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Federal Judge Freezes Prominent L.A. Attorney’s Assets over $2 Million Missing Funds

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Federal Judge Freezes Prominent L.A. Attorney's Assets over $2 Million Missing Funds

A federal judge froze the assets of prominent Los Angeles’ attorney, Thomas Girardi, and his firm, Girardi Keese, after he embezzled at least $2 million from a settlement fund for the Boeing jet crash victims’ families.

Through a telephonic contempt hearing on Monday, December 14, 2020, Thomas M. Durkin, the U.S. District Judge, described Girardi’s conduct as “unconscionable.” He also stated, “This isn’t that difficult: You learned in law school, we all did, in Ethics 101, that when you get the money that belongs to a client, you put it in an escrow fund and you don’t touch it.” The judge continued, “No matter what your personal financial situation is, no matter what kind of pressures you’re under, if you touch client money, you’re going to be disbarred and quite possibly charged criminally.”

Judge Durkin referred Girardi to the U.S. attorney’s office for criminal investigation. His attorneys disclosed during the hearing that the $2 million was currently not in his possession. Evan Jenness, one of Girardi’s attorneys, informed the judge that Girardi Keese, her client’s firm, located approximately $15,000 in its accounts.

Girardi and his celebrity wife, Erika Jayne, face a civil suit over alleged embezzlement of settlement funds meant for families of victims of the Lion Air Flight 610 crash, which occurred on October 29, 2018. Girardi Keese, Girardi’s law firm, represented the victims’ families and were appointed to process Boeing’s settlement.

Jenness told the judge, “They were unable to make payroll more recently.” She also cited her client’s family court battle with his celebrity wife, Erika Jayne, related to their assets, as well as “obligations and debts.”

Jenness told the judge that because Girardi, 81, remained silent throughout the telephonic proceedings, she questioned whether or not he comprehended the “nature or the gravity of the current situation.” She allegedly requested him to go through a mental examination.

However, attorney Jay Edelson, whose Chicago firm filed the class action suit against Girardi on behalf of the victims’ families, called out Jenness’s claim, citing it as nothing but a sham. He also told the judge that Girardi was offered money to steer clear of the contempt hearing.  

“Half a million dollars for any one of these families is significant money, life-changing given the tragedy they have been through and trying to carry on in the aftermath,” Edelson said.

Edelson’s suit alleges that Girardi misappropriated the funds to meet his and his wife’s lavish lifestyle. He further added that Girardi paid off loans worth millions.

During the Monday hearing, Edelson informed Judge Durkin of his firm’s investigation into uncovering evidence that will nullify Girardi’s attorneys’ claim of mental incompetence. “What we have been uncovering through our investigation is that the Girardi firm has been running a Ponzi scheme for at least a decade,” he said.

Edelson added, “What they do is when money comes in, they use that to pay previous creditors, previous clients, and then they wait until more money comes in. And what happened is, I guess everything just caught up with them. But this is not new behavior. This is consistent. They’ve been doing it for a decade.” 

The asset freeze is yet another blow to Girardi following the divorce filed by his wife in November for undisclosed reasons. The husband and wife duo were hit with another suit in early December from Edelson’s firm. That lawsuit accused them of fund embezzlement, alleging their divorce was a “sham attempt” to “continue funding his and Erika’s lavish Beverly Hills lifestyles.”

Both have yet to comment on the allegations publicly.