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A federal judge in Chicago has frozen the assets of prominent Los Angeles attorney Thomas Girardi, finding that he misappropriated at least $2 million in client funds that were due to the families of those killed in the crash of a Boeing jet in Indonesia.
At a contempt hearing Monday morning, U.S. District Judge Thomas M. Durkin called Girardi’s conduct “unconscionable” and said he was referring him to the U.S. attorney’s office for criminal investigation.
“No matter what your personal financial situation is, no matter what kind of pressures you are under, if you touch client money, you are going to be disbarred and quite possibly charged criminally,” said Durkin, calling it “ethics 101.”
“You learn that in law school,” the judge said, “and someone as experienced as Mr. Girardi knows that as well as anyone.”
Girardi, 81, is one of the nation’s preeminent civil lawyers, thanks to his role in the case that inspired the film “Erin Brockovich” and, more recently, appearances on “The Real Housewives of Beverly Hills” alongside his now-estranged third wife, a 49-year-old pop singer known as Erika Jayne.
During the hearing, two attorneys representing Girardi said he did not currently possess the $2 million owed his clients. Los Angeles attorney Evan Jenness told the judge her client’s firm, Girardi Keese, had about $15,000 in its operating accounts.
“They were unable to make payroll more recently,” Jenness told the judge. The lawyer also cited “obligations and debts,” as well as an anticipated family court battle with Jayne over their assets. She filed for divorce last month after more than 20 years of marriage.
Girardi attended the court hearing by phone but did not speak beyond acknowledging his presence. His lawyers, who were hired in recent days, said Girardi had not been able to assist them in preparing a defense for the hearing. They said they had concerns about his mental competency.
“I’m unsure that he understands either the nature or the gravity of the current situation,” said Jenness, who told the judge she wanted Girardi to undergo a mental examination.
Another lawyer for the plane crash victims’ families called those assertions “a sham.” Attorney Jay Edelson, whose firm alerted the judge to the misappropriated funds, told Durkin that, as recently as last week, Girardi was offering him money in an attempt to stave off the contempt hearing.
Durkin also ordered that a trustee be appointed to oversee whatever assets remained to Girardi and his firm. The priority, he said, was for Girardi’s clients to receive their entire settlement.
“These are widows and orphans,” he said, noting each was due about $500,000. “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.”
The settlements at issue stem from the crash of Lion Air Flight 610, which plunged into the ocean off Indonesia, killing all 189 people on board. The plane was a 737 Max, the jet that Boeing subsequently grounded because of problems with its anti-stall software.
The missing money is part of the amount Girardi and his firm negotiated from Boeing for four families, and the federal judge was overseeing the litigation and the payouts. The terms of the settlement are confidential, but based on remarks in court, each client was to have been paid $2 million but had only received about 75% of the money owed to them.
Last week, Edelson’s law firm filed a separate lawsuit against Girardi, accusing him of diverting the Lion Air settlement money to finance his “public image of obscene wealth” for him and his wife.
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