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NY Lawyer Faces Bribery Charge By Vesselin Mitev A Long Island attorney previously charged with stealing $700,000 from real estate investors is now facing an attempted bribery charge after allegedly trying to pay off a Nassau County clerk to speed up his request for information on a property he was trying to close on. According to prosecutors, Frederic Powell, 54, was told by a Hempstead building's department clerk that his request would normally take five days to process. Mr. Powell, of East Meadow, then told the clerk he needed the information that day and placed a $100 bill on the counter, and asked "if the process could be sped up." When he was informed that it could not, he placed another $100 bill on the counter, which was again rejected. Before leaving, Mr. Powell allegedly crumpled up a $50 bill and threw it at the clerk, according to a statement by Nassau County District Attorney Kathleen Rice. He faces one count of third-degree attempted bribery, which carries a maximum four-year sentence. He is due back in court on March 17. Mr. Powell is also facing grand larceny charges in an unrelated incident for allegedly pocketing bridge loans in deals he brokered in 2006 and 2007. He has pleaded not guilty. NY Lawyer Who Admitted Ripping Off His Clients for Millions Wants Them to Pay His Fees By Vesselin Mitev Mr. Rondos, who is in jail awaiting sentencing for the thefts, contends he owes $1.2 million in restitution while prosecutors are seeking nearly $2.7 million. At a restitution hearing on Wednesday, Mr. Rondos testified that he had fulfilled his obligations as a guardian with regard to the "personal needs and day-to-day expenses" of his wards. Mr. Rondos told the court he is owed at least $35,000 for work he performed on a dozen accounts before he was charged with money laundering and grand larceny. Mr. Rondos, who has since been disbarred and faces between six and 18 years as a result of his plea, told Acting Supreme Court Justice Ronald A. Zweibel in Manhattan that his outstanding legal fees would go to repay the victims of his thefts. He said he hoped he could pay off the balance once he served his sentence and begins working again. "I am asking the court, for the work that I have done, to credit me for that amount," Mr. Rondos said. The hearing resumes Monday. Mr. Rondos' former Brooklyn firm, Raia & Rondos, was also charged in the thefts. Trial in that case starts April 12
Execution-Style Murder of NY Lawyer, By Mark Fass Yesterday, the Brooklyn District Attorney's Office announced the indictment and arrests of four defendants who, along with the couple themselves, allegedly operated a million-dollar criminal conspiracy involving money laundering, identity theft, mortgage fraud and larceny. The investigation into the murders remains ongoing, and the prosecution has not alleged a direct link between the conspiracy and the deaths. Rather, the district attorney's office said the murder probe led to the discovery of the crime ring. According to the indictment filed yesterday, four individual defendants — Robert Delvicario, Lennox Johnson, Shanda Bruce and Thermine Remy — joined the couple in a series of scams in order to steal and launder money from, among others, the couple's clients. The defendants allegedly recruited straw buyers to participate in fraudulent real estate transactions, then laundered the proceeds through forged documents and stolen identities. Prosecutors said that their crimes stretched from Brooklyn to Queens, Long Island, Westchester County, Connecticut and New Jersey. One of the main victims of the alleged conspiracy was Tiffany Partners, the principal developer of a Carroll Gardens condominium and a client of Mr. Schwartz. According to the indictment, the defendants drained some $270,000 deposited by the corporation into an escrow account to bond mechanics liens filed by contractors against the property. The defendants—which also include three corporations, Adonis Abstract (which was owned by the Schwartzes), LBW Corp. and Robo Capital Securities—are charged with a wide range of crimes, including enterprise corruption, grand larceny and money laundering. "These defendants thought they could bankroll their extravagant lifestyles by stealing from clients who trusted them, but as is often the case, they eventually turned on each other, robbing their own partners in crime, as well," District Attorney Charles J. Hynes said yesterday at a news conference. "My office will continue to work with the NYPD to determine who killed Mark Schwartz and Christina Petrowski." According to the indictment, three of the defendants—Mr. Delvicario, Mr. Johnson and Ms. Bruce—ultimately "turned" on the Schwartzes and began stealing from Mr. Schwartz's firm. Mr. Delvicario, a former business partner of Mr. Schwartz, has long been considered a suspect in the murders of Mr. Schwartz, 60, and Ms. Petrowski-Schwartz, 48. Reached for comment yesterday, Mr. Delvicario's attorney, solo practioner Joseph Mure, said, "We'd love to see the discovery on how they connect [Mr. Delvicario] to all this." Mr. Mure added that his client "obviously denied and continues to deny" any responsibility for the murders. The individual defendants were arrested early yesterday morning and face prison sentences of up to 25 years. Assistant District Attorneys Laura Neubauer and Wojciech Jackowski of the Rackets Division are prosecuting the case, which investigators dubbed "Operation Bankroll." Two NY
Lawyers, One Ex-Lawyer By Mark Fass Brooklyn District Attorney Charles J. Hynes announced yesterday that 12 people, including two lawyers and one ex-lawyer, have been charged with participating in various, unrelated mortgage and real estate scams. Attorney Jarrett Haber was charged with using Brooklyn properties to secure mortgages without the properties' owners' permission. Attorney Alan Rocoff, the court-appointed referee for the sale of a foreclosed church, allegedly pocketed the net proceeds from the sale, more than $200,000. And former attorney Alexander Landy, who resigned from the bar in 2006 after being accused of failing to safeguard client escrow funds, was charged with grand larceny and falsifying business records for selling a building without repaying the underlying mortgage. Ex-BigLaw Partner Charged in Corruption Probe By Brian Baxter A federal grand jury in Raleigh, N.C., has charged C. Ruffin Poole, a former partner at McGuireWoods and one-time chief legal aide to former North Carolina Gov. Michael Easley, with 51 counts of corruption. As prosecutors were closing in, Poole left McGuireWoods last month. Prosecutors claim that the 37-year-old Poole extorted money from key Easley supporters through his role as the governor's legal counsel and took action on environmental permits to push forward development projects in which he was a silent investor. The 64-page indictment charges Poole with bribery, racketeering, money laundering and deprivation of honest services. The News & Observer of Raleigh reports that while the indictment doesn't name any other defendants, one well-known developer in North Carolina circles resigned on Thursday from a position he held on the state's Board of Transportation. The indictment against Poole is the first stemming from a long-running probe by federal prosecutors into Easley, who served as governor of North Carolina from 2001 until last year. Easley, who previously served as the state's attorney general from 1993 until 2001, joined McGuireWoods last April along with Poole and another former adviser named Franklin Freeman Jr. All three became partners at the firm, with Easley serving as a corporate partner in Raleigh, specializing in economic development, life sciences and energy issues. Easley also serves as a senior adviser for McGuireWoods Consulting, the firm's public affairs subsidiary. Joseph Cheshire of Raleigh's Cheshire Parker Schneider Bryan & Vitale is representing Easley. According to The News & Observer, Easley released a statement through Cheshire that said in part: "We have reviewed the indictment of Ruffin Poole. While Governor Easley has no knowledge of the conduct that makes up the criminal allegations therein, he has faith in Ruffin Poole and finds it hard to believe that he would ever intentionally violate the law. Ruffin Poole, like anyone else charged with a crime, deserves the presumption of innocence, not a rush to judgment." Joseph Zeszotarski Jr., a partner at North Carolina firm Poyner Spruill in Raleigh, is representing Poole. Last month Zeszotarski had his client invoke his Fifth Amendment right not to incriminate himself when testifying before the State Board of Elections. A McGuireWoods spokesman told The Am Law Daily that Poole resigned from the firm last month. Easley, who has maintained his innocence throughout the ordeal, is still employed by the firm. First Assistant U.S. Attorney John Stuart Bruce and Assistant U.S. Attorney Dennis Duffy from the economic crimes section of the U.S. Attorney's Office in Raleigh are prosecuting the case against Poole. This article first appeared on The Am Law Daily blog on AmericanLawyer.com. Disbarred
Attorney, Partners Busted for By Amanda Bronstad An ex-lawyer in Irvine, Calif., has been arrested on charges of defrauding more than 400 victims in a $1.25 million loan modification scam targeting struggling homeowners. According to the Orange County, Calif., district attorney's office, Christopher Lee Diener, 42, along with two business partners, defrauded homeowners by promising loan modification services in exchange for advance payments. The trio allegedly told customers that they would guarantee their loan modifications, negotiate lower rates with lenders, reduce the principal on their mortgages and have lenders forgive second mortgages or late fees. The accused, who were neighbors, operated under the names Home Relief Services LLC, U.S. Loan Mod Processing, HRS Communications, The Diener Law Firm and Diener Law Group, according to the district attorney's office. Diener allegedly served as the attorney in the scheme. Also arrested was one of Diener's business partners, Terrence Green Sr. Diener and Green are each being held on $1.5 million bond and are expected to be arraigned on Jan. 26 in Santa Ana, Calif. Each faces one count of conspiracy to commit grand theft and 97 counts of grand theft by false pretense — both felonies. They face a state prison sentence of up to 70 years. A warrant has been issued for the arrest of the other business partner, Stefano Joseph Marrero. Diener lost his license to practice law in October after the State Bar of California found that his conduct posed "a substantial threat of harm to his clients or the public." California Attorney General Jerry Brown has filed a civil suit against all three defendants. In April, the State Bar of California launched its Loan Modification Task Force, targeting attorneys for alleged loan modification misconduct. Since then, more than a dozen attorneys have resigned or been placed on involuntary inactive status. About 250 lawyers are under investigation. Suzan Anderson, supervising trial counsel for the State Bar of California, said that Diener, who faces a trial before the State Bar of California next month that could lead to his being disbarred, is the first attorney under investigation who has been arrested. But she indicated that there could be more arrests in the future. "When we see something that looks, for example, like theft, we'll send it over to the DA's office. When we see something that looks like fraud, we'll send it to the DA's office," she said. "The State Bar has been and continues to refer attorneys to the DA's offices, or the proper law enforcement offices, when we find something that we feel they need to take a look at." Diener's attorney in that suit, Jefford Davis, a solo practitioner in Brea, Calif., did not return a call for comment. NY Lawyer Busted in Bribery Scheme By The Associated Press Southern District U.S. Attorney Preet Bharara said cash payoffs helped Ms. Annabi come up with the downpayments on property she was buying and also paid her mortgage, utility and cable TV bills. Ms. Annabi originally opposed the real estate projects, including a $685 million retail development known as Ridge Hill. But Mr. Bharara said she switched her votes under the influence of more than $166,000 in payments arranged by her co-defendants. Ms. Annabi left office days ago when her term expired. She was to be arraigned yesterday on bribery, corruption and extortion charges. The indictment also said she did not live in the district she represented and filed false tax returns in 2005 and 2006. Prosecutors said one developer funneled a $30,000 cash payment to Ms. Annabi through Mr. Mangone to get her support. A second developer promised Mr. Jereis a $60,0000-per-year consulting job if he could get Ms. Annabi to change her vote on the project. Mr. Mangone was arrested yesterday in Purchase; the other two defendants surrendered to authorities
The
Attorney and the Jailhouse Lawyer: By Mark Hamblett A Garden City lawyer has been barred from practicing in the Southern District for accepting a $5,000 retainer from a prisoner but doing little or no legal work. Uzmah Saghir of Saghir & Associates was stricken from the rolls of practicing attorneys by the district's Committee on Grievances, effective Nov. 30, 2009. According to an opinion by Committee Chair Judge Jed S. Rakoff, Ms. Saghir accepted the money from the inmate's family but then had another prisoner draft and file a motion to set aside his sentence for narcotics convictions. Three other clients, the court said in Matter of Uzmah Saghir, M-2-238, gave testimony indicating that Ms. Saghir "charged substantial fees and did no work on their behalf FTC Seeks
Contempt Charges Against By Jenna Green The Federal Trade Commission has filed contempt charges against an attorney for refusing to fork over fees he was paid by the operators of an illegal Ponzi scheme. The lawyer, solo practitioner Jeffrey Benice of Costa Mesa, Calif., was ordered in March 2009 to turn over $238,300 to the FTC by a federal judge Nevada. The court also imposed a $18.9 million judgment on Benice’s clients for running a fraudulent "Internet kiosk" business in violation of the FTC Act and the agency’s franchising rule. According to the FTC, the defendants – Charles Castro, Network Services Depot, Inc. and others, paid Benice a $375,000 retainer in January 2005. Judge Lloyd George of U.S. District Court for the District of Nevada in March 2009 determined that Benice’s fee was derived from the defendants’ unlawful conduct and was subject to consumer restitution. He allowed Benice to keep $136,700 for his work but ordered him to return the balance - $238,300 - within 10 days. The FTC says it is still waiting for Benice’s payment, and now asks the court to hold him in contempt. Benice was a partner at Brobeck, Phleger & Harrison from 1986 until 1994, when he launched his own criminal and civil trial practice, according to his website. He is a 1978 graduate of UCLA School of Law and clerked for Justice F. Douglas McDaniel in the California Fourth District Court of Appeal in 1978. Benice could not be reached immediately for comment. In court papers, Benice argued that he could not afford to comply with the order, but offered to pay $2,500 a month. The FTC says this is not enough, noting that Benice in a deposition said he makes an average of $400,000 a year. The FTC also noted that he spends more than $3,100 a month in car payments alone, for a BMW, a Porshe Turbo, a Jeep Wrangler and a motorcycle. The FTC wrote that Benice and his firm "have not explained why they have not put money aside every month to restore the funds that the Court found rightfully belonged to consumers. Apparently Benice did not heed the Court’s March 2006 warning that he should factor such a risk into his fee calculations."
Judges
Reject NY Attorney's By Noeleen G. Walder An attorney who continued to practice law after being suspended has been disbarred. Howard L. Blau, who had an office in Manhattan, was suspended in February 2008 based on "substantial admissions" that he misappropriated client funds. However, he failed to notify clients of the suspension, continued to maintain a Web site identifying himself as a lawyer and represented a seller in a real estate deal. After the First Department Disciplinary Committee moved to disbar Mr. Blau, he asked the court to allow him to "resign gracefully." Claiming he was on a number of psychiatric medications, Mr. Blau argued he was "emotionally unable to participate in any hearings or referrals to referees" and "cannot handle the stress which would be generated by such proceedings." However, he would not admit the charges against him and said he was unwilling to "prostrate myself in order to resign from the Bar." The Appellate Division, First Department, refused Mr. Blau's bid to resign, concluding that he had "openly and notoriously engaged in the unauthorized practice of law" in Matter of Blau, M-2914. Closing
Bell: Lawyer Admits Losing By Amanda Bronstad The
National Law Journal A Southern California lawyer who lost nearly all of a $2.5 million class action recovery by investing client trust funds in the stock market has pleaded guilty to criminal charges. Sandeep Baweja, 39, of the Baweja Law Group in Irvine, Calif., pleaded guilty on Oct. 1 to one count of wire fraud and one count of obstruction of justice. He faces a maximum sentence of 30 years in federal prison and fines of up to $500,000. "One of the worst things an attorney can do is to steal from his clients. Another is to lie to the court. Mr. Baweja did both," said Assistant U.S. Attorney Richard Robinson, lead prosecutor in the case. "To his credit, however, he eventually decided to self-report his misconduct to the authorities." Baweja's attorney, Jeffrey Rutherford, a partner in the Los Angeles office of Crowell & Moring, issued a statement via e-mail. "Before anyone had learned about what he'd done, Mr. Baweja stepped forward and self-reported his conduct to the Court, his clients, the State Bar, and the criminal authorities," Rutherford said. "He did this, fully understanding the consequences, because it was the right thing to do. He has agreed to plead guilty for the same reason." In 2007, Baweja filed a class action on behalf of current and former agents of ZipRealty Inc., alleging that their employer failed to pay certain sales commissions, refused to reimburse business expenses and made unlawful wage deductions. The case settled later that year for $3.55 million. On March 10, 2008, U.S. District Judge S. James Otero of the Central District of California approved the settlement, which included about $887,000 in attorney fees for Baweja and his co-counsel, Ernest Franceschi, a solo practitioner in Los Angeles. Baweja received 75% of the fee award, according to an information filed with his plea agreement. Approximately $2.5 million was deposited into an account at Union Bank of California for approximately 800 class members, according to court documents. Baweja clandestinely transferred all of that money, plus some of his awarded legal fees, to an online stock brokerage account with TD Ameritrade Inc., from which he began investing in the securities market. "In pursuing his fraudulent scheme, defendant Baweja removed client trust funds from the safety and security of an insured fiduciary bank account at Union Bank, and placed them at extreme risk by using them to day trade securities on margin," federal prosecutors assert in the information. During 2008, Baweja failed to disclose the real reason for his delays in distributing the proceeds to the class, according to court documents. As of December 2008, Baweja had lost all but $55,000 of the money. About $121,500 ended up being distributed to 46 class members before Baweja confessed that he had lost the rest. He filed a motion to withdraw from the case; at least two lawsuits were filed on behalf of class members seeking to remove Baweja and Franceschi from the case. Otero granted Baweja's motion and disqualified Franceschi from the case. A State Bar of California security fund is expected to reimburse class members, according to court documents. Baweja is to make his first court appearance later this month. Disbarred
NYer and Ponzi Scheme By Julie Kay Daily MIAMI - The receiver in an alleged $347 million Ponzi scheme has filed a malpractice lawsuit against Holland & Knight and partner Scott MacLeod, claiming they failed to provide investors with crucial information about the disbarred attorney behind the investments. The suit filed Monday in Sarasota Circuit Court accuses the law firm and its attorney of preparing disclosure documents for investors that failed to mention Arthur Nadel, who headed the hedge funds, was a disbarred New York attorney who had drained a client’s escrow account. The suit also accuses Holland & Knight of conflicts of interest by representing Nadel and his investment funds simultaneously. The suit seeks in excess of $50 million in punitive damages, receiver Burt Wiand said. Karen McBride, a spokeswoman for Holland & Knight, said, "the firm’s position remains unchanged. We’ve done nothing wrong and we intend to vigorously defend this." MacLeod, an Orlando partner who represented Nadel, did not return calls for comment by deadline. Holland & Knight represented Nadel’s hedge funds and his Scoop Management since 2002 and received hundreds of thousands of dollars in legal fees, according to the suit. The receiver may add other attorneys at the firm to the suit in the future, said Guy Burns, a partner with Johnson Pope Bokor Ruppel & Burns of Tampa, which filed the suit on behalf of Wiand. "Holland & Knight either knew, should have known or was reckless in not knowing of Nadel’s past conduct in illegally and improperly using money of third parties entrusted to him," the complaint said. The firm "should have recommended and insisted that normal and usual safeguards be put in place so that a person with a history of improper use of client funds would not be put in unrestricted and unsupervised charge of hundreds of millions of dollars of assets belonging to the investment funds." The suit also alleges the firm failed to advise the Securities and Exchange Commission that Nadel was legally required to register and was operating illegally as an unregistered investment adviser. Additionally, when Holland & Knight learned funds were being illegally sold by a salesman, rather than reporting the violation, the firm reached a settlement with the salesman allowing him to receive additional payments under the guise of "public relations," according to the suit. "In exchange for aiding and turning a blind eye to Nadel’s and Scoop Management’s activities, Holland & Knight received hundreds of thousands of dollars [in] legal fees," the suit states. The lawsuit came days after a similar lawsuit was filed in federal court by investors against the New York law firm Proskauer Rose, which represented Stanford Financial Group, before the discovery of an alleged $7 billion fraud driven by sales of certificates of deposit by a Caribbean bank. Experts anticipate more such suits as fraud schemes crumble, leaving investors scrambling to recover funds sometimes by seeking to place liability on deep-pocket defendants such as law and accounting firms. "In the aftermath of large financial fraud cases or Ponzi schemes, investors and law enforcement agencies are going to look for compensation and wrongdoing from law firms, accounting shops, investment banks and any related third parties who might be held accountable," said Anthony Alfieri, a law professor who heads the Center for Ethics & Public Service at the University of Miami. "This is unsurprising and likely to continue." Alfieri said the current financial climate prompted him to offer a course on professional liability and malpractice this fall. The lawsuit against Holland & Knight is the second for its representation of Nadel. Investors led by Chicago investor Michael J. Sullivan filed a class action suit against the law firm in Tampa federal court in March. The allegations are similar to those in the suit by the receiver. Nadel, 76, is being held in a New York jail in lieu of $5 million bail. He is charged with one count each of securities fraud and wire fraud. Each charge carries a maximum penalty of 20 years in prison. In January, Wiand, a shareholder with Fowler White Boggs in Tampa, was appointed receiver to try to recover some of the funds investors say they lost to Nadel and associates. On Aug. 12, the court granted Wiand permission to hire Johnson Pope Ruppel & Burns on a contingency basis to sue Holland & Knight. In addition to the malpractice claim, the receivership alleges breach of fiduciary duty, aiding and abetting breach of fiduciary duty and aiding and abetting fraud. Wiand said in an interview that he filed suit in state court rather than federal court because Nadel’s hedge funds were Florida entities. When asked if it was a difficult decision to sue a fellow law firm operating in the same city, Wiand said, "No." "I make the decision to review the information that is available to me and determine whether there are claims that can be pursued," he said. "If there are, I have an obligation to pursue those claims. The decision to go after them is a practical one as to whether it’s a worthwhile claim on behalf of the receivership." Guy Lewis, a former Miami U.S. attorney and partner at Lewis Tein in Miami who frequently serves as a receiver, said Holland & Knight likely has enough malpractice insurance to cover the claims. However, the injury to its reputation would be far more damaging than a financial loss. "In a profession where your judgment is key, you’ve already lost the battle," he said. "To be on the wrong side of something like this is never a good thing. Lawsuits against third parties are becoming commonplace in fraud scandals. "Law firms and lawyers are the target du jour because they have deep pockets through their malpractice carriers," Lewis added. "It’s sad because 99 percent of the time they do their best. You try to dot your Is and cross your Ts. There is no such thing as perfection in this business." Holland & Knight has more than 1,000 attorneys in 23 cities and is one of the country’s largest law firms, ranking 44th by revenue last year in a survey by American Lawyer, a Daily Business Review affiliate. NY
Mainstay Firm, Partner Accused By Leigh Jones The National
Law Journal A group of investor clients of Stanford Financial Group has filed a class action against Proskauer Rose and partner Thomas V. Sjoblom. The lawsuit, filed Aug. 27 in the U.S. District Court for the Northern District of Texas in Dallas, alleges that the law firm and Sjoblom participated in a massive investment fraud scheme that led to the intervention by the U.S. Securities and Exchange Commission and the appointment of a receiver for the investment firm. The class action follows a guilty plea by former Stanford Chief Financial Officer James Davis made Aug. 27. In it, Davis appeared to implicate Stanford's outside attorney, Sjoblom, in a conspiracy to thwart an investigation by the SEC into Stanford's alleged fraud. Sjoblom was assistant chief litigation counsel in the SEC's enforcement division prior to entering private practice. Proskauer Rose issued a statement that said the lawsuit was "legally flawed and factually erroneous." "There is no basis whatsoever for any claim that Proskauer, which functioned as defense counsel in a regulatory investigation, bears any responsibility for the fraud allegedly inflicted upon investors," the firm said in the statement. A phone call to Sjoblom was not immediately returned. In February, the SEC charged Stanford Financial Group, led by Allen Stanford, with orchestrating a "massive ongoing fraud" that included selling some $8 billion in high-yield certificates of deposit. The class action, Troice v. Proskauer Rose, claims that the law firm and Sjoblom aided and abetted Stanford Financial's alleged fraud and that it conspired with Stanford Financial. It claims that under Texas law Proskauer Rose is liable for the $7 billion in total fraud losses. Representing the plaintiffs are Edward C. Snyder and Jesse R. Castillo of Castillo Snyder in San Antonio. "We know that one or two people cannot carry out a massive fraud of this scale," Snyder said. Attorney Indicted for Taking Bribe to Coach Client to Lie By Amanda Bronstad Alfred N. Villalobos, who recently moved from West Hills, Calif., to South Lake Tahoe, Calif., was indicted on Aug. 21. Federal prosecutors allege that Villalobos coerced an attorney who represents the target of an immigration fraud investigation to give him $107,000 in cash and other compensation. In exchange, Villalobos promised that his client, referred to in court documents as "Client One," would make false statements to the federal prosecutor conducting the investigation, as well as to the grand jury. Prosecutors allege that Villalobos accepted the first installment of the alleged bribe - about $50,000 in cash - during an Aug. 4 meeting in Century City, Calif. He was arrested later that day at the law office where the meeting took place. Reached in his own law offices in West Hills, Villalobos, a solo practitioner, referred calls to his attorney, Brian Sun, a partner in the Los Angeles office of Jones Day. Sun's recent clients have included former Orange County, Calif., Sheriff Mike Carona, once dubbed "America's Sheriff" by broadcaster Larry King, but who was sentenced earlier this year to 5 1/2 years in federal prison on one count of witness tampering. "We're severely disappointed that the government would seek to bring charges and engage in a rush to judgment," Sun said. "Villalobos would contend that he was zealously representing his client in seeking payment for lawfully earned wages she had been forced to rebate back to this guy in order to retain her immigration status." According to court documents, the alleged bribe stemmed from a federal investigation of an individual referred to in court documents as "Confidential Witness One," or "CW1," who runs a religious organization in Los Angeles. Federal law permits people involved in religious occupations to obtain temporary work visas. According to the court documents, CW1 allegedly falsified employment records for individuals claiming to work at the religious organization. Grand jury subpoenas had been served and witnesses interviewed as of July 15, according to court papers. One of the witnesses was Client One, who had obtained a visa by claiming to be employed at the organization. Federal prosecutors contend that Villalobos contacted the attorney representing CW1, who was cooperating with the FBI. During that meeting, Villalobos agreed that if his client got paid $100,000 in cash, plus additional compensation in the form of charitable donation receipts, his client would tell federal prosecutors that the employment was legitimate. Villalobos said his client would describe the cash, if necessary, as payment from the settlement of a sexual harassment claim. During the Aug. 4 meeting, Villalobos accepted half the bribe, with the other half to be paid after his client provided the false testimony, according to federal prosecutors. Villalobos will be arraigned on Aug. 31. Lawyer
Run Out of Town in Banking Scandal By Susan Beck Former UBS general counsel David Aufhauser, who resigned last year following allegations of involvement in the bank's alleged sale of auction-rate securities, has rejoined his former firm Williams & Connolly. Aufhauser - a former managing director of the Swiss bank and general counsel of the US Department of the Treasury - last October settled charges with New York attorney general Andrew Cuomo that he engaged in insider trading at UBS, agreeing to pay $6.5m. As part of the settlement, Aufhauser also agreed not to practise law in the state of New York for two years. Williams & Connolly is based in Washington DC. According to Cuomo's statement announcing the settlement, Aufhauser's trading occurred during the auction rate securities crisis. On December 14, 2007, Aufhauser was on a train from New York to Washington DC, when he read an email sent that day by UBS's chief risk officer. The message described serious problems with UBS's auction rate securities market. A few minutes later, Aufhauser sent an email to his financial adviser and told him to sell all of his auction rate securities, according to the statement. The District of Columbia Bar's Web site shows no disciplinary actions taken against Aufhauser. He is not a member of the New York Bar. Last November Raoul Weil, the chairman and CEO of the global wealth management and business banking division at UBS, was indicted by a federal grand jury on charges that he helped US taxpayers avoid income taxes on assets in overseas accounts. Disbarred
NY Lawyer Busted for By The Associated Press NEW YORK — A disbarred Long Island attorney is accused of falsifying a court document promising his client a $24,000 settlement. Brian Holzberg, of Port Washington, is charged with criminal possession of a forged instrument. He faces up to seven years in prison if convicted. Nassau County District Attorney Kathleen Rice says the document contained the forged signature of a Nassau Supreme Court judge. She says Holzberg gave his client numerous documents indicating the suit was filed. She says no paperwork was filed. The 53-year-old Holzberg was supposed to help his client collect a debt from a business associate. He was disbarred in December 2008 after a similar incident in nearby Suffolk County. His lawyer, Richard Librett, declined comment on Friday. Lawyer Gets Trashed, Winds Up Canned By the Staff of The
National Law Journal
Jeffersonville City Council
attorney Larry Wilder in a trash can after a night of drinking. The Courier-Journal of Louisville, Ky., reported that one police officer snapped a photo and another officer released it to the media. Wilder would like to know who took the picture. "If you're proud of what you've done, you should come forward and take praise," he said. Wire reports contributed t this article.
