By BRIAN MELLEY and KATHLEEN FOODY | Associated Press
LOS ANGELES (AP) — Disgraced ex-lawyer Tom Girardi, once celebrated for winning massive settlements, has been indicted by federal grand juries in Los Angeles and Chicago on charges he stole more than $18 million from clients, prosecutors announced Wednesday.
The charges are the latest legal blow to a once-powerful player who rubbed elbows with politicians and celebrities. As one of the nation’s most prominent plaintiff’s attorneys, Girardi was known for high-profile litigation such as the case that led to a $333 million settlement portrayed in the movie “Erin Brockovich.”
With a weekly radio show called “Champions of Justice,” Girardi stood up to large corporations on behalf of people harmed by pollution, medical products and automobiles. At the same time, however, he was robbing some of those clients, Los Angeles U.S. Attorney Martin Estrada said at a news conference.
“He claimed to be fighting for those less fortunate,” Estrada said. “But our investigation has revealed that behind this public persona, (he was) committing fraud on a massive of scale."
The schemes included swindling a Los Angeles couple whose son was paralyzed in a car wreck, an Arizona widow whose husband died when a boat unexpectedly sped up to 120 miles per hour (193 kilometers per hour) and flipped, and family members of victims in a 2018 Lion Air crash that killed 189 people, according to the indictments.
Girardi, 83, who once played a supporting role on “Real Housewives of Beverly Hills,” which starred his now-estranged wife Erika Jayne, was disbarred last summer for siphoning client funds. His Los Angeles firm Girardi Keese is bankrupt and he’s said to be suffering from dementia and is under a court conservatorship.
U.S. prosecutors in Chicago said Girardi, his attorney son-in-law and their firm's chief financial officer took funds for five clients who reached settlements with Boeing, the makers of the 737 Max operated by Indonesia’s Lion Air that crashed into the Java Sea on Oct. 29, 2018 and killed 189 people.
“The substantial misappropriation alleged in this indictment compounded the grief and anguish of the clients who lost loved ones in the Lion Air crash,” said John Lausch, the U.S. attorney for the northern district of Illinois.
A Chicago law firm involved in the Lion Air case filed a racketeering lawsuit last year alleging that Girardi and his associates essentially ran a Ponzi scheme, siphoning off $100 million from their clients, attorneys they worked with and others.
“The real story is one that seems like a tale out of a John Grisham novel: Girardi Keese was little more than a criminal enterprise, disguised as a law firm,” according to the lawsuit filed in Los Angeles by the Edelson law firm. “Indeed, the Girardi Keese firm operated what we now know was the largest criminal racketeering enterprise in the history of plaintiffs’ law."
Girardi made his name, and his money, taking on powerful corporations and public institutions, including Hollywood’s major movie studios, Lockheed, The Los Angeles County Metropolitan Transportation Authority and Pacific Gas and Electric in a case that inspired “Erin Brockovich,” the 2000 Julia Roberts film about a California desert community whose water has been poisoned. Girardi served as an adviser on the Oscar-winning flick.
“That particular case revolutionized people’s thinking about all the toxic things they are exposed to,” he told Attorney at Law magazine in 2015.
Girardi married Jayne in 2000. She became a member of the cast of “Real Housewives of Beverly Hills,” on which he made several appearances. He spent considerable money funding her unsuccessful musical career.
Jayne filed for divorce in 2020.
While Girardi's legal and financial woes only surfaced publicly in the past few years, clients filed more than 200 complaints against him over four decades, The State Bar of California revealed in November. Nearly 60% of complaints were about accounts set up to safeguard client funds.
Until he was disbarred in June, he had never been publicly disciplined.
Ruben Duran, the chair of the bar’s board of trustees, issued a mea culpa over “serious failures” in its discipline system.
“There is no excuse being offered here,” Duran wrote. “Girardi caused irreparable harm to hundreds of his clients, and the State Bar could have done more to protect the public. We can never allow something like this to happen again.”
An ongoing investigation by an outside law firm is examining whether Girardi’s influence or connections at the bar helped him evade discipline for the unusual volume of complaints.
Girardi and attorney David Lira, 62, his son-in-law, and firm CFO Christopher Kamon face eight charges of wire fraud and four counts of criminal contempt of court in Chicago.
Girardi and Kamon, 49, are charged in Los Angeles with wire fraud for embezzling more than $15 million from clients, prosecutors said.
In one case, described in the LA indictment, Girardi settled a case for $53 million involving a man severely burned in a PG&E gas line explosion in San Bruno, California, in 2010. But he told the client the settlement was for $7.25 million.
More than half the settlement was then embezzled and some was used to pay expenses, firm liabilities and other clients whose funds had also been misappropriated. Payments to the burn victim, meanwhile, were delayed through a series of stall tactics.
When asked about how an Alzheimer's diagnosis that Girardi was given in his conservatorship matter would affect the criminal case, Estrada said it would be up to the court to evaluate his mental competency.
“The indictment charges misconduct during a 10-year timeframe,” he said. “When Mr. Girardi was a practicing lawyer, we believe the evidence shows he was competent during that time.”
Girardi is expected to appear Monday in U.S. District Court in Los Angeles. Arraignments were set for Feb. 7 in Chicago.
Kamon, who is custody, has pleaded not guilty to another wire fraud case in which he's accused of embezzling law firm funds to renovate two LA-area homes, pay for shopping sprees and hire an escort.
Attorneys for Girardi and Kamon did not immediately respond to requests for comment.
Lira's attorney said his client is innocent, will plead not guilty and will fight the charges.
“David Lira was not involved in a scheme to defraud," attorney Damon Cheronis said in an email. “Mr. Lira is a well-respected lawyer and has been for over three decades."
Foody reported from Chicago. Associated Press journalist Andrew Dalton contributed to this report.
At just $20/year, your subscription not only helps us grow, it helps maintain our commitment to independent publishing.
If you're already a subscriber and you'd like to send a tip to continue to support the Chicago Journal, which we would greatly appreciate, you can do so at the following link:
Chicago Journal Newsletter
Join the newsletter to receive the latest updates in your inbox.