Fear of Girardi No excuse in contempt of lawyer proceedings (1)
A Chicago federal judge said he would not accept arguments that Thomas Girardi was so powerful that his former colleagues were afraid to take action when they learned he did not immediately transfer millions of people. dollars of client settlement funds.
“A defense by coercion is not convincing to me. I don’t care who Tom Girardi was, ”Judge Thomas M. Durkin said, after one of Girardi Keese’s two former lawyers who defended himself in contempt proceedings said he was remembers being “very afraid” of Girardi.
Girardi was politically well connected and vindictive, Keith Griffin said. Griffin and David Lira had both been practicing for at least 20 years when faced with the question of what to do when they learned their boss was mismanaging their clients’ money, according to testimonies.
They argued that they were just employees of W-2 with no authority over the finances of the company, and that a court order regarding finances, which was issued to the company, did not exist. did not apply to them.
Girardi – whose representatives say he suffers from dementia and who has since been declared mentally incompetent by a state court – said in an affidavit that if called to testify, he would assert his constitutional right to keep the silence.
The former CEO of the company, Chris Kamon, did the same.
The contempt proceeding began with a show cause motion filed in December 2020 by Chicago-based law firm Edelson PC, which is the court’s friend in the contempt proceeding.
Edelson was Girardi Keese’s co-counsel in a litigation against Boeing, representing family members of those killed in the Lion Air flight 610 crash in 2018.
Email correspondence between Lira, Griffin and Girardi’s longtime assistant shows that Lira and Griffin knew in May 2020 that Girardi planned to send manufacturing-filled letters to their clients to save the company more time. for the delivery of funds, and that Girardi had only made partial payments, despite the lack of authorization or legitimate reason for payment in installments.
At least two of the letters were sent despite efforts by lawyers to arrest them, they say.
None of the lawyers told their clients that Girardi was lying to them, nor reported Girardi’s handling of client funds to a disciplinary authority. Griffin said he eventually saw an ethics counselor, but it wasn’t until November, barely two weeks before Edelson notified the court that the money was missing.
Griffin said he never imagined Girardi wouldn’t pay his clients and he didn’t know he was in financial trouble.
The company received the money from Boeing in March 2020 and was required to wire the money within 30 days. Instead, he made partial payments, and they were late.
Griffin, who was at the stand for most of the day on Wednesday, said he urged Girardi to comply with court orders and immediately pay clients their full settlement, but counted on Lira to to intervene. Griffin said he believed Lira, who was older, was in a better position to influence Girardi.
Lira said he tried.
“I told him he was risking 50 years of legal work, that it was wrong, that it was not his money, and that he had to be paid,” Lira said Thursday.
Lira said he specifically recalled reminding Girardi that his last name was on the Loyola Law School advocacy center.
He said Girardi listened, nodded and told him he would take care of it.
Lira is also Girardi’s son-in-law, but they weren’t close, Lira said. Girardi had no relationship with Lira’s children and had only visited his home a handful of times in recent years, he said.
When he resigned in June 2020, Lira said she called Girardi a “thief”. Girardi begged Lira to stay, saying he would fix everything soon after, Lira said. He said he learned weeks later that Girardi had not followed through.
Lira admitted, pressed by Durkin, that there were other things he could have done when she learned that only half of the money went to Lion Air customers.
He was a signatory to the trust account and admitted that he could have gone directly to the bank to demand the documents in trust he said Kamon refused to give him. He was allowed to sign checks without a second signature, but said he didn’t realize it at the time.
Girardi, the sole owner of the business, was found in contempt of court last December.
After Girardi told Durkin he didn’t have the $ 2 million balance he owed his clients, Durkin referred him to federal prosecutors. He has not yet been charged with any crime.
The exact amount the customers were supposed to receive is unknown because the underlying settlement agreements with Boeing are confidential.
Edelson accused Girardi of setting up some sort of Ponzi scheme, and evidence shows Girardi paid some of Lion Air’s clients with attorney fees from another case when it went into effect, in September.
In the afternoon, Durkin called Griffin back to ask questions about another Girardi Keese client, not covered by the court order, who also did not receive his settlement money from Boeing.
He then called Rafey Balabanian, managing partner and general counsel of Edelson PC, to determine whether Edelson had his own obligation to notify the court by December 2020.
In their memoir, Griffin and Lira argued that as long as they had an obligation to do more than they did, Edelson’s lawyers did too. And Durkin seems to agree.
Durkin wanted to know if Edelson had – at some point before September 30, when Balabanian says Girardi unequivocally told him the clients had been paid – considered coming to court to report there were issues with respect. court orders.
Balabanian said they had considered it but ultimately decided the explanations were reasonable “in terms of Mr. Girardi’s illnesses, in terms of the result of an error.”
Durkin interrupted him to ask, “Isn’t that really up to me, though?”
“Obviously if you knew half was paid then you knew it, and if you didn’t know then Sharg did it because he knew what the settlement agreement said,” said Durkin, referring to Ari Sharg, Edelson’s partner. “You had to know as a company that there had been a breach of the order,” said Durkin. Sharg seems to have communicated a lot with Griffin.
“You might also be in the soup,” Durkin said later.
Durkin continued the hearing until a date yet to be determined, so he could further question Sharg and Jay Edelson, the firm’s founding partner, on what they knew and when.
Balabanian said at one point that some of the conversations with Girardi sounded like the movie “Groundhog Day,” as if their previous conversations never happened. Girardi seemed sick and uncomfortable at times, he said. But when questioned directly by Durkin, Balabanian said he had no reason to doubt Girardi’s mental competence.
Lira is represented by Robie & Matthai PC and Swanson, Martin & Bell LLP.
Griffin is represented by Rosen Saba LLP and Cassiday Schade LLP.
Former clients, who live in Indonesia, are represented by the law firm Wisner.
Girardi is represented by Monica & Spevack.
The case is In re Lion Air Flight JT 610 Crash, ND Ill., No. 11: 18-cv-07686, 12/8/21.