Ex-NY
BigLaw Partner Really Going By the Staff of the New
York Law Journal A former partner at Latham & Watkins was sentenced Friday to 15 months in prison followed by three years of supervised release and ordered to pay a $10,000 fine and $350,000 in restitution to Latham for defrauding both clients and his own firm. Samuel A. Fishman, 51, of Fairlawn, N.J., a mergers and acquisitions specialist in the firm's New York office from 1993 to 2005, pleaded guilty to a single count of mail fraud last year (NYLawyer, March 31, 2008). He faced a maximum sentence of 20 years in prison. Mr. Fishman admitted that he had billed fraudulent expenses to clients by mischaracterizing some non-reimbursable costs, such as local meals and parking, as other reimbursable costs, such as photocopying and express mail, and had inflated other, otherwise reimbursable expenses. Mr. Fishman also defrauded Latham by obtaining reimbursement from the firm for personal expenses, such as hotel bills, by falsely claiming that they were business expenses. At his sentencing, Southern District Judge Victor Marrera said that Mr. Fishman was "not just an ordinary citizen or offender but an officer of the court." The judge added that the lawyer had "betrayed by extensive criminal conduct" the oath he took. Mr. Fishman, who faces disbarment, resigned from Latham when his conduct was discovered. The firm reimbursed clients for improper expenses. Lawyers
Stealing From Lawyers - By Douglas McCollam The call that marked the beginning of the end for James "Jamie" Perdigao came in late August 2004. The accounting department at Boomtown Casino, one of Perdigao's biggest clients, had questions about a bill that the attorney had recently submitted. Neither Perdigao, a partner at Adams and Reese, the largest firm in New Orleans, nor his secretary was in, so a temp routed the call to the firm's accounting department, which could find no record of the matter in its system. The firm asked Boomtown—a riverboat casino business—to fax over the paperwork, and checked with other Adams and Reese lawyers whose time appeared on the invoice. No one had a file number matching the one on the bill. Further inspection showed that the invoice looked "nonstandard" (as the firm would later term it), as did some other billing statements to Perdigao's clients, which included many of the country's top gaming companies. On the Friday before Labor Day, Perdigao, the firm's top-billing partner, was placed on mandatory leave and told not to return to the office until further notice. Despite that directive, over the long holiday weekend, security cameras at the 51-story office tower in downtown New Orleans where Adams and Reese is headquartered captured Perdigao carting off about 60 boxes of files. On the Tuesday after his Labor Day haul, Perdigao faxed in his resignation and admitted that he had been misappropriating funds. In the weeks that followed, the scale of his theft remained unclear. Initially, it seemed it might just be around $1 million. But after a series of meetings between firm management and Perdigao's lawyer, he agreed to return about $9 million to the firm. About a month after that, the U.S. attorney's office and the Federal Bureau of Investigation, which had been brought into the case by Adams and Reese, discovered that, even as Perdigao was negotiating with the firm following his resignation, he had transferred an additional $19 million to a branch of Credit Suisse Group in Zurich. The FBI arrested Perdigao on Oct. 16, 2004. At that time, agents found about $25,000 in cash and two cashier's checks totaling nearly $1.2 million in the trunk of his car. (He was released on $2 million bail.) After a long and often bitter four-year battle with the firm and federal prosecutors, Perdigao finally pled guilty in the fall of 2008 to 30 counts of bank fraud, money laundering and tax evasion. Perdigao further admitted making $23 million worth of unauthorized withdrawals from the firm between 1991 and October 2004, according to a summary of the case against him that he signed. As part of his plea agreement, Perdigao agreed to pay back about $23.5 million in restitution, nearly half of that amount to his former firm. (The other monies are for the Internal Revenue Service, the Louisiana Department of Revenue and Boomtown's parent company, Pinnacle Entertainment, Inc. An additional $6 million the feds seized has so far gone unclaimed.) In a statement, Adams and Reese labeled Perdigao's actions "among the most egregious of any lawyer who has ever been criminally prosecuted in our nation's history," and the U.S. attorney prosecuting the case called him "a poster boy for all corrupt attorneys." At Perdigao's sentencing in March, federal district court judge Eldon Fallon fixed the wayward lawyer with a reproving eye. "Mr. Perdigao, every day I see defendants with no education, no family, no letters [asking the court for leniency], because there is no one to write for them, no opportunity, no job, very little to lose. You don't fall into that category," Fallon said. Below him, Perdigao, manacled hand and foot and clad in an orange jump suit, slumped. His lawyer, Charles Griffin, a solo practitioner in New Orleans, caught him around the waist. Fallon continued: "You are a lawyer, an officer of the court, you took an oath to follow the law and the Constitution of this country. You let yourself down, your family down, let society down, let the country down. This was not aberrant behavior. For a decade you did this." And with that, the judge gave Jamie Perdigao, Phi Beta Kappa key holder, 15 years and eight months in prison, with no possibility of parole. At first glance, Perdigao might seem like just another high-living rogue of our new gilded age. (Through his lawyer, Perdigao declined to be interviewed for this story.) But in interviews with almost two dozen colleagues, classmates and family friends, the picture that emerges is hardly that of a callous huckster. To the contrary, Perdigao is often described by those who know him as a "nice guy," "personable" and "considerate," hardly the adjectives usually invoked when describing a hard-driving attorney who routinely billed 3,000 hours a year. In contrast to the lifestyle one might suppose Perdigao lived, he was a notorious miser—wearing rumpled suits, scuffed shoes and driving a beat-up Mitsubishi sedan that doubled as a cluttered rolling office. Though he was paid more than $300,000 a year as a partner at Adams and Reese, at the time of his arrest he still lived in the same $500-a-month rental apartment he moved into just after law school. "He came across as something of a Boy Scout," says William Scheffler, a New Orleans attorney who worked with Perdigao on litigation matters as outside counsel. "He was very polite, very hardworking. He was really the epitome of what you'd want your son to grow up to be." Perhaps it was unsurprising, then, that despite the energy and ingenuity Perdigao put into stealing millions of dollars from his clients and partners, he was in a good position to pay them back. It turned out that he'd never spent a penny and was able to turn it all over to the U.S. Marshal's Service to be placed in the registry of the court. Perdigao, 47, grew up in New Orleans. He graduated with honors from Tulane University and Tulane Law School before joining Adams and Reese as a first-year associate in 1987. He arrived at the firm at an auspicious time. Long known as a no-frills insurance defense, admiralty and product liability firm, Adams and Reese was on the cusp of a rapid expansion. Within five years it opened offices in Washington and Mobile. Two years later it established a branch in Houston, and later, offices in Jackson, Miss., and Birmingham. Part of this growth was led by current managing partner Charles "Chuck" Adams Jr. (no relation to the firm's name partner), who brought in a host of big clients, including telecom giant WorldCom Inc., when he joined the firm in 1996 from Jackson-based Brunini, Grantham, Grower & Hewes. Last year Adams and Reese had 233 attorneys and revenue of $103 million. Within New Orleans legal circles, the term frequently used to describe Adams and Reese is "entrepreneurial," that is, a firm where the partners often maintained a variety of outside business ventures, including ownership stakes in local sports teams and casinos. The firm is also known as very politically connected. Its blend of dealmaking and politics, in a state where politics is often a dirty business, fosters some ambivalence about the firm in the more buttoned-down precincts of New Orleans's legal community. "I always thought of A and R as a little schizophrenic," says one former managing partner of a big competing firm in town. "One set of guys would have fit in at [other prominent New Orleans firms] Liskow & Lewis, Jones Walker, and Phelps Dunbar. But another set were more of the wheeler-dealer ... political types." One practice that meshed well with the firm's mix of business and politics was gaming law. In the early 1990s, Louisiana passed a series of measures allowing the operation of video poker machines, riverboat casinos and other forms of legalized gambling. One of Adams and Reese's longtime clients, Robert Guidry—a local businessman with strong political ties to then-Gov. Edwin Edwards—decided to bid on one of the coveted licenses to operate a riverboat casino. Guidry retained Adams and Reese partner Robert Vosbein to assist him on the deal. To help advise Guidry on gaming issues, Vosbein tapped Perdigao, then a young partner at the firm. Perdigao quickly built a reputation as one of the top legal experts in the field. Within Adams and Reese, he was seen as a rising star with a prodigious work ethic. Though not an early riser, Perdigao routinely worked until after 10 p.m. and almost every weekend. He regularly exceeded his annual billing quota and, as his gaming practice grew to include industry heavyweights like Pinnacle, Harrah's Entertainment Inc. and Bally Gaming International Inc., he became Adams and Reese's top-billing lawyer for several years in a row. According to attorneys who worked with him, Perdigao was viewed as very bright and well-liked, but he had a reputation as a loner who was intensely focused on his work and kept his social life to himself. In retrospect, Perdigao's profile as a brilliant soloist takes on a more ominous cast. Even before he made partner, according to federal prosecutors and court filings, Perdigao began to engage in fraudulent billing. At first he simply added time to legitimate bills. Later, Perdigao fashioned dummy bills to look like legitimate Adams and Reese invoices and sent them out with special return envelopes addressed to him that he personally collected from the firm's mail room. These bills were usually for no more than $15,000 and included time attributed to other lawyers at the firm. When the checks arrived, he would deposit them in the firm's trust account (which prosecutors say was not closely audited at the time). Then he would have checks from that account cut to one of several outside entities he controlled, such as Atlas Development Corp. and Capital Services Group. These companies were sham businesses created to help Perdigao launder the proceeds from his billing operation, according to federal investigators. Later, as Perdigao became more brazen, he would intercept checks from clients and deposit them directly into his personal accounts, stamping "Adams and Reese" on the back as an endorsement. The firm has sued at least one bank, JP Morgan Chase & Co., for allowing Perdigao to do this. A lawyer for the bank declined to comment except to say that his client denies any liability. Why didn't the clients catch on? Robert Murphy, a partner with New Orleans-based Murphy, Rogers, Sloss & Gambel who is representing Pinnacle in a suit against Adams and Reese, says that even though Perdigao submitted $5.2 million in fictitious or inflated bills to the company between 1999 and 2004, "no bell went off" in his client's accounting system. Murphy says Perdigao and the firm did so much legitimate work for Pinnacle that the extra billing didn't seem out of the ordinary. Perdigao alone was billing the company about 1,000 hours a year and did about $2.5 million worth of legitimate work during those same five years. "There were so many bills, it just didn't jump out," says Murphy. He adds that Perdigao's stature in the gaming world also bolstered the scheme: "He had our confidence. He was the top guy in gaming law. I know that the Louisiana Gaming Control Board used to call him up when they had questions about how something worked." In the end, the court granted Pinnacle $6.5 million in restitution from Perdigao. Pinnacle's suit against Adams and Reese has yet to be dismissed pending receipt of that payment. Among aficionados of the Perdigao case in New Orleans (and there are many), there is frank skepticism that one lawyer, however talented, could have pulled off a billing scheme involving almost $30 million at a medium-sized regional firm without someone at the firm getting wise. (No charges have been brought against anyone else at the firm.) Managing partner Chuck Adams declined to be interviewed about the case, but he said in an e-mail that Perdigao's "elaborate crimes unexpectedly evaded standard safeguards that law firms routinely employ and that otherwise have served us well for decades." Speculation about a wider conspiracy in the case was fueled, in part, because after he was arrested, Perdigao signed a cooperation agreement and was debriefed by federal law enforcement officials for more than two years before being formally indicted. That was partly due to exigent circumstances, says U.S. Attorney James Letten, such as the disruption caused by Hurricane Katrina in 2005. But partly it was because Perdigao had some fantastic tales to tell about his former law firm. He told prosecutors that Adams and Reese partners had buried documents to obstruct the government's investigation into the administration of former New Orleans mayor (and Adams and Reese partner) Marc Morial, who now heads the National Urban League. (Though members of his administration have gone to jail, Morial has never been charged with wrongdoing.) Perdigao told prosecutors that Chuck Adams had helped his client Bernard Ebbers, the now-jailed former CEO of WorldCom, obtain fraudulent loans by disguising the true state of Ebbers's personal finances. All of these allegations—and many, many more—found their way into a voluminous Racketeer Influenced and Corrupt Organizations suit Perdigao filed against the firm and eight of its top partners in May 2008. "It read like a damn Grisham novel," one former Adams and Reese lawyer said of the lawsuit's explosive allegations. Indeed it did—and was about as popular around New Orleans when it was filed, with Perdigao casting himself as the lone voice of virtue, forever battling the dark designs of his nefarious partners. The problem, according to federal prosecutors, was that none of Perdigao's stories checked out. "We talked, but we came up goose eggs on his information," says prosecutor James Mann. Another prosecutor in the office even referred to Perdigao as a "pathological liar." (Along with Mann and Letten, other prosecutors on the case included Sal Perricone, Brian Klebba and Mimi Nguyen.) Even though Letten and his team didn't find Perdigao's allegations against the firm credible, the charges nevertheless seemed to contain oddly detailed knowledge of certain meetings between prosecutors and Adams and Reese. Mann went so far as to suggest to the firm's leaders that they had a leak in their shop. Adams and Reese had similar concerns. For example, they found it odd that the only common thread among the eight partners named in Perdigao's civil suit was that they were the ones assigned to handle the investigation of Perdigao's billing, and liaise with the government. How could he know this? Eventually, an explanation surfaced. On Oct. 11, 2008, about six weeks before Perdigao's criminal trial was to begin, David Erwin, then the chief information officer of Adams and Reese, was reviewing computer user logs when he noticed some unusual activity. Someone using Perdigao's user name had tried to log in to the firm's network in the early morning hours. Though the attempt had been unsuccessful (Perdigao's name had been deleted from the system), one minute later someone from the same IP address had successfully logged in, using the name of a lawyer in the firm's Baton Rouge office. Curious, Erwin called the lawyer and asked if he had been on the network the night before. He said he had not. The IP address used by the trespasser was ultimately traced to the home of Perdigao's longtime girlfriend, where he had been staying. A search of her home by the FBI turned up two laptops belonging to Adams and Reese, as well as information stolen from the files of an Adams and Reese partner. In all, it turned out that Perdigao had hacked into the firm's computer network more than 400 times since his initial October 2004 arrest. Perdigao was rearrested, and his $2 million bail (secured by his parents' homes) was revoked. Prosecutors determined that, in addition to stealing information related to his case and personal information about firm lawyers and staffers, Perdigao was attempting to create a false paper trail in the firm's system that would have authorized his billing activities, which he could then obtain in discovery. With his rearrest and the revocation of his bond, all resistance within Perdigao seemed to crumble. Though he had previously rejected a plea deal (against the advice of his lawyers and others) that would have given him a maximum of five years in prison for one count of mail fraud, he now agreed to plead guilty to 30 counts of a 61-count indictment. As part of the sentencing process, family and friends (including former Republican congressional leader-turned-lobbyist Bob Livingston) wrote to Judge Fallon asking for leniency. In the letters, those closest to Perdigao struggle to reconcile the good man they knew with the man facing the prospect of spending years behind bars. Many noted that his parents' bitter divorce while he was a teenager, and a subsequent seven-year estrangement from his mother, had a profound impact on him. His father, H. Gunther Perdigao, a New Orleans psychiatrist, described how after the divorce Jamie became much more of a loner, and how, despite the family's wealth, he began shopping for clothes at the Salvation Army because he was sure he would become destitute. Jamie, his father wrote, developed "a dark side" and would carefully manage information, "never telling any one person everything ... he began to lie so no one knew exactly what he was doing." His son, Dr. Perdigao wrote, never had any intention of spending the money he stole, comparing him to a "homeless man found dead with a million dollars under his mattress." Perhaps the keenest insights came from Perdigao himself in a letter he wrote to Judge Fallon. "I am not sure what is wrong with my judgment and decision-making process, but it relates somehow to the fact that I don't have much balance in my life," he wrote, noting that at firm Christmas parties he'd been given a blanket and pillow for his office. "My life was my work. On most nights for many years, I left the office after the night cleaning crew. I never bought a house, never married, never had children." His years as a corporate defense lawyer, he noted, had taught him how "to deflect the focus of the charges and allegations against my clients by raising all sorts of misdirections, counterpoints and counterclaims, which did not necessarily have any basis in fact. Unfortunately, trying to be my own lawyer, I used this same approach to try to deflect the charges against me." As for what his ultimate plans were for the money, or why exactly he stole it, Perdigao offered no clue. Nor do those around him claim any special insight. As one of his defense lawyers put it: "I'm no closer to understanding that than I was in the beginning." Douglas McCollam is a New Orleans-based freelance writer, who contributes to The American Lawyer. Ark.
Lawyer Expected to Plead Guilty By Debra Cassens Weiss Cauley will plead guilty to wire fraud and criminal contempt for failing to safely hold the money, the Wall Street Journal Law Blog reports. The blog says the expected plea was revealed in an Arkansas Supreme Court filing. Cauley’s lawyer, John Wesley Hall, told the Law Blog his client is expected to file the guilty plea in June. Hall said the missing money "could be in all kinds of things," such as real estate and business ventures. So far, Hall said, he has recovered about $500,000 and he hopes to find the other missing funds. Cauley revealed to co-counsel last month that he can’t produce the money. It was supposed to be held in U.S. Treasury bonds. The Law Blog cites this explanation in Cauley's court filing: "I now understand I have been faced with issues of depression and am seeking appropriate help for them. I do not offer this situation as any form of defense for my actions detailed here. I accept full responsibility for my actions." Foreign
Trusts Allege N.Y. Lawyer Pamela A. MacLean The owners of five Liechtenstein-based trusts have sued a New York lawyer with 60 years experience in international estate planning, alleging he "shamelessly looted" more than $15 million from the clients for longer than a decade. Winthrop Ross Munyan, most recently associated with a small Rye, N.Y.-based trusts and estates firm, Riad & Associates, was accused of fraud, unjust enrichment, conversion and breach of fiduciary duty in a state court suit filed on April 9. It alleged he embezzled millions of dollars from the offshore companies between 1997 and 2007. Munyan left the Riad firm in 2008, according to Maged Riad, the managing partner. "He has no relations with the firm, Riad said. "He was acting as trustee for the foreign trusts for 30 or 40 years. I thought I saw something improper, and I called the trustees and brought it to their attention," Riad said. "That was his [Munyan's] last day with the firm," he said. Named in the suit along with Munyan are Riad & Associates; Dr. Peter Ritter; Dr. Guido Meier; Peter Meyer; Pictet & Cie, a private bank in Geneva; and Kinbrace Corp., a Liberian flow-through entity allegedly operated on behalf of Munyan by Ritter. Munyan could not be reached for comment. None of the other named defendants could be reached for comment. Riad said he has not yet seen the lawsuit but denies all allegations related to him and the firm. Michael S. Feldberg of Allen & Overy in New York represents the plaintiffs. He alleged that Munyan "looted" money from the bank accounts he was meant to manage "all while living the high life ... often flying on the Concorde and maintaining an apartment in Paris and hotel suites in London." "It is unclear whether Munyan planned his scheme from the outset or if he slithered into it as the opportunity arise," Feldberg wrote in the complaint. The suit alleges that funds were embezzled between January 1997 and December 2007. The five plaintiffs, Establishment Finapart, Establishment Figest, Establishment Gour-Sande, Establishment Elatia and Establishment Elatia, accuse Munyan of "using a Byzantine system of trusts and offshore companies for his own personal use." It alleges he diverted assets from the five Liechtenstein trusts to make payments to Riad's accounts and to pay Kinbrace for his personal use, and that he diverted plaintiffs' funds to pay his American Express accounts. In Establishment Finapart v. Munyan, No. 0960110 (New York Co., N.Y., Sup. Ct.), Feldberg alleges that Ritter and Meier were directors on the trusts' board of directors and had an obligation to prepare annual financial statements. Instead, "Ritter and Meier gave Munyan the keys to the establishments and, by extension, the assets they controlled, and turned a blind eye as Munyan drained the establishments' coffers." Ritter is described as co-founder of a Liechtenstein wealth management company, Kaiser Ritter Partner Holding, and Meier as a Liechtenstein lawyer. The suit states that Munyan resigned as trust protector in December 2007. In addition, it alleges that Maged Riad contacted a lawyer for the trust beneficiaries in March 2008 to provide a list of documents in Riad's possession related to the trusts. "Maged Riad subsequently offered to make those documents available subject to an exorbitant fee," the suit states.
Ex-Partner
Gets 15 Years for By Michael Kunzelman Former Adams and Reese partner James Perdigao, 46, pleaded guilty in October to charges that included fraud and money laundering. He briefly apologized before U.S. District Judge Eldon Fallon sentenced him. Fallon also ordered Perdigao to pay restitution of about $11 million to his former law firm, about $6 million to casino company Pinnacle Entertainment, about $5 million to the Internal Revenue Service and about $768,000 to the Louisiana Department of Revenue. Fallon scolded Perdigao before he handed down the sentence. "You let yourself down, you let your family down, you let your profession down, and you let your country down," the judge said. "It's not aberrant behavior. For a decade you did this, not just one time." Perdigao expressed remorse in a statement filed by U.S. Attorney Jim Letten's office on the eve of the sentencing hearing. In the statement, Perdigao said he regrets making "uncorroborated allegations" about Letten and other prosecutors "based entirely on rumor and hearsay." Perdigao had accused Letten's office of failing to act on information he gave them about other criminal activity because his allegations involved a key witness against former Gov. Edwin Edwards, whom Letten prosecuted for corruption. He also had dropped a lawsuit that accused his former Adams and Reese colleagues of involvement in a wide range of fraud and bribery schemes, including the WorldCom scandal. "His crimes were reprehensible," Letten said of Perdigao. "The man abused a position of trust and stole about $30 million from his clients and his law firm." Perdigao, who resigned from Adams and Reese in September 2004, was awaiting trial in the fraud case last year when a grand jury indicted him on new charges that he hacked into his former firm's computer system and stole confidential correspondence between prosecutors and the firm. "This man's crimes were about as broad as any economic crimes could be," Letten said. Lawyer Convicted of Mortgage Fraud By Mark Hamblett Attorney's Office Shut Down
for By Amanda Bronstad LOS ANGELES — Prosecutors at the State Bar of California, responding to a tip from the Orange County District Attorney's Office, have shut down a satellite office of Walter S. Martinez, a solo practitioner in Upland, Calif., on the ground that two office administrators were allegedly illegally practicing law. Earlier this week, the Orange County District Attorney's Office charged a dozen people, most of them chiropractors, as part of an ongoing sting operation targeting illegal patient referral and insurance overbilling schemes. Operation K-Fraud, which stands for "Knockout Fraudulent Attorneys and Unscrupulous Doctors," targets a scheme in which doctors have allegedly agreed to pay 30% of their patient billings to law office administrators in exchange for those patients' referrals. This week's defendants include eight chiropractors, one attorney and three administrative staff members. The attorney is David Gonzalez of the Law Offices of David Gonzalez, in Placentia, Calif. Another defendant, a law office administrator named Lisa Marie Tran, worked in Martinez's Orange County office, which is in Westminster, Calif. Brooke Schafer, deputy trial counsel at the State Bar, said most actions against nonattorneys do not involve related criminal investigations. "In the course of their investigation, one little part of it was this satellite office of Mr. Martinez in Westminster," he said. "It appeared to them that it was being run by nonattorney staff and so they let us know and brought us in on it." Earlier this week, an Orange County Superior Court judge granted the State Bar authority to take over Martinez's Westminster satellite law office, which also goes by L&M Legal Services. Two office administrators were ordered to cease and desist from practicing law. According to the State Bar, Martinez had little or no contact with many of his clients from the office, which handled primarily personal injury claims. Schafer said the State Bar has taken files from the office and returned them to clients. He declined to say whether the State Bar intended to investigate Martinez, who has not been charged. Martinez did not return a call for comment. Famed Civil Rights Lawyer Faces Bar Charges By Mike McKee SAN FRANCISCO - SAN FRANCISCO — Nationally known San Francisco civil rights lawyer Philip Kay has won millions of dollars for clients in discrimination and sexual harassment cases over the past 25 years. But he might be facing his biggest fight with State Bar prosecutors, who have charged him with turning two cases before three San Diego judges into three-ring circuses by repeatedly impugning court orders and caustically accusing the judges of misconduct in front of jurors. Prosecutors also claim Kay entered into an illegal fee-splitting agreement in his most high-profile case — a sexual harassment suit against mega-law firm Baker & McKenzie that in 1994 resulted in a $6.9 million San Francisco jury award for his client, former legal secretary Rena Weeks. (The judgment was later reduced to $3.5 million.) Kay's motion to have the charges dismissed was rejected Tuesday by the State Bar Court's review department. State Bar Supervising Trial Counsel Allen Blumenthal, who's prosecuting Kay, wouldn't say Wednesday what punishment he intends to seek, but he called the charges "serious." NY Lawyer
Indicted for Ripping Off By Noeleen G. Walder According to the Manhattan District Attorney's Office, James John Armenakis, 65, and his law firm, Armenakis & Armenakis, received a deposit in October 2007 of $735,000 in connection with representing the seller of a $7.35 million condominium at 285 Lafayette St. While Mr. Armenakis initially deposited the funds into his attorney escrow account, he failed to show up on the day the transaction was scheduled to close and did not return the money to the buyer. Mr. Armenakis, who allegedly spent the deposit on personal items, was indicted on charges of second-degree grand larceny and second-degree criminal possession of stolen property, both class C felonies punishable by up to 15 years in prison. In addition, Mr. Armenakis faces second-degree larceny charges for allegedly failing to pay some $98,000 in withholding taxes to the New York State Department of Taxation and Finance and under-reporting his personal income from 2002 to 2007. Mr. Armenakis pleaded not guilty and posted a $75,000 bond. Lawyers
Who Made Job Offer to the Judge Charles Toutant The suit, just filed in Morris County, N.J., is the aftermath of the New Jersey Supreme Court's September ruling in Denike v. Cupo, A-61-07, which upended a commercial suit judgment based on a perceived appearance of impropriety. The justices found Gerald Escala, a Bergen County Superior Court judge nearing retirement, created an appearance of impropriety by talking about a job offer with a Hackensack, N.J., law firm while winding up the dispute, in which the firm represented one of the parties. Now the other party, Michael Cupo, is suing Herten, Burstein, Sheridan, Cevasco, Bottinelli, Litt & Harz and partner Thomas Herten, claiming the firm's actions amounted to professional negligence and have injured him in the pocketbook. "Cupo spent over $250,000 to have his case against Lawrence Denike tried to conclusion and now as a direct result of the actions of Thomas J. Herten, Esq., and the Defendant law firm of Herten, Burstein, Sheridan, Cevasco, Bottinelli, Litt & Harz, LLC, he must spend additional funds for the retrial," reads the complaint in Cupo v. Herten. The suit advances a third-party legal malpractice cause of action, for which Cupo's lawyer says there is ample precedent. "Cupo is a third-party beneficiary to the contract between Denike and Herten," says his attorney, Jeffrey Pocaro, a Fanwood, N.J., solo. "Herten's got an obligation not to injure my client." Herten's job offer came in the final chapter of a contentious, three-year dispute between Cupo and Denike, founders of a mortgage company who decided to go their separate ways. According to court papers, Escala issued a final decision in the underlying case on Jan. 23, 2006, ordering Denike to pay Cupo the $731,682. The next day, Herten visited the judge's chambers, inquired about his retirement plans and asked whether he would consider joining Herten Berstein in some capacity. Escala outlined the type of firm relationship he was contemplating. Herten discussed the proposed relationship with his partners on Jan. 25 and told Escala they would need a few days to analyze it. On Jan. 30, Herten received from Escala by mail an order with terms that seemed inconsistent with the judge's prior decision. Herten submitted an alternate form of order, which the judge signed on Feb. 1. The same day, Herten told Escala the firm's analysis of the proposed relationship was not yet completed. On Feb. 3, Herten visited Escala in chambers and the two agreed to a relationship in principle, with the financial terms to be worked out later. That night, Escala announced at a retirement dinner, attended by his former law clerks and staff, that he was joining the firm. He came aboard Feb. 27. The Appellate Division said the episode did not amount to reversible error. But the Supreme Court ordered a new trial, finding that the job negotiations between a judge and an attorney appearing before that judge cast doubt on the integrity of the judicial process. Judges may not talk about jobs with parties or attorneys in a matter in which they are participating, and, if offered a job by parties in a matter before them, should halt the conversation immediately and disclose on the record what happened, the court said. The new suit is seeking compensatory and punitive damages, including reimbursement for legal bills from the original trial. "It's wasted money now," says Pocaro. The suit also seeks legal fees for the appeals process just completed and for the prospective retrial. What's more, if Cupo's recovery at retrial for his share of the business is less than the $731,682 he was awarded in the first trial, he will seek compensation from Herten's firm for the difference. Cupo's suit includes counts of malpractice, deprivation of right to fair trial and tortious interference with business advantage. Pocaro says there is a common law right to bring a malpractice claim against an adversary's lawyer based on the Supreme Court's holding in Petrillo v. Bachenburg, 139 N.J. 472 (1995). There, the buyer in a real estate transaction sought damages from the seller's attorney for providing incomplete information about percolation tests on the property. The Petrillo court held that the seller's attorney had a fiduciary duty of care to the buyer and that such duty may exist "when the attorney knew, or should know, that nonclients will rely on the attorney's representations." Pocaro says, "It's a question of foreseeability. Could Herten foresee his offering the judge a job before the judge signed the final orders would result in a retrial? The answer is yes." Pocaro also intends to rely on the Appellate Division holding in Finderne Management Co. v. Barrett, 355 N.J. Super. 197 (2002), that "generally, to recover for an economic loss resulting from negligence by one furnishing a service, a "direct contractual relationship between the parties" must exist or the injured party must be a known "beneficiary of the defendant's undertaking." Divorce
lawyer Raoul Felder Sues Alliance By Jose Martinez Now it's the divorce lawyer who says he's getting taken to the cleaners. Famed divorce lawyer Raoul Felder sued a top investment firm Monday for allegedly costing him $200,000 by gambling on a risky hedge fund when he wanted to play it conservatively. "My instructions were very simple," he said. The so-called Duke of Divorce filed the $5 million suit in Manhattan against AllianceBernstein, saying he was misled last year into investing $750,000 in a riskier fund that brought the firm more fees and commissions. Felder, whose divorce court targets have included Martin Scorsese, Lawrence Taylor and Patrick Ewing, said the investment firm steered him into the losing fund out of "greed and self-interest." "It's like the owner of a restaurant who tells his waiters to push the chopped liver," Felder said. AllianceBernstein, whose parent is French insurance giant AXA, manages more than $590 billion. A spokesman for the firm declined to comment. NY Lawyer
