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Trial Lawyers Inc.


   Trial Lawyers Inc.: Asbestos
    A Report on the Asbestos Litigation Industry, 2008

 

Trial Lawyers Inc. Asbestos
A Message from the Director
Introduction
Business Model

Exposing Fraud
Judicial Review
Further Evidence
Conning Clients

Reform Efforts
Recent Developments and Conclusion
Other Resources
Media
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The Manhattan Insitute's Center for Legal Policy.
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Walter Olson's OverLawyered.com.
 

 

ROBLES ROBBERY

A crooked lawyer lives the high life while his clients die destitute.

 

When asbestos lawyers get greedy, an overwhelmed judiciary is often unable to prevent misdeeds that can include inflated bills, payments to dummy companies, bribery, conspiracy, the kind of fraud highlighted in Judge Janis Jack’s stunning order,[201] and even outright theft. The ultimate victims are the truly sick left destitute, even though the supposed villain—big business—has paid large settlements.

 

One Miami case in particular should shock the conscience. Attorney Louis Robles was convicted of pocketing $13.5 million in payments made by asbestos defendants to benefit his sick clients. The total losses, however, could be some multiple of that, because the deceit continued for years before investigations of complaints to authorities bore fruit.[202]

 

A Vast System of Deceit

 

Robles collected $164 million between January 1, 1989, and September 30, 2002,[203] but how much of that actually reached his more than 7,000 clients[204] may never be known. Besides grossly inflating his legal bills,[205] Robles admitted taking from trust funds over $13.5 million that would have gone to almost 4,400 claimants nationwide.[206]

 

Before looting his clients’ trust accounts outright, Robles charged fees[207] and expenses[208] that totaled as much as 63 percent of the settlements. [209] Those sums included $10 million paid to a dummy “outside” computer firm he owned, $6.9 million in “file storage fees,” $2.1 million as a “set-up/investigation fee,” and $1.2 million for travel.[210] Robles also secretly extracted millions of dollars in so-called accruedinterest charges—a percentage of already inflated expenses that was added to bills while cases awaited settlement.[211] According to the U.S. Attorney’s statement accompanying Robles’s guilty plea, the lawyer would misappropriate settlement proceeds from one group of clients, and then to quiet their complaints about the resulting delay in payment, he would finally pay them, in pyramid-like fashion, with the settlement proceeds owed other clients. His delays in making payments naturally produced delays in his clients’ payment of expenses, on which Robles shamelessly imposed interest charges.

 

The Florida bar had serious complaints about Robles in hand by 1999, yet it did not file a formal disciplinary complaint until May 16, 2001, and Robles was not suspended until February 19, 2003.[212] He was finally disbarred on May 15, 2003, and it would be another which Robles would serve a ten-year prison term, he was given, on December 4, 2007, a 15-year sentence,[213] after pleading guilty to three counts of mail fraud.[214]

 

Lifestyle of the Rich and Infamous

 

Robles admitted pocketing over $13.5 million that would have gone to almost 4,400 claimants nationwide.

At his plea allocution, Robles declared, “I am truly sorry.” But prosecutors did not fail to point out that “Robles sought out clients who were dying and cheated them out of millions of dollars, so that he could finance his own extravagant lifestyle.”[215]

 

Just how extravagant? From 1999 to September 30, 2002, the amounts Robles looted from client trust funds ballooned from about $6 million to over $13 million.[216] That princely sum covered Robles’s $2 million in annual living expenses, including almost $600,000 in mortgage payments on a 9,000-square-foot Key Biscayne waterfront mansion, plus the cost of limousines, private jets, and apartments in New York and Los Angeles.

 

He blew millions more producing bizarre movies and records.[217] In 1999, Louis and his wife were the executive producers of the bomb Love God, a tale of “a nearsighted, epileptic schizophrenic with a history of suicide attempts and public masturbation,” who, after getting out of the loony bin, goes to live in a hotel where giant worms crawl out of the toilet and “rip off stray jewelry with extensor suction tongues.”[218] It should be no surprise that it received neither an MPAA rating nor a U.S. video-store release.[219]

 

Insider Deals Make It Worse

 

Before Robles’s disbarment and indictment, his firms borrowed over $3 million from Core Funding Group LLC.[220] In the bankruptcy of Robles personally as well as the two firms with which he was affiliated, the Robles entities, now consolidated, were ordered to pay Core $3.75 million, representing the loan’s unpaid principal plus unpaid accrued interest.[221]

 


VICTIMS SPEAK OUT

These are sampling of the over 100 pages of comments filed to the court by a Robles’s victims and relatives prior to his sentencing.

 


Attorneys and consultants in the Robles bankruptcy racked up over $1 million in bills,[222] money unavailable to compensate victims. Lawyers for the trustee are still billing up to $420 an hour; paralegals, up to $135.[223] There’s even a $4,958 bill for legal work involving the setting of fees.[224]

 

If that wasn’t bad enough, the court has authorized the trustee in the case, who complained of the costs of storage, to start destroying Robles’s files.[225] In perhaps the ultimate insult, the high-flying Robles, now bankrupt, was represented by federal public defenders,[226] though he had earlier been able to post a $1 million bond.

 

What Do the Victims Get?

 

Before Robles’s sentencing, victims and their relatives were offered a chance to file comments with the court. The more than 100 pages they submitted included an offer to serve as judge and executioner; many accounts of victims dying destitute; and perhaps most poignant, a simple question: “Are widows allowed any reimbursement? I don’t understand any of this.” Another widow simply returned a letter that was addressed to her late husband, noting the date he had died (see box).[227]

 

The tales of Robles’s real victims are in these court files—heartbreaking tales of people who really suffered, whose claims were paid by companies that did the right thing but who never received proper medical treatment or money that would have provided a decent life for their spouses and children.

