The State Bar of California announced on Jan. 24 that it will intensify its efforts to determine whether disciplinary action against Thomas V. Girardi was averted, through the years, by virtue of Girardi’s influence and the connections he had within the organization, and on Jan. 10, the State Bar Court recommended to the California Supreme Court that the former premier personal injury attorney be disbarred.

Girardi, 82, is a conservatee, is no longer practicing law, is in bankruptcy, is being divorced by his trophy wife, actress/singer Erika Jayne, and has moved from his Pasadena mansion into an assisted living facility. His reputation is irredeemable based on litigation in which it is claimed that he and his firm stole millions of dollars in clients’ settlement funds.

In the latest development in the Girardi saga, the State Bar disclosed that the downtown Los Angeles law firm of Halpern May Ybarra Gelberg LLP has been hired to conduct an investigation into the question of possible overlooking of the lawyer’s persistent ethical breaches.

An earlier peek at the matter led the State Bar to admit in July that an internal review “revealed mistakes made in some investigations over the many decades of Mr. Girardi’s career going back some 40 years and spanning the tenure of many Chief Trial Counsels.” The bland admission of “mistakes” was widely seen as inadequate absent any elaboration.

 A statement on Monday by State Bar Board of Trustees Chair Ruben Duran, who heads Best Best & Krieger LLP’s Ontario office, suggests the State Bar is now set to dig more deeply than before. He said:

“Mark our words: we will go wherever the evidence leads us.”

Duran also commented:

“The State Bar Board leadership and staff take very seriously the immense harm done by Thomas Girardi to innocent victims. We have been proactively doing everything in our power to learn from the past and do better in the future to prevent harms like this from recurring.

“This necessarily includes assessing whether intentional wrongdoing by anyone associated with the State Bar may have influenced how complaints against Girardi were handled.”

While Duran expressed a resolve to determine what occurred when complaints about Girardi were received, he did not provide hope that much of what is learned will be shared with the public. To the contrary, he said:

“Details of the investigation, including details of past closed complaints and investigations, must remain confidential to comply with the law and to give this investigation the greatest chance of success.”

The probe will doubtlessly include questioning of Tom Layton who, while an investigator for the State Bar, acted as an aide to Girardi, frequently accompanying the high-profile lawyer at social events; attorney Walter Lack and former State Bar President Howard Miller, who worked with Girardi on a case that resulted in an ethics probe by the Ninth U.S. Circuit Court of Appeals (with a determination that Girardi and Lack had committed misconduct); and former State Bar Court prosecutor Dale G. Nowicki who had a clandestine professional relationship for more than a year with Girardi’s son-in-law, attorney David Lira.

Layton

The Los Angeles Times, in a July 13 article by Harriet Ryan and Matt Hamilton, reported:

“As an investigator for the State Bar of California, Tom Layton was responsible for policing the legal profession for rogue attorneys.

“But while collecting a salary as a watchdog for the public, Layton spent work hours advancing the interests and political connections of a lawyer with a long record of misconduct complaints: the now-disgraced trial attorney Tom Girardi, emails obtained by the Los Angeles Times show.

“During years when clients accused the attorney of stealing from them, Layton, the most high-profile investigator at the agency, was arranging dinner dates for Girardi with civic elites, such as then-Los Angeles Police Chief Charlie Beck and billionaire developer Ed Roski, and otherwise acting as his personal assistant, political operative and, at times, chauffeur, according to the emails.”

Lack, Miller

Girardi’s firm, Girardi | Keese, in tandem with Lack’s firm, Engstrom, Lipscomb Lack, attempted to levy execution in the United States on a $489 million Nicaraguan default judgment against Dole Food Company. That company had not been named as the defendant but court documents were altered to make it appear that it had been. The firms’ bid in the U.S. District Court for the Central District of California failed.

On July 6, 2005, Miller, of Girardi’s firm, a week before he was to orally argue the appeal before the Ninth Circuit, determined that the judgment was invalid and that the appeal should be dismissed. It was dismissed five days later.