Clashing With Judge May By Joel Stashenko ALBANY - Sanctions appear to be warranted against an attorney who made the "utterly baseless" accusation that the Northern District Bankruptcy Court altered his complaint, a judge has ruled. Judge Robert E. Littlefield Jr. ordered Paul S. Hudson to appear before him on Oct. 29 in Albany to show cause why the attorney should not be punished for alleging the judge had ex parte conversations with the plaintiff in a Chapter 7 bankruptcy action against Mr. Hudson and that Mr. Hudson's complaint had been changed by the court. "The court is greatly distressed by the tactics Hudson is willing to employ in attempts to have the court recuse itself from this matter, especially given that Hudson is an attorney," Judge Littlefield wrote in In re Hudson, 00-11683. "There simply was no foundation for Hudson to falsely accuse this court of a crime. Given the seriousness of the allegations combined with the lack of any evidentiary support or minimal investigation, sanctions against Hudson appear to be warranted." Judge Littlefield noted that the Rule of Bankruptcy Procedure 9011(b)(1) and (3) empowers him to admonish Mr. Hudson, impose a monetary sanction and/or refer his case to the Committee on Professional Standards. The judge also denied Mr. Hudson's motion that the judge recuse himself from an adversary proceeding titled Washington 1993 Inc. v. Hudson, 00-90091, filed in connection with the bankruptcy case. Judge Littlefield noted it was the fourth time Mr. Hudson had asked the court to recuse himself in Mr. Hudson's 8 1/2-year bankruptcy case or in related adversary proceedings. As with Mr. Hudson's other motions, Judge Littlefield said he would not recuse himself because "the court finds that a reasonable person would not conclude that the court's impartiality could be reasonably questioned" under 11 U.S.C. §455(a). Mr. Hudson, who is representing himself, contended that in reviewing the court's file in his case in connection with an appeal to the district court, he discovered Post-It notes on the cover sheet of the adversary proceeding and on his complaint. One note read "5/1/00 added relief per chambers direction"; the other, "added 727 relief for this complaint per chambers 5-01-00." At the time of the filing for bankruptcy protection and the adversary proceeding, Mr. Hudson's case was before Bankruptcy Court Judge E. Stephen Derby in Maryland. Judge Littlefield explained that one cause of action on the discharge in the adversary proceeding was entered by Judge Derby in error because it mentioned 11 U.S.C. §523(a)(6), when the applicable Bankruptcy Code section is §727. After Judge Derby noticed the error, he vacated the discharge by an order dated March 14, 2000. However, before the docket was corrected under Judge Derby's direction, the adversary proceeding and Mr. Hudson's bankruptcy case were transferred to the Northern District of New York. Judge Littlefield wrote that the docket was corrected on May 1, 2000, as reflected in the Post-It notes. The changes were not made, as Mr. Hudson argued, by the court ex parte and sua sponte, the judge determined. He also rejected Mr. Hudson's contention that his complaint was altered by the court. Mr. Hudson claimed that a typewritten passage in the complaint did not match the font of the rest of the computer-printed copy he submitted to the court. Judge Littlefield wrote that he reviewed not only the docket in the case before his court, but also that in Maryland bankruptcy court. He held that the copies of the complaint were identical, meaning they had not been altered in the Northern District. The document that Mr. Hudson purported to be a "smoking gun" in reality shows that his charges are "simply false," the judge held. "Hudson obviously failed to conduct a reasonable inquiry prior to filing his motion," Judge Littlefield wrote. "Seemingly, if one was going to accuse the court of altering a pleading the first piece of evidence one would gather to support this claim would be an unaltered copy of the pleading." Judge Littlefield and Mr. Hudson sparred in a different case last year in which the judge reduced the tax liability for Mr. Hudson and his late wife on a trust recovery. Judge Littlefield reduced liability for the Hudsons from more than $50,000 to about $5,000, and ordered that Mr. Hudson, who also represented himself in that case, could seek attorney's fees. But Judge Littlefield reduced the $21,206 Mr. Hudson sought to $6,831 and wrote that he was tempted to refuse him any fees because of an application that was "replete with deficiencies and problems." Washington 1993 Inc., is seeking to recover $385,000 from Mr. Hudson. Washington 1993 Inc., was a real estate company. It no longer exists, and all of its rights have been transferred to its principal, Richard Corvetti, according to his attorney, Kenneth G. Varley of Donohue, Sabo, Varley & Armstrong in Albany. Mr. Varley said yesterday that Mr. Corvetti will not have a role in Mr. Hudson's hearing before Judge Littlefield. Mr. Hudson, formerly of Albany and now of Sarasota, Fla., yesterday said he expects to file a written response to Judge Littlefield's order to show cause by tomorrow's deadline and to appear before the judge on Oct. 29. Mr. Hudson said any further comments would be inappropriate. NY Lawyer
Clashing With Judge May By Joel Stashenko ALBANY - Sanctions appear to be warranted against an attorney who made the "utterly baseless" accusation that the Northern District Bankruptcy Court altered his complaint, a judge has ruled. Judge Robert E. Littlefield Jr. ordered Paul S. Hudson to appear before him on Oct. 29 in Albany to show cause why the attorney should not be punished for alleging the judge had ex parte conversations with the plaintiff in a Chapter 7 bankruptcy action against Mr. Hudson and that Mr. Hudson's complaint had been changed by the court. "The court is greatly distressed by the tactics Hudson is willing to employ in attempts to have the court recuse itself from this matter, especially given that Hudson is an attorney," Judge Littlefield wrote in In re Hudson, 00-11683. "There simply was no foundation for Hudson to falsely accuse this court of a crime. Given the seriousness of the allegations combined with the lack of any evidentiary support or minimal investigation, sanctions against Hudson appear to be warranted." Judge Littlefield noted that the Rule of Bankruptcy Procedure 9011(b)(1) and (3) empowers him to admonish Mr. Hudson, impose a monetary sanction and/or refer his case to the Committee on Professional Standards. The judge also denied Mr. Hudson's motion that the judge recuse himself from an adversary proceeding titled Washington 1993 Inc. v. Hudson, 00-90091, filed in connection with the bankruptcy case. Judge Littlefield noted it was the fourth time Mr. Hudson had asked the court to recuse himself in Mr. Hudson's 8 1/2-year bankruptcy case or in related adversary proceedings. As with Mr. Hudson's other motions, Judge Littlefield said he would not recuse himself because "the court finds that a reasonable person would not conclude that the court's impartiality could be reasonably questioned" under 11 U.S.C. §455(a). Mr. Hudson, who is representing himself, contended that in reviewing the court's file in his case in connection with an appeal to the district court, he discovered Post-It notes on the cover sheet of the adversary proceeding and on his complaint. One note read "5/1/00 added relief per chambers direction"; the other, "added 727 relief for this complaint per chambers 5-01-00." At the time of the filing for bankruptcy protection and the adversary proceeding, Mr. Hudson's case was before Bankruptcy Court Judge E. Stephen Derby in Maryland. Judge Littlefield explained that one cause of action on the discharge in the adversary proceeding was entered by Judge Derby in error because it mentioned 11 U.S.C. §523(a)(6), when the applicable Bankruptcy Code section is §727. After Judge Derby noticed the error, he vacated the discharge by an order dated March 14, 2000. However, before the docket was corrected under Judge Derby's direction, the adversary proceeding and Mr. Hudson's bankruptcy case were transferred to the Northern District of New York. Judge Littlefield wrote that the docket was corrected on May 1, 2000, as reflected in the Post-It notes. The changes were not made, as Mr. Hudson argued, by the court ex parte and sua sponte, the judge determined. He also rejected Mr. Hudson's contention that his complaint was altered by the court. Mr. Hudson claimed that a typewritten passage in the complaint did not match the font of the rest of the computer-printed copy he submitted to the court. Judge Littlefield wrote that he reviewed not only the docket in the case before his court, but also that in Maryland bankruptcy court. He held that the copies of the complaint were identical, meaning they had not been altered in the Northern District. The document that Mr. Hudson purported to be a "smoking gun" in reality shows that his charges are "simply false," the judge held. "Hudson obviously failed to conduct a reasonable inquiry prior to filing his motion," Judge Littlefield wrote. "Seemingly, if one was going to accuse the court of altering a pleading the first piece of evidence one would gather to support this claim would be an unaltered copy of the pleading." Judge Littlefield and Mr. Hudson sparred in a different case last year in which the judge reduced the tax liability for Mr. Hudson and his late wife on a trust recovery. Judge Littlefield reduced liability for the Hudsons from more than $50,000 to about $5,000, and ordered that Mr. Hudson, who also represented himself in that case, could seek attorney's fees. But Judge Littlefield reduced the $21,206 Mr. Hudson sought to $6,831 and wrote that he was tempted to refuse him any fees because of an application that was "replete with deficiencies and problems." Washington 1993 Inc., is seeking to recover $385,000 from Mr. Hudson. Washington 1993 Inc., was a real estate company. It no longer exists, and all of its rights have been transferred to its principal, Richard Corvetti, according to his attorney, Kenneth G. Varley of Donohue, Sabo, Varley & Armstrong in Albany. Mr. Varley said yesterday that Mr. Corvetti will not have a role in Mr. Hudson's hearing before Judge Littlefield. Mr. Hudson, formerly of Albany and now of Sarasota, Fla., yesterday said he expects to file a written response to Judge Littlefield's order to show cause by tomorrow's deadline and to appear before the judge on Oct. 29. Mr. Hudson said any further comments would be inappropriate. NY Lawyer Suspended for Forgery By Anthony Lin Anthony M. Mahoney had originally been convicted in 2002 on two theft counts as well but those were ultimately reversed in 2006 by the New Jersey Supreme Court. Noting that the twists and turns of the criminal case had delayed Mr. Mahoney's New York disciplinary proceedings and then removed the most serious charges, a referee had recommended a three-year suspension retroactive to January 2004. The referee cited Mr. Mahoney's previously unblemished disciplinary record and history of active community involvement in her recommendation and noted he had made restitution to his clients within months of his alleged theft. The hearing panel in the case, however, urged a prospective five-year suspension on the grounds that Mr. Mahoney only made restitution after he became aware his actions were the subject of a criminal investigation. In ordering a prospective three-year suspension, the court split the difference, noting that his misconduct appeared "truly aberrational" but was nonetheless serious. Lawyer
Suspended for Accepting Nude Dances Associated Press CHICAGO - An attorney has been suspended for more than a year for accepting nude dances from a stripper as partial payment for the legal fees she owed him. The Illinois Attorney Registration and Disciplinary Commission on Thursday said Scott Robert Erwin will begin serving a 15-month suspension for misconduct next month. Erwin, who practices in the northern Illinois city of DeKalb, and his client mutually agreed that she'd perform nude dances for him in his office as a way to reduce her legal fees, the commission's report said. He credited her for $534 toward his bill for services of various legal matters, the report said. While she agreed to the performances, the client contended he touched her inappropriately during those dances, and she went to police in 2002 with sexual assault allegations. Erwin denied any inappropriate touching happened, and he was never charged criminally, the report said. He declined to comment on the panel's decision Thursday. The woman no longer works as a stripper, the report said. Lawyer Who Stole $300,000 for Nestegg Going to Prison New York Lawyer PORTLAND, Maine (AP) - There was no extortion. No lavish vacations. No gambling debts. No drug addiction. Instead, a former partner in a major Maine law firm stole more than $300,000 simply because he felt he needed greater savings, his lawyer said. Addressing a federal judge, disgraced lawyer John Duncan said he never would have envisioned himself in trouble with the law when he graduated 30 years ago from law school. "I have gone far astray from the ideas and ideals I had," Duncan said in his first public comments since the case shook Portland's legal community. Judge George Singal, who sentenced Duncan to 28 months in prison for tax evasion, told Duncan he broke an important public trust when he stole $300,000 from his clients and law firm Verrill Dana. "People wonder who they can believe in," Singal said. "That's the real damage here. People's ability to trust has been harmed across the board. It pains me that someone as well-educated as you are, an individual who the community should look up to has fallen so far." Duncan joined Verrill Dana in 1978 after graduating from Bowdoin College and receiving a law degree from the University of Virginia. During the years of theft and embezzlement, Duncan was earning an average of $269,000 a year and his family had assets of more than $1 million. He clearly did not need the extra money to survive, said defense lawyer Toby Dilworth. Instead, he had a compulsion to provide his family more financial security. "His conduct was completely irrational," Dilworth said. "He felt this desire to have more savings, just so it would be there." Duncan, 54, of Falmouth, was permanently disbarred in July by the state Supreme Court. That was believed to be the toughest penalty ever against a Maine lawyer. Duncan has also pleaded guilty to felony theft charges in Cumberland County Superior Court. Sentencing on those charges is set for Sept. 18. From his savings and with help from family members, Duncan has paid back the money owed to Verrill Dana and the Internal Revenue Service. NY Lawyer Accused of Stealing More Than $5 Million By Vesselin Mitev A disbarred real estate attorney yesterday pleaded not guilty to 26 counts of wire and mail fraud in Central Islip federal court. Stuart Moshell, a Jericho solo practitioner, is charged with stealing more than $5 million from clients and business associates, according to Eastern District U.S. Attorney Benton J. Campbell. Between 1998 and 2007, Mr. Moshell allegedly induced several clients and business associates to loan money by falsely informing them he had a client who needed a "bridge loan" to complete a real estate deal. Mr. Moshell allegedly promised lucrative returns on the investments but in reality used the money to pay personal debts. Mr. Moshell is also charged with defrauding client escrow accounts and perpetuating mortgage fraud. In March, he tendered his resignation as an attorney to the Appellate Division, Second Department, Matter of Moshell, 51 Ad3d 122. At the time, he was under investigation by the grievance committee for the Ninth Judicial District for borrowing from escrow accounts to pay mounting debts, said his attorney, James O. Druker of Kase & Druker in Garden City. Mr. Moshell is "fully cooperating with the authorities in terms of victim restitution," Mr. Druker said. Mr. Moshell was arraigned before Eastern District Judge Joanna Seybert.
By Anthony Lin A federal judge has upheld
novel employee-benefits fraud charges against a lawyer, calling his
argument for dismissal "provocative" but "fatally flawed." Lawyer
Caught Up in Internet Scam By R. Robin McDonald ATLANTA - Securities lawyer Gregory Bartko said he is the victim of an Internet fraud scheme that is apparently targeting law firms throughout the country and the banks where lawyers have their escrow accounts. As a result, Bartko is now a defendant in a federal suit by Wachovia Bank—which is seeking reimbursement for nearly $200,000 that the bank wired, on Bartko's instructions, to a Korean bank on behalf of a company that had hired Bartko via the Internet. Wachovia has also notified the State Bar of Georgia that Bartko's firm escrow account was overdrawn by more than $190,000, Bartko said. The scheme that entangled Bartko matches one in a fraud alert issued in February by SunTrust Bank in Atlanta. An overseas company contacts a U.S. lawyer by e-mail and retains that attorney as a settlement agent to collect a debt from a U.S. company. The U.S. company sends a settlement check to the lawyer, who deposits it into his trust account and then wires the settlement amount, minus his fee, to the "client." But the settlement check is counterfeit, and the lawyer loses the money he wired abroad. "I'm pretty upset about it," Bartko said last week. "I got conned by someone who I thought was a client." Bartko is not the first to have been taken in by the scam. The July issue of the California Bar Journal reported on two unnamed California attorneys, one in Long Beach and one in San Francisco, who fell for a similar Internet pitch, but their banks noticed the counterfeit checks before any money was sent abroad. Wells Fargo Bank in San Francisco and City National Bank in Los Angeles have reported at least six other lawyers who were drawn in, according to the California Bar Journal. Bartko said that a member of Wachovia's loss-management/rapid-deployment team in Atlanta told him that she was already working on a virtually identical complaint involving another metro-Atlanta attorney who had been instructed to wire funds—based on a phony check—to an Internet client in the Philippines by the same individual who had hired Bartko. Bartko said he was taken in by the fraud scheme because he occasionally handles international legal transactions involving clients in Asia. It is not unusual for such transactions to be conducted by e-mail, he said, because of the 12- or 13-hour time difference between Atlanta and the Far East, he added. Bartko said fraudsters first contacted him in early February via an e-mail from the Tah Tong Textile Co. in Taiwan seeking representation in the U.S. to collect a large debt. Bartko said the e-mail mentioned five different firms in Atlanta that Tah Tong claimed to have also contacted. Tah Tong's representative informed him that the company had identified the Atlanta law firms, including Bartko's solo practice, through the State Bar directory, Bartko said. "I think I let my guard down when I heard that," Bartko explained. "We entered into an attorney-client agreement with them" on March 12 and, eventually, contacted the alleged debtor. Bartko said that in April he received a SunTrust cashier's check—payable to his law firm—from that debtor for $197,530 as partial repayment of its outstanding account. Then, Bartko said, Tah Tong executive Hua Cheng instructed Bartko via e-mail to wire the money to the textile company's account at the Woori Bank in South Korea. Bartko said Tah Tong is a real public company that trades on the Taiwanese stock exchange. "When they approached us to do some work for them, we checked them out," he said. "It's a reputable company. … But I suspect there is no connection between Tah Tong and the people who are involved in the scam." As for Hua Cheng, Bartko said, "Since he was the one who instructed us what to do, I can only assume he was part of the scam." Bartko said he deposited the cashier's check in his escrow account at Wachovia on April 8. A bank representative told him that he could not draw on the funds until April 10 — the time it would take to confirm that funds were available and that SunTrust would honor the check, the lawyer said. On April 11, shortly after 10 a.m., Bartko returned to Wachovia and arranged to wire $192,530 to the Woori Bank. Three days later, on April 14, Bartko said he discovered that his escrow account reflected a debit of $197,530. When he called Wachovia for an explanation, bank representatives told him that SunTrust had returned the cashier's check that Bartko had deposited as counterfeit. A bank representative told him that Wachovia had attempted to recall the wire the day Bartko had arranged it, but had been unsuccessful. While the cashier's check was counterfeit, Bartko said that SunTrust had determined that the customer in whose name it was purchased is a real one. "They are not part of the [fraudulent] transaction," Bartko said. On April 15, Wachovia informed Bartko that he would be responsible for the $197,530 chargeback. Bartko said he learned that day that the bank's loss-management team was already working a similar fraud involving Hua Cheng, the same Tah Tong representative who had contacted Bartko. "That disturbed me," he said, noting that he thought the bank should have been on the lookout for other counterfeit checks by the same fraudsters. The bank sues Wachovia's suit against Bartko—originally filed in Gwinnett County State Court and transferred to U.S. District Court on Aug. 18—claimed that the bank had provided Bartko with "provisional credit" when it wired the funds to South Korea. The bank laid claim to more than $7,000 already in Bartko's escrow account, closed it and billed the $191,619.95 negative balance to Bartko. Wachovia has also claimed that the account was a personal—rather than a business—account, making Bartko potentially personally liable for the loss. Richard B. Herzog Jr. with Nelson Mullins Riley & Scarborough in Atlanta is handling the suit for Wachovia. On Monday, Herzog said because the matter is currently in litigation, "I don't think I'm authorized to speak on behalf of my client." Wachovia spokeswoman Evelyn Mitchell said that it is Wachovia's policy not to discuss pending litigation. Bartko acknowledged that he has not paid the bank for the bulk of the wired funds. But he said that what appears to have been a delayed communication between SunTrust and Wachovia caused Wachovia to authorize the outgoing money wire. Bartko said that SunTrust identified the cashier's check as counterfeit on April 9, the day after he deposited it. According to federal law, SunTrust had three days in which to notify Wachovia electronically that the deposited check was counterfeit. But SunTrust, according to Bartko, missed the three-day notification deadline. Bartko didn't wire the money to Tah Tong until April 11. "So what's going on between the ninth and the 11th?"—the time when SunTrust identified the counterfeit check and Wachovia attempted to recall the bank wire, the lawyer asked. Bartko suggested that the communication gap could have occurred because the counterfeit check was misplaced. He noted that a copy of the check that was delivered to Wachovia on April 16 stated that SunTrust was providing Wachovia with a photocopy "in lieu of the original item lost in the process of being returned." Bartko said Wachovia's legal counsel notified him about SunTrust's missed midnight deadline, adding that Wachovia intended to file a claim of late return against SunTrust for the $197,530 loss. But in June, Wachovia's counsel contacted Bartko a second time, notifying him that the late return claim against SunTrust had failed and that Bartko's "obligation to repay the overdraft remains." A SunTrust representative could not be reached to discuss the case. Bartko said that since April, his efforts to get additional information about the counterfeit check have failed. SunTrust's associate counsel advised him that any requests for information about the check would have to come from Wachovia or via a subpoena and that "any recourse you may have is between you and Wachovia." Said Bartko: "I can't get anything from Wachovia. They won't give me the first piece of paper." The case is Wachovia Bank v. Bartko, No. 1:08-cv-2636. NY Firm Sees Fees Bid Slashed in Fight Over Rejected Will By Mark Fass Imprisoned Pol Surrenders His Law License for Five Years By Julie Kay Jenne's attorney, David Bogenschutz of Fort Lauderdale, Fla.'s Bogenschutz & Dutko, said that Jenne agreed to the suspension as a compromise. The Florida Bar had sought permanent disbarment. Palm Beach, Fla., acting Circuit Judge Paul Moyle — the referee in the case — signed off on the agreement on Friday. Now the Florida Supreme Court must approve it. Jenne, 61, was sheriff for nearly a decade and a former Democratic state senator. A lawyer by training, he was one of the most powerful figures in the state when he was indicted by a federal grand jury for allegedly accepting more than $150,000 in improper payments from Sheriff's Office contractors. Jenne pleaded guilty last
September to one count of mail-fraud conspiracy and three counts of
income tax evasion. He is serving a one-year sentence at a Virginia
penitentiary and is scheduled for release in September. By Brenda Sapino Jeffreys A former paralegal at Houston lawyer Richard Laminack's current and former firms alleges the prominent plaintiffs lawyer is a "sexual predator" who once offered her $15,000 to stay with him in a hotel room in Las Vegas over a weekend and once suggested she perform a sexual act on an expert witness to improve his mood and testimony. Defendants in the suit Angela Robinson filed in state district court in Houston on July 25 are Laminack; his current firm, Laminack, Pirtle & Martines; and the O'Quinn Law Firm, formerly known as O'Quinn, Laminack & Pirtle in which Laminack was partner.Robinson, a Magnolia, Texas, woman who worked on fen-phen litigation while employed at the firms, alleges the defendants engaged in mail fraud under 18 U.S.C. §1962 for mailing settlement statements to fen-phen clients that contained overcharges for medical records. Robinson alleges "firm employees would order fictitious medical records" for clients from health care providers that had never treated those clients, and then the firms added $100 to $150 to the expenses deducted from the clients' portion of their fen-phen settlements for those "fictitious medical records." Robinson alleges she told Laminack of the "unlawful scheme to defraud thousands of fen-phen litigation clients" but he "told her to be quiet and not inform anyone of this" and he directed the firms to mail the settlement statements containing the charges. She alleges she was wrongfully terminated under the Texas Supreme Court's 1985 opinion in Sabine Pilot Services v. Hauck for failing to commit an illegal act. Robinson also brings battery and intentional infliction of emotional distress causes of action alleging she was subject to a hostile work environment. She seeks unspecified actual and punitive damages. "No cause of action under or alleging Title VI of the Civil Rights Act of 1964, 42 U.S.C. §2000e, or Chapter 21 of the Texas Labor Code is being asserted at this time against any defendant," she writes. Robinson, who alleges she worked under Laminack's supervision at O'Quinn Laminack and at Laminack Pirtle from May 2002 until her "wrongful termination" on April 14, 2008, seeks unpaid overtime wages under the Fair Labor Standards Act totaling $27,500, plus an equal amount in penalties, plus attorney fees and costs. Laminack, managing partner of Laminack Pirtle, could not immediately be reached for comment. But Houston lawyer Dale Jefferson, a partner with Martin, Disiere, Jefferson & Wisdom, who represents the O'Quinn Law Firm, says the mail fraud allegation is "completely false." As to the allegations of a hostile work environment at O'Quinn Laminack when Laminack was working there, Jefferson says Robinson never made a complaint under the firm's sexual harassment policy. In 2006, Laminack and Thomas Pirtle left O'Quinn Laminack to form Laminack Pirtle. "When all the facts come to light, I sure hope the actual facts are reported with the same intensity as the alleged facts contained in the petition," Jefferson says. Robinson's attorneys, of counsel Spencer Markle and partner Andrew McKinney IV of Houston's McKinney & Cooper, could not immediately be reached for comment. NY Firm Ruled Liable for Florida Firm's Foulup By Joel Stashenko
Flip-Flopping Disbarred Lawyer Pleads Guilty By Vesselin Mitev Joseph C. Levine had a plea deal revoked in February after one of his victims implored County Court Judge John Kase to "not allow Mr. Levine to con you the way he conned me" and give him a longer sentence than one-to-three years behind bars. Judge Kase offered Mr. Levine the option of either taking a new deal of three to nine years or withdrawing his guilty plea and going to trial. In March, Mr. Levine opted to withdraw his guilty plea and go to trial. He changed course yet again yesterday by accepting the three-to-nine year deal. Sentencing is set for August 29 GC
Apologizes for Saying Judges By Alana Roberts Grimsley pleaded guilty to two Florida Bar grievances April 25, and the Florida Supreme Court has approved the unconditional plea and consent judgment for discipline. Under the judgment, Grimsley wrote a letter of apology to the Daily Business Review for his inappropriate comments about judges and admitted a 2006 drunken-driving arrest. The date of Grimsley's reprimand by the Bar's board of governors has not been set. He must undergo a medical evaluation by a doctor who specializes in substance and alcohol abuse and comply with any treatment recommendations. He also must pay $1,371 in costs. Grimsley, who remains with the company, declined to comment beyond his letter to the Daily Business Review. United Automobile Chief Executive Officer Richard Parillo Sr. issued a statement saying the company "regrets the entire incident resulting in the Florida Bar reprimand issued against Mr. Grimsley." Parillo distanced the company from the comments but also criticized Florida law for allowing abuse in insurance claims. "His frustration with a legislative system widely known to condone abuse unfortunately caused him to express thoughts and ideas that were misdirected," Parillo's statement said. The firm's outside attorney Carlos Lidsky declined to comment. In the June 17 apology letter, Grimsley acknowledged making an inappropriate comment about judges but claims he immediately asked to retract it. The Daily Business Review disputes that contention and stands by its story. "Irrespective of how it happened, the fact remains that I should never have made such a statement that was clearly derogatory toward the judiciary in direct violation of several rules of professional conduct," Grimsley's letter stated. He was quoted in the article about United's efforts to fight fraudulent and excessive claims for personal injury protection coverage in car accidents. Company leaders and others alleged PIP encourages fraud by lawyers, medical providers, policyholders and others, increasing pressure for higher rates. Grimsley didn't single out any judges, but the company had aggressively been targeting Miami-Dade County Court Judge Jacqueline Schwartz to get her removed from all of its cases for alleged bias. The article also noted United had contentious lawyer fee hearings before both Schwartz and County Judge Lawrence King. Miami-Dade Circuit Court spokeswoman Eunice Sigler said Judges King and Schwartz declined to comment on the disciplinary action. Grimsley complained in the article about the rates of summary judgments granted by judges compared with the company's success before juries and concluded, "I think the judges are being paid off, but I can't prove that." In a follow-up article, he groused about judicial hostility and the role of campaign contributions, but he added, "I don't think there's any money changing hands." Former Dade County Bar Association President Merrick Gross wrote a letter to the editor criticizing Grimsley and the Daily Business Review for publishing his "scandalous and unsupported quotation." United distanced itself from Grimsley's comments. Lidsky, a partner in the Hialeah, Fla.-based law firm of Lidsky Vaccaro & Montes, said at the time that his firm hand-delivered an apology letter to King. Grimsley's letter to the Daily Business Review was on the letterhead of Charles J. Grimsley & Associates of Miami Gardens and listed a phone number that reaches United's claims switchboard. Disbarred
NY Lawyer Admits By Daniel Wise A disbarred Westchester County lawyer has admitted in court that he stole $310,000 from his grandparents. Chase Caro of White Plains pleaded guilty yesterday to grand larceny and has been sentenced to 2 1/2 to 7 1/2 years in prison by County Court Judge Susan Cacace. A spokesman for Westchester District Attorney Janet DiFiore said Mr. Caro, 49, admitted stealing money meant for his grandparents' trust fund. He already had pleaded guilty to another theft of more than $470,000 from another elderly client. He was sentenced to 2 to 6 years on that count. Mr. Caro agreed to pay restitution of $1.1 million, which also includes funds from a third theft. His sentences will run at the same time. Mr. Caro, who was disbarred in November, is the son of Robert Caro, the Pulitzer Prize-winning biographer of Robert Moses and Lyndon Johnson. The Associated Press contributed to this report. BigLaw
Partner Should Face Criminal Charges New York Lawyer Criminal Charges Against
Pillsbury Partner Called for in SonicBlue Bankruptcy By Niraj
Chokshi The motion for referral accuses William Freeman, a partner in Pillsbury Winthrop Shaw Pittman's Los Angeles office, of failing to disclose payments the firm received that allegedly affected its status as a disinterested party in representing electronics maker SonicBlue in its bankruptcy. "[T]he conclusion Mr. Freeman willfully perjured himself ... has now become utterly inescapable," wrote William McGrane, an attorney with Bay Area firm McGrane Greenfield. He filed the motion last Friday on behalf of his client, SonicBlue Claims -- created to buy creditors' claims against SonicBlue. "These actions are very rare," said Jesse Fried, co-director of the Berkeley Center for Law, Business and the Economy. Freeman and Craig Barbarosh, a partner in the firm's Orange County office, were kicked off the case one year ago when San Jose Bankruptcy Judge Marilyn Morgan found they failed to disclose a letter promising investors payment even if SonicBlue filed for bankruptcy. The firm was accused of a second major disclosure failure in November and then again recently. McGrane accuses Freeman of knowingly failing to disclose receipt of preference payments made on account of antecedent debt -- payments in the 90 days leading up to SonicBlue's Chapter 11 bankruptcy filing. All parties hired in a bankruptcy are legally required to disclose any existing connections with debtors, including preference payments. Before the company filed for bankruptcy, a retainer account was set up which SonicBlue replenished periodically, according to the filings. The firm withdrew payment from the retainer under the impression that it did not technically constitute payments on account of antecedent debt. However, McGrane said, in a February 2005 e-mail to Barbarosh, Freeman wrote, "[t]he firm has major exposure here." One week later, Freeman e-mailed Barbarosh the proposed text of an e-mail to the head of the official creditor's committee explaining the retainer account. "We're going to get fucked ... I'm very uncomfortable," Barbarosh responded. "We have no chance of success," Freeman replied. "Embarasses [sic] to put my name on this letter." A firm associate was asked to look into the payments. In an April memo, the associate wrote, unless the court could be convinced otherwise, "it is clear that we did receive payments on account of antecedent debt." McGrane accuses Freeman of deliberately withholding that information from the court in declarations related to his application to be employed as counsel for SonicBlue in the bankruptcy. "How sad, and how absolutely criminal, all this misconduct ultimately was," McGrane wrote in the recent filing. Freeman did not return calls seeking comment on Thursday. "We have received and reviewed the pleading in question," said John Grenfell, a San Francisco partner with Pillsbury who is representing the firm along with its outside counsel. "We think it has no merit. And we expect to file a response to it by April 7." According to a response the firm filed in February, the creditors committee investigated the payments and "concluded 'that no such payments constitute avoidable preference payments.'"
