Correction: The updated version of this story clarifies that Robert Finnerty is not included in the fraud allegations against Tom Girardi, Girardi Keese and other defendants. He has only been named in his capacity as a former partner of Girardi Keese, “purely as a defendant to Count II, which seeks an accounting” of settlement funds.
Tom Girardi, long ranked among the most successful plaintiffs attorneys of the mass tort bar, is accused of owing tens of millions of dollars to numerous creditors who filed lawsuits against him long before a federal judge on Dec. 14 froze his assets and that of his Los Angeles law firm.
A review of lawsuits filed in the past two years reveals that Girardi and his firm, Girardi Keese, allegedly defaulted on million-dollar loans from numerous litigation financing firms, at times using the same collateral to borrow from each of them. He also failed to pay clients their settlement funds and ignored fee arrangements with other lawyers, often coming up with other reasons why he could not make payments, according to the lawsuits.
Now, Girardi, 81, faces a $2 million judgment from a federal judge and, according to a lawyer for one of the litigation funders, possible involuntary bankruptcy from his creditors. In addition, former firm partners, including retired name partner Robert Keese, and vendors for office equipment, court reporter services and security guards at his home in Pasadena, California, have filed lawsuits.
Last month, Girardi’s wife of 21 years, Erika Jayne, star of “The Real Housewives of Beverly Hills,” filed for divorce—a move that some lawsuits allege in court records was a “sham” to hide millions of dollars from creditors.
Girardi could owe tens of millions, possibly hundreds of millions of dollars, according to the lawsuits, some of which refer to his activities as a Ponzi scheme.
“For years he tells these attorneys, ‘I’ll pay you next week,’ and strings them along,” said James Spertus, of Los Angeles-based Spertus, Landes & Umhofer, who has represented several lawyers in suits against Girardi over unpaid fees. He said it “appears he’s running a Ponzi scheme” because he is not looking for funds to meet his obligations but seeking money from “other sources.” “He’s just not being honest with people,” he said. “This world is now catching up with him.”
Girardi’s lawyers, Evan Jenness, of the Law Offices of Evan A. Jenness in Los Angeles, and Bob Baker, of Los Angeles-based Baker, Keener & Nahra, as well as Michael Monico, of Monico & Spevack in Chicago, who also represents Girardi Keese, did not respond to a request for comment.
Here is a look at the many lawsuits against Girardi and his firm:
Lion Air Crash
Girardi filed lawsuits against Boeing on behalf of family members of victims of Lion Air Flight 610, a Max 8 aircraft that crashed in 2018 in Indonesia. Consolidated before U.S. District Judge Thomas Durkin of the Northern District of Illinois, the lawsuits settled in early 2020 for confidential sums.
Over the next several months, Girardi and his firm’s lawyers refused to turn over the full settlement funds for six of their clients, according to a Dec. 2 lawsuit brought by local counsel Jay Edelson. The explosive lawsuit also names, among others, Jayne; another Girardi Keese partner, Keith Griffin, who has since left the firm; two litigation funders; and two former Girardi Keese partners, David Lira and Robert Finnerty. (Finnerty and one of the litigation funders were not alleged to have engaged in fraud; they were named in the second count of the complaint, which seeks an accounting of settlement funds.) It alleges Girardi and the firm embezzled client funds to finance Girardi’s “outrageous lifestyle,” which includes private jets, multiple homes and a $250,000 Lamborghini. When pressed about the Lion Air settlement funds, according to the suit, Girardi Keese lawyers blamed Boeing for stalling, and Girardi gave an explanation that “was extremely convoluted and meandering.”
Edelson, of Edelson PC, also filed a motion to hold Girardi Keese in contempt of court orders, which Durkin granted Monday as to four clients. “When people get money from Boeing in trust and don’t keep it in trust and spend it other ways, it’s a serious ethical violation, probably illegal,” said the judge, who issued the $2 million judgment against Girardi and his firm and froze their assets.
On Wednesday, Durkin had prepared to appoint a trustee to oversee the Girardi assets, but a lawyer for one of the litigation funders named in Edelson’s lawsuit—William F. Savino, of Woods Oviatt Gilman in Buffalo, New York—suggested the judge should wait because other creditors were planning to file an involuntary bankruptcy petition within 48 hours.