However, the Ninth Circuit on Aug. 25, 2005, issued an order to show cause to Girardi, Lack, Miller, two Lack associates, and the two firms to show cause “why it or he should not be required to reimburse the appellees for fees and expenses incurred in defending this appeal, and why it or he should not be suspended, disbarred, or otherwise sanctioned.” The alleged conduct was described as “filing a frivolous appeal, falsely stating that the writ of execution issued by the Nicaraguan court named Dole Food Company, Inc. as a judgment debtor, falsely stating that the writ corrected mistakes in the judgment, and falsely stating that the notary affidavit constituted an accurate translation of the writ.”

The OSC was discharged on March 28, 2006, as to Miller.

Senior Judge Wallace A. Tashima was appointed as a special master. In a October 7, 2009 report (incorporating corrections to an earlier report), he declared:
“In a high stakes gamble to enforce a foreign Judgment of nearly a half billion dollars, Respondents initiated and directed years of litigation against Defendants. Respondents efforts went beyond the use of ‘questionable tactics’—they crossed the line to include the persistent use of known falsehoods….Respondents made these false representations knowingly, intentionally, and recklessly. Their actions vexatiously multiplied the proceedings at great expense to Defendants and required the Ninth Circuit to deal with a frivolous appeal.”

Tashima called for sanctions totaling $390,000, which were not contested.

A three-judge panel—comprised of Judges William A. Fletcher, Marsha S. Berzon, and N. Randy Smith—on July 13, 2010, said:

“As early as January 2003, respondents Lack and Girardi were aware that the Nicaraguan Judgment named the wrong defendant and that the discrepancy could doom any enforcement action in American courts.”

 The panel added that the “careful and detailed decision” by then-District Court Judge Nora Manella (now presiding justice of Div. Four of this district’s Court of Appeal) “should have given them pause in pursuing an appeal, as it laid bare the fundamental and fatal flaws in their enforcement action.”

The judges noted that Girardi had a “practice of authorizing the Lack firm to sign his name on briefs that turned out to contain falsehoods,” and concluded that his “proven conduct is at most reckless.” They declared:

“THOMAS V. GIRARDI is formally reprimanded.”

Lack and his associate Paul A. Traina—whom the panel said “cannot, like Girardi, rely on a claim of ignorance”—were suspended from practice before the Ninth Circuit for six months.

Yet, the State Bar imposed no discipline on Girardi, Lack or Traina.

In light of Miller being State Bar president, a special prosecutor, Jerome Falk, was named. He found that no misrepresentations had been “intentional.” It later emerged that Falk had ties to Girardi and Lack; their law firms had been clients of his law firm.

Nowicki
It has also emerged that Nowicki, while a State Bar prosecutor, reported to a supervisor in the office who was overseeing the disciplinary proceedings against Girardi. At that time, Nowicki was moonlighting, practicing law with Lira, whose wife, Jacqueline Lira, is Girardi’s daughter.

When it came to light, the State Bar said it did not know of Nowicki’s moonlighting as a lawyer, noting that it was not reported to it, in violation of a policy. Nowicki resigned from his State Bar post on Oct. 4. He is now practicing law with an office in La Mirada.

Lira left Girardi | Keese—which is now shut down—on June 13, 2020, after a heated confrontation with Girardi over his cheating of clients. He’s presently with Engstrom, Lipscomb & Lack, the firm of which Walter Lack is managing partner.

Girardi, while he was still practicing law, often teamed with Lack in representing clients in court. Girardi provided theatrics and Lack understood the legal aspects.

With the current focus on the State Bar’s disciplinary system, the question is presented whether other high-profile attorneys who were subjects of publicly aired allegations of misconduct—such as the late Neil Papiano and former Los Angeles County Bar Association President Paul Kiesel—escaped State Bar actions based on their prominence and clout.

The Jan. 10 State Bar Court recommendation that Girardi be disbarred came as no surprise given that the ex-practitioner did not file opposition. Chief among the findings was that Girardi “committed an act of moral turpitude…by intentionally misappropriating $1,985,615.15” that belonged to the minor children of air crash victims.

Girardi and his firm represented four sets of plaintiffs—families, including minors—in multidistrict litigation in In Re: Lion Air Flight JT 610 Crash, assigned to the U.S. District Court for the Northern District of Illinois. The case stemmed from a plane crash on Oct. 29, 2018, causing the death of all 189 persons who were aboard. A settlement was reached. In violation of court orders to electronically disburse settlement funds that were in his client trust account (“CTA”), Girardi held onto $2 million of the funds. According to the State Bar complaint:

“On or about September 3, 2020, the balance in respondent’s CTA was $239,396.25. On or about December 4, 2020, before respondent had disbursed any portion of the $2,000,000.00 from respondent’s CTA to, or on behalf of the minor plaintiffs, the balance in respondent’s CTA was $14,384.85.”