New Kind
of Jailhouse Lawyer: By Ryam J. Foley MADISON, Wis. - A former state senator convicted of accepting kickbacks could practice law again soon after the state Supreme Court declined Wednesday to revoke his license. Gary George, a Milwaukee Democrat who served in the Senate for 23 years, was convicted in 2004 on a charge of accepting monthly cash payments that flowed from a nonprofit group that received state funds. He was sentenced to 48 months in prison. In a 5-0 decision on Wednesday, the Supreme Court rejected a recommendation from state regulators that George's license be revoked for misconduct. The court said a suspension of four years and three months is enough punishment and perhaps the longest ever imposed in Wisconsin. The court applied the punishment retroactive to March 2004, when his license was suspended. That means George could be eligible to practice again as early as June. The court said George's misconduct was extremely serious but disbarring him would be too harsh. The court noted his long public service, previously clean disciplinary record and prospects for rehabilitation. The court ordered George, who has completed his prison term and is living in Milwaukee, to pay the cost of more than $14,000 for the disciplinary proceedings. George's attorney, Mark Hazelbaker, called the decision "a significant victory" for his client. George wants to return to work as a lawyer so he can pay a $568,000 restitution order, he said. "Gary acknowledged that he made some very serious mistakes and knew he was going to face the severest of discipline," Hazelbaker said. "But throughout the whole process he was hoping to have a chance to practice law again and ultimately be able to redeem himself." George pleaded no contest to his role in a kickback scheme involving Opportunities Industrialization Center of Greater Milwaukee, which had contracts worth $40 million per year to administer the state's welfare-to-work program. The nonprofit group paid a monthly retainer to attorney Mark Sostarich, typically about $5,800. Sostarich would then send up to $4,670 to George, who performed no legal work in exchange for the payments. The group also "invested" $200,000 of an affiliate's money in a corporation controlled by George's family. In all, George received $400,000 from the group. He also admitted that he used legislative staffers to perform personal work for himself and his campaign. Regulators asked for George's license to be revoked because his "conduct involved criminal behavior and dishonesty and a violation of public trust," said William Weigel, a lawyer for the Office of Lawyer Regulation. But he said he respected the court's suspension and the effect was little different. Lawyers whose licenses are revoked can petition for reinstatement after five years. The court's order allows George to start that process April 1 instead of later this year or early next year, Weigel said. George will still have to prove that he is fit to practice law before he is reinstated, during a "rigorous process" that can take up to one year, he said. Justices David Prosser and Louis Butler recused themselves from the case. Prosser served with George in the Legislature. Butler, who is facing a tough challenge for a 10-year seat on the court in the April 1 election, did not give a reason. Witness's
"Amnesia:" $500,000; New York Lawyer Defense attorneys say investigators misunderstood taped phone conversations. Lawyers for executive Lance Poulsen were beginning their case Monday after the government spent a week playing taped phone calls and meetings for a federal jury. Poulsen goes on trial in August on multiple charges of conspiracy, securities and wire fraud and money laundering. The government alleges he misled investors about unsecured loans his company was providing health care companies such as hospitals and nursing homes. Before that trial, he is defending himself against charges that he and longtime acquaintance Karl Demmler, a Columbus bar and restaurant owner, teamed up to persuade the witness to help Poulsen beat the fraud case against him. Poulsen is founder and former chief executive officer of National Century Financial Enterprises, once described as the country's biggest health care financing company. Poulsen said on a tape played Friday that the government's star witness should explain that her previous statements to prosecutors were based on old facts. Poulsen said the witness should say, "But now, there is a new set of charges and it's a new indictment and I'm not familiar with it," Poulsen said on the recording. Prosecutors say the witness, Sherry Gibson, a former National Century executive vice president was promised $500,000 if she could "have amnesia" when it came time to testify. On Friday, Poulsen attorney Peter Anderson suggested telephone conversations between Demmler and Poulsen were harmless because they corresponded with trips that Poulsen, living in Florida, was about to make back to Columbus. Jeffrey Williams, an FBI agent who led the investigation, disagreed, saying records indicated dozens of phone calls back and forth between the two at several different times last year. Gibson pleaded guilty in 2003 to a lesser charge of securities fraud in exchange for helping prosecutors.
He Was Just Trying to Settle Case New York Lawyer MANCHESTER, N.H. (AP) - A lawyer who says he was just trying to settle a case has been convicted of extortion. Daniel Hynes of Manchester told a Concord hair salon to pay him $1,000 15 months ago or face a lawsuit because its different prices for men and women were discriminatory. In one court document, he said the unequal prices at Claudia Lambert's salon caused him mental anguish. That's even though the salon charged women more than men. This week, a Manchester District Court jury convicted him of theft by extortion, a misdemeanor. Hynes, 27, said he plans to appeal. "The conviction goes against the First Amendment," he said. "People have a right to petition the courts." Asked why he contacted the salon directly, he said he was seeking "as amicable a resolution as possible." Assistant Attorney General Elizabeth Baker said Hynes sent letters to at least 19 salons in the state. The one to Claudia's said haircut prices should be based on the time required or the length of the customer's hair, not gender. "I demand payment in the amount of $1,000 in order to avoid litigation," he wrote. Lambert's husband, Ben Nardi, contacted authorities, who arrested Hynes when he came collect $500. A jury deliberated for about 90 minutes Wednesday before convicting Hynes, who was represented by a public defender. He faces up to a year in jail and a $2,000 fine. He started practicing law in New Hampshire a month before sending the letter to Claudia's. The state Supreme Court committee the handles misconduct by lawyers probably will review the case, said Richard Uchida, a former member of the committee. NY
Government Lawyer Fired for Running By The Associated Press State Inspector General Kristine Hamann says Christine Timber, 58, of Albany, had also been reprimanded in 1994 for conducting business for her private practice while at her state job. She resigns effective June 8, 2008. Ms. Timber earned about $100,000 a year in her state job. Department of Labor policy prohibits employees from engaging in any outside business or activity while they are working. Ms. Timber did not immediately return a message left at her home in Albany. Judge Faults NY Firm's "Frivolous" Pursuit Of Case By Vesselin Mitev Chase Bank Sues Law Firms Claiming Debt-Relief Scam By Bud Newman MIAMI - Chase Bank USA is suing two Coral Springs, Fla., attorneys specializing in reducing consumer debt and South Florida affiliates, claiming they are engaging in blatantly illegal and fraudulent practices. The federal suit filed Friday in Wilmington, Del., accuses Hess Kennedy Chartered, lawyer Laura Hess, Edward Kennedy, affiliated companies and others of using "an unlawful debt elimination scheme" relying on lawsuits challenging valid credit card charges. Attorney Jeffrey Campos of Coral Springs and the Legal Debt Center, which has the same Coral Springs address and suite number as Hess' law firm, also are named as defendants. In addition, attorneys general in Florida, North Carolina and West Virginia are looking into Hess Kennedy's operations, and the Florida Bar has moved to suspend Hess' license. The bank suit claims its credit card customers were urged to falsely claim nonexistent billing errors on monthly statements to avoid payment or have the debt erased. Nationwide, Chase said more than 3,800 credit card holders have used such tactics to avoid paying more than $25 million in legitimate debts. The Chase attorney who filed the suit, Beth Moskow-Schnoll in Wilmington, declined to comment. A spokeswoman for the bank declined to comment. The six-count complaint seeks injunctive relief and punitive damages to prevent the defendants from operating a debt reduction "scheme." The complaint claims "tortuous interference with contractual relations" between Chase and its customers, abuse of process, conspiracy and violations of Delaware trade practices and fraud laws. Chase is asking the court to declare that "billing error disputes asserted by Chase's card members who are represented or assisted by defendants are sham" claims. Chase also wants the defendants to notify "each card member whom defendants have previously advised, assisted or represented" that the disputes do not eliminate the obligation to pay outstanding debts. Calls to Hess, Kennedy and Campos were not returned. The first item that pops up in a Google search for Hess Kennedy refers to Hess Kennedy Co., an international law firm. Clicking on that reaches Laura Hess & Associates P.A. Hess and Campos are Florida Bar members, but Kennedy is not listed as a member of the Florida Bar. The Florida Bar filed a contempt petition Feb. 11 against Hess with the Florida Supreme Court, seeking a three-month license suspension. The petition noted the high court in 2005 "publicly reprimanded Hess and placed her on probation for three years," but eight new complaints were filed about her work during the probation period. In a statement dated Oct. 4 on the Hess Kennedy Web site, the company described itself as a law firm that "believes that integrity, honesty and values play a major role in the culture of a company." It said customers can "rest easy" when working with the firm. Florida Attorney General Bill McCollum hasn't been resting. His office filed a civil suit Feb. 21, claiming Hess Kennedy and its affiliates have bilked thousands of consumers by promising to reduce or eliminate out-of-control credit card or other debts for a fee. Fees appear to vary, according to several online complaints that customers posted about problems they had with the company. A Rhode Island man said Hess Kennedy charged him $700 but paid none of his credit card bills and his "credit rating has been destroyed by these people." A Minnesota woman claimed she was charged $500 for credit counseling and was referred to Hess Kennedy about getting a refund but concluded it was "a bunch of ripoffs." The North Carolina attorney general's office has filed a suit with allegations similar to the Chase action. The Better Business Bureau of Southeast Florida has received 140 complaints about the firm and given it a failing grade. The West Virginia attorney general's office obtained an injunction Dec. 14 barring Florida attorneys employed by Hess Kennedy from settling West Virginia consumer debts until they comply with a state investigation. The monthly service fee for debt settlement firms is capped at 2 percent of consumer payments in West Virginia, where state investigators say it appears Hess Kennedy has been charging more. The Chase and state suits make essentially the same claims. They say Hess Kennedy and the affiliated Consumer Law Centers in Boca Raton and Delray Beach, Fla., falsely told customers that their credit card companies had violated the federal Fair Credit Billing Act. The law firm or the customers then wrote letters to credit card companies disputing all charges. In a Feb. 21 news release, McCollum said Hess and related companies falsely told clients that they "did not have to pay creditors and creditors could not sue or otherwise take action against them" once the letters were sent to credit card companies claiming FCBA violations. Chase's federal court suit said defendants misled card members into believing they can stop payments on debts dating back years "until Chase investigates and resolves the purported 'billing error disputes' to their satisfaction." "Defendants' conduct is entirely in bad faith and serves no legitimate purpose," the Chase suit said. "Defendants' ulterior goals are to extract fees from card members who should be paying the money to Chase to satisfy their debts and to maliciously harass Chase in an improper (albeit unsuccessful) attempt to coerce the elimination of their clients' legitimate debts." Jailed Lawyer Faces More Heat From SEC in $1 Billion Scam By John Pacenti Federal authorities are not done with him yet, though. The Securities and Exchange Commission filed a complaint Feb. 15 against Ziegler and two other convicted Mutual Benefits officials: Raquel Kohler, the company’s chief financial officer, and Ameer Khan, former president and nominee shareholder of related company, Viatical Services. The complaints aim to bar the individuals from participating in any type of securities fraud in the future or face the possibility of criminal contempt of federal court. "We only have so many tools in our quiver and we felt this was an important complement to the criminal convictions," said Teresa Verges, assistant regional director in the SEC office in Miami. The way viatical settlements work is that life insurance policies for the dying and elderly are sold at a discount. Investors collect on the difference between the insurance payout at death and the purchase price. Mutual Benefits started failing when people started living longer than the company projected. In the end, the company became nothing but a shell for a Ponzi scheme, according to SEC investigators, with top company officials living in luxury while paying off early investors with money that arrived from later customers who were lured with promises of big returns. From 1994 to 2004, the company bilked more than 30,000 investors worldwide of $956 million. Last year, President Peter J. Lombardi was sentenced to 20 years in prison. Ziegler, Kohler and Khan each are serving five-year prison sentences. Lombardi agreed to pay $1.5 million to the receiver and a $6 million penalty to the SEC. "Ziegler was a substantial participant in the MBC offering fraud," the complaint reads. "He served as a primary securities regulator counsel for MBC." Ziegler falsified documentation in connection with the purchase and assignment of group insurance polices, according to the complaint. He then filed false reports with the state regulators. Kohler, according to the complaint, helped conceal the fraud and wired investor funds to accounts controlled by MBC's principals. "Kohler also participated in the preparation and filing of false and misleading information with state of Florida regulators to conceal the fact that a convicted felon with a disciplinary history was a controlling principal of MBC," the complaint reads. Khan tracked policies and performed post-investment services for MBC and "was well aware of MBC's misuse of investor funds and helped conceal the fraud," according to his complaint. The SEC has said the company really was run by Leslie and Joel Steinger, whom the SEC permanently barred from violating securities laws in 1998. According to the SEC, the Steingers and their relatives were paid $26 million in consulting fees from MBC. Now that is what is happening to Ziegler, Kohler and Khan. Both Kohler and Khan have agreed to terms with the SEC but Ziegler has yet to consent to judgment. The SEC is not seeking monetary relief because the defendants have been ordered to pay millions in restitution by the U.S. District Court. "It’s an important message to send given the roles," said the SEC's Verges. "If they ever violated securities law again, we can immediately apply to court for contempt and additional penalties. A judge can refer the matter to criminal contempt. "The complaint isn't good news for Ziegler if he ever wants to practice law again." Ziegler may reapply to practice law after his prison sentence is up, said Francine Walker, spokeswoman for the Florida Bar. "The process is fairly lengthy where the applicant has to prove rehabilitation under suspension," she said. "It's a process and not automatic." Walker said the new SEC
complaint will find its way into Ziegler's disciplinary file. She
said investigators will determine if additional action is required
against the attorney.
By Vesselin Mitev Anthony Galasso, the Long Island bookkeeper who stole more than $4 million from his brother's law firm, pleaded guilty last week to 22 charges, including two counts of grand larceny. In return, Mr. Galasso, was promised a term of 2 1/2 to 7 1/2 years in prison when he is sentenced on April 28. Mr. Galasso was arrested in January 2007 after the 22-count indictment was brought by the Nassau County District Attorney's Office. His brother, Peter J. Galasso, a partner in Galasso, Langione & Botter of Garden City, notified authorities after finding a client's escrow account depleted. In court last week before County Judge George R. Peck, Mr. Galasso admitted using client money to fund personal expenses, including private jet trips, a luxury car and tickets to shows and sporting events . Peter Galasso called the guilty plea a sign that his brother had "[run] out of options." The firm has filed a civil suit against Anthony Galasso and two of the firm's former banks, claiming the banks enabled the theft. Former In-House Lawyer Avoids Prison in FBI Fraud Case By Lynne Marek CHICAGO — A federal court in Chicago sentenced a former Siemens AG subsidiary attorney to four years of probation with electronic monitoring for her role in facilitating a joint venture fraud by the company in 2000 and lying to the FBI about the matter. The in-house lawyer, Ellen Roth, pleaded guilty last year to drafting documents that falsely represented a Siemens Medical Solutions USA joint venture as being a minority-owned business eligible to bid for a $49 million Cook County Hospital contract in Chicago when it was in fact not a qualified bidder. She ultimately admitted lying to the FBI on the eve of a trial in the U.S. District Court for the Northern District of Illinois. Federal prosecutor Barry Miller asked U.S. District Judge John W. Darrah at a hearing yesterday to impose the 60-month prison sentence suggested by federal sentencing guidelines, telling the judge that the public attention to the case would be a deterrent to other such conduct. While Darrah said he agreed that the case could serve as a deterrent, he rejected the recommendation for prison time. Roth's attorney Michael Monico told the judge that Roth simply hadn't had the strength to walk away from the fraud because she was the main breadwinner for her husband and children and the provider of healthcare benefits for the family. She had led an "unblemished life" up until the incident and was unlikely to ever appear again as a criminal defendant, he said. Roth, 62, told the judge that her conduct was "an aberration a terrible thing" for which she was embarrassed and remorseful. Monico, a lawyer with Chicago-based Monico, Pavich & Spevack, was pleased with the outcome, saying Darrah came to a "fair sentence." Roth must also pay a $12,500 fine, perform 200 hours of community service and continue counseling she has been receiving. "It was in keeping with the nature of the offense and the defendant's background," Monico said. Miller declined to comment. Daniel Desmond, another Siemens executive involved in the fraud who pleaded guilty to perjury, was also sentenced to four years probation and a smaller fine of $10,000. I llegal Bills: Lawyer Busted for CounterfeitingBy Amanda Bronstad New York Lawyer The National Law Journal February 27, 2008 LOS ANGELES — Federal immigration authorities have arrested a Los Angeles attorney, charging him with illegally selling hundreds of counterfeit Federal Reserve notes, some of which, if real, would have been worth $500 million. U.S. Immigration and Customs Enforcement (ICE) agents arrested Darrell Lee Johnson, 78, of the Law Offices of Darrell Lee Johnson, who is charged with possessing and attempting to sell fictitious financial obligations. Johnson has had his license suspended five times by the State Bar of California for failing to pay his membership fees and MCLE noncompliance. He also has received two disciplinary actions, most recently in 2006. ICE agents allege that Johnson, along with two other people previously arrested, marketed the fraudulent notes to investors nationwide. The agents seized 500 fraudulent notes from Johnson's law office, and from his residence, that had a 1934 issue date and depicted President William McKinley. The Bureau of Engraving and Printing's largest denomination printed for the public was a $100,000 Series 1934 Gold Certificate with a picture of President Woodrow Wilson. These notes, printed in 1934 and 1935, were used as transactions between Federal Reserve Banks. The investigation, which is ongoing, is being prosecuted by the U.S. Attorney's Office for the Central District of California, with assistance from the U.S. Secret Service. ICE is the investigative arm of the Department of Homeland Security. For prior articles click here
NY Lawyer Sees Plea Deal Unravel
After By Vesselin Mitev NY Lawyer Admits Stealing $2.1 Million By Anthony Lin A Manhattan lawyer has pleaded guilty to stealing $2.1 million in client funds from an escrow account. Real estate lawyer Ira L. Berman took money placed in his care as down payments on property sales and used it for his personal and office expenses. According to the Manhattan District Attorney's Office, which announced the guilty plea yesterday, at least eight people lost money that was placed in escrow with Mr. Berman for the purposes of consummating property sales primarily in Manhattan but also in Southampton, N.Y. Prosecutors said about $3.2 million is missing, though $1.1 million remains in the escrow account and will be distributed to Mr. Berman's victims. Mr. Berman, 66, has already been promised a sentence of three-to-nine years in prison on a charge of first-degree grand larceny. NY Lawyer Accused of Stealing $266,000 From Client By Daniel Wise The lawyer, Roger Cohen, 69, pleaded not guilty to one count of third-degree grand larceny and was released on $250,000 bail, according to the Westchester County District Attorney's Office. Mr. Cohen was accused of taking more than $294,000 from the proceeds of a real estate sale for his client, who owned a real estate investment company. The proceeds were supposed to have been placed in an Internal Revenue Services account to be established for the client, whose name was not released. When the client demanded the money's return, Mr. Cohen refunded only $28,671, according to prosecutors. NY Lawyer
Loses License for 30 Months By Daniel Wise The panel also found that the lawyer, Leah Larsen, 68, violated ethical rules by demanding an "exorbitant" fee not backed by time records and by pressuring her client to withdraw a complaint about the fee he had made to the Dutchess County judge handling the divorce. One judge on the panel, Justice James M. McGuire (See Profile), would have disbarred Ms. Larsen. But the majority, consisting of Justices Richard T. Andrias (See Profile), David B. Saxe (See Profile), Eugene Nardelli (See Profile) and John W. Sweeny Jr. (See Profile), found the suspension severe enough in view of Ms. Larsen's previously unblemished 28-year career. According to the opinion in Matter of Larsen, M-5004, Ms. Larsen had told her client, Conrad Tebbetts, that he could pay her with $40,750 from the proceeds of the sale of the divorcing couple's home. Justice James V. Brands had ordered the money be paid into Mr. Tebbetts' 401(k). Mr. Tebbetts suggested Ms. Larsen take only about $30,000 for the fee. Ms. Larsen then sent her client a one-page bill for $168,400, claiming 852 hours of work at $200 an hour without detailing her work, the decision reported. When Mr. Tebbetts wrote to Justice Brands to complain about the bill, Ms. Larsen threatened to collect the entire $138,000 balance due at an arbitration unless he withdrew his letter to the judge. Lawyer's
Bullying Secretary Over Weight Demands By Thomas B. Scheffey Russell is currently on leave from his firm, serving a home confinement sentence for his admitted destruction of a hard drive containing child pornography while working for a Greenwich church. The church's music director was implicated. Russell, a former Bronx, N.Y., assistant district attorney, pled guilty to a single count of obstruction of justice, and was spared prison time. Lamothe says Russell warned her at her first job interview that his law firm was in disarray and that he was a "yeller." Within a few months "he fulfilled his prophecy," with Lamothe resigning after the final outburst. During her course of employment, Russell said she had been a good employee, but harangued the 300-pound woman about her weight gain. She was diagnosed with uterine cancer in February 2006. She had diabetes and testified she was concerned about her ability to have a child. Russell told the court "it's none of my business," about her health problems, but allegedly ordered Lamothe to exercise daily, to walk from the train station, and, she says, "constantly belittled, berated and screamed at her in front of her fellow employees," wrote Gilardi in his Jan. 18 ruling. Russell allegedly told her to "move her fat ass," called her "fat" and threw objects at or near her. The alleged incidents of physical contact convinced Gilardi to issue the pre-judgment remedy. At one time a workman broke a light fixture in a stairwell and Lamothe called the building's management to clean up the debris. Upset, Russell allegedly grabbed her arm and brought her to the basement to get a vacuum cleaner. "When he couldn't open the basement door because the vacuum was in the way he pushed the door open, grabbed the vacuum, and threw it down the stairs, breaking it," Gilardi noted. He then allegedly took Lamothe nearby to the lobby of the Patriot National Bank and "in front of the bank tellers and customers yelled to ask if there was a dust pan or a broom" Lamothe could use, then made her go get them. On another occasion, Lamothe says she was outside smoking a cigarette, and Russell "came up and grabbed the cigarette out of her mouth and stomped it on the ground. He announced to everyone that she is '(expletive) sick' and told her that if he ever saw her smoking again she would be fired," Gilardi recounted. Russell conceded he might have told Lamothe she was sick because she was "fat," Gilardi noted, adding, "He said it was not beyond the realm of possibility that he told plaintiff she was 'retarded.'" Russell, a former member of the Connecticut Law Tribune's editorial board, is defended in this case by Lewis H. Chimes of New Haven, Conn.'s Garrison, Levin-Epstein, Chimes & Richardson. "I think, given the very low standard for a PJR in Connecticut, this wasn't a surprise, although I was surprised at the amount," Chimes said. "I think once the facts are known, it will be clear this is a garden variety workplace stress situation. [The tort of] Intentional infliction of emotional distress has a very high standard, and 90 percent of claims are not allowed." He added, "I don't think this case meets this threshold." Lamothe is represented by the five-lawyer New Milford, Conn., firm of Guendelsberger, Collins, Henry & Guendelsberger. Her lawyer, Rebecca E. Guendelsberger, said her client is currently employed in a Bridgeport law office. She said the judge, "obviously recognized that my client was hurt. This is something that no employee should have to experience, especially someone who works for an attorney." Disbarred
Lawyer Gets 41-Month By The Associated Press A federal judge has sentenced former Lafayette, La. attorney Mel Credeur to 41 months in a federal prison and ordered him to pay more than $769,000 in restitution. Credeur accepted a plea agreement last year and pleaded to one count of making false statements to a bank and one count of forging securities of private entities. He had been indicted in 2006 on charges that he lied to banks by asking for extensions on attorney-client lines of credit, even though he had already settled their cases. Prior to the plea agreement, Credeur also faced 23 counts of forging securities of private entities, stemming from allegations that he settled his clients' cases without their knowledge and then kept their settlements by forging their signatures. According to the plea agreement, Credeur faced possible fines of more than $1 million and up to 40 years in prison. U.S. District Judge Richard Haik on Tuesday sentenced Credeur to 41 months on each count to run concurrently and five years of supervised release afterward. Credeur was disbarred in
April 2007, according to a release from the Louisiana Supreme Court.