Durkin also granted a request from the U.S. Attorney’s Office in Chicago to have access to a sealed document that Girardi Keese filed Dec. 11 in response to Edelson’s motion.
Durkin, on Monday, said he would refer the Girardi matter to the U.S. Attorney’s Office. “If you touch client money, you’re going to be disbarred and quite possibly charged criminally,” the judge said. “Someone as experienced as Mr. Girardi knows that as well as anyone.”
Jenness, appearing for Girardi, has insisted her client needs a mental evaluation. She also disclosed in court that Girardi Keese had only $15,000 in its operating bank account. “We are trying to find out what happened,” said Monico, for Girardi Keese.
Girardi Keese’s website went offline this week.
Savino represents California Attorney Lending II Inc., a litigation funder based in Williamsville, New York, that obtained a $6.2 million judgment against Girardi on Oct. 27. On Dec. 4, California Attorney Lending filed an ex parte application for a receiver to manage the finances of Girardi Keese, which is “spinning out of control.” The filing said that, from 2013 to 2018, Girardi began pledging collateral on the lender’s loan to other funders—a move that resulted in him obtaining $32.5 million in additional loans. Girardi Keese should receive at least $10 million from settlements soon, such as those involving 8,000 residents of a Los Angeles suburb who sued Southern California Gas Co. over a 2015 gas leak, but California Attorney Lending II isn’t the only one suing Girardi.
“These creditors are becoming increasingly active in pursuing repayment from debtors, who have demonstrated they will assign away CAL II’s collateral to the creditor screaming the loudest, without regard to CAL II’s superior rights in such collateral and without notice,” wrote California lending attorney Keith Gregory, of Snell & Wilmer in Los Angeles.
Another litigation funder, Stillwell Madison LLC, of Carefree, Arizona, joined with California Attorney Lending II in seeking a receiver to manage the firm’s assets.
Stillwell Madison, also named in Edelson’s complaint, sued Girardi in June 2019 for $5 million in defaulted loan payments alleging that he, along with Jayne, used the funds to “sustain their lavish lifestyle and maintain their glamorous public image.”
On Tuesday, both lenders stipulated to drop their receiver request in light of Durkin’s order in the Lion Air cases.
As early as June 2019, another litigation funder, Law Finance Group LLC, of Mill Valley, California, sued Girardi for failing to repay $15 million in loans. Girardi called Law Finance Group a “miserable, rotten, despicable company,” but resolved that matter in November.
Three former clients of Girardi Keese who obtained settlements with Pacific Gas & Electric over a 2010 pipeline explosion sued in June 2019 after failing to obtain their funds. On April 20, they got an $11 million judgment against Girardi Keese, but later, upon not receiving payment, sought an ex parte application to turn over fees that Girardi obtained as part of a $23 million settlement, reached in September, with the city of Los Angeles on behalf of a man who lost both his legs after a truck hit him.
Their Oct. 9 filing included a partial transcript of a debtor examination of Girardi, held by videoconference, in which the attorney insisted he could not pay the judgment.
“I’m—at one point, I had about 80 million or 50 million in cash,” Girardi told Treyzon at the Sept. 23 examination, when asked whether he had any personal bank accounts. “That’s all gone. I also had a stock portfolio of about 50 million, and that’s all gone.”
When asked about recent settlements coming up, Girardi estimated his firm only would receive fees of less than $2 million.
Girardi insisted his ex-clients had no legal or factual basis to impose a lien. Judge Holly Fujie of the Los Angeles Superior Court has not ruled on the turnover request but, on Tuesday, she issued an order to show cause why she should not refer Girardi and Girardi Keese to the State Bar of California for “misconduct and violation of the Rules of Professional Conduct for withholding settlement funds from plaintiffs that were required to be maintained” in a firm trust account. She set a Jan. 4 hearing.
The plaintiffs lawyer in that case is Boris Treyzon, founding partner of ACTS (Abir Cohen Treyzon Salo), based in the Encino district of Los Angeles. ACTS was the firm that Finnerty, the former Girardi Keese attorney named in Edelson’s lawsuit, joined in June. Finnerty called Edelson’s suit a “publicity grab.”
