRS, he agreed to cooperate in the investigation and prosecution of the errant IRS agent and others. His cooperation included wearing a "body wire" to tape record several conversations. As a result of appellee's cooperation, two IRS agents pleaded guilty to criminal charges in federal district court. Appellee also testified in federal court in 1976, under a grant of immunity, against his former business partner, Stanley Stein, who was convicted of federal charges. For obvious reasons, the partnership had dissolved and appellee began a sole proprietorship in 1975.
In 1980, the Board brought formal disciplinary action against Stanley Stein based upon his 1976 federal conviction. In prosecuting this disciplinary action, the Board reviewed appellee's testimony from the 1976 federal jury trial and learned, for the first time, of appellee's participation in the 1974 bribery involving Southside. On September 16, 1981, the Board issued a citation and notice of hearing to appellee, charging him with violations of section
.9a of the C.P.A. Law*fn1 and of the Board's regulations.*fn2 Appellee's answer essentially admitted the factual allegations of the citation and admitted his participation in the 1974 bribery of the IRS agent. Appellee's answer additionally asserted the affirmative defense of laches, stating that he "will be severely prejudiced in his defense and in raising vital mitigating circumstances, because of the passage of over seven (7) years since the occurrence of the events set forth in the citation." Appellee also requested the Board to consider the "vital mitigating factors" in determining the "ultimate discipline to be imposed," including that "his prior single incident of professional misconduct does not adversely reflect on his current fitness to practice . . . accounting" and his "staunch cooperation with the prosecuting authorities . . . ."
At the hearing held on December 8, 1981, appellee's testimony at the 1976 Stein trial constituted the Commonwealth's
case in chief. Appellee testified at this hearing and admitted that he had delivered the bribe money to the IRS agent on behalf of Southside and had kept $500 of the money for himself. He also acknowledged that his testimony in the 1976 trial was truthful and accurate. In his defense, however, appellee testified as to his voluntary cooperation in the IRS investigation. He was not able to recall all of the details of that cooperation, nor were the IRS agents involved in the investigation able to recall details of appellee's participation or locate the IRS files involved.
On March 22, 1982, the Board adjudicated appellee guilty of violating the C.P.A. Law and the rules of professional conduct promulgated by the Board, and ordered that appellee's certificate and permit to practice accounting be suspended for one year. The Board rejected appellee's defense of laches, holding that there was not undue delay in initiating the disciplinary proceeding and that appellee was not prejudiced in his defense by the delay because, despite the lack of complete recall on the part of appellee and the IRS agents, the Board fully accepted appellee's assertions as to his voluntary cooperation in the IRS investigation. The Board took into account the lapse of time since appellee's criminal conduct, his subsequent clear record, and his voluntary cooperation in the IRS investigation in arriving at its "rather lenient sanction" of a one year suspension.
Appellee appealed the Board's adjudication to the Commonwealth Court and petitioned for a stay, which was granted. A Commonwealth Court panel reversed the Board. 76 Pa. Commw. 216, 463 A.2d 1210 (1983) (per Doyle, J., joined by Rogers, J.; Blatt, J. dissenting). The Commonwealth Court held that laches barred the Board from instituting disciplinary proceedings because it had not acted with due diligence and because appellee had been prejudiced ...