Redondo Beach councilman accused of misappropriating $515,000 in law practice faces new State Bar charges

The State Bar of California charged Redondo Beach Councilmember Zein E. Obagi Jr. with seeking to mislead a judge and making misrepresentations to the Superior Court over money meant for a former client.
(Robert Gauthier / Los Angeles Times)

By Rebecca Ellis

An attorney serving on the Redondo Beach City Council who is accused of misappropriating half a million dollars meant for a former client now faces additional disciplinary charges over his explanation for why the money wasn’t handed over.

The five disciplinary charges announced Thursday by the State Bar of California, which include seeking to mislead a judge and making misrepresentations to the Superior Court, set in motion a disciplinary process that, in the most extreme cases, could end in disbarment.

The councilman, Zein E. Obagi Jr., has denied the accusations and said the State Bar is overreaching. He already faced seven disciplinary charges filed in July 2021, including an allegation that he “intentionally misappropriated” $515,000.

Two years ago, according to the disciplinary charges, $1.9 million was deposited into Obagi’s account as part of a settlement agreement around the sale of a cannabis dispensary, Valley Herbal Healing Center. Obagi had represented the owners and, according to filings from the State Bar, was supposed to transfer $515,000 from that settlement money to his former client, Eric Dominguez.

Now, the State Bar alleges he made false statements about what happened to the money.

In a lawsuit filed in 2021, Obagi blamed a different attorney involved in the settlement agreement, saying that attorney was the one responsible for transferring the settlement money to Dominguez.

According to the State Bar, that attorney had transferred money to Obagi with the explicit understanding that he would use some of it to pay his former client.

“The new set of charges alleges additional misconduct by Obagi, in particular false statements that he made in a lawsuit that he filed in court,” said Chief Trial Counsel George Cardona.

In an interview, Obagi called the newest charges “ludicrous” and said he was just the latest target of an overzealous State Bar.

“I never thought I’d be charged by the bar for anything. Now that I have been, it’s a total, absolute nightmare. It’s not justice,” he said. “I could have been more diligent at different times, but that’s the extent of it.”

A recent Times investigation found the State Bar has a record of going after attorneys without the capital or political clout to fight back, a population that is disproportionately Black, while ignoring misconduct by some of the state’s most prominent lawyers, such as Tom Girardi, who misappropriated millions of dollars from clients and was the subject of more than 200 State Bar complaints.

Obagi, who said he is part of a small firm, believes the charges against him are part of this pattern.

“It’s a machine. It’s churning for convictions,” he said. “That’s all it gets fed on, so that’s what it’s going for.”

The original charges, filed in 2021, are still pending. Obagi said an agreement between him and the State Bar was rejected by a judge because he said there was no evidence that the alleged misappropriation was intentional.

A status conference is scheduled for Jan. 30, where the court will decide how to proceed on both sets of charges.

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Redondo Beach councilman accused of misappropriating $515,000 in law practice faces new State Bar charges