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Former Latham Partner Pleads Guilty
Blog News | 2008/03/31 14:53

A former partner at Latham & Watkins pleaded guilty Friday to defrauding both clients and his own firm by charging them more than $300,000 in personal or false expenses.

Samuel A. Fishman, a mergers and acquisition specialist in Latham's New York office from 1993 to 2005, was designated billing partner for a number of firm clients. According to prosecutors at the Southern District of New York U.S. Attorney's Office, Fishman, 51, used his position to carry out a fraudulent scheme over the course of several years.

Responsible for supervising and approving invoices sent to clients, Fishman added to the bills a number of inappropriate items, mischaracterizing them as charges for photocopying or express mail. He also fraudulently sought reimbursement from his firm for a number of personal expenses he claimed were for business.

The U.S. Attorney's Office did not identify Latham as Fishman's firm in a criminal information filed with the guilty plea, nor was the firm's name mentioned in court Friday afternoon when Fishman entered his plea to one count of mail fraud. But in a statement Friday, the firm acknowledged Fishman as a former partner and said his misconduct had come to light in 2005.

Latham "immediately acted to protect our clients fully, and disclosed the matter to appropriate law enforcement authorities," said David Gordon, Latham's New York managing partner. "Mr. Fishman resigned from the firm at the time the issues were discovered. Since that time, we have cooperated fully with the investigation."

In announcing Fishman's guilty plea, prosecutors noted that the firm had reimbursed its clients hundreds of thousands of dollars that had been fraudulently charged. A firm spokesman Friday declined to identify the clients defrauded by Fishman.

The criminal information said Fishman's clients were in the banking, utilities, telecommunications and entertainment industries. He has previously acted as lead counsel for companies including movie theater chain AMC Entertainment Inc. and JPMorgan Partners, the private equity arm of JPMorgan Chase & Co.

Accompanied at Friday's hearing by defense lawyer Jack Litman of Litman, Asche & Goiella, Fishman expressed remorse to Southern District Judge Victor Marrero.

"I am very sorry for what I did," he told the judge.

Fishman's sentencing is scheduled for June 27. The mail fraud charge carries a maximum sentence of 20 years in prison. Fishman also has agreed to forfeit $350,000 in ill-gotten wealth. He also faces likely disbarment.

A number of major firms have had to deal in recent years with fraud by partners, though most instances have resulted in disbarment or other disciplinary sanction as opposed to criminal prosecution.

In 2006, former WilmerHale intellectual property partner William P. DiSalvatore resigned from the bar after admitting to a litany of misconduct, including falsifying expense reports and assigning associates to perform "pro bono" work for friends and family. He claimed more than $109,000 in false personal expense.

Willkie Farr & Gallagher and the former Kronish Lieb Weiner & Hellman are two other firms that have also terminated partners for fraudulently seeking reimbursement for personal expenses.

In most such cases, including that of Fishman, the defrauded amounts have been small compared to what the perpetrators earn as partners. Last month, Latham said it had profits per partner of $2.3 million in 2007.

Steven Lubet, a legal ethics professor at Northwestern University School of Law, said he always found it "incredible" that highly paid partners would resort to fraud. He said he could only imagine that such people were overspending trying to emulate the lifestyles of those they represented.

"The clients have that kind of money, the lawyers don't," said Lubet. "Sometimes, lawyers decide they want to live like their clients and that extra money has to come from somewhere."

Perhaps the most well-known case of a lawyer bilking his clients and firm was Webster Hubbell, the former associate attorney general under President Bill Clinton.

Hubbell was forced to resign his position in 1994 after his former partners at Arkansas' Rose Law Firm discovered billing irregularities. He later pleaded guilty to fraudulently charging almost $500,000 for personal expenses and legal work never actually performed. He served 16 months in prison.