 

Ronnie and Dorothy Thomas of Caddo Mills, a small town northeast of Dallas, started building their retirement home, expecting that money resulting from settlement negotiations Robles claimed to have started would help pay for it. With only the garage finished, Ronnie became too ill from asbestosis to continue working. The settlement money they were counting on never arrived.

 

“It breaks my heart thinking of [Ronnie] having to spend his final years living in this garage, but that is how things turned out,” Mrs. Thomas wrote. “It is where I still live today, with no hope of ever being able to finish the house. While Mr. Robles has led a life of wealth and excess, many of his victims have suffered and died in poverty, my late husband among them,” she told the judge who decided Robles’s sentence.[228]


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201. See Order in the Court, supra pp. 12-13.
202. See infra notes 203-28 and accompanying text.
203. USA v. Robles, No. 06-20286 (S.D. Fla. May 11, 2006) (Doc. 3, Indictment ¶ 10).
204. No. 06-20286 (Doc. 129, Factual Basis in Support of Entry of Guilty Plea ¶ 4).
205. Robles billed clients on behalf of an “outside company” that was supposedly handling the “extraordinary computer and data processing needs” demanded by the “sheer complexity” of the litigation. The firm was actually part of the Robles business and legal network, but clients were never told. Florida Bar v. Robles, No. SC-01-051 (Fla. 2003). Other bills found to be illegal or questionable by the state bar association included seven different charges for X-ray screenings that were supposed to be free, even $1 allocated for electricity. Bar v. Robles (initial complaint). Alicia Vale, special counsel to the U.S. Attorney in Miami, confirmed in a telephone interview on Sept. 24, 2007, that the
$13.5 million figure covered only money “directly diverted from client accounts,” not inflated billing or other practices. She said prosecutors have not made a comprehensive estimate of the total loss to victims.
206. No. 06-20286 (Doc. 129, Factual Basis in Support of Entry of Guilty Plea ¶ 19).
207. Such fees were limited by law or contract to 33 to 40 percent. See note 205. See No. SC-01-051.
208. See id. Such fees were limited by contract to 10 percent. See note 205.
209. See id. (initial complaint ¶ 72).
210. Such fees were imposed 1.6 million times by Robles’s law firms. In re: Appointment of Inventory Attorney for Louis Steven Robles, No. 03-11-CA 60 (Cir. Ct. Fla.) (exh. A).
211. See note 205.
212. No. SC-01-051 (Order of the Supreme Court of Florida) (granting motion for emergency suspension).
213. No. 06-20286 (Doc. 143).
214. Id. (Doc. 3).
215. Associated Press, Former Attorney Gets 15 Years for Stealing Asbestos Settlements, Naples News, Dec. 4, 2007; John Pacenti, Fla. Attorney Sentenced to 15 Years in Prison for Bilking Elderly Clients Out of $13M, Daily Bus. Rev., Dec. 7, 2007.
216. No. 06-20286 (Doc. 129, Factual Basis in Support of Entry of Guilty Plea ¶ 14).
217. Id. at ¶ 15.
218. Vanessa Blum, S. Fla. Attorney Pleads Guilty in $13.5 Million Theft, South Florida Sun Sentinel, Sept. 19, 2007; Movie Synopsis, Hollywood.com, accessed at http://www.hollywood.com/moviedetail/Love_God/168698 (last accessed Sept. 23, 2007).
219. Adam Groves, The Cutting Edge, Fright Sight, www.fright.com/edge/lovegod.html (last accessed on Sept. 23, 2007).
220. In re: The Robles Law Center, P.A., and Louis B. Robles, P.A., Nos. 04-16685, 16686 (Bankr. S.D. Fla.). Both the history of the case and the loan from Core Funding Group are detailed in a settlement agreement filed July 23, 2007.
221. See id. (Doc. 348). The deal sets up a complex payment schedule giving Core a fixed share of the estate’s income; if that doesn’t pay off the debt in full by the time there are funds to pay unsecured creditors, Core gets to file an unsecured claim for a share of that money.
222. An analysis by the author of bills submitted by attorneys for the trustee, their financial and other advisors, and consultants, and for their expenses in the bankruptcy cases of the two law firms with which Robles was affiliated (No. 04-16685 (Bankr. S.D. Fla.) (six consolidated for administration)) shows that attorneys billed the estate $1.025 million. The bills included $640,220.26 in attorney fees and expenses, of which $505,900 was approved; and $385,257.43 in fees and expenses for accountants, data management consultants, and financial consultants, of which $81,832.29 had been approved as of Sept. 18, 2007. A 20 percent holdback was imposed on the fees but can be sought when the proceedings conclude, and hearings on some fees and expenses had not yet been scheduled as of that date.
223. No. 04-16685 (Summary of Third Interim Application for Allowance and Payment of Compensation, at 17).
224. Id. (Fee Summary Attachment, at 11).
225. Id. (Docs. 318, 332). Certain parties had the right to protect certain documents from shredding; others had 30 days to seek exemptions for documents that the trustee would otherwise be allowed to shred. After that period the trustee was free to shred whichever documents had not been exempted.
226. No. 06-20286 (May 25, 2006) (Docket item No. 9) (Order).
227. Id. (Doc. 78).
228. Id. (Doc. 78, at 91).

 

 

 


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