By The Associated Press A Memphis attorney who testified last year against a partner who stole from clients now faces accusations that he stole as well. Phoebe Copeland claims in a lawsuit that J. Richard Rossie stole more than $346,000 from her after she granted him power of attorney to handle her estate. Copeland hopes to block any settlement between Rossie and Darrelle Miller, another client who is suing the attorney, claiming Rossie stole more than $1 million from her. Rossie's attorney, James Wilson, could not be reached for comment on Thursday. Copeland's attorneys argue that a settlement with Miller would make Rossie insolvent and unable to pay Copeland. Chancellor Arnold Goldin has issued a restraining order temporarily preventing Rossie from distributing any money. According to a financial statement, Rossie is worth $3.85 million, but Copeland's attorneys say much of that is immune from judgment. Copeland is accusing Rossie of taking her money by writing at least 42 checks to himself between August 2000 and June 2007, using funds from the law firm's escrow account. He then deposited the money in personal accounts at various banks, the suit alleges. Rossie is a former partner of John Houser Parker who pleaded guilty last year to stealing nearly $2 million from clients and was sentenced to 22 years in prison. Rossie testified against Parker at a sentencing hearing. State prosecutor Steve Crossnoe would not say whether he is considering criminal charges against Rossie. Lawyer
Who Sexually Assaulted Five or More Minors By Amaris Elliott-Engel A former Philadelphia criminal defense attorney convicted of several sex crimes with minors, including an estimated five incidents in the Criminal Justice Center, was sentenced last week to serve 25 to 50 years in prison. Larry Charles, 50, was sentenced Thursday by an out-of-county judge, Berks Common Pleas Senior Judge Albert A. Stallone, for sex crimes between 1999 and 2007 related to six girls authorities said Charles raped, molested or groped. Charles pleaded no contest to crimes including rape, indecent assault and corruption of minors. He received consecutive sentences for the crimes related to each of the girls, including seven to 14 years for raping a 5-year-old girl. The girl was raped vaginally and anally in both a motel in New Jersey and a bank deposit room, said Jim Carpenter, the assistant chief of the Philadelphia District Attorney's Office's family violence and sexual assault unit. Authorities said Charles sexually abused the girls in both of his offices in Center City and Southwest Philadelphia, in the deposit rooms of banks, in the Criminal Justice Center (CJC) and in motels. The criminal case against Charles broke open when sheriff's deputies found him with a 14-year-old girl after engaging in sexual contact with her in a third-floor attorneys' lounge at the CJC on Martin Luther King Day 2007. Deputies began searching for Charles because they found it unusual that he was in the building on a public holiday with a young girl; Deputy Andrew Ortiz had to break down the door, and the girl was found cowering inside, Carpenter said. Charles was found naked. "We were very pleased with this sentence," said Carpenter, who prosecuted Charles. "It reflects the terrible damage he's done to these six girls. It also reflects his offense not only against his profession but against the courthouse where you seek justice and truth." In addition to the sexual encounter that the sheriff's deputies disrupted, Charles raped a 16-year-old in the rear room of the lawyers' lounge and also sexually molested a girl in the anteroom outside a courtroom and twice pulled girls onto his lap in the lawyers' lounge, Carpenter said. Charles' defense attorney, Angelo Cameron, had sought for Charles to be sentenced to five to 10 years in prison and supervised counseling. He wanted a "controlled environment and psychiatric treatment" for his client, Cameron said, "because pedophilia is a mental abnormality." Philadelphia Common Pleas President Judge C. Darnell Jones II said that after Charles was initially arrested, the Philadelphia Sheriff's Office, which controls security for the CJC, reviewed if more restricted access should be instituted for the building, but it was ultimately determined that attorneys do need to meet and work inside the CJC at varied hours. It also was decided that Charles' activities were an aberration so the sheriff's CJC protocols were found to be sufficient, Jones said. "It's one-in-a-billion for a lawyer to do something like that," Jones said. Two of the girls, and four of the other girls were from the same family, Carpenter said. "He basically used his influence and his status to gain the trust of families, particularly families in difficult circumstances, and then used that trust to isolate the girls, buy them things, use treats and to groom them for sexual contact," Carpenter said. He used force when the girls resisted, Carpenter said. Once the MLK incident opened up awareness into Charles' activities, some of the other victims came forward and law enforcement conducted an investigation, including verifying motel records and bank surveillance tape footage, the prosecutor said. Charles was ruled to be a sexually violent predator and a pedophile strongly attracted to both pre-pubescent and post-pubescent children during a Megan's Law hearing held before his sentencing, Carpenter said. Cameron has not discussed yet with Charles if he wants to appeal his sentencing. Charles will not be eligible for parole until he's 75, Carpenter said. Charles did have remorse for his actions, Cameron said. Charles agreed to an emergency suspension of his legal license after his arrest in January. Corporate
Attorneys Mull Meaning New York Lawyer Has the
indictment Tuesday of Mayer
Brown partner Joseph P. Collins sent "a chill down the spine" of
transactional lawyers everywhere, as Mr. Collins' defense lawyer
said it should? Solo
Faces 73 Criminal Counts for Leading 25-Year, By Amaris Elliott-Engel Personal injury attorney H. Allen Litt, 58, of Bryn Mawr, Pa., has been charged along with 14 others in a scam involving falsifying personal injuries from made-up or exaggerated slip-and-fall and auto accident cases and submitting fraudulent insurance claims, Philadelphia District Attorney Lynne Abraham said. Litt was charged with 73 criminal counts, including 31 third-degree felonies of insurance fraud and one first-degree felony of corrupt organizations. Litt, who was admitted to practice law in 1975, is accused of working with 100 runners who both located potential imposter claimants or posed as claimants, according to a grand jury presentment charging Litt and his co-defendants. The imposters would obtain medical care from physicians selected by Litt and rack up inflated medical bills via numerous visits to the Litt-selected doctors, the grand jury charged. Some claimants actually took falls or had an injury from another instance but still participated in a fraudulent fall or accident claim at the behest of the runners, the grand jury charged. Litt would file fraudulent insurance claims based on the doctors' bills and bogus photographs taken by the runners, the grand jury charged. Four runners alone brought in 300 claims for which insurance companies paid $2.5 million, according to the grand jury presentment. Runners received commissions for bringing in cases and for taking pictures of fraudulent accident scenes, the presentment charged. Abraham cited the Charles Dickens' story Oliver Twist about an orphan sucked into a crime ring and called Litt the equivalent of the story's Fagin, the Dickensian criminal mastermind. The 25 years of alleged fraud and "hundreds upon hundreds and hundreds of fake accidents" probably involved much more than the $2.5 million, Abraham said. Abraham's office plans to seek a judge's imprimatur on an exception to the statue of limitations in order to be able to prosecute Litt for more fraud-based charges. Litt was scheduled to be arrested at the office of his attorney, Marc Neff, at noon yesterday, Abraham said. A call to Neff's office was not returned. There was no answer at Litt's 1515 Market St. office. Litt also was charged with one first-degree felony count of conspiracy, 21 third-degree felony counts of theft by deception, 13 third-degree felony counts of attempted theft by deception, four counts of second-degree misdemeanor of false swearing, one first-degree felony count of dealing in proceeds of unlawful activities and one third-degree felony, count of criminal use of a communication facility. Litt could face up to 20 years in prison and a $25,000 fine for each first-degree felony, seven years in prison and up to a $15,000 fine for each third-degree felony, and two years in prison and up to a $5,000 fine for each second-degree misdemeanor. The grand jury evidence included testimony from three alleged runners for Litt: Lewis Crump, a North Philadelphia man who said he was in the "accident business," James "Big Frank" Guinn, a taxi driver who based himself at 27th and Tasker streets in South Philadelphia and Nathaniel Shaw, who said he was a real estate investor and landlord in North and West Philadelphia. All three men have already pleaded guilty to insurance fraud as part of plea bargains. They revealed Litt "relied on a stable of runners like themselves to recruit friends and family members who pretended to fall and faked injuries in order to file false insurance claims. He then paid the runners, usually between $100 and $1,000 per case," the grand jury charged. According to the grand jury presentment, the 132 claims brought by Shaw to Litt involved more than $1 million, and Shaw was paid $47,000. The 36 claims brought by Guinn to Litt brought in $100,000, and Guinn was paid $12,000, the presentment said. Crump allegedly brought 10 to 12 cases to Litt. The runners "worked on commission and they were more than happy to recruit," Abraham said. Shaw, who first met Litt when he was involved in a legitimate trolley accident, said Litt was aware the 132 cases he brought him were fraudulent, but Litt would pretend with these clients that he was not involved in the fraud, the grand jury charged. Litt, however, coached Shaw to choose accident sites that involved a cracked sidewalk or a broken step and no surveillance cameras; Litt also told Shaw to instruct the imposter claimants to go to an emergency room and complain of injuries from a fall, the grand jury charged. Shaw's imposter-accident recruits complained that Litt promised them big money if they made frequent appointments with the doctors he referred to them, but that their share of settlements were tiny, according to the grand jury presentment. Litt dismissed the complaints, the grand jury charged, and said: "Don't worry about it. They're not hurt anyway, and I got to pay the medical bills and got to pay the doctors." Iris Kurtz, the receptionist in Litt's office, testified that Litt directed her to improperly notarize releases of settlements without obtaining the signatures of the clients, the grand jury charged. According to the grand jury presentment, Shaw learned that an investigation was being undertaken of his and Litt's activities from two women he had recruited to take part in fraudulent claims. In response, according to the grand jury presentment, Litt got Shaw to obtain retraction statements from both women. Those statements were not submitted to the district attorney, but instead were turned over to an investigator and were introduced as evidence in front of the grand jury. Files were seized from Litt's office in December 2005, and Litt asked Shaw to contact the claimants involved in the cases in those files, but Shaw refused during a phone call with Litt, the grand jury charged. "In response, Litt announced, 'things are going to get ugly,' and hung up," according to the presentment. Guinn said that he drew claimants from 16 of his neighbors that he called the "Tasker Street Crew," according to the presentment. Guinn said he followed Litt's instructions to find holes in front of "well-off, but not too big, businesses" that didn't have a lot of attorneys to fight a case but would have more money to pay out than Chinese or Korean businesses, the grand jury charged. Abraham said that the investigation is continuing into at least 10 doctors that Litt allegedly referred fraudulent clients to. The investigation into Litt and his alleged cohorts began with an October 2004 tip from an insurance fraud investigator with Chubb Insurance Co., Abraham said. A search of Litt's office revealed hundreds of documents, including accounting file cards, canceled checks and accident scene photos, according to the grand jury's presentment. Litt was "really very helpful to us," Abraham said. "He kept great records." Linda Perkins, chief of the District Attorney's Office's Insurance Fraud Unit, said Litt is an exception to the rule and that most attorneys are honest and withdraw a claim for a fraudulent accident. Joshua Pitts, 63, of Philadelphia, was Litt's most active runner, according to the presentment. Over 400 checks totaling more than $190,000 were issued to Pitts from Litt, according to records seized from Litt's office, the grand jury charged. Pitts and three of his adult children were charged each with one count of insurance fraud and related offenses, according to the District Attorney's Office. Ten alleged co-conspirators, including Crump, Guinn and Shaw, have already been arrested. Some have pleaded guilty as part of plea bargains and have agreed to testify against Litt. Samuel Stretton, an attorney who writes an ethics column for Pennsylvania Law Weekly, The Legal's sister publication, and who often represents jurists in legal quandaries, said that Litt will most likely be able to continue practicing law pending the outcome of his court case. But the Disciplinary Board of the Pennsylvania Supreme Court can seek more immediate action on Litt's law license by requesting that a hearing be held on suspending Litt from practicing law on an interim basis, Stretton said. Attorney
Get 15 Years in Prison for New York Lawyer MIAMI -- Saying he would mete out a longer sentence if he could, U.S. District Court Judge Alan Gold handed down the strictest prison sentence possible under federal guidelines -- 15 years -- for one-time high-flying Miami attorney Louis S. Robles for bilking elderly clients out of more than $13 million. Gold had previously rejected a plea deal worked out for Robles by the U.S. Attorney's office that would have resulted in 10 years behind bars for the 59-year-old lawyer, saying it was too lenient. Besides serving 15 years in prison, Gold ordered Robles to pay $13.5 million in restitution and work 900 hours of community service in a nursing home. He must also relinquish his law license for good. The attorney represented more than 7,000 asbestos clients from the late 1980s through February 2003. Federal prosecutors said he operated an elaborate Ponzi scheme. Clients -- many elderly and dying -- would not be paid until he misappropriated money from other clients. Nearly 4,400 clients were defrauded, the government said. Robles pleaded guilty to three counts of mail fraud on Sept. 17 for misappropriating settlements in asbestos lawsuits, defrauding thousands of clients nationwide. He paid little or nothing to clients while living in the lap of luxury with two full-time servants, a private plane and a waterfront mansion on Key Biscayne. The lawyer "abused the special trust that his clients placed in him," U.S. Attorney R. Alexander Acosta said in a statement late Tuesday. "Robles sought out clients who were dying and cheated them out of millions of dollars, so that he could finance his own extravagant lifestyle." Attorney Indicted for Helping Clients Avoid $4.6M in Taxes By Shannon P. Duffy Also named in the indictment are eight of Bagdis' clients and two of his employees. U.S. Attorney Patrick Meehan alleged in a news release that Bagdis "was so proud of his schemes that he boasted he would write a book and call it Federal Tax Fraud, The User's Guide." The indictment alleged that Bagdis has not filed an individual federal tax return since at least 1990 and was captured on tape saying the government investigation of him would be "a fight to the death." Bagdis was charged with one count of attempting to impede and obstruct the IRS, seven counts of conspiracy, 16 counts of aiding and assisting the preparation of a false tax return, six counts of failing to file individual income tax returns and five counts of failing to file currency transaction reports. Attorney Arrested in Internet Sex Sting at Statehouse By John McCarthy COLUMBUS, Ohio -- An attorney arrested in an Internet child-sex sting in the basement of the Ohio Statehouse thought he was going to meet a 15-year-old girl he had met online, authorities said. Barry Mentser, 48, a former children's services lawyer, was taken into custody Wednesday moments after the police officer who conducted the sting testified two floors above in favor of a bill that would increase penalties for such offenses. Lt. Jeff Braley, a detective from Hamilton Township in Warren County in southwest Ohio, said he posed as the girl to set up a Statehouse meeting with the man. "I said, 'I'm in Columbus.' He said, 'I'll meet you anywhere,'" Braley said. Braley, who said he'd been communicating with the man for about a year, testified before the Senate Criminal Justice Committee in favor of a bill that would set mandatory sentences of one to five years for the offense of importuning by telecommunications, aimed at sexual offenders who prey upon underage children through the Internet. Braley said he didn't arrange the sting at the Statehouse to draw attention to the bill or his testimony, but that he knew the man was in the Columbus area and that police were aware of his identity. Undercover Columbus police officers spotted Mentser in the Statehouse cafeteria, where Braley had set up the meeting, said city police spokesman Sgt. Rich Weiner. A security video later made available by Statehouse officials showed a man identified as Mentser walking from one side of the basement to the other, then back across, toward the cafeteria. The Statehouse is a popular stop for school field trips, but there were none scheduled Wednesday, and the building had few visitors besides people attending legislative sessions and hearings, said Statehouse spokesman Gregg Dodd. Mentser, of nearby Gahanna, is married with three children, The Columbus Dispatch reported. He was charged with importuning and attempted unlawful sexual conduct with a minor, Weiner said. If convicted he could face from one year to 30 months in jail. Defense attorney Steve Palmer said Thursday he expected Mentser would enter a not guilty plea. "He had no prior record whatsoever, criminal or otherwise, and this sort of came out of left field," Palmer told WCMH-TV. His client remained in the Franklin County jail Thursday afternoon, hours after a judge set bond at $50,000. Mentser was scheduled to return to court Nov. 9 for a preliminary hearing. Current Ohio law doesn't require prison sentences for people convicted of importuning by telecommunications. Many judges say sexual acts typically don't occur in undercover stings, so they take a "no harm, no foul" stance and sentence offenders to just weeks in jail and probation, Warren County Prosecutor Rachel Hutzel said after testifying before the committee. Braley said he'd arrested about 35 people as the result of such sting operations in the past year. "The Internet has served as a very fertile preying ground for these predators," Braley told committee members. Mentser was a staff attorney for Franklin County Children's Services from 1987 to 1990, when he resigned, agency spokeswoman Kay Marshall said. He had no direct contact with children outside of court while employed there and no complaints were filed with the agency about him, Marshall said. Disbarred
NY Lawyer Headed By Daniel Wise The ex-lawyer, Richard Boter, has agreed to a sentence of at least one year in prison and to pay $160,000 in restitution and forfeiture, according to the Manhattan District Attorney's Office. Mr. Boter was the twelfth attorney to be netted by the office's probe into the use of runners by personal injury lawyers to bribe hospital employees to gain access to potential clients. Mr. Boter had purchased cases from various runners, at least one of whom had bribed hospital employees to gain confidential information about patients, who were often being treated for injuries sustained in automobile accidents, according the the district attorney. To date, the 12 lawyers caught in the investigation have agreed to pay restitution or forfeiture of $1.7 million. With regard to Mr. Boter, who was disbarred last month for treating clients like "commodities", the district attorney's office said he had stolen client funds by keeping their share of settlement proceeds. He was able to do that by settling cases without his clients' permission and then forging their signatures on release forms forwarded to insurance companies to obtain the release of the settlement funds, the office said. Missing Local Lawyer Turns Up Dead By Douglas S. Malan The Connecticut Law Tribune New York Lawyer October 30, 2007 The saga of missing Clinton, Conn., lawyer Jonathan Hoyt has ended with his suicide in Cedar Rapids, Iowa. Hoyt, a 59-year-old business law attorney believed to have embezzled close to $700,000 from about a dozen clients, was found by police Monday around 11 a.m. in his one-bedroom apartment that he had been renting since Aug. 30. Cedar Rapids police Lt. Kenneth Washburn said there was "no indication of foul play," without providing further details. Dr. Donald J. Linder, chief medical examiner of Linn County in Iowa, said that Hoyt's death was "a well-planned suicide," but declined to comment further until a final autopsy report is ready within a couple of weeks. Police were called by Hoyt's landlord, Richard G. Hileman, a semiretired lawyer from Cedar Rapids. Hileman said that Hoyt began renting the apartment two months ago under the name Jim Bragg of NY Biz Systems, a company Hoyt portrayed as assisting companies going through bankruptcy and other financial difficulties. Hileman received a letter in the mail from Hoyt on Monday: "It said that by the time I had received the letter, he would've committed suicide and not to call 9-1-1 because he didn't want anyone to be hurt rushing over to the apartment," Hileman said. Hoyt signed the letter using his real name, Hileman noted. "I didn't quite know what to make of it," Hileman added. "I thought I was getting his rent check or his 30-day notice" of vacating the apartment for which he was paying $470 per month. Hileman said he drove to the apartment building and told his wife to call the police. Hileman added that he had had only brief encounters with Hoyt but had found him to be a "very likeable guy. "He had only been here two months, and I really didn't know the gentleman," Hileman said. "[Hoyt's stay] was just unremarkable until [Monday]." Hoyt had been missing since early July. Clinton police officers investigating the case estimate that Hoyt embezzled almost $700,000. Fugitive Local Lawyer Leaving Few Clues for Cops By Douglas S. Malan Police say the trail has gone cold in the case of missing Clinton, Conn., lawyer Jonathan Hoyt. The 58-year-old business law attorney was last seen in early July before he left behind his tan 1999 Lexus and cryptic letters in which he confessed to embezzling funds from clients. Police said they received tips from acquaintances and colleagues in July and August, but leads in the case have since come to a halt. "There hasn't been anything for a while," said William F. Tate, a public information officer with the state police. "Nothing has come from [tips we received this summer]. We're still looking." The state police Criminal Intelligence Unit has taken over the case, which is standard protocol after 30 days. The unit is working with local police in Westbrook, where Hoyt lived, and in Clinton, where he based his practice. Clinton Sgt. Joseph Flynn said Hoyt has "totally dropped off the grid" with no credit card or cell phone activity. Flynn, who led the Clinton Police Department’s investigation of Hoyt, estimates that the missing lawyer embezzled close to $700,000 from about a dozen clients. Flynn added that he doesn't know if Hoyt is alive or dead. "I wouldn’t be surprised either way, at this point," he said. "There's a good chance he's offed himself, but I don't know how or where. It's pretty baffling." Family in Shock In one letter sent to grievance officials in July, Hoyt cleared his assistants and his son Christopher by taking sole responsibility for "the thefts that have happened concerning The Hoyt Law Group, LLC Connecticut's office." Hoyt wrote a letter to his son, dated July 7: " have embezzled funds from my clients … . Like most lawyers who fall into this trap I always did it with the idea that I would repay the funds, but of course once I started down this slippery slope there was nothing but failure for me at the end." Hoyt's confessions and disappearance come "as a shock to the family," Christopher said in an interview. Christopher Hoyt practices intellectual property, business and criminal law out of the firm's New York office. "I'm not at liberty to make a statement that might jeopardize the investigation," he added. "The family is very concerned. Nobody knows where he is." Flynn said he believes Christopher Hoyt is telling the truth. The elder Hoyt was last seen on July 6 at his Clinton office, according to police. His Lexus 300, four-door sedan was found by police on July 17 in a parking lot near the Intermodal Transportation Center in Bridgeport. On July 20, Middletown Superior Court Judge Julia L. Aurigemma accepted the state disciplinary counsel's application to immediately suspend the elder Hoyt's law license. Legal Aid Lawyer Admits Videotaping Female Co-workers By Barbara Ross and Bill
Hutchinson A former Legal Aid Society lawyer pleaded guilty Wednesday to using a spy camera to videotape female co-workers changing their clothes in their office. Peter Barta won't go to jail for behavior he admitted was "creepy, disrespectful, juvenile and stupid," but he will lose his law license. "I offer no excuse or justification for my action. My behavior was inexcusable," added Barta, 32, in a letter he submitted to Manhattan Supreme Court Justice Michael Obus. But before admitting to felony crime of unlawful surveillance, he asked that the charge be dismissed or reduced to a misdemeanor. "I'm not asking for forgiveness, but an opportunity to earn it," Barta of Queens said in his letter. Obus refused to reduce the charges, but agreed to go along with a recommendation from prosecutors to show mercy when Barta is sentenced Dec. 3. Under the plea agreement, the case will be dismissed and sealed once Barta completes a year of probation and counseling. A Georgetown University Law School graduate, Barta began working as a Legal Aid attorney in 2001. Between May 2004 and October 2006, he used a $179 Sharper Image minicam hidden in a clock to videotape female colleagues changing their clothes. The women would use an office to change out of their casual clothes into more dressy attire to appear in court. When investigators searched Barta's Kew Gardens home, they found it full of porn and adult toys, according to court papers. Claims of
Adultery, Forgery Have Firm New York Lawyer Daniel Portnoy wasn't having much luck. For days he'd been tracking his quarry. First he had called his house. Then he began stopping by unannounced, only to be turned away by a woman who said the man he sought was out of town. But now, on the morning of Tuesday, Oct. 2, after days of mounting frustration, he finally had his target in his sights. As Portnoy watched from a parked car up the block, Albert Beveridge III, name partner of the Washington-based environmental boutique Beveridge & Diamond, pulled his silver Acura up to his home in the tony neighborhood of Wesley Heights in Northwest Washington. As Beveridge headed to his front door, Portnoy moved in, but the 72-year-old corporate litigator was too quick for him, doubling back into his car before Portnoy could reach him. As Portnoy ran back to his own car, Beveridge raced down the street to shake his pursuer. The chase was on. As Portnoy would later recount in a sworn affidavit, he soon caught up with Beveridge at a stoplight at the corner of Nebraska and New Mexico avenues, but when he tried to talk to Beveridge, the lawyer responded by executing a quick U-turn, brushing Portnoy out of the way. But Portnoy still managed to make his long-thwarted delivery, sticking a subpoena under the Acura's windshield wiper as Beveridge sped away. The incident was just the latest twist in a sordid story that has ensnared partners at 95-lawyer Beveridge & Diamond in allegations that include adultery and forgery. The dispute stems from a bitter divorce battle between firm partner John Guttmann and his wife, Nancy Lasater, a nonpracticing attorney who was previously co-chairwoman of the Law Practice Management Section of the D.C. Bar and a solo practitioner who often represented firms on ethics issues. The couple's real-life "War of the Roses" has pulled a litany of well-known Washington lawyers into the fray, including the elusive Beveridge, who is now senior counsel at the firm and was subpoenaed to testify about his role as a former trustee of the firm's 401(k) program. It was Lasater, acting pro se, who persuaded Maryland state Judge Durke Thompson to issue the subpoena to Beveridge, based on her allegation that Guttmann forged her signature while taking out a loan from the firm's 401(k) plan in 1993. That loan is one of three Lasater is investigating. "I'm entitled to all of the documents surrounding these three loans," Lasater says. "I need information." The firm argued against subpoenaing Beveridge because of his age and the fact that nearly 14 years have passed since the disputed loan was executed. But that argument didn't get far with Thompson. "If Mr. Guttmann is dipping into the 401(k) without Ms. Lasater's permission at the time and altered documents and now says 'I can't remember what I did,' it doesn't look too good," Thompson said during a Sept. 24 hearing on the firm's motion to quash the subpoena, according to a transcript. "And it may not look too good for Mr. Beveridge either if, indeed, there isn't an adequate documentation in the file." The firm and Guttmann both say Lasater's allegations are much ado about very little. "Mr. Guttmann denies Ms. Lasater's allegations and intends to defend himself vigorously," says Guttmann's attorney, Mark Carlin, a partner at Ain & Bank. "The only fair inference is that incomplete and misinformation was given to the Legal Times in a deliberate effort to embarrass Mr. Guttmann and to extract a larger settlement for Ms. Lasater." The firm hired Evan Miller, an Employee Retirement Income Security Act partner at Jones Day (who was formerly at Hogan & Hartson) and Hogan & Hartson ethics partner John Keeney Jr., to look into Lasater's allegations. Both lawyers concluded there was no wrongdoing on the part of the firm. Which isn't to say there were no problems. "I wish that we had been more scrupulous with the paperwork," says Robert Brager, managing partner of Beveridge & Diamond, "because then this wouldn't be an issue. "The firm," he adds, "is behind John 1,000 percent." Signing Your Wife's Name Guttmann is an environmental litigation partner focusing on commercial and securities cases. According to a court document filed by Lasater, he is the billing partner for the firm's largest client, Sunoco Inc. Lasater cites his high profile as an incentive for the firm "not to have to report itself for disciplinary proceedings under the affirmative whistle-blowing obligations." In 1995, Guttmann was tabbed by The American Lawyer as one of the 45 best lawyers under 45 years of age. At the time, Guttmann was serving as managing partner of the burgeoning environmental firm. When he stepped down at the end of his six-year run in January 1996, he left behind a record of tremendous growth. Under Guttmann's guidance, Beveridge & Diamond's head count and profits doubled, jumping to 60 lawyers and gross revenue of about $60 million. But it was also during this period that Guttmann served as one of three trustees to the firm's 401(k) plan. While a trustee, he took out three loans from his 401(k) over a three-year period beginning in 1992. In total, Guttmann borrowed $103,693 from the retirement plan. But taking those loans required spousal approval. And because of what the firm acknowledges is "sloppy bookkeeping," there is now a dispute over whether that approval was ever obtained. Lasater claims she had no knowledge of the three loans. She says it was only through discovery during the divorce proceedings that she came across copies of three promissory notes. "He took money out of our account without my consent," Lasater says. "I don't know where that money went." While she acknowledges that the first and third loan appear to have her signature, she maintains that the second loan, for just under $33,000, does not have her signature. About that fact, there appears to be no dispute. According to an August 2007 deposition, Guttmann says he wrote his wife's signature on the promissory note dated April 1994, but contends it was with her blessing. She insists that's not the case. "I haven't the faintest idea," said Guttmann, when asked in his deposition if he was aware of any other 401(k) participants at the firm receiving loans without the paperwork being done first. Further clouding the matter is the fact that records show that the effective date of the loan was in December 1993, but that the promissory note wasn't signed by the firm administrator until February 1994. And Guttmann did not sign the loan document for both himself and Lasater until April 1994. Beveridge, who was then a trustee of the firm's 401(k) program, signed his name without dating his signature. Beveridge declined to comment for this story. These points in particular drew Judge Thompson's attention. "It's certainly not Ms. Lasater's signature, and it's a little fuzzy whether she consented or whether he just forged it," Thompson said during the Sept. 24 court hearing, according to a transcript. "What does that mean? That means he [Guttmann] is committing acts of moral turpitude which could affect his license to practice. ... And if the law firm through the 401(k) and its trustees hasn't done what they were supposed to do, guess what, the law firm is now liable, OK?" An 'Alternative' Investment? Beveridge & Diamond was made aware of the loan dispute in a letter Lasater sent to the firm in December 2006. The firm responded on Jan. 7 with a letter from its general counsel, Cynthia Lewis, saying it would look into the allegations. The firm then hired Jones Day's Miller to investigate, and he concluded that there were no ERISA violations. In a letter to Lasater sent in March, Miller said the loan had been paid back in full and at a reasonable rate of interest. Miller added that "any adverse effect on the value of Mr. Guttmann's 401(k) plan account would be both speculative and trivial. And, in any event, the statute of limitations on ERISA violations you assert has long since expired." Miller says that prior to being withdrawn, the money Guttmann took from the 401(k) plan was invested in treasury bills and money markets, which provided the investment return of roughly 3.8 percent. The loans Guttmann repaid had an 8 percent interest rate. "It becomes an alternative investment that, at the end of the day, had more money in it as a consequence of the loan being at 8 percent," Miller says. "Ms. Lasater actually saw her interests as a contingent beneficiary enhanced." But Lasater says she does not know what Guttmann did with the money he borrowed. ERISA lawyers agree that there appears to be no violation by Guttmann, but there is puzzlement over the loan being approved before Guttmann signed the promissory note. "It would seem odd that a firm would permit the execution of a promissory note well after the loan had been executed to the participant," says Kenneth Robbett, an ERISA lawyer at Robbett & Robbett. Accounting for an Affair For Lasater, the issues aren't limited to Guttmann and the disputed loans. Dean "Holly" Cannon, a partner at the firm and managing partner from 1996 through the summer of 2001, admitted in an August 2006 deposition to having an affair with Guttmann that began in May 2005, six months before Guttmann filed for divorce, according to a transcript of that deposition. She is also helping Guttmann pay his soaring legal fees in the case. According to court documents and copies of personal checks produced by Guttmann in the litigation and provided to Legal Times by Lasater, Cannon has contributed more than $300,000 to help Guttmann pay his lawyers at Ain & Bank. Cannon declined to comment. According to court documents, Guttmann has signed promissory notes to repay the money to Cannon. Lasater alleges in a court document that Guttmann is borrowing money from Cannon and claiming it as a loan in order to "reduce both his obligation to support his family and to negate his equitable obligation to reimburse my legal fees." Court documents show Guttmann's assets totaling $2 million, with a net worth of $1.6 million. He claimed a gross monthly wage of $45,695. Guttmann declined to comment. Beveridge's Brager, who says he has been friends with Guttmann for roughly 20 years, has also been pulled into the fray. According to both Lasater and Brager, he told a psychologist appointed by the court to determine custody of the couple's two children that they would be better off with Guttmann. "Nancy has accused me of unethical conduct for talking to the psychologist," Brager says. "She's threatened to report me to the D.C. Bar. That claim on me reflects on her." This isn't the only pending litigation between Lasater and Guttmann. In August 2005, before Guttmann filed for divorce, Lasater filed a fraud case against him in the Circuit Court for Montgomery County, Md., alleging he moved money to a secret bank account. In that case, Lasater, who is seeking $2 million in punitive damages, is represented by Timothy McEvoy, a partner at Odin, Feldman & Pittleman. The case has been stayed by Judge Ann Harrington until the divorce is settled. The divorce trial date is Oct. 29. Moreover, there remains a question as to whether Guttmann could be subject to an ethics investigation by the D.C. Office of Bar Counsel. The investigation done on the firm's behalf by Hogan's Keeney determined that Beveridge & Diamond attorneys overseeing the 401(k) did not violate any ethics laws. "We were responding to a letter that said attorneys who received the authorization to execute the loan acted unethically," Keeney says. "And that's just not true." But Keeney says he did not specifically look into whether Guttmann acted unethically. Barry Cohen, a legal ethics and malpractice partner at Crowell & Moring, says the D.C. rules of conduct for lawyers are clear. "If he signed her name without her permission then it would be, for ethics purposes, a dishonest act," Cohen says. "It would fall under the category of dishonesty and could result in a censure or a suspension. We'd need to know the facts and the motivation."