On Dec. 14, 2020, U.S. District Court Judge Thomas Durkin of the Northern District of Illinois found Girardi in contempt for violating his orders, directed entry of a $2 million judgment against him, and ordered that his assets be frozen.

The judge said of the plaintiffs:

“These are widows and orphans. Half a million dollars for any one of these families is a significant amount of money. Life changing, given the tragedy they went through.”

A Dec. 2, 2020 class action alleges that Girardi and Jayne embezzled the money to fund their “outrageous lifestyles…in the glitz-and-glam world of Hollywood and Beverly Hills.”

It is also alleged by the State Bar that Girardi “willfully and intentionally misappropriated at least $269,759.70” of a $504,400 settlement of a client’s suit for the wrongful death of her husband.

Girardi was relegated to involuntary inactive status by the State Bar on March 9. Disciplinary charges were filed against him on March 30 alleging 14 counts involving the large-scale cheating of clients.

His ability to pay damages is in doubt. Girardi now professes a lack of assets, saying in court papers last year:

“At one point I had about $80 million or $50 million in cash. That’s all gone. I don’t have any money.”

The trustee in the bankruptcy of Girardi’s dissolved law firm, is seeking $25 million from Jayne, asserting she knew that funds for gifts and “glam” services lavished on her were derived from settlements stolen from her husband’s clients.

There has been a further sentencing delay in the case of disbarred California lawyer Philip James Layfield. He is facing a potential sentence of more than 200 years in prison after being convicted on Aug. 27 by a jury in the U.S. District Court of the Central District of California on 19 counts of wire fraud, one count of mail fraud, one count of tax evasion, one count of failure to collect and pay over payroll taxes, and one misdemeanor charge of failure to file a tax return.

 The conviction took place after a 13-day trial in the courtroom of Judge Michael W. Fitzgerald.
 A sentencing hearing was slated for Nov. 8 but was continued to Jan. 27, pursuant to a stipulation, based on a tardy disclosure of the pre-sentencing report. On Jan. 11, the U.S. Attorney’s Office requested a 60-day continuance, explaining in an ex parte motion explaining that it was “to allow for a public hearing for defendant’s victims to address the Court in person and in defendant’s presence.”

The motion explains:

“[T]he government presently intends to call at sentencing approximately 10 of defendant's victims to tell their stories and to, hopefully, achieve some reasonable level of closure.”

The government argues that “[g]iven the nature and seriousness of the convictions, the large number of clients whom defendant defrauded, and the severity of the harm that defendant's victims have suffered, the government submits that offering the in-person statements of crime victims for the suggested period of time is reasonable.”

Layfield’s attorney filed opposition the following day, pointing out that “Mr. Layfield remains in custody in Santa Ana Jail.” The defendant is diabetic, the opposition pointed out, increasing his vulnerability to COVID-19.

The opposition sets forth:

“Nothing in the law requires that (1) the victims be physically present in the courtroom or that (2) the defendant be personally present in the courtroom. Were the hearing to proceed by zoom or other video method, nothing in the law would be violated. In fact, in light of the pandemic, which persists, having the hearing by zoom protects all parties from contact with one another, while permitting the sentencing to proceed.”

On Jan. 13, Fitzgerald re-scheduled the hearing for Feb. 17, specifying: “The hearing will proceed by Zoom, if necessary.”

As federal investigators closed in on Layfield in 2017, he fled to Costa Rica in June of that year, was in the United States for two days in October 2017, returned to Costa Rica, and came back to the U.S. on Feb. 19, 2018. He was arrested in New Jersey one week later and was indicted here on March 9, 2018.

The prosecution began in connection with Layfield having pocketed settlement funds belonging to Josephine Nguyen, who was a client of the then-firm of Layfield & Barrett. She was to receive 60 percent of a $3.9 million settlement of her personal injury claim, amounting to $2.3 million.
A superseding indictment expanded the scope of the prosecution to include tax evasion and fraud for 2016 and 2017.