On Wednesday, Treyzon showed up at the hearing in the Lion Air cases, asking Durkin to amend his asset freeze because his firm was taking over representation of Girardi’s clients, “per agreement with Mr. Girardi,” and “there was a stoppage of transfer of files which will negatively affect our cases.”
The judge denied the request, calling the clients’ cases “potential sources of assets” for the firm.
Another ex-client sued Girardi on Oct. 29 after she only received $50,000 of a $500,000 settlement reached in March over her husband’s death from a boating accident in Lake Havasu, in Arizona. She alleges that Girardi and another Girardi Keese lawyer in the case intended “to keep the money for themselves.”
Edelson is not the first co-counsel to sue over Girardi’s failure to honor a fee splitting arrangement. Shawn Azizzadeh, of Bedford Law Group in Los Angeles, who referred a client to Girardi to sue Uber over a 2016 accident, filed an Aug. 27 lawsuit for unpaid fees associated with a $934,300 settlement.
Two other lawyers, Philip Sheldon, of the Law Offices of Philip R. Sheldon in Irvine, California, and Robert Finn, of the Law Offices of Robert Finn in Long Beach, California, who referred thousands of cases to Girardi, sued for more than $4.8 million in unpaid fees. In a combined amended complaint filed Wednesday, they added Jayne, Finnerty and Lira as defendants.
“The facts are beginning to come out,” said Spertus, who represents Finn and Sheldon. “Tom Girardi, who literally has over his career earned eight figures in attorney fees, is claiming to be penniless. He’s hiding his assets somewhere, and we are alleging that Erika Jayne and her production company and Girardi’s investment partnerships are all hiding Tom Girardi’s assets. No one can even spend the amount of money he’s earned.”
According to the amended complaint, Girardi insisted that “idiots from KCC” were making “outrageous” demands from him, holding up fees on the settlements, which involved environmental contamination tied to TXI cement plants in Southern California. KCC, a litigation services provider, was claiming he owed them $5 million, which he called “total B.S.”
Spertus said Girardi’s assurances are an “illusion.”
“Tom has a way of explaining delays that make it appear that he’s just doing in-house math and calculating costs,” Spertus said. “It’s surprising because even in the Robert Finn and Phil Sheldon cases, Girardi personally called me and sent me letters saying ‘I’m on the verge of resolving this’ and ‘you’ll get paid next week.’ He has this way to have people confidentially believe him.”
Girardi also faces lawsuits from former partners of his firm. Robert Keese, the name partner of his firm who retired a decade ago, filed two lawsuits Dec. 11 for money Girardi owed him. One suit, joined by Finnerty and Jill O’Callahan, the widow of former partner James O’Callahan, seeks $442,500 in lost equity and $315,000 in earnings tied to their interest a partnership that owns the law firm’s downtown Los Angeles office, valued at $7.5 million. According to that suit, Girardi obtained nearly $7.5 million in loans, using the real estate as collateral, without the plaintiffs’ knowledge. “It is believed that he took that money for his personal gain,” the suit says.
In the second suit, Keese, who practiced law with Girardi for 30 years, seeks $500,000 owed him as part of his retirement earnings. Girardi stopped making those payments Nov. 3, according to the lawsuit.
A spate of lawsuits citing Girardi’s failure to pay bills, have been filed by vendors for office equipment, court reporting and security guards.
KCC obtained a $7.5 million judgment Tuesday after Girardi stopped paying his bills in 2019. Girardi and his firm paid $4.5 million of the $12 million outstanding, but “have made it clear that they will not make further payments,” according to the judgment.
Wells Fargo Vendor Financial Services sued Girardi Keese on Dec. 9 for more than $880,000 in lease payments owed for office equipment, and Veritext filed a lawsuit Tuesday over nearly $550,000 in unpaid court reporting services.
And, CSI Group Inc., which provided armed guard services at Girardi’s home, had already filed a May 12 lawsuit for $53,859 in unpaid services.
Ross Todd contribute to this report.