Lawyer's Assistant Wore Wire LOUISVILLE, Ky. -- An assistant to one of three lawyers charged bilking clients of millions of dollars in a diet drug settlement wore a wire and turned over notes of meetings to the FBI, a defense attorney said. Rebecca Phipps, an administrative assistant to Melbourne Mills Jr., secretly recorded conversations as early as June 2006 as the FBI investigated how Mills, William Gallion and Shirley Cunningham handled a $200 million settlement over the diet drug fen-phen, said Mills' attorney, Jim Shuffett of Lexington. "It appears reasonably certain that an intentional violation of (Mills') right to counsel occurred and that a hearing is necessary to develop and remedy the parameters of that violation," Shuffett said. Gallion and Cunningham, who are part owners of Preakness winner Curlin, and Mills are jailed in northern Kentucky pending a trial in January on charges of conspiracy to commit wire fraud. A civil court has ruled that they owe at least $42 million to their former clients. The use of Phipps as an informant became known in a motion filed last week seeking to exclude any evidence that Phipps turned over to FBI agent Mary Trotman. Shuffett wants U.S. District Judge William Bertelsman to hold a hearing to determine whether the evidence turned over by Phipps can be used against Mills in a criminal trial set for Jan. 7. The U.S. Attorney's Office in Lexington did not immediately return calls seeking comment Tuesday morning. Mills wants 63 handwritten notes and 293 pages of e-mails and other memos Phipps turned over to federal authorities excluded from evidence in the case. Those notes involve meetings she attended between Mills and former attorney William Johnson or current attorneys James Shuffett and Calvin Fulkerson. Federal prosecutors turned over Phipps' information as part of the discovery process. But, prosecutors also told Shuffett that some of the information provided by Phipps could be protected under attorney-client privilege. Typically, attorney-client privilege does not extend to others who hear conversations between attorneys and their clients. However, because Phipps was working as Mills' legal assistant, the privilege also extends to her, Shuffett said. According to Shuffett's motion, Phipps wrote in July 2006 that her attorney, Burl McCoy, called and told her that an FBI agent on the case wanted her to attend a meeting at the office of Johnson, who was then representing Mills in a civil lawsuit regarding the settlement. McCoy said Phipps has cooperated with the FBI and will most likely continue to cooperate. Trotman has testified that the attorneys, who represented about 440 clients sickened by fen-phen, settled the case for $200 million. Trotman said the clients received $74.8 million from the settlement. Gallion received $30.4 million; Mills, $23.7 million; and Cunningham $20.7 million. A chunk of the settlement also went to other attorneys and employees involved in the case. Bertelsman has said that millions of dollars are still unaccounted for. Cunningham, 52, and Gallion, 56, bought Curlin for $57,000 as a yearling through their Midnight Cry Stable. They sold controlling interest in the horse in February for a reported $3.5 million to a group composed of Jess Jackson, founder of Kendall-Jackson wines; Satish Sanan's Padua Stables; and George Bolton, an investment banker. Fla.
Prosecutor Charged in Sex Sting Kills Self Associated Press DETROIT - A federal prosecutor from Florida accused of flying to Detroit last month to molest a 5-year-old girl committed suicide in his cell Friday in federal prison, authorities said. Assistant U.S. Attorney John D.R. Atchison was found unresponsive, taken to a hospital and pronounced dead, said Felicia Ponce, spokeswoman for the Federal Bureau of Prisons in Washington. A previous suicide attempt was foiled in September, according to authorities. Atchison was being held in a special housing unit in the prison in Milan, about 36 miles southwest of Detroit. The administrative detention area houses all levels of prisoners, and Atchison had a cell to himself, Ponce said. She declined to say how Atchison killed himself or whether he was on suicide watch, saying the death was being investigated.Atchison, 53, was arrested last month at Detroit Metropolitan Airport after weeks of Internet conversations between the prosecutor and a detective posing as the mother of a 5-year-old girl, authorities have said. Carried presents for girl After his arrest Atchison was placed on suicide watch, but it was lifted at the request of the defense, after Atchison assured a U.S. magistrate he wouldn't harm himself. Two days later, Atchison used a sheet in his Sanilac County jail cell to try to hang himself around 4 a.m. Another inmate yelled out to jailers, who kept Atchison from hurting himself, according to Sanilac County Sheriff Virgil Strickler. Atchison was later moved to the Milan prison. Atchison, a married father of three, was an assistant U.S. attorney in northern Florida, based in Pensacola. Gulf Breeze, Fla., residents have described him as a respected figure who coached girls' softball and basketball in a park a few blocks from his home. A statement released Friday by his lawyer, James Thomas, said Atchison had "done a lot of good in his life." "Unfortunately, he is going to be judged by his most recent charges and what we have read in the media, and not by the goodness, hard work or by the love of his family," the statement read. The statement also said Thomas would file a request to have the case dismissed. Authorities have said they found no cases of child molestation in Florida involving Atchison, who worked mostly on tax and financial crime cases. The prosecutor had been charged with three felonies. The most serious charge was crossing state lines with intent to have sex with someone younger than 12. Conviction carries a minimum 30-year prison sentence and a maximum of life. Suspended
NY Lawyer Charged By Anthony Lin The Queens District Attorney's Office has announced criminal charges against a suspended lawyer who allegedly helped sell an elderly man's house out from under him. Attorney N. Stephen Sukhdeo is facing larceny and forgery charges for participating in a scheme with real estate broker Mohammed Keita. According to the prosecutor's office, the two men forged the signature of one of Mr. Sukhdeo's clients in order to sell his house while he was hospitalized with a stroke. The house was first sold to a company owned by Mr. Sukhdeo's brother and then "flipped" to Mr. Keita's daughter. Queens District Attorney Richard A. Brown said the scheme netted its participants hundreds of thousands of dollars. Messrs. Sukhdeo and Keita each face up to 15 years in prison. Mail
Fraud Scheme Leads to Guilty Plea; By Jeff Coen A Chicago attorney pleaded guilty to mail fraud charges in federal court Thursday in connection with a scheme to cheat insurance and rental car companies by staging phony traffic accidents. Gerald Penovich acknowledged in a plea agreement that he instructed and directed some of those involved in the plot, which involved purposely colliding vehicles and filing false claims and bogus medical bills. He was the last of six defendants in the case to plead guilty, and all are to be sentenced by U.S. District Judge Amy St. Eve in December. Penovich acted as his own lawyer in the case, court records show. A call to his law office Thursday was not immediately returned. Prosecutors said leaders of the scheme recruited players, orchestrated the fake accidents and directed the filing of false reports. Those taking part allegedly were told to consult with Penovich and others about making false claims, and they were instructed to visit medical clinics that were in on the scam. Fraudulent medical records were created at those facilities, according the plea agreement, and fraudulent insurance claims were filed with the victimized companies. In one 1998 incident, Penovich filed a personal injury claim of $64,000 and a damage claim of $9,750 with Avis Rent a Car, court records show. Avis eventually paid out $24,000, according to the plea agreement, based in part on bogus bills created by the Devon Family Medical Center. In a second incident the next year, Penovich allegedly helped the schemers after a staged two-car crash. Penovich was accused of filing claims for $25,000 with Enterprise Rent-a-Car and an insurer, which were settled for $13,000. Defendants associated with the Devon Family Medical Center generated false treatment records in that incident as well, court records show. Prosecutors are expected to recommend Penovich be sentenced to between 27 and 33 months in prison. The maximum penalty for the two counts of mail fraud Penovich has pleaded guilty to is 10 years in prison. I Covered up Church Porn: Att'y Associated Press Russell was charged Feb. 16 with destroying a computer that contained child pornography at Christ Church in Greenwich. Russell, a former attorney for the church, is accused of obstructing an FBI probe that led to the January conviction of the church's music director, Robert Tate, for possessing child pornography. Former President George Bush attended the church while growing up, and funeral services for his parents were held there. Russell was released on $100,000 bond and faces eight to 14 months in prison. "I just want to make perfectly clear how sorry I am for what I did in this case," he said yesterday. NY Lawyer
Accused of Saying He'd Make Charges By Joel Stashenko A special prosecutor will investigate a woman's claim that a part-time public defender promised he would make her drug case "go away" if she had sex with him. Latoya Gorton contends she had sexual encounters with attorney Matthew Swedick at his law office in Albany while he represented her. Mr. Swedick was assigned Ms. Gorton's case after she was arrested for having 39 grams of crack cocaine and $10,000 in a dwelling she shared with her boyfriend. In June, Ms. Gorton pleaded guilty to fifth-degree criminal possession of a controlled substance under a plea agreement that carried a two-year prison sentence. Albany County Judge Thomas A. Breslin allowed her to withdraw her plea last week after her allegations against Mr. Swedick surfaced through her attorney, William Martin of Brooklyn. Another Albany County judge, Stephen Herrick, appointed attorney Michael Koenig to investigate Ms. Gorton's charges after District Attorney P. David Soares of Albany removed himself from the case. Mr. Swedick, who has been a part-time public defender in Albany County since 1999, has been placed on administrative leave with pay, according to county spokeswoman Kerri Battle. Officials are also reviewing his actions in a personnel inquiry separate from Mr. Koenig's, Ms. Battle said. James E. Long, Mr. Swedick's attorney, said the allegations are false. Mr. Long said that as a public defender, Mr. Swedick was in no position to make the charge against the woman "go away," as she contended. "It's absurd," Mr. Long said.
NY Lawyer Disbarred for Treating The Appellate Division, First Department, has disbarred a Manhattan personal injury lawyer for a litany of misconduct, including paying a non-lawyer "runner" to refer cases to him. Richard Boter had pleaded guilty in Nassau County to misdemeanor charges relating to that scheme, but the Manhattan appellate court noted that Mr. Boter, 32, had also faced a wholly separate disciplinary proceeding charging him with 51 counts of professional misconduct. These included presenting his clients with overreaching retainer agreements, settling cases without his clients' consent, falsifying clients' signatures on documents and lying to clients to convince them to withdraw disciplinary complaints. Mr. Boter also allegedly commingled client funds with those of his practice. In disbarring him, the court noted that though the lawyer "knew at the time that his actions were illegal and wrong, he displayed no remorse and seemed insensitive to interests of and risks to his clients, and he considered personal injury law to be a competitive 'business' to be expanded through referrals, with clients treated as commodities." Ex-top Lawyer Robles Faces Prison By Jay Weaver
Dressed
in a drab prison uniform, once high-flying lawyer Louis Robles
pleaded guilty in federal court in Miami to charges of stealing
$13.5 million in settlements from thousands of elderly clients
ailing from exposure to asbestos.
Robles, 59, who lived in a Key Biscayne mansion before his legal empire collapsed, could spend his golden years in federal prison. U.S. District Judge Alan Gold accepted Robles' plea deal on the brink of trial, saying it was ''more appropriate'' than previous deals that had limited his ability to punish him more harshly. The earlier deal required Robles to plead guilty to two mail fraud offenses, which carried a maximum 10-year prison sentence. His sentencing is set for Dec. 4. Gold revoked his $1 million bond and placed him in the federal detention center last spring after Robles had spoken with his girlfriend about fleeing. During Tuesday's hearing, Robles said nothing beyond declaring his ''guilty'' plea and responding ''yes'' to standard questions about the plea from the judge. His defense lawyer, Hector Flores, also said little. Any apology from Robles would come at his sentencing. Prosecutors portrayed Robles as a scoundrel who defrauded about 4,400 clients by pocketing millions in asbestos settlements to pay for a lavish lifestyle: a 9,000-square-foot home on Biscayne Bay, ski properties in Telluride, Colo., and leased apartments in Los Angeles and New York, which he used for his ventures into the motion picture and recording industry. During the 1990s, Robles and wife, Ruth, now divorced, were spending about $2 million a year in mortgage payments and living expenses. Assistant U.S. Attorney Michael Davis called Robles' modus operandi through the 1990s and early 2000 period ''an ever-expanding pyramid scheme.'' He stole asbestos settlements from trust accounts and kept almost all the money for himself while paying small amounts to some victims, Davis said. The ''gap'' between his client obligations and trust account funds grew at a rate of $1 million annually, Davis said. By September 2002, he had ''misappropriated'' $13,522,159.92 owed to clients, leaving less than $25,000 to pay them. Robles allegedly tried to cover up the theft through sleight-of-hand accounting practices by charging bogus expenses to clients. Davis said Robles' victims, whose claims ranged from a few hundred dollars to $185,000, were agreeable to receiving a fraction of the money because they have waited so long -- more than a decade in some instances. The victims are expected to receive roughly 8 percent of their total settlements. Among them: A 79-year-old widow from Jacksonville, who was going to testify against Robles at trial. He owed her $177,952.87 but will now get $14,236 under the payout plan. ''She is living on a fixed income and has not received any settlement money in many years,'' Davis wrote in court papers in July. ``She is going blind and fears that she will die soon without receiving any of the money owed to her during her lifetime.'' Robles, who was initially charged in a 41-count indictment, plead guilty to defrauding three asbestos victims in 2001-02. His victims -- many of whom have died or are dying from lung-related diseases -- are spread all over the country. Both prosecutors and a private attorney assigned by the Miami-Dade Circuit Court to take charge of thousands of Robles' cases pushed for the plea deal. They said there would be no more money to recover from Robles -- other than the $1.1 million frozen after his indictment last year. Miami attorney Thomas Tew,
who represents Robles' asbestos victims in a class action case,
hailed the final agreement. Said Tew: ``This will mean a lot to a
lot of people who otherwise won't be fully compensated for their
losses.''
Federal Prosecutor Arrested for Making Date DETROIT -- A U.S.
prosecutor accused of using the Internet to arrange for sex with a
5-year-old girl flew to Michigan carrying sexual materials and
presents for the child, authorities said Tuesday. John D.R. Atchison, 53, of
Gulf Breeze, Fla., was arrested Sunday at Detroit Metropolitan
Airport after several weeks of Internet conversations between the
prosecutor and a detective posing as the mother of a 5-year-old
girl, authorities say. Officials said Atchison, an
assistant U.S. attorney in Florida, made the trip anticipating a
sexual encounter but was arrested instead. He was carrying presents
for the girl, including a doll and hoop earrings, and also had
sexual materials, including petroleum jelly, Sheriff Mark Hackel
said. A federal grand jury added
a charge Tuesday of crossing state lines with intent to have sex
with someone younger than 12. Atchison also faces charges of use of
the Internet to seek illicit sex and interstate travel to engage in
illicit sexual contact. He could face up to life in prison.
Defense lawyer James Thomas
declined to comment after the hearing. Atchison's boss, U.S.
Attorney Gregory R. Miller, said that his staff was "deeply saddened
by the arrest." He said his office was cooperating with the FBI,
U.S. prosecutors and Michigan investigators and believed that "in
the end, justice will be served." The status of Atchison's
employment was unclear. The prosecutor is a married
father of three, and Miller said that the staff was concerned about
Atchison's family. "Our thoughts and prayers go out to them," he
said. According to an FBI
affidavit, Atchison sent an instant message Aug. 29 to Macomb County
sheriff's Detective Linda Findlay, who was posing as a mother who
was willing to let men have sex with her daughter. Atchison messaged her that
he was "very much a family man," FBI agent Matthew A. Bowman said.
The prosecutor and
undercover detective held almost daily online chats after that, and
he told her that he wanted to have sex with the young girl, the FBI
agent said. Federal agents obtained a
search warrant Monday for Atchison's Florida home. There was no word
on what they sought or found. Also Tuesday, a youth
sports organization in which Atchison is active said it was placing
him on leave until the charges were resolved. Atchison is president
of the Gulf Breeze Sports Association, which runs youth baseball,
softball, cheer leading, soccer, football and basketball programs.
In a statement, the group said he had been involved with the
organization for a decade.
Famous Litigator Pleads Guilty to Defrauding Clients, September 18, 2007 MIAMI -- A once-prominent
attorney who specialized in asbestos lawsuits pleaded guilty Tuesday
to fraud charges involving thousands of former clients and could
face up to 15 years in federal prison. Louis S. Robles, 59,
pleaded guilty to three counts of mail fraud under an agreement with
prosecutors that requires restitution of $1.3 million be paid to
about 4,400 of his former clients. U.S. District Judge Alan Gold set
sentencing for Dec. 4, with each count carrying a potential
five-year prison term. Last spring, Robles agreed
to plead guilty, but Gold rejected it because the maximum possible
sentence was 10 years in prison. Gold expressed concern that the
sentence was not long enough, especially considering the restitution
was only a fraction of what Robles allegedly stole from clients.
Prosecutors, however, said
the $1.3 million in a frozen bank account was the only amount that
could be recovered from Robles, who has fallen far from his
once-flamboyant lifestyle. An attorney who once jetted around the
country and was known for his stylish clothes now is being held
without bail at Miami's federal detention center. Robles once represented
more than 7,000 clients in lawsuits against companies that made
asbestos, which has been linked to cancer and other serious health
problems. Over a 13-year period ending in fall 2002, Robles
collected more than $164 million in about 75,000 lawsuit
settlements, according to court documents. Reprimand
Sought for Local Attorney By Henry Gottlieb When an attorney-client
relationship turns nasty and litigation seems imminent, is it OK for
the lawyer to send the kind of aggressive letter that attorneys
sometimes write to scare off potential adversaries? The answer is no, the
Disciplinary Review Board suggests in recommending a reprimand for a
lawyer who wrote such a letter, Harry Levin of Levin & Cyphers in
Toms River, N.J. Levin's actions violated
Rules of Professional Conduct requiring courtesy to participants in
the justice system, RPC 3.2, and against trying to intimidate the
filer of an ethics grievance, RPC 8.4(c), the board said in an
opinion made public Monday, In re Levin, DRB 07-132. In a letter sent to
personal injury client Linda DiBella on Aug. 29, 2005, after she
filed a grievance that suggested he mishandled escrow funds, Levin
warned he would sue her and would ask a judge to send her to a
psychiatrist if she pursued an ethics grievance. "As soon as the complaint
is dismissed by the ethics committee, which it is sure to be, I will
file suit against you and your husband," Levin wrote. "It is obvious to me that
there is something wrong with you," he continued. "I do not know if
it's a function of some medical condition you have or some other
emotional limitation, but I am not going to stand by while you try
to blemish my reputation." He concluded, "I am also
exploring seeking court intervention to have you examined by a
physician and psychiatrist. If you are suffering from some ailment
that is affecting your thinking, I want that known by the ethics
committee as well." The dispute centered on
whether Levin had properly handled a medical lien on a $110,000
crash settlement he had obtained for DiBella and whether he owed her
money he had held in escrow. DiBella filed an ethics
grievance when the dispute arose in 2004, withdrew it to pursue
negotiations with Levin, and re-filed it when she didn't like his
proposed resolution. An investigator for the
District IIIA Ethics Committee in Ocean County found the grievance
over the escrowed money to be without merit. The panel dismissed a
formal complaint prompted by the letter. What's more, although the
DRB reinstated the ethics case prompted by the letter, it found
credibility problems with the client and the members of the client's
family, saying they "claimed an ill-fitting fragility" in portraying
their relationship with the lawyer. Yet credibility and
motivation didn't matter because the letter was unethical on its
face, the DRB concluded, stating, "That respondent's letter was
discourteous is unquestionable. Moreover, it contained threats of
lawsuits and of court-ordered psychiatric examinations, threats that
had the obvious purpose of frightening DiBella into withdrawing her
grievance." "The only inference to be
drawn was that respondent's pledge to sue DiBella and her husband
was intended to either frighten or bully her into abandoning her
grievance," the DRB said. Levin's lawyer, Frederick
Dennehy of Wilentz, Goldman & Spitzer in Woodbridge declined to
comment except to say he would ask the state Supreme Court to
reverse the DRB decision. The defense argued that
Levin's letter was prompted by frustration over the client's refusal
to recognize that the lawyering was proper. By Levin's reckoning,
the filing of the grievance, its withdrawal and its refiling was
evidence of an ongoing dispute with a tough-minded client that could
end up in court. As Levin put it in a
certification, "While the letter certainly demonstrates extreme
frustration it is not unethical. In fact, it is no different than
letters write every minute of the day, advising the claimant of a
vociferous defense to baseless charges." Besides warning lawyers to
keep their fingers on the edit button when venting their anger, the
DRB opinion serves as a reminder that the lawyer-client relationship
can be worse than a war between adversaries. Take, for instance, what
DiBella told the ethics committee. "She recalled that on one
occasion he became so upset with her that he had 'pulled out of his
pocket a whole bunch of needles, and he goes, because of clients
like you, that's why I have to take these,'" the DRB said. Levin,
who takes insulin shots for diabetes denied the story. During the dispute, Levin
called in a policeman turned private investigator to dig up
information on the DiBellas. They had "constantly bragged about
getting over on other people and filing lawsuits and claims against
others," Levin told the district ethics committee. "He also wanted to use the
same lawyer skills against the DiBellas that he had used so
effectively to litigate their claims for them," the DRB said.
Levin said he halted the
investigation after a week because the detective called on DiBella's
son's fiancée, which went beyond the operative's instructions to
make a records search only. Levin's former associate,
Laura Nunnink, now of November, Nunnink & Napoliello in Glen Rock,
told the ethics committee that DiBella was one of the most difficult
clients she had ever met and had claimed to be a "witch" who could
read people's minds. DiBella later said she was joking. Lawyer
Found Naked at Courthouse By The Associated Press PHILADELPHIA -- A defense attorney who was found naked with a
14-year-old girl in a city courthouse pleaded no contest to charges
of sexually assaulting the teen and five other girls. Larry Charles, 50, entered the pleas on Monday, the day his trial
was scheduled to begin. Authorities have said a sheriff's deputy making his rounds in the
courthouse on Jan. 15, Martin Luther King Jr. Day, looked into a
lawyers' lounge and discovered Charles and the girl. Charles, who often worked in the courthouse as a criminal defense
attorney, was charged with rape and related offenses in that case.
After his arrest, five other girls came forward and testified
that Charles assaulted them. Some of the girls testified they were
assaulted multiple times from 2000 to the time of Charles' arrest in
January 2007. The girls were ages 5 to 10 at the time of the alleged attacks
and are now ages 11 to 17. They testified the assaults occurred in
motels, Charles' law offices, safe deposit box rooms at banks, and
in the lawyers' lounge and a court anteroom. Charles was charged in those cases with multiple counts of rape,
sexual assault, corruption of a minor and other charges. He pleaded
no contest to all the counts. After entering the no contest pleas, Charles' bail was revoked
and he was sent to prison, pending his sentencing on Dec. 20.
Prosecutors said they plan to recommend a sentence of 25 to 50 years
in prison. Three of the six girls are sisters, one girl was a cousin of
theirs, and the two other girls are sisters, Assistant District
Attorney James Carpenter said. "The defendant befriended their families and started gradually
conditioning them to be molested" and eventually escalating to rape,
Carpenter said. An attempt to reach Charles' lawyer, Angelo L. Cameron, for
comment was not successful. A woman answering the phone at his
listed office telephone number said that he did not live there, then
hung up. Husband-and Wife NY Attorneys Busted in Fraud By Daniel Wise Both James Christo and his wife, Remila Christo, have posted the
$100,000 bail that Southern District Judge Richard M. Berman set for
them. The couple were charged with helping clients concoct fraudulent
stories and evidence to support their asylum claims. James Christo's
lawyer, John W. Mitchell, said his client "is innocent and intends
to vigorously fight this case." Ex Prosecutor Admits Sex With Judge in
Courthouse, By The Associated Press Laurie Hurst, 29, admitted misconduct and agreed to a three-year
suspension, with the understanding she would serve only serve six
months with the rest of the suspension stayed upon successful
completion of 2½ years of probation, according to documents
submitted Thursday to the Colorado Supreme Court's Presiding
Disciplinary Judge William Lucero. Lucero will decide whether to accept the recommendation from a
panel of lawyers. Hurst, previously known as Laurie Steinman, was fired on Dec. 22.
Grafton M. Biddle, 57, resigned his position after Hurst was fired.
A complaint filed in April said the affair began in the spring of
2006. Both admit to having sex in the judge's chambers and "on a
number of occasions Judge Biddle would 'sneak' into the women's
shower facilities in the courthouse early in the morning," the
complaint said. A message left after business hours for Hurst was not immediately
returned. Allegations of misconduct in Hurst's case include misuse of
judicial officer chambers, disrepute upon the judiciary and the
district attorney's office, and potential tainting of bias in the
two trials. Biddle's case is still pending. Lawyer
and Two Judges He Bribed Are Sentenced to Prison Holbrook Mohr A prominent attorney and
the two Mississippi judges he bribed for favorable rulings were
sentenced Friday to several years each in federal prison.
Paul Minor, a once highly
regarded attorney who amassed a fortune from asbestos, tobacco,
medical malpractice and car safety cases, was ordered to serve 11
years in prison. He also was fined $2.7 million and must pay
restitution. In handing down the
sentence, Southern District of Mississippi Judge Henry T. Wingate
told Minor: "You distinguished yourself in the practice of law.
