By KENNETH OFGANG
Staff Writer

A last-ditch attempt to settle a conspiracy suit against Los Angeles Superior Court Judge Patrick B. Murphy and seven other defendants fell through yesterday after an attorney for Murphy's sister declined to join the agreement.

Senior U.S. District Judge Wm. Matthew Byrne Jr. of the Central District of California met privately with each party, as he had on March 24 when another proposed settlement fell through.

Byrne informed the whole group that plaintiffs had stuck to their earlier amount and said "it's higher" than what the defendants had been able to come up with. Attorneys said Byrne asked them to keep proposed amounts confidential.

"I think we just try it," the jurist said, warning the parties:

"Don't come back to try to get it settled. It's not fair to litigants and clients who have to keep paying attorney fees."

Trial Date

The parties are due back in court Thursday to work out joint exhibit and witness lists, jury instructions and stipulated facts. Byrne said he would set a trial date at that time. He said it would likely be in June, since the previous April 11 date was too soon for Murphy's new attorneys, who just joined the case last week.

In the suit, Smith Barney, Inc. and Prudential Securities, Inc. accuse Murphy, Dr. George Taus, and others of conspiring to "launder" money from Taus' accounts with the brokerages to hide it from his ex-wife, Susan Taus.

She sued, claiming that the two firms wrongly gave George Taus money to which she was entitled under a marital settlement agreement. A National Association of Securities Dealers arbitration panel ordered the firms to repay her $785,000, and they in turn accused Murphy and a host of his friends and associates of devising a scheme to help Taus conceal the money.

The brokerages allege that Taus first invested $1.8 million in Copex International, a Nevada company founded by defendant Arnold Secord.

Secord allegedly used the money to settle a sexual harassment claim by defendant Maryanne Baumgarten, a former employee and friend of Murphy. Secord transferred the money to defendant Paul Ottosi, an Encino attorney who allegedly employed Baumgarten at one time.

Ottosi then gave the money to Baumgarten, who allegedly distributed it to three other defendants--Azusa attorney Stephen Alexander; Baumgarten's sister, Winnie Eisen; and Colby Cota, another friend of Murphy's.

Murphy Denial

Ottosi claims he received and disbursed the money on Murphy's instructions, but Murphy denies that account, saying he had nothing to do with Ottosi's getting the money, and that when he found out about the transfer, he told Ottosi to get the money back and give it to Taus.

There are also allegations that Murphy helped Baumgarten in an effort to launder some of the money through Las Vegas casinos. Murphy acknowledged in a deposition that he had been to Las Vegas with Baumgarten and Cota, but said he only accompanied Baumgarten to the cashier's cage when she was buying chips.

Other allegations involve some of the money being converted to gold. Murphy acknowledges delivering a package from Alexander to Baumgarten that he says Alexander told him contained gold.

Taus declared bankruptcy in November 1998 and bankruptcy trustee David A. Gill--represented by his own firm, Danning, Gill, Diamond & Kollitz--then sued the physician to recover funds he owed to Susan Taus and other creditors.

The bankruptcy suit involves the same allegations but adds four additional defendants, including Murphy's sister, Barbara Parsons.

Byrne yesterday denied without prejudice a motion to consolidate the two cases for trial. He added that "a renewed motion to dismiss the bankruptcy might be entertained."

Byrne acknowledged that the cases would be triable together, but told the attorneys, "You've got enough trouble trying this case."

Judge Critical

The trustee's lawyer, Richard Burstein, argued against joining the cases. Byrne was critical, quizzing him on how much money he thought could be recovered.

Burstein said about $200,000 had been found and said he hoped a bankruptcy trial would lead to more. But Byrne noted that Danning, Gill had already billed more than $300,000 to recover $200,000 and would likely earn more than $450,000 seeking money that remains unlocatable.

Byrne told Burstein that Taus' bankruptcy should never have been filed, as evidenced by Taus' ability to contribute to the failed settlement. He noted that Taus had tried to withdraw his bankruptcy but Danning, Gill opposed it.

"You've done nothing but charged attorneys' fees," he said, adding:

"At the end of this case, all it's going to be about is attorney's fees."

Murphy attorney Tracy Green said yesterday that Murphy's contribution to the failed settlement would have been $145,000 and that Parsons would have paid $55,000.

But Parsons' attorney, Gary A. Laff, insisted that the settlement agreement include language to protect his client from a judge in a future criminal proceeding requiring her to pay restitution.

Plaintiffs rejected Laff's proposal and Laff withdrew from the agreement. Without Parsons' $55,000, the total offer by the defendants fell short of the plaintiffs' demands.

While other defendants' contributions were confidential, Taus' attorney said his client would have provided "the lion's share."

Byrne noted that two defendants would have contributed nothing, and it became clear from discussion in open court that they were Alexander and Cota.

Byrne at one point asked the plaintiffs if they wanted to settle with everyone but Murphy and Alexander, whom he said was "sitting there not paying anything."

"If it were my recommendation, I'd carve two of them out," Byrne said.