The now-defunct law firm Girardi Keese operated an ongoing criminal enterprise that stole more than $100 million from its clients, co-lawyer, vendors “and many others unfortunate enough to do business with the firm,” the law firm Edelson PC said in a federal lawsuit.
The court case, filed Wednesday evening, alleges that Girardi Keese siphoned off settlement payments to family members of victims of a plane crash, women who developed breast cancer after undergoing hormone replacement therapy and other others who hired the complainants’ company. Instead of handing out rewards to clients, millions of dollars went to fund the lavish lifestyles of Thomas Girardi and his “Real Housewives of Beverly Hills” wife, Erika Girardi, according to the filing.
“When the curtain was finally drawn, it became clear that Girardi Keese was operating in a manner similar to a Ponzi scheme, but much worse,” according to the lawsuit, filed in U.S. District Court for the Northern District of California.
Edelson served as Girardi Keese’s local co-counsel for clients in litigation regarding the 2018 Lion Air JT 610 crash. In December 2019, Edelson sued Girardi, Girardi Keese and others to recover his share of the attorney fees and to track Boeing Co. settlement funds Girardi Keese still owes to several clients. Girardi’s creditors have filed for Chapter 7 involuntary bankruptcy against the company.
Girardi Keese collapsed days after Edelson filed a contempt motion for money stolen from Lion Air families, the lawsuit heard. Tom Girardi was disbarred in June and the California Supreme Court ordered him to pay $2.28 million plus 10% interest for funds stolen from clients.
Edelson alleges Girardi Keese stole from clients; falsified expenses to justify stealing customers’ money; mixed stolen client funds; laundered stolen funds through the company’s payroll account and American Express cards; mixed money from Tom Girardi and lenders in the client’s trust account to pay off long-overdue payments to clients; and paid non-lawyers, like case runners, illegal cash bonuses for referring clients, in addition to committing to pay them illegal shares of ultimate recovery.
Girardi was the company’s founder and a celebrity inside and outside the courtroom. Girardi was considered by many to be the nation’s most prominent plaintiff’s attorney, according to the lawsuit. “But inside the corporate gates, the story was completely different.
Edelson accuses Girardi Keese of bribing former judges who allegedly split the settlement money among the plaintiffs to produce the result Girardi Keese wanted. The lawsuit alleges that Girardi Keese lied to, threatened and/or bribed clients and attorneys “to silence them and keep the scheme from collapsing.”
Edelson has redacted the amount of money he seeks, including treble damages, restitution, attorneys’ fees and punitive damages of at least $55 million.
Edelson directors could not be reached for comment Wednesday evening. Girardi is said to be mentally incapacitated. The lawsuit also names David Lira, a former partner of Girardi Keese who is now a member of Engstrom, Lipscomb & Lack, and who is Girardi’s son-in-law. Lira did not respond to an email seeking comment, nor did Keith Griffin, a lawyer for Girardi Keese who is now a partner at Dordick Law Corp.
Erika Girardi and EJ Global LLC, a California limited liability company whose sole member is Erika Girardi are also named as defendants. “EJ Global was created for the purpose of funneling money from Girardi Keese for the benefit of Erika,” the lawsuit said.
Christopher Kamon, chief financial officer of Girardi Keese, was also prosecuted; George Hatcher, a non-lawyer “consultant” who was responsible for referring the families of plane crash victims; Consultants Hatcher’s Wrongful Death; Joseph DiNardo; and Nardo’s California Attorney Lending II, which allegedly loaned Girardi Keese money and secured a first tranche of settlement money entering the business.
Filing alleges violations of federal racketeer-influenced and corrupt organizations law; conspiracy; postal fraud; electronic fraud; money laundering; engage in monetary transactions in property derived from specified illegal activities; obstruction of justice; transportation of stolen goods; and violate the California Unfair Trade Practices Act and the California Penal Code for receiving stolen property and aiding and abetting the concealment of stolen property.
Despite years of complaints and allegations of fraud and mismanagement, “Tom has maintained an unblemished record before the state bar. The fraud therefore continued, with only an occasional glimpse of rot within the Girardi Keese business,” the lawsuit said.
Edelson alleges that Girardi “cultivated the impression that not only was he a successful and powerful lawyer, but that he was in fact in control of the relevant authorities, including the agency responsible for disciplining lawyers, the State Bar of California”. Girardi entertained bar officials at lavish parties “and allegedly went so far as to bribe a longtime state bar investigator,” the lawsuit said.
A California bar representative was not immediately available for comment.
The case is Edelson PC vs. LiraND Cal., No. 3:22-cv-03977, complaint filed 7/6/22.