Speaking metaphorically, Lady Justice must be sobbing." Minor and his
co-defendants, former judges Wes Teel and John Whitfield, will
appeal their convictions, according to Minor's lawyer, high-profile
Washington attorney Abbe Lowell. "The various decisions
Judge Wingate made will keep the appeals courts busy for a long
time," he said on the courthouse steps. The three men have long
claimed they were the victims of a Republican vendetta because of
Minor's support of Democratic causes. The attorney acknowledged
guaranteeing loans for the two judges, but claimed he was only
helping friends and expected nothing in return. Dave Fulcher, one of the
federal prosecutors in the case, said the sentence reflects the
seriousness of the crimes. "The defendants put justice
for sale and the sentence is a deterrent to anyone who might
consider corrupting the judicial system," Fulcher said. Mississippi Supreme Court
Justice Oliver Diaz Jr., who was acquitted in the bribery scheme in
2005, echoed the sentiment that the prosecution was politically
motivated. "When the federal
government begins to politically prosecute, everyone should be
afraid," said Diaz, who served seven years as a Republican in the
state House of Representatives before becoming a judge. In the 2005 trial, the jury
failed to reach verdicts on some charges against Minor, Teel and
Whitfield, so they were retried in March. Minor was convicted on 11
charges including racketeering and bribery. The two judges, who
handled trials in coastal Harrison County, were convicted of mail
fraud and bribery. On Friday, Whitfield was
sentenced to more than nine years in prison and fined $125,000. Teel
was sentenced to nearly six years in prison and he and Minor were
ordered jointly to pay $1.5 million in restitution to USF&G
Insurance Co. That amount involved a settlement reached in Teel's
court between the insurer and one of Minor's clients. Minor was convicted of
guaranteeing $140,000 in loans to Whitfield in 1998, then using
cash, a third party and a backdated promissory note to conceal that
Minor paid off the loan. Whitfield awarded Minor's client $3.6
million in a lawsuit. The Mississippi Supreme Court later reduced
the award to $1.6 million. Minor was also accused of
guaranteeing a loan of $24,500 to Teel the same year. Prosecutors
said Teel forced through a $1.5 million settlement in one of Minor's
cases before his court. During the sentencing
hearing, Minor thanked Wingate for jailing him last year when his
bond was revoked, in part for excessive drinking, because that time
in jail helped him confront his alcoholism. The judge gave Minor credit
for the year he has served but said he could not give Minor
leniency. "The crimes for which you've been convicted are just so
great to a system of justice," he said. Teel and Whitfield asked
for short sentences because of family obligations. Teel's wife has
multiple sclerosis. Whitfield, who divorced his wife before she died
last year, has a son in school. The judge allowed the two
men to report to prison Dec. 27 so they would have time to get their
affairs in order. Dad on
the Lam: Missing Lawyer Stuns Partner-Son By Douglas S. Malan "I have embezzled funds
from my clients," business law attorney Jonathan Hoyt wrote to his
son, attorney Christopher Hoyt. "Like most lawyers who fall into
this trap I always did it with the idea that I would repay the funds
but of course once I started down this slippery slope there was
nothing but failure waiting for me at the end." The letter is dated July 7,
one day after Jonathan Hoyt, 58, was last seen in The Hoyt Law
Group’s Clinton office, according to police. As of late last week,
he was still missing. Clinton police are investigating his
disappearance. Hoyt’s tan 1999 Lexus 300 four-door sedan was found
by police on July 17 in a private parking lot near the Intermodal
Transportation Center in Bridgeport. On July 20, Middletown
Superior Court Judge Julia L. Aurigemma accepted the state
disciplinary counsel’s application to immediately suspend the elder
Hoyt’s law license. A trustee has been appointed to take over the
firm’s client files. Fatherly Advice Hoyt, who resides in
Westbrook, was admitted to the state bar in 1974, a year after
graduating from Southern Methodist University School of Law. His
Martindale-Hubbell profile states that his practice provides "a full
range of legal services for commercial transactions." Hoyt was respected enough
in his field that he gave seminars on topics such as international
taxation and limited liability corporations. But he also had his
troubles. In his letter, Hoyt makes reference to an illness, which
appears to be depression. The past few years have
also been littered with his own personal divorce, foreclosure and
bankruptcy proceedings. And Assistant Disciplinary Counsel Frank P.
Blando noted in his application for the suspension of Hoyt’s law
license that Hoyt is under investigation for $800 worth of
overdrafts to his Interest on Lawyers Trust Account. In the letter, Jonathan
Hoyt advises his son, who is based in The Hoyt Law Group’s office in
the Empire State Building in New York, on how Christopher Hoyt might
continue his law practice. "Once you receive this
letter, you will have to make arrangements to come back to the
office and start working on the mess I have left you," the letter
states. "You will need someone with a clear mind to advise you as to
how to wrap up the Hoyt Law Group, LLC." The elder Hoyt added: "I
think in most cases [of defrauded clients] our malpractice policy
and surety bonds will compensate the victims. My recommendation
would be to dissolve the Hoyt Law Group LLC and have you practice
under your name only in [New York City] or join a firm." In his letter, the elder
Hoyt listed his victims. "Deceived her," is the notation next to the
name of a woman from whom Jonathan Hoyt took funds after a real
estate closing in Seattle. Also listed is a trust for two minor
children. "There are surety bonds so they should be compensated,"
Hoyt wrote, referring to the children’s trust. ‘Totally Out Of Character’
Howard M. Gould, of Gould &
Gillin in Old Saybrook, described Hoyt as a "very conservative,
standard professional transactional attorney," and called his
disappearance and his embezzlement confession "very surprising."
"The reaction you got from
me is the reaction police are getting from everyone," Gould said.
"There was not the slightest clue that any of this was in the works.
It seems totally out of character." Gould said his office has
consulted two potential clients who lost money in dealings with
Hoyt. He said he has "reason to believe" that federal authorities
are involved, based on his discussions with local police.
Michael J. Sweeney, of
Crosby & Cronan in Madison, is serving as trustee for Jonathan
Hoyt’s clients. Sweeney said he has "no idea" how much money the
elder Hoyt embezzled. He said computer hard drives from the Hoyt Law
Group are in the Clinton Police Department’s possession, and he
planned to submit a written request to the local state’s attorney’s
office to obtain a copy of the hard drive. Christopher Hoyt contacted
Statewide Bar Counsel Michael P. Bowler twice in the last two weeks
to provide information. In one letter to Bowler, the younger Hoyt
said he wanted to "request instructions on how to proceed in order
to protect existing clients and the law firm from any additional
harm." In another letter, Christopher Hoyt states that his father
"suffers from clinical depression and is under psychiatric care."
The older Hoyt also has a
recent history of legal problems. In March 2007, he and his wife
Ellen B. Hoyt filed for Chapter 7 bankruptcy in New Haven with
creditor debts of nearly $280,000 and debts to the Internal Revenue
Service and state of Connecticut totaling nearly $29,000.
The bankruptcy filing came
eight months after a foreclosure on a property in Durham and almost
a year after the couple filed for divorce, court records reveal.
The bankruptcy case was
dismissed by Chief U.S. Bankruptcy Judge Albert S. Dabrowski on
April 26 when Hoyt failed to file certain required documents. The
day before, the couple’s divorce was finalized. Christopher Hoyt did
not return a telephone call by press time last week. But in a short
to-whom-it-may-concern letter, it’s clear that the father was trying
to preserve his son’s career and reputation. "I, Jonathan Hoyt, am
solely responsible for the thefts that have happened concerning The
Hoyt Law Group, LLC Connecticut’s office," it states. "My assistant
Melinda Winchell and my son, Christopher, had no knowledge of these
thefts and embezzlements." Litigious
NY Lawyer Barred From Suing on By Mark Fass In throwing out Eleanor
Capogrosso's legal malpractice action against the attorney she hired
to litigate a medical malpractice claim, Manhattan Supreme Court
Justice Debra A. James also issued an order requiring Ms. Capogrosso
to receive approval from an administrative judge before filing
future actions or motions on her own behalf. "Though a review of the
record shows that plaintiff has flirted with placing her own license
to practice law in jeopardy, of more moment is her pattern of
commencing frivolous and repetitious actions," Justice James wrote
in
Capogrosso v. Kansas,
112291/06. "Based on a pattern of vexatious conduct and repetitive
litigation and proceedings brought by plaintiff . . . this court
grants a protective order prohibiting plaintiff from initiating any
further litigation as party plaintiff without prior approval."
Ms. Capogrosso graduated
from the Quinnipiac University School of Law in 1987. She practices
transportation law from her office on 42nd Street. Last year, she initiated a
pro se legal-malpractice claim (one of five such actions recently
filed by Ms. Capogrosso in New York state courts) against solo
practitioner Tina Kansas. Ms. Capogrosso claimed Ms. Kansas'
negligence resulted in the dismissal of one of her two medical
malpractice claims. Justice James dismissed the
case against Ms. Kansas on statute of limitations grounds. After
reviewing state court records, the judge also barred Ms. Capogrosso
from pursuing any further claims without the "prior approval of the
Administrative Judge of the court in which she seeks relief."
Justice James noted that of
the 15 cases filed by Ms. Capogrosso between 2002 and 2006, only one
proved meritorious - a landlord-tenant claim against Ms. Kansas, who
was once also her landlord. Justice James cited Ms.
Capogrosso's challenges to "the integrity of at least three judges"
- including Justice James - and a 2003 decision, Capogrosso v.
Hospital for Special Surgery, 112075/02, in which Supreme Court
Justice Eileen Bransten stated that "Capogrosso narrowly escapes
sanctions this time but hopefully will nonetheless learn that she
must follow court orders." Reached by phone yesterday,
Ms. Capogrosso detailed the 16 cases for which she is listed as a
plaintiff on the state court Web site. The actions include the
five legal and two medical malpractice claims, two landlord-tenant
actions, four suits against various government agencies and two
suits involving money allegedly owed to or by Ms. Capogrosso. Ms.
Capogrosso could not recall any details about the final case,
Capogrosso v. Dept. of Health, 101002/02, in which she appeared
pro se. The attorneys and firms
that have represented her include: Mark Kessner; Jonathan M.
Landsman; Lutfy & Santora; Fried & Epstein; Calabro & Fleishell;
D'Ambrosio & D'Ambrosio (twice); and Ms. Kansas. John W. Fried of Fried &
Epstein said his firm represented Ms. Capogrosso in two cases, an
insurance matter that was settled and an action against New York
City's Department of Investigation. (Because the insurance case was
filed in federal court, it is not included among the 16 suits listed
on the state's Web site.) Mr. Fried noted that his
firm is now a defendant in a sixth legal malpractice case filed by
Ms. Capogrosso, this one in New Jersey state court. The remaining attorneys who
have represented Ms. Capogrosso either could not be reached or
declined to comment. "This has a lot to do with
a lot of things other than [the] 16 lawsuits," Ms. Capogrosso said.
Namely, Ms. Capogrosso
claimed, the repeated filings are a by-product of a judicial
conspiracy against her, borne from her filing of complaints against
Justices Eileen A. Rakower and Carol Robinson Edmead. "Ever since I filed a
judicial complaint against Rakower and then Edmead, every case that
I've had has been dismissed, a file has been missing from the
courthouse [and] judges aren't disclosing complaints I made to the
advisory committee on their judicial questionnaires," Ms. Capogrosso
said. "When a lawyer tries to
complain about actions of a judge, they will face such retaliation
that they will try to run you out of business. To every lawyer out
there: Do not complain about a judge." Justice Edmead provided a
single exception to her order, allowing Ms. Capogrosso to appeal the
order itself without prior approval. Ms. Capogrosso said that she
intends to avail herself of that exception. Capogrosso v. Kansas
will become Ms. Capogrosso's fourth case pending before the
Appellate Division. Ms. Kansas could not be
reached for comment. Lawyer
Indicted For Paying More By Brenda Sapino Jeffreys Warren Todd Hoeffner, a
partner in Houston plaintiffs firm Hoeffner & Bilek, was named in a
federal indictment that alleges he paid more than $3 million in
"bribes and kickbacks" to two former claims adjustors for The
Hartford Insurance Co. in connection with $34 million in settlements
of Hoeffner's silica-related suits. Hoeffner and his
co-defendants, Rachel Rossow and John Prestage, the former claims
adjustors for The Hartford, each face one count of conspiracy, one
count of conspiracy to money launder, two counts of wire fraud, four
counts of mail fraud and six counts of monetary transactions with
criminally derived property. The grand jury indictment,
which was made public on June 27, alleges Rossow received
approximately $2,681,874 in "bribes and kickbacks" and Prestage
received about $764,476 in "bribes and kickbacks." The indictment
also notes that Hoeffner received about $5,366,839 in attorney fees
from the settlement. Hoeffner, 42, pleaded not
guilty to the charges at an arraignment on June 27 before U.S.
Magistrate Judge Frances H. Stacy of the Southern District of Texas.
He was released after posting a $100,000 deposit on a $250,000 bond
Well
That's Hardly Playing Fair: Firm Asks Bank About Buying Opposing
Counsel's Mortgage By Henry Gottlieb A federal judge denounced
lawyers at Hackensack's Cole, Schotz, Meisel, Forman & Leonard on
Thursday, and threatened them with sanctions, for trying to meddle
with an opposing attorney's personal finances. Two Cole, Schotz partners admitted to U.S. District Judge Harold
Ackerman that an associate asked a bank counsel whether a client of
the firm could buy mortgages the bank held on property of litigation
foe Gregg Trautmann of Rockaway. Such purchases would have made Cole, Schotz's client - a lender
defending itself against six suits brought by Trautmann - holder of
the mortgages on his home and office. Nothing in the record explained what the Cole, Schotz associate,
or the partner who authorized the inquiry, had in mind. But Ackerman said he reached the "evil conclusion" that the goal
was to control Trautmann's mortgages so Cole, Schotz's client,
Kennedy Funding Inc. of Hackensack, could "put the squeeze, as we
use that colloquial phrase, on him and on the litigation." Trautmann said he believed the idea was to have Kennedy Funding
hold his mortgages so it could argue that he lacked the independence
to represent clients suing the company. He asked that Cole, Schotz
be sanctioned and disqualified. But the firm didn't wait for a ruling. On Friday, it told the
court it was terminating its representation of Kennedy Funding in
the four federal cases in which Trautmann is their adversary. At Thursday's hearing, the administrative chair of Cole, Schotz's
litigation department, Steven Klein, had apologized to the judge,
calling the inquiry about the mortgages "improper" and "horrible."
He said "it was the worse exercise of judgment that could have been
made." "It is a blemish which we will obviously work as hard as we can,
as we have for almost the 80 years of our existence, to remedy and
rectify," Klein told Ackerman. He said an internal investigation of
the incident had started at the firm, Bergen County's largest. Even so, Klein insisted that the call to the bank for information
was proper and that the offense consisted of just one "very bad
question" at the end of the call. He says the firm would never have
condoned the actual purchase of the mortgages. "It would have gone
no further," he said. Ackerman did not seem mollified and suggested the U.S. attorney
might be interested in the affair. "I don't know whether it is attempted criminal behavior or not,
but I am going to find out," he said. "Lawsuits can get awfully
frisky, we all know that, and in the heat of battle I see lawyers
lose it," he said. "But that, I respectfully submit, does not excuse
in any way, shape or form the kind of back alley tactic which has
been described to me and [is] now conceded." Violated
in the Peeper's Court By Laura Italiano
A Legal Aid Society lawyer
was charged in Manhattan yesterday with sneaking a camcorder
disguised as a clock into the offices of his young female colleagues
so he could videotape them as they changed in and out of their
business suits. From 2004 until last
October, attorney Peter Barta, 32, switched the motion-activated
device in and out of at least five women's offices in the Legal
Aid's TriBeCa suite, and succeeded in capturing OBJECTION!
Peter Barta
nude images of at least
one of them But the criminal defense
lawyer was eventually outfoxed by his foxy prey. One of his victims realized
she had a peeping Tom on her hands when she found a picture of the
same mysterious, reappearing clock in a copy of a catalog for The
Sharper Image - under the heading, "Security Camcorder Hidden in a
Clock." The unnamed woman and her
female colleagues took a closer look at the clock in question, which
was sitting on a colleague's desk - but aimed toward the desk of one
of the women. When they were able to pop
out its computer memory card and download images the gals alerted
their bosses, who then trained a hidden camera of their own on the
offending device. For a few days, the cameras
stared down each other. Then, last Oct. 26, Legal
Aid's camera caught Barta on tape entering the office and removing
his camera-clock. "It's a betrayal of trust,"
a Legal Aid lawyer said. "We're all colleagues; we work in close
quarters, and there's an assumption of trust." Barta, a graduate of
Stuyvesant HS and Georgetown Law School, resigned immediately.
"We don't tolerate this
kind of conduct," said Legal Aid Society spokeswoman Pat Bath. "We
wanted him out as quickly as we could get him out." On Barta's home computer
from Kew Gardens, Queens, prosecutors said they found images of a
female employee's "breasts and buttocks." Barta faces up to four
years in prison on felony charges of unlawful surveillance. He could
also be disbarred. Barta was one of 140
lawyers working in Legal Aid's offices at Church and Thomas streets.
He allegedly targeted
younger women - some working their first legal jobs - who were known
to dress in their offices. Insiders explained that the women either
belonged to gyms, or kept their good suits in their offices. Denied
Entry to Bar, Law School Grad's "Rubber Check" Business Now Called
"Fraud on Court" By Michael Booth Though finding his
fabrication of check assignments did not make Triffin liable for
common law fraud, the judges said his actions might constitute a
fraud on the court itself. On Thursday, they remanded the case,
Triffin v. Automatic Data Processing Inc., A-6986-03, to the
trial court for a hearing on the possible imposition of sanctions.
The court noted that
Triffin's conduct is under review by the Essex County, N.J.,
prosecutor and the state attorney general and that "all parties
defending future claims by plaintiff on purchased dishonored checks
are on notice to scrupulously explore the legitimacy of any tendered
assignments." Triffin's standard practice
is to buy dishonored checks from check-cashing companies and then
present them to the issuing companies. If they refuse to pay, he
files claims against them in New Jersey Superior Court, Special
Civil Part. His targets have accused him, with success, of drafting
phony assignment contracts, often containing signatures of
questionable authenticity. In addition, many of the bad checks turn
out to be counterfeit, stolen, altered or forged, according to court
records. At last count, Triffin, of
Drexel Hill, Pa., had filed at least 4,000 lawsuits on bad checks,
and the appellate division judges cited 14 separate appeals stemming
from such suits. Thursday's ruling stems
from Triffin's appeal from a 2004 verdict by an Essex County
Superior Court jury for Roseland, N.J.-based Automatic Data
Processing Inc., the world's largest payroll processor. When Triffin,
acting pro se, sued ADP and others for refusal to pay him as a
holder in due course, ADP fought back with counterclaims of
common-law fraud, RICO and negligence, alleging the checks were
counterfeit and that Triffin knew it. The trial judge dismissed
Triffin's complaint on summary judgment. On the counterclaim, the
jury found Triffin defrauded ADP because Triffin admitted that
parties selling him dishonored checks had not signed the assignment
agreements -- he in fact pasted scanned signatures on the 12-page
documents. The jury awarded ADP
$132,600 in compensatory damages and $50,000 in punitive damages on
the common-law fraud claim, which the trial judge reduced to
$5,919.80 in compensatory damages and $17,759.40 in punitive
damages. But Judges Thomas Lyons,
Jack Sabatino and Edwin Stern vacated the verdict, finding ADP's
common-law fraud claim against Triffin should be dismissed, because
it failed to meet one of the five criteria for common-law fraud:
reasonable reliance by another party. ADP had decided to fight
the claims without relying on the manufactured assignments. "An
exhaustive review of the record does not demonstrate that defendant
either took, or refrained from taking, steps to protect its
interests based upon the misrepresentation that the assignment
agreements were authentic," Lyons wrote for the panel. "Our courts have long held,
however, that where there is a civil wrong, there should be a
remedy," Lyons said. "In this case, there has been a wrong in our
view, a possible fraud on the court." He cited R. 1:4-8(a), which
requires that pro se parties like Triffin file authentic documents
with the court. "Unlike common law fraud on
a party, fraud on a court does not require reliance. Separate and
distinct from court rules and statutes, courts possess an inherent
power to sanction an individual for committing an act of fraud on
the court," said Lyons. "Therefore, recognizing
that the trial court possesses inherent power to sanction a fraud on
the court, we remand this matter to the trial court for further
proceedings," Lyons said. "Following a hearing, the trial court may
impose sanctions on plaintiff on its own motion, or on the
application of defendant, or both." ADP's lawyer, Dennis
Kearney, while disappointed with the vacating of the verdict, says
banks and other potential payers should be gratified by the court's
ruling. "The most important thing is that the whole world is on
notice. This guy's been exposed," he says. "The way he does business
is over. The opinion gives every lower court in New Jersey, where
this guy swims, the ability to shoot him down." Kearney says his client
will not hesitate to ask the judge to sanction Triffin. "We're going
to follow the instructions of the court," says Kearney, of Florham
Park, N.J.'s Day Pitney. Triffin did not return a
telephone message left at his home, which doubles as his office.
Officials from the Essex
County Prosecutor's Office and the Division of Criminal Justice did
not return telephone calls seeking comment. Triffin has been sanctioned
before for his check collection practices. In 2004, in Triffin v.
Commerce Bank, a three-judge panel upheld frivolous litigation fees
against him for $5,723. The special civil judge awarded counsel fees
to the bank's lawyers, concluding not only that the clear
unambiguous language of a contract involving the bank barred
Triffin's claim but also that the case law on point was a 1999
appellate ruling titled Triffin v. First Union Bank, N.A.,
319 N.J. Super. 72. The per curiam opinion called this "a fact which
plaintiff was obviously aware of when he commenced this frivolous
suit." The adjudication of fraud
by the Essex County jury in the ADP case was not Triffin's first. In
the late 1980s, a Pennsylvania court concluded he defrauded a bank
out of almost $100,000 in a check-kiting scheme in 1985. That
ruling, along with other rebukes for ethical breaches and a lack of
respect for the judicial process, led to Triffin, a law school
graduate, being denied admission to the Pennsylvania Bar in 1990. He
was also denied entry to the New Jersey Bar by the state Supreme
Court in 1993 after the character committee found him unfit.