23 Districts Improperly Report Attorneys
Blog News | 2008/03/31 14:38

Twenty-three school districts - nearly one-fifth of all the school districts on Long Island - improperly reported private attorneys as employees, which helped the attorneys earn public pensions totaling more than $342,082 a year, plus health benefits worth thousands more, a Newsday review of records has found.

In some cases, a town, village, library, special district or county also reported the attorneys as employees, often as full time, even though records show they did not always work full time. By being reported as employees at these other agencies while also working in private practice, they were able to enhance the size of their state pensions.

The employment arrangements - some of which started in the early 1970s and continue to this day - enabled a select group of 10 attorneys to garner generous public benefits, even as they earned millions in legal fees as well, state and school district records show. Three of the 10 have not yet begun receiving their pension.

Among the attorneys is one currently collecting a six-figure public pension; another is a Nassau County legislator. Although most of the attorneys declined to comment, those who did speak with a reporter said they were following previous practice when they got onto the public and school district payrolls. Two recently changed their status from employee to independent contractor.

The issue of independent contractors being treated as employees so they could obtain public benefits has been called into question after Newsday reported on the case of Centerport attorney Lawrence Reich. Five school districts falsely reported him as a full-time employee, enabling him to collect a pension of nearly $62,000 and health benefits for life.

About three weeks ago, the state comptroller's office found that Reich did not meet the standards used by the Internal Revenue Service to determine whether someone is an employee. As a result, he must pay back the pension he has been collecting since September 2006.

The FBI, IRS and New York attorney general's office all have launched investigations of lawyers being carried as employees by school districts.



DOJ to Continue Crackdown on Political Corruption
Topics | 2008/03/28 15:53

US Attorney General Michael Mukasey said Thursday he would personally ensure that the US Department of Justice does not bow to political pressure as it prosecutes government officials for corruption. In a speech to the Commonwealth Club in San Francisco, Mukasey said:

Public corruption can inflict damage that is not only costly but also profound. When a public servant at any level of government exploits his or her office for improper purposes, the damage is measured not just in dollars and cents but also in erosion of the public trust upon which depends the survival of our system of government.

We fight, investigate and prosecute public corruption to ensure that those who hold public office live up to the public's trust, and to build the public's confidence in the very idea of government, without which the government cannot function.

The investigation and prosecution of public corruption is therefore among the highest obligations of law enforcement, and it should come as no surprise that I consider it to be one of the top priorities of the Department of Justice. In recent years, the Department's career prosecutors and criminal investigators have been engaged in a renewed effort to pursue corruption at all levels and in all branches of government.

Mukasey emphasized that the joint efforts of the DOJ and US Attorney's offices had resulted in the convictions of 1,093 individuals for corruption in 2006, including former congressmen Randy "Duke" Cunningham and Bob Ney.

Mukasey's speech came only hours after a federal grand jury in San Juan, Puerto Rico charged Puerto Rican Governor Anibal Acevedo Vila and 12 associates with 27 counts of conspiracy, false statements, wire fraud, federal program fraud and tax crimes related to campaign financing.



Herbies Promotes Record Number of Partners
Blog News | 2008/03/28 15:45
Herbert Smith has made up a record 18 associates to the partnership and a third of them are women.

The bulk of the promotions were made around the firm's international network with just eight of the 18 based in the London office. As last year, when the firm made up a total of 10, the corporate practice gained the highest number of new partners at seven. Litigation and arbitration has gained five new partners while finance and real estate will receive two new partners apiece and employment and competition each gain one.

Senior partner David Gold said the geographic and departmental splits had been very deliberate. "This year's promotions will support two of our key strategic priorities, namely strengthening our international capability and further developing the distinctive breadth and balance of our practice," he added. "Both are pivotal to our ability to support clients and maintain high activity levels across the range of economic cycles."

In terms of offices, after London, Paris has gained four new partners while Hong Kong and Tokyo have each gained two and Beijing and Brussels have gained one each. This is a big shift in strategy from last year's promotions when Hong Kong received one internal promotion with the remaining nine going to the London office.



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