State bar charges famed attorney Tom Girardi with misappropriating millions from clients
The State Bar of California filed discipline charges Tuesday against legendary attorney Tom Girardi, formally accusing him of misappropriating millions in client funds, dishonesty and other acts of moral turpitude in his law practice.
In practical terms, the disciplinary action will have little effect on the “Real Housewives of Beverly Hills” cast member. Last month, Girardi, 81, was placed in a temporary conservatorship because of what his family said was dementia and consequently was moved to inactive status by the bar.
But the disciplinary charges carry great symbolic weight for bar regulators, who have been under fire for their handling of Girardi over the decades. Politically savvy and one of California’s most renowned attorneys, Girardi kept a pristine license with the bar despite a trail of unhappy clients and malpractice suits.
That reputation began to crumble late last year after his wife, singer and “Real Housewives” star Erika Jayne, filed for divorce and his vaunted Wilshire Boulevard firm ceased operations. A bankruptcy trustee has said in court papers that Girardi owes more than $56 million to creditors, former clients and lenders.
Tuesday’s 19-page filing in the State Bar’s Los Angeles court identifies three cases in the last year where the attorney allegedly failed to immediately and fully pass on financial settlements he had negotiated for clients.
Tom Girardi and his firm were sued more than a hundred times between the 1980s and last year, with at least half of those cases asserting misconduct in his law practice. Yet, Girardi’s record with the State Bar of California remained pristine.
In one West Virginia settlement with a medical device manufacturer, a couple represented by Girardi’s firm, Girardi Keese, was due about $56,000, according to the filing. Though the manufacturer wired the money to the firm in May, Girardi never passed the money on, even telling the pair falsely months later that he was still awaiting a court order, the filing states. To this day, the couple, Michael and Josefina Hernandez, have not received their settlement funds, according to the filing.
Another case concerns a widow whose husband died in a boating accident at Lake Havasu in Arizona. Girardi secured Judy Selberg a $500,000 settlement last March, but according to the bar, he told her he planned to take a 40% cut, rather than the 33% share provided by their contract, and then failed to pass on about $184,000 owed her.
The final case cited by the bar, a suit against Boeing over an air crash in Indonesia, was the subject of a hearing last year in federal court. A judge in Chicago ordered Girardi held in contempt for misappropriating more than $2 million due to crash victims’ widows and orphans.
In a January voicemail message cited by bar attorneys, Girardi assured his co-counsel in the case, “I want you to know that we paid all of the people. We had to wait for releases, and we couldn’t pay until the releases came through, and so they’re all paid.” The bar called his statement “false and misleading,” noting that the money had not been paid.
Tom Girardi is facing the collapse of everything he holds dear: his law firm, marriage to Erika Girardi, and reputation as a champion for the downtrodden.
Girardi’s attorney, Diane Karpman, declined to comment on the charges.
The move by the State Bar comes weeks after a Times investigation documented Girardi’s long-standing ties to the agency and his ability to avoid discipline despite more than 100 suits against him and his firm since the 1980s.
In recent weeks, the bar has taken an aggressive stance with Girardi. Earlier this month, agency lawyers challenged the diagnosis of Alzheimer’s disease by a psychiatrist retained in connection with the conservatorship case.
James J. Chang, a prosecutor with the bar, wrote in a court filing that the conservatorship proceedings came “under highly unusual circumstances” and “only after [Girardi] became enmeshed in mounting legal troubles and as he is facing imminent State Bar discipline.”
Girardi’s brother attempted to resign his brother’s law license, writing that his “brother is in no position to practice law at this time, a situation that is unfortunately never to change.”
The bar rejected the move.
Earlier this month, the Consumer Attorneys Assn. of Los Angeles, or CAALA, voted to revoke the awards it previously bestowed on Girardi, including his induction to the trade group’s hall of fame. Leaders of the group moved to terminate Girardi’s membership, but Girardi resigned before that process was completed.
“We are appalled by the victimization of clients to whom a fiduciary duty is owed, and our sympathies extend to those lawyers and vendors whose trust was violated,” said L.A. employment lawyer Genie Harrison, the president of CAALA, in a statement.
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