Never
Mind a Slice - Ferry Lawyers Want Slabs of Pie By John Marzulli Attorneys who defeated the
city's attempt to limit its liability in 2003's deadly ferry crash
now want a piece of every victim's settlement. The city so far has settled 120 lawsuits for a total of about $28 million in the Staten Island wreck of the Andrew J. Barberi, which killed 11 and injured scores of others. Another 64 cases are pending, so the payout to the lawyers could be in the millions. The Staten Island firm of Anthony Bisignano and maritime law experts Dougherty, Ryan, Giuffra, Zambito & Hession filed a motion in Brooklyn Federal Court yesterday seeking "a percentage of all sums recovered" - past and future. They want Judge Edward Korman to decide what the percentage should be. None of the two firms' own cases have been settled yet. "The lawyers who filed this motion should be ashamed of themselves for attempting to obtain a windfall," said attorney Sanford Rubenstein, who represents five victims. "Instead of focusing all the energies of the lawyers on behalf of the clients they represent, there will now be a fee dispute." Another lawyer involved in the litigation said the demand is a "black eye" on the legal profession. The city had tried to use an 1851 maritime law to cap total damages at $14.4 million, the value of the ferry's hull. The city is appealing Korman's decision not to put a cap on damages. The firm Weisman & Calderon doesn't intend to fork over a penny of the $9 million settlement it negotiated for Tina Evans, who lost both legs in the accident. "Your reluctance to share your good fortune is disappointing," Bisignano responded, according to court papers. NY Lawyer Admits Ripping Off Elderly Client New York Lawyer A White Plains attorney pleaded guilty to stealing $470,143, the proceeds of a 2006 Peekskill house sale, from an elderly client, the Westchester County District Attorney's Office announced yesterday. Chase Caro, 49, practiced in White Plains and New York City, the New York Law Journal reports. He ignored numerous requests to transfer the money owed after the payment of litigation related fees, instead using the money for personal and business expenses, the DA's office said. He eventually sent the client a check for $310,000, but it bounced, according to the district attorney. Mr. Caro was arrested in January and has been free on bail; he was suspended from the practice of law in March. He faces 2 to 6 years in prison on his plea to one count of second-degree grand larceny. Restitution in the amount of $780,000 to the original victim and an additional victim identified during the investigation will be considered at Mr. Caro's Oct. 29 sentencing. Local Lawyer Dented by New Charges of Staging Auto Accidents By Henry Gottlieb New fraud charges were filed on Tuesday against a West Orange, N.J., personal injury lawyer and his firm, both under indictment for almost two years on charges that they used runners and were involved in a phony accident scheme. An Essex County grand jury indicted Irwin Seligsohn and Goldberger, Seligsohn & Shinrod (now known as Goldberger & Seligsohn) on charges they conspired between 1998 and 2003 to submit insurance claims for a fake auto accident, the New Jersey Division of Criminal Justice announced.The indictment, handed up June 15, says nonlawyer conspirators reported a hit-and-run accident to Newark police on July 17, 1998, and met with Seligsohn later to pursue fraudulent claims with Allstate Insurance Co. As a result of what the announcement called the "purported" accident, $18,000 in bodily insurance claims were submitted to Allstate and $14,500 in personal injury protection payments were made. The grand jury returned three more indictments accusing nonlawyers of staging other phony accidents in Newark or East Orange. It is the third indictment against Seligsohn, 71, of Kinnelon, N.J., in connection with the same types of activity. In April 2005, he and partner Allen Goldberger, now 74 of Livingston, N.J., became the first lawyers to be charged with violating a New Jersey law that criminalized the use of runners. In November 2005, they were indicted on charges of paying runners to solicit people to participate in staged automobile accidents to collect insurance money. The November 2005 indictment included a racketeering charge and sought the forfeiture of $5 million in financial assets obtained by the Seligsohn firm. The latest indictment, which does not include Goldberger, adds specificity to the allegations against Seligsohn by providing alleged details of the 1998 accident in Newark. The announcement quotes Greta-Ann Gooden-Brown, the state's insurance fraud prosecutor, as saying, "The use of runners has a domino effect on the insurance industry." "Runners, in turn, stage accidents and urge people who are not injured to be treated for injuries," she says. "They submit false police auto accident reports and engage in fraudulent conduct which drives up the cost of auto insurance in this state." Seligsohn's lawyer, Dennis Cipriano of West Orange, N.J., says that after extensive discovery, the case was scheduled for trial in September but will be most likely be delayed because of the additional indictment. "There's got to be an end to these charges," he says. "Irwin has from the beginning denied any fraudulent or improper conduct and he has defended the charges against him and intends to continue defending the charges against him," Cipriano says. Local
Lawyer's Sex With Client, Brings By Douglas S. Malan A Sunday afternoon tryst with a married client has sullied an Avon lawyer’s otherwise clean disciplinary record for the first time in his 25-year legal career. The Statewide Grievance Committee recently approved a conditional agreement struck between attorney Gary Joseph Greene and the Office of Chief Disciplinary Counsel under which Greene was reprimanded. Since the sexual encounter occurred in January 2006, a new attorney-ethics rule that took effect at the beginning of this year prohibiting lawyers from having sexual relations with their clients did not apply to Greene. Rather the 49-year-old attorney acknowledged, in his affidavit and conditional admission, that he violated Rule 1.7(b) of the Rules of Professional Conduct. That rule bars attorneys from representing a client if that representation "may be materially limited by the lawyer’s responsibilities to another client or to a third person, or by the lawyer’s own interests." The new rule, 1.8, prohibits lawyer-client sexual relations altogether on the basis, according to commentary accompanying the rule, that they "can involve unfair exploitation of the lawyer’s fiduciary role, in violation of the lawyer’s basic ethical obligation not to use the trust of the client to the client’s disadvantage." In this case, Greene was grieved by his client’s husband, Paul Papagna of Simsbury. In his June 2006 complaint to the SGC, Papagna said he felt "Greene used his power and trust that my wife [Lisa M. Papagna] had with him that [then] resulted in the affair they had in his office … ." In his July 2006 written response to the grievance committee, Greene denied that he abused his power or trust to take advantage of Lisa Papagna, or that he facilitated "an inappropriate relationship with her." His attorney, Mark H. Dean of Hartford, told an SGC reviewing panel "[t]his is a case that involved a one-time incident, and it’s by an attorney who has no prior disciplinary record." The "incident" cost Greene his marriage, Dean told the panel. At the hearing, Greene promised that a sexual relationship with one of his clients "will not happen again." He said he was "deeply sorry that my actions have brought me here. … I had prided myself on being someone who understood where the line was, and I never crossed it or came close to it. And in this particular case, I did," Greene conceded. Not The First Time? Paul Papagna stated in a July 2006 letter to grievance officials that he understood from Greene’s wife, Lisa, that such relationships were actually common for Greene. Papagna said he spoke to Lisa Greene after he became suspicious about late-night telephone calls from attorney Greene’s cell phone, which appeared on Papagna’s caller ID. "When I first talked to Lisa Greene and told her what was going on [between their spouses], her first response was that bastar[d] is doing it again and that he did the same thing with another of his clients two years into their marriage," Papagna claimed in his letter. "She then told me that that was how they [met]. Attorney Greene was married and that she was also a client. And they were also having an affair." Neither Dean nor Attorney Greene returned telephone messages by press time. In his affidavit and conditional admission, Greene acknowledged there is a "substantial likelihood that a trier of fact" would find he violated Rule 1.7(b). Lisa Papagna retained Greene in July 2005 for a bankruptcy matter. During that representation, Greene began asking her about her considerable amount of medical debt, Lisa Papagna stated in her August 2006 letter to grievance officials. "I told him of the situation leading up to the debt, which was the therapy that … I had due to past [sexual] abuse," Lisa Papagna wrote. "At that point in our conversation Attorney Greene stated that I could trust him, that he was not only my attorney but ‘my counselor.’" After further discussion of similarly personal issues, Lisa Papagna said she hired him in December 2005 for a child support matter from a previous relationship. "At some point after that Attorney Greene phoned me at my house … [w]hich I initially believed to be for professional reasons regarding the support case," Lisa Papagna wrote to grievance officials. "Attorney Greene told me he was happy to have a reason to phone me, [and] went on to say that he had to tell me something else. I asked him what that was, at which point he stated that while in his office he had an overwhelming desire to kiss me. I was shocked. This made me feel extremely uncomfortable and I was unsure of how to respond," she wrote. At some point, however, during December 2005, Lisa Papagna apparently began to feel more at ease with Greene. The attorney told SGC officials that, during that time, his client asked his secretary if he liked peanut brittle and also told the secretary that she would "pop in [the office] with a little something for him." During their telephone conversations, "she would flirt with me and I reciprocated," Greene stated and Lisa Papagna confirmed. Office Confrontation After the sexual encounter in late January 2006, Greene represented Lisa Papagna in court on Feb. 7, 2006, regarding the child support matter. Later that day, "Attorney Greene called my wife to tell her that he sent his secretary home because his office lost power, and he wanted her to come see him …, Paul Papagna maintained in his letter to grievance officials. Greene referenced a Feb. 7, 2006, incident in which Paul Papagna "showed up, barged into another office here in our building and then came into my office and proceeded to cause a scene" that caused Greene to call the Avon police. Paul Papagna wrote that Greene "lied" to police and "told them that my wife was in the middle of a divorce and that I barged into his building and caused a scene because I was a jealous ex-husband." Chief Disciplinary Counsel Mark A. Dubois noted in his prehearing memo that Lisa Papagna "generally supports her husband’s account" of the events and that the couple has "reconciled." A telephone call to Paul Papagna’s house was not returned. Greene’s reprimand matches the discipline handed to Rockville attorney John F. O’Brien in 2005 for a sexual relationship he had with a client. Torrington attorney Ira S. Mayo was suspended for 15 months in 2005 for making unwanted sexual advances toward clients who were referred to him by the Susan B. Anthony Project for abused women. NY Attorney Admits Robbing $550,000 From Aunt By Daniel Wise A White Plains lawyer pleaded guilty yesterday to stealing $550,000 from her aunt. Under a plea agreement, Shelly Ann Rivera, 40, will be sentenced to 1-to-3 years in prison on July 11. Most of the money was stolen from the proceeds of two home sales Ms. Rivera handled for her aunt. Ms. Rivera also promised to pay her relative $700,000 in restitution, though her sentence is not conditioned upon her making any restitution. The Westchester District Attorney's Office insisted that Ms. Rivera agree to compensate her aunt, Annette Rivera, for losses related to her handling of her aunt's affairs beyond those stemming from the theft, a spokesman said. For instance, the restitution amount covers a $100,000 down payment the aunt lost when her niece failed to produce enough proceeds from the earlier sales to close on a new home the aunt was buying in Riverdale. Judge Rejects Ex Lawyer Robles' Plea Deal By Jay Weaver A frustrated federal judge on Monday rejected a plea deal that would have sent once prominent Miami lawyer Louis Robles to prison for 10 years on charges of stealing more than $13 million from aging clients exposed to asbestos. U.S. District Judge Alan Gold said he thought Robles, 59, deserved more time behind bars after Gold complained about the ``lack of meaningful sentencing options.'' The plea agreement, recommended by the U.S. attorney's office and Robles' federal public defender, required him to plead guilty to two counts of mail fraud -- but each count carried a maximum of five years each. Gold expressed his dissatisfaction with those limits, especially because there are about 4,400 alleged victims of Robles but only $1.3 million available for restitution. ''A number of these people are not going to receive restitution,'' Gold said. Robles -- once dubbed the King of Torts who was later disbarred -- spent almost $2 million a year on mortgages and other expenses for a Key Biscayne waterfront mansion, a ski property in Telluride, Colo., and apartments in New York City and Los Angeles. The judge gave Robles a choice Monday -- plead guilty to the 41-count indictment and face up to 20 years in prison, or withdraw the original plea and face trial. Robles, represented by assistant public defender Hector Flores, opted for trial. Gold set the date for Sept. 4. Meanwhile, Robles, who once wore stylish business suits and flew all over the country for his work, was headed back to the Federal Detention Center in his khaki-colored prison jumpsuit. FLIGHT RISK Last week, the judge revoked his $1 million bond because Robles' girlfriend reported to authorities that the defendant had ''discussed with her on two occasions his obtaining a false passport for the purpose of fleeing'' South Florida, court records say. Gold ruled Robles' recent behavior ''evidenced an increased likelihood of flight,'' the documents said. Both federal prosecutors and a private attorney assigned by the Miami-Dade Circuit Court to take charge of thousands of Robles' cases urged the judge to accept the plea deal. They said there would be no more money to recover from Robles -- other than the $1.3 million frozen by federal authorities after his indictment last year. Assistant U.S. Attorney Michael Davis said ``nobody has turned up any other assets.'' He said Robles' alleged victims, whose claims ranged from a few hundred dollars to $185,000, were agreeable to receiving a fraction of the money because they have waited so long for it -- more than a decade in some instances. PUBLIC INTEREST Davis said the recommended 10-year prison term was ``in the public interest.'' ''That is a significant term of imprisonment in a white-collar fraud case, especially for a defendant who is 59 years old,'' he said. The U.S. attorney's office issued a statement backing the deal. ''We believe that the terms of the proposed plea agreement were fair and just,'' said Alicia Valle, special counsel to U.S. Attorney R. Alexander Acosta. ``The plea agreement served two goals: it provided quick restitution to elderly and dying victims, and ensured just punishment -- 10 years in prison -- for the defendant's crimes. 'We do not know and cannot comment on whether Robles' reported attempt to flee the jurisdiction played a role in the court's decision,'' she said. ``We are prepared to proceed to trial as directed by the judge, and will present the evidence to a jury.'' Tom Tew, the appointed attorney who reorganized Robles' asbestos cases, said he was disappointed in the judge's ruling. ''My biggest concern was getting money to these folks,'' Tew said. ``I don't think they were as concerned about how much time he got as long as justice was served that he was going to prison.'' Famous
and Disbarred Lawyer's Girlfriend By Julie Kay On May 10, U.S. District Judge Alan Gold in Miami issued an arrest warrant and ordered Robles' $1 million bond revoked, calling him a flight risk. Robles, a nationally known Miami mass torts lawyer, was placed in federal prison May 11, days before Gold was set to decide whether to accept a plea deal for a 10-year sentence that was worked out between Robles and prosecutors. Gold found that Robles may have moved some of his clients' unaccounted-for funds to foreign countries while traveling abroad prior to his indictment. In his order, Gold stated he was concerned about the fact that Robles only has $1 million left out of the $13 million prosecutors say Robles misappropriated from clients, and that he traveled to foreign countries just before he was indicted. Robles' girlfriend, named in court records only as "Ms. Wiki," reported to his probation officer that over the last two months, Robles asked her if she could get him and his grandson phony passports. He also had been talking to a pilot who previously offered to help him flee, according to the probation officer's petition. On May 14, however, Robles' attorney, assistant federal public defender Hector Flores, filed a motion seeking a review of the bond revocation, claiming the allegations in the probation officer's petition are "overstated and lack factual support." He said, "Counsel believes the Government's own investigation of these matters supports this conclusion." According to Gold's order, the office of U.S. Attorney Alex Acosta had suggested electronic monitoring and home detention for Robles. But Gold wrote that "no adequate assurance was given prior to (or during) the hearing that the Defendant even has a place to reside in the event he was reinstated on bond." These developments came days before a scheduled hearing today at which Gold is set to decide whether to accept a plea deal for Robles. It calls for Robles to serve 10 years in prison and pay $13 million in restitution to victims. But prosecutors say they've only found $1 million left in Robles' bank accounts and don't know what happened to the other funds or to the $13 million he received when he sold his Key Biscayne mansion last year. The latest allegations against Robles could affect Gold's willingness to accept the plea deal and put Robles in a position to stand trial, according to defense lawyers not involved in the case. Two of the 41 counts Robles faces carry 20-year maximum penalties, and the remaining counts carry five-year maximum penalties. "The maximum potential sentence, therefore, provides an incentive for flight," Gold stated in his order. Neither prosecutors nor Flores returned calls for comment. "This could destroy the plea agreement," said Miami criminal defense attorney Richard Sharpstein, who's not involved in the case. "This is absolute proof that Louis is out of his mind. If he's trying to reunite himself with lost money, that can be huge." ABUSE AND ALCOHOL Robles, 59, was indicted in May 2006 on 41 counts of mail fraud and misappropriating $13.5 million in settlements from asbestos clients. According to the indictment, Robles used client trust money to finance movie productions and waste management companies and to make mortgage payments on a $13 million Key Biscayne mansion and a Colorado condominium, and to finance an extravagant lifestyle that included two full-time servants. At a hearing scheduled for 4:30 p.m. Monday, prosecutors are set to report on whether Robles' 4,390 victims approve of the plea deal worked out between prosecutors and Robles. Late Thursday, Gold issued an order denying Robles' motion for bond following a hearing May 17. Gold held the hearing after Robles' probation officer, Urania Salamanca, filed a petition May 9 requesting bond revocation based on Robles' girlfriend's statements that he was planning to flee. The petition also stated that Robles' girlfriend has said Robles is physically and psychologically abusing her and that she is "in fear for her life." He is also starting to abuse alcohol, the petition stated. "The defendant's girlfriend has concerns that if the defendant were to flee, she cannot pay the $100,000 lien put on her property to secure the bond," the petition said. Robles' girlfriend and the pilot Robles allegedly talked to, Dwight Hewlett, testified at Thursday's hearing. At the conclusion of the hearing, the judge issued an order denying Robles' motion for bond. In his order, Gold stated he was revoking the bond because of the substantial sentences Robles faces, the defendant's initial reluctance to accept the plea agreement, the fact that Robles has engaged in foreign travel recently, his lack of family ties in Miami since his relationship with his girlfriend is troubled, and that only $1 million of the $13 million he apparently obtained from clients is left. "The inference, therefore, is strong that the Defendant may have secreted some of the unaccounted for monies in foreign countries during his foreign travel prior to the filing of the indictment in this matter," Gold said. ROBLES PANICKED? In 2002, the Daily Business Review first reported on a four-year Florida Bar investigation into Robles and the abrupt closure of his downtown Miami office in 2002. The Bar had received numerous complaints from some of Robles' estimated 7,000 asbestos clients around the country. Clients had complained that Robles overcharged them for costs, didn't return phone calls and sent them few, if any, settlement payments. The Florida Supreme Court later disbarred him. After being indicted last year, Robles initially pleaded not guilty. Then, earlier this year, he struck a plea deal with federal prosecutors that called for him to serve 10 years in prison and pay full restitution to victims. Not so fast, said Gold, who told prosecutors last month that he wanted them to send letters to all victims to determine whether they approve of the plea deal terms. Some victims told the Review they thought the deal was too lenient. Bruce Lehr, a Miami criminal defense attorney and former county prosecutor who is not involved in the case, said it's not clear if the latest developments would harm Robles' chances of getting the plea deal accepted by Gold. "A judge can look at it either way," Lehr said. "Either as unrelated panic, which doesn't change the appropriateness of the plea deal, or as disrespect and additional criminal behavior." In his 24 years of practice, Lehr said only one of his clients has fled, the day after he bonded out of jail. But Sharpstein said Gold, who is known for being a relatively strict judge, likely would be tougher on Robles as a result. The few clients of his who fled the country while out on bond "inevitably" got caught, Sharpstein said. "The world is a very small place," he said. "It's an idiotic act." 'Teddy' Rap By Kieran Crowley Robert Shuster, 66, allegedly looted the estate of John Allen Gable, director of the Theodore Roosevelt Association. Shuster, hired to administer the estate of Gable, who died in February 2005, made numerous transfers from an estate escrow account into his personal account over several months, Nassau cops said - until Gable's brother, Patrick, "found out there was only $5 left." Husband and Wife NY Lawyers Confess Insider Trading By Mark Hamblett Crooked NY GC Must Pay $52 Million, Headed to Prison By Beth Bar Mr. Sorin, a Harvard-educated attorney who pleaded guilty in Eastern District court in November to one criminal count of conspiracy to commit securities fraud, mail fraud and wire fraud, was also ordered yesterday by Eastern District Judge Nicholas G. Garaufis to pay nearly $52 million in restitution. In addition to Mr. Sorin, who faced a maximum sentence of five years in prison, David Kreinberg, the company's former CFO, has pleaded guilty to criminal charges. Messrs. Sorin and Kreinberg were charged in August but were never indicted. Jacob "Kobi" Alexander, the company's ex-CEO, a fugitive who was discovered in Namibia in September, has been indicted on 35 charges. In an Oct. 11 superseding indictment, Mr. Alexander was accused of using fictitious names to generate hundreds of thousands of backdated options. Lawyer's
"Life's Short. Get a Divorce" By The Associated Press A racy billboard proclaiming, "Life's short. Get a divorce," caused such an uproar that city workers stripped it from its downtown Chicago perch after a week. It wasn't so much about the partially clothed man and woman on the law firm's ad. It was the phrase that lawyers Corri Fetman and Kelly Garland chose that drew scores of complaints from neighbors and from other attorneys who said it reflected poorly on their profession. A city alderman who lives nearby found a technical reason to jettison the sign. "I called the building inspector and told him to do his job, and he did," said Alderman Burton Natarus. "It has nothing to do with content or anything else. They did not have a permit, and they were ordered to take it down." Fetman and Garland say they're upset the sign was removed. "They ripped our billboard down without due process," Fetman said. "We own that art. I feel violated." Despite its brief run, the sign apparently was good for business. Since it went up last week, the two attorneys said calls to their law firm have gone up dramatically. Lawyer's Alleged "Bedside Manner" Triggers Ethics Probe By Charles Toutant When Miguel Herrera was badly hurt in a 2002 car crash, he didn't have to look far for legal representation. Cherry Hill, N.J., lawyer Jeffrey Hark appeared one day in his hospital room. Herrera says that in pain and under heavy medication, he signed a contingency fee agreement. It wasn't until much later, Herrera says, that he learned of Hark's conflict of interest: The other driver in the crash was Vernon Roth, Hark's wife's grandfather. Herrera says Hark told him he could not recover more than Roth's $100,000 automobile insurance policy, even though Hark knew Roth had substantial assets. And, Herrera says, Hark arranged a lawyer for him in a municipal court case arising from the crash while arranging for another lawyer to represent Roth. Both were tenants of Hark's law building. While those facts make out a prima facie case of deviation from acceptable professional standards, a Camden County, N.J., judge properly dismissed Herrera's legal malpractice case on summary judgment, an appeals court ruled on Tuesday. Herrera can't recover damages for malpractice because the lawyer who replaced Hark in the negligence case settled it for an acceptable amount. "Herrera has not shown how he would have obtained a better result than the $95,000 settlement, even if Hark had disclosed his conflict of interest. In short, no showing of damages has been made," wrote Judges Ariel Rodriguez and Thomas Lyons in Herrera v. Hark, A-1862-05. Nevertheless, the panel referred the case to the Office of Attorney Ethics for an investigation of Hark's conduct. The panel cited Rule of Professional Conduct 7.3(b)(1), which forbids initiation of contact with prospective clients whose physical, emotional or mental state is such that the person could not exercise reasonable judgment, and In re Pajerowski, 156 N.J. 5 (1998), which found RPC 7.3(b)(1) violated where a runner was sent to a victim's hospital room shortly after an accident. Hark, contacted after Tuesday's ruling, disputed many of the facts Herrera alleged. He did not visit the hospital room unannounced but was contacted by a friend of Herrera about representation, and Herrera signed the fee agreement in Hark's office, not the hospital, Hark says. He also says he had no involvement in retaining lawyers to represent Herrera or Roth in municipal court. Hark says Herrera sued him for malpractice to get leverage in a fee arbitration between Herrera and the law firm that settled the case, Perskie, Wallach, Fendt & Holtz of Atlantic City, N.J. Herrera also sued the Perskie firm, which was dismissed as a defendant. Hark says Herrera reported him to the OAE and that an investigation has been pending for three years. Herrera's lawyer, Sebastian Ionno II of Clifford Van Syoc's office in Cherry Hill, did not return a call. Lawyer Indicted in Porn Probe Says Feds Overreached By The Associated Press Philip Russell was charged Feb. 16 with destroying a computer that contained child pornography at Christ Church in Greenwich. Former President George H.W. Bush attended the church while growing up. Russell, the former attorney for the church, is accused of obstructing an FBI investigation that led to the January conviction of the church's music director, Robert Tate, for possessing child pornography. He was charged under the Sarbanes-Oxley Act, which Congress passed in 2002 after a wave of corporate accounting scandals to make it easier to prosecute such cases. He faces up to 40 years in prison if convicted. Russell filed court papers Thursday urging a judge to dismiss a count that involves the Sarbanes-Oxley Act, saying the law was meant to prevent corporate document shredding. The law made it easier to prosecute obstruction of justice by requiring only that an investigation was foreseeable, rather than pending. Russell acknowledges he destroyed the computer but says he had no reason to believe the matter was under investigation or that it would lead to an investigation. "A parent who finds pictures of 'naked boys' in his/her child's backpack would also face a 20-year federal felony for obstruction ... if he/she throws the pictures out to insulate the child from future legal difficulties," wrote Russell's attorney, Robert Casale. Prosecutors declined to comment on the latest court papers but have defended Russell's indictment. Lawyer's Hoax Spurs Debate on Legal Tactics, Ethics By The Associated Press MADISON, Wis. -- When a prominent lawyer was defending a businessman on charges of sexually assaulting a boy and possessing child pornography, he used a ruse to obtain the boy's computer to aid his case. Now, state regulators want the state Supreme Court to scold the lawyer for the hoax. Stephen Hurley hired a private investigator to trick the boy into swapping his computer for a new laptop. The case illustrates what the American Bar Association says has been a major debate in legal circles in recent years: Can lawyers ethically participate in covert activities? The court will decide whether to discipline Hurley. The private reprimand sought by regulators is the lightest punishment possible. The Oregon Supreme Court set off a similar debate in 2000 when it reprimanded a lawyer who posed as a doctor in phone calls to an insurance company he was planning to sue. Hurley's lawyer, Claude Covelli, said his client did nothing wrong in supervising an undercover investigation to collect evidence, similar to sting operations conducted by law enforcement officers investigating civil rights complaints. But a complaint filed by a state disciplinary board says Hurley broke rules that prohibit lawyers from engaging in "dishonesty, fraud, deceit or misrepresentation" by approving the hoax. "There are limits to zealous advocacy," said William Weigel, lawyer for the Office of Lawyer Regulation, who brought the complaint last month. Supporters say Hurley, who has represented everyone from former University of Wisconsin football player Ron Dayne to former Gov. Scott McCallum, is being unfairly targeted. "I certainly wouldn't be proud of taking advantage of a teenager," said Jack King, spokesman for the National Association of Criminal Defense Lawyers. "But I don't feel the guy did anything unethical as far as the professional responsibilities rules go." At issue is Hurley's defense of Gordon Sussman, who owned a business in Madison selling canoes and kayaks and became the boy's school mentor. Sussman, 54, has insisted his accuser is lying. Hurley wanted the boy's computer to aid the defense. He acknowledges hiring private investigator Sheridan Glen to obtain it through deception. Glen sent the boy a letter from a fake Illinois company called Thermetric, Inc., claiming to be researching students' computer use. "You have been selected to receive a brand new Hewlett Packard laptop computer, free of charge" in exchange for turning over a computer, the letter said. "The new computer is your reward for participation." The letter was signed "Glen Sheridan." Glen later traveled to the boy's home in Indiana, where he had moved, to make the swap. His mother soon feared they were tricked and alerted authorities. A defense analyst discovered hundreds of pornographic images on the computer, including 28 images involving children. Hurley claimed the images showed the boy accessed child pornography and learned about sex on his own and not through Sussman. The evidence was never introduced at trial. A judge ruled that pornography viewed by the boy in 2004 was not relevant to assaults that happened at least two years earlier. A jury found Sussman guilty of assault and possessing child pornography. He is in prison, though he maintains his innocence and is appealing. Hurley, who did not return phone or e-mail messages, argued in court documents in 2005 that the hoax was the only way he could obtain the computer and perhaps evidence to exonerate his client. "Given that the defense does not have the police at its disposal, this was the only means to obtain this exculpatory evidence," his law firm wrote in a motion. "The defense was correct in its instinct as the computer did contain relevant pornography." Weigel's complaint says Hurley could have asked authorities to investigate the computer or sought a subpoena requiring the boy to produce it. Other defense lawyers called those steps impractical and the use of deception justified, saying it was no different than a prosecutor who oversees undercover police operations. "It's exactly the same thing or should be," Madison attorney Stephen Morgan said. Dane County District Attorney Brian Blanchard, who complained to regulators about Hurley's actions, dismissed such comparisons. "There is no comparison between those lawful investigative activities and a private attorney's use of a sophisticated trick, without any court involvement whatsoever, to dupe a child witness in a criminal case out of his private computer files," he said. Weigel acknowledged that Wisconsin rules are murky and the court could use the case to spell them out. Lawyer Guilty of Medicare Fraud By John Dorschner South Florida attorney Benjamin R. Metsch pleaded guilty today on charges he defrauded Medicare from October 2002 through August 2004, the U.S. Attorney's Office announced. Metsch conspired with another individual, unnamed in the indictment, to facilitate the fraudulent sales of 67 South Florida durable medical equipment companies. According to the charges, the sales involved ''straw purchasers'' who acted in the place of the true purchasers of the DME companies. This kind of convoluted transaction tends to impede Medicare investigators and prosecutors from quickly tracking down persons committing fraud. In the plea agreement, Metsch agreed to pay $103,000 restitution to Medicare because his law firm earned $103,000 in the fraudulent transactions. Metsch faces a maximum sentence of 10 years' imprisonment, according to prosecutors. His sentencing is scheduled for May 18. The case is being prosecuted by David Frank. Attorney Busted in 500g Theft Associated Press A lawyer was arrested yesterday on charges of stealing at least $500,000 from clients involved in real-estate deals. Gwenerva Cherry stole from a company in bankruptcy, two people who were trying to buy homes, and two clients looking to invest in Brooklyn apartments, prosecutors said. Cherry, 50, was stealing because she was constantly in debt, Manhattan District Attorney Robert Morgenthau said. "She was robbing Peter to pay Paul, using the money to pay back money she had already embezzled," he said. The bankrupt company, Rapsil Construction Corp., hired Cherry in fall 2005 to help sell off several Harlem properties. Cherry contracted with several buyers who gave her $300,000 in down payments, and stole the cash, Morgenthau said. People ripped off in that scam included a woman who gave her $95,000 and a man who gave her $80,000 as down payments on townhouses, Morgenthau said. She used those funds to pay office expenses and pay off debts to clients, he said. Suspended
Metro Solo Can Practice Again New York Lawyer Ira S. Mayo, the Torrington, Conn., solo whose law license was suspended for 15 months in September 2005 for making unwanted sexual advances toward female clients, was reinstated to practice last month, as long as he abides by certain conditions. Among them, he must never be alone or in confined quarters in his law office with women at any time, according to a court order. Middlesex Superior Court Judge Robert L. Holzberg also demanded that Mayo "direct his practice away from the representation of women in domestic relations matters." The clients who grieved Mayo were referred to him by the Susan B. Anthony Project for abused women. Complainants accused Mayo of coercing them into performing sexual favors to reduce the legal fees they owed. Mayo "seemed more interested in fulfilling his sexual urges than my [marriage] dissolution case," one of the women asserted in her complaint to the Statewide Grievance Committee. Mayo initially "denied any sexual contact or other improper behavior," but later admitted to certain facts lodged in the complaints. Waterbury attorney Sean G. FitzMaurice has been designated as Mayo's practice mentor.
Husband-and-Wife Lawyers Face Trial By Mary Alice Robbins A Bexar County grand jury first indicted the two lawyers on the theft charges in 2005, identifying the four men who are the complainants only by their initials. A second Bexar County grand jury reindicted the couple in 2006, this time naming the four men: Steve Riebel, Geoffrey Ferguson, Paul Fitzgerald and Reagan Sakai. The second indictments allege that Mary and Ted Roberts unlawfully appropriated the four men's money by deception and by coercion. According to the indictments, the alleged offenses -- violations of Texas Penal Code §§31.01 and 31.03 -- occurred between Oct. 1, 2001, and April 2, 2002. Cliff Herberg, Bexar County's first assistant district attorney, says the allegation is that the wife had sexual liaisons with the men and her husband subsequently approached them to demand payments or he would expose them to hatred, contempt and ridicule. Riebel, Ferguson and Sakai did not return telephone calls seeking comment before press time. "It's a very personal matter," Fitzgerald says, declining further comment. At least one of the men met Mary Roberts online. "My client had some information posted on a Web site, and he was contacted by Mary Roberts," says Van G. Hilley, who represents Riebel. Hilley, a partner in San Antonio's Goldstein, Goldstein & Hilley, says Riebel had a relationship with Mary Roberts and thought he had settled the matter with her husband. "He was very sorry that it happened," Hilley says. Herberg says Ted Roberts collected about $144,000 total from the four men. If the jury finds Mary and Ted Roberts guilty of theft, each could be convicted of a second-degree felony, punishable by up to 20 years in prison and up to a $10,000 fine. Ted Roberts, principal in Ted H. Roberts in San Antonio, is certified in personal injury law and civil trial law by the Texas Board of Legal Specialization, according to the State Bar's Web site. As noted on that Web site, Mary Roberts' primary areas of practice include ethics and legal malpractice, law office management, real estate and wills, and trusts and probate. She is an attorney in her husband's firm. San Antonio solo Michael McCrum, who represents the couple, contends Ted Roberts presented the men with whom his wife had the affairs with demand letters and copies of petitions that Ted Roberts proposed to file under Rule 202 of the Texas Civil Rules of Procedure in contemplation of filing a suit for intentional infliction of emotional distress. "He found out about the affairs, and he was incensed," McCrum says of Ted Roberts. McCrum says that instead of beating the men up, like some husbands would do, Ted Roberts chose to present them with the demand letters and petitions. He says Roberts told the men that he could file a tort claim against each of them for having the affairs with his wife. "They settled; their wives didn't know this had happened," McCrum says. McCrum contends the state is trying to prosecute his clients for something that civil lawyers do all the time -- send demand letters and present petitions they plan to file under Rule 202. "By stretching statutory words to an unprecedented interpretation, the state seeks to criminalize as "theft the presentment and subsequent settlement of potential claims authorized under the Texas Rules of Civil Procedure," Mary and Ted Roberts alleged in one of several motions to quash their indictments that Harle dismissed in October 2006. McCrum says the outcome of his clients' case could impact every civil lawyer in Texas who writes a demand letter. "Their demand letters can come under attack by a DA," he contends. "We dispute that version of the facts," Herberg says. "If we thought this was something that all lawyers do, they wouldn't have been charged." TWO THINGS Rod Phelan, a commercial trial lawyer and partner in Baker Botts in Dallas, says lawyers are supposed to use Rule 202 for two things: to investigate whether they have a claim or to preserve testimony of a witness who would not be available to testify because the witness either is dying or is leaving the jurisdiction. Ted Roberts' use of Rule 202 "sounds like an odd use of the rule," Phelan says. But he adds, "That doesn't have anything to do with whether it's criminally actionable." Phelan says there is "a kernel of truth" in the point that McCrum is making. "The line between extortion or blackmail and making a demand to settle a colorable claim is gray," he says. "What seems to a defendant as extortion or blackmail may seem to the plaintiff as a bona fide claim." Bill Dorsaneo, a Southern Methodist University Dedman School of Law professor who teaches and writes on Texas civil procedure, says demand letters that lawyers write have been regarded as privileged. Dorsaneo says he's surprised that the criminal law would allow the criminal prosecution of a lawyer for doing something that would be privileged in the civil context. "I'm not sure it's a good idea," he says. The couple argued in their motions to quash that the theft statute is unconstitutionally vague and/or overly broad and that the indictment failed to state an offense. McCrum says Harle dismissed the motions without prejudice, and he says he will re-urge the motions at the end of the state's case. Herberg says the theft statute has been around for a long time. "We don't think it's vague," he says. Williamson County District Attorney John Bradley, who has followed the case, says he thinks the theft provisions in the Penal Code are the "best fit" for prosecuting Mary and Ted Roberts. "You obviously have to get a jury to believe the lawyer [Ted Roberts] was manipulating the legal system to get that money," Bradley says. Bradley says he doesn't think it's a good argument to contend that Ted Roberts merely did what civil lawyers do all the time when Roberts presented his demand letter and petition to each of the men who had a relationship with his wife. "The unique thing going on here is he [Ted Roberts] was litigating for himself," Bradley says. For prior
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