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

Trial lawyer who won millions for Boeing 737 MAX crash victims accused of mishandling money

Attorney Thomas Girardi is at the center of a legal drama of his own, with accusations that he misappropriated settlement money from Boeing for... (Irfan Khan / TNS)

By MATTHEW GOLDSTEIN

Two decades ago, the movie “Erin Brockovich” helped make Thomas Girardi something of a folk hero.

Already an accomplished trial lawyer who pursued personal injury cases against large corporations, he was part of the legal team when Brockovich went after Pacific Gas & Electric in 1993. Ultimately, the California utility was forced to pay hundreds of millions of dollars to people who said they got cancer and other ailments from drinking contaminated groundwater.

The movie helped introduce the world to “toxic tort” litigation — cases arising from exposure to chemicals and pollutants. And Girardi, who was thanked in the movie’s credits and served as an adviser on the film, reaped the rewards for clients and himself: He went on to win billions of dollars for customers of pharmaceutical company Merck and married a singer who has a spot on the “Real Housewives of Beverly Hills.”

But now Girardi is starring in his own legal drama — one that William F. Savino, a lawyer for one of the firms that is suing him, called an “almost Shakespearean tragedy.”

Lawsuits playing out simultaneously in state and federal courts in Los Angeles and Chicago have left Girardi’s personal and professional life in tatters as he faces accusations of misconduct, including that he misappropriated money that was supposed to go to families of victims of the Lion Air crash in 2018 that led to the grounding of Boeing’s 737 Max.

Lawyers for Girardi, 81, have suggested in court that he is no longer mentally competent — an idea that another attorney for Lion Air families said was merely an attempt to avoid responsibility for a Ponzi scheme that finally fell apart.

Girardi owes tens of millions of dollars to finance firms and hedge funds that lent money to his small Los Angeles law firm, Girardi Keese, according to court filings. He and the firm were pushed into bankruptcy in December, and most of his assets have been frozen. Last week, a federal judge ordered the appointment of an interim trustee “to immediately take possession of the books and records” to determine how much money he has and owes to others.

At the same time, a federal judge in Chicago is holding hearings into fraud accusations against Girardi over a settlement with Boeing over the Lion Air crash. Lawyers with another firm who represent victims’ families say Girardi may have misappropriated at least $2 million in settlement money paid out by Boeing, which had acknowledged that a software issue had contributed to the crash that killed 189 people.

And then there is the personal strife. Girardi’s wife of 21 years — Erika Jayne, a singer and star of the reality TV show “Real Housewives of Beverly Hills,” filed for divorce in November just as the mounting debts and allegations of financial misdeeds began to mount.

It is a stunning fall for Girardi, who in 2014 was inducted into the Trial Lawyer Hall of Fame. The group noted that he had secured more than 30 favorable jury verdicts for clients and praised him for his role in more than 100 settlements, including the PG&E case and the $4.85 billion settlement arising from complications associated with Merck’s pain medication Vioxx.

Now Girardi’s legal practice is effectively shuttered, throwing other lawsuits into upheaval. His firm had been representing about 8,000 clients in the so-called Porter Ranch environmental litigation — a far-reaching lawsuit involving 36,000 people who lived near a major gas leak in 2015. Court filings estimate the litigation could lead to settlements worth $1 billion just for Girardi’s clients, who now need new representation.

Girardi’s firm was the lead counsel in the Lion Air litigation, and Boeing paid it an undisclosed sum that was supposed to be dispensed to the families of victims. But at least $2 million of that money wasn’t distributed, said Jay Edelson, an attorney who had represented other clients in the litigation. Lawyers for Girardi have suggested to the Chicago court that neither he nor his law firm was in a position to pay the disputed money.

At a hearing last month, Evan Jenness, a criminal defense lawyer hired by Girardi, told Judge Thomas Durkin that she wanted to get a “mental evaluation” of Girardi because “he’s unable to effectively advise me on how to defend him.”

Jenness did not respond to a request for comment. The lawyer representing Girardi’s firm, Michael Monico, said in an email that he had no new information to provide.

Edelson said the suggestion that Girardi’s competency might be at issue was a ruse to evade liability and accused Girardi and his firm of “running a Ponzi scheme” for many years. In a recent court filing, Edelson’s firm said Girardi has a history of postponing payments until money comes in from other settlements and jury verdicts.

Edelson said his firm became suspicious that something was amiss over the summer because some of the victims’ families had not been paid by Girardi’s firm even though Boeing had largely settled with the families in early 2020.

“We kept getting a lot of excuses but didn’t have any firm knowledge the money was taken,” Edelson said. “We knew the money did not go to the clients in the fall.”

In early December, Edelson filed court papers alerting Durkin to the problems with the payments. In a Jan. 5 court filing by Edelson’s firm, he included a transcript of a voice message left by Girardi around Thanksgiving.

“Don’t be mean to me, be nice to me,” Girardi said in the message, according to the filing. “I’m doing good. It was because of me that we got this by the way. I’ll be in touch, don’t worry about everything. We’re friends. Things are going to work out good.”

As the bankruptcy case proceeds, it’s not clear whether the families of the victims of the Lion Air crash or Girardi’s creditors will be paid first. But that may be the least of Girardi’s concerns.

In many states, misappropriation of client money can be grounds for disbarment and even criminal prosecution. At a hearing last month, Durkin called Girardi’s conduct “unconscionable” and said he would refer the matter to federal prosecutors. Later that day, the U.S. attorney’s office in Chicago filed a motion with the judge to unseal confidential settlement documents for law enforcement to review.

Shanin Specter, a trial lawyer in Philadelphia who has served as a co-counsel with Girardi on the Vioxx litigation, said Girardi had a well-earned reputation as one of the nation’s top trial lawyers. But the allegations that he misappropriated client money, if true, were inexcusable.

“Taking your client’s funds is the professional equivalent of touching an electrified rail,” Specter said. “It’s professional suicide.”

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Trial lawyer who won millions for Boeing 737 MAX crash victims accused of mishandling money

Former judge accused of defrauding estates resigns from bar

by Dave Stafford

A one-time northern Indiana trial court judge who is accused in lawsuits of taking money from two estates in cases he represented has resigned from the Indiana bar rather than face disciplinary proceedings related to his misconduct.

The Indiana Supreme Court on Thursday accepted the resignation of Monon lawyer Robert V. Monfort. In resigning, Monfort acknowledged that there was a Indiana Supreme Court Disciplinary Commission proceeding alleging misconduct and that he could not successfully defend himself if prosecuted.

Montfort, who once presided as a Jasper Superior Court judge, has not been criminally charged, but lawsuits filed on behalf of charities in Rensselaer allegt he and/or his law office misappropriated hundreds of thousands of dollars that a deceased widow bequeathed to community charities.The commission filed a disciplinary complaint April 27 accusing Monfort of criminal acts and “conduct involving dishonesty, fraud, deceit or misrepresentation,” among a litany of other ethical charges.

The discipline case against Monfort arises from two estate matters he handled that resulted in litigation in Jasper Superior Court against him and his law firm.

In one case, charities that stood to benefit from an elderly widow’s estate accuse Monfort of undue influence over Rose Jennette Nagel that “resulted in more than $600,000 in damages” to a Catholic school and the Jasper Newton Foundation, which the suit says stood to benefit from her bequests. The suit also makes claims of negligence and improper estate administration, and contests Nagel’s probated will that would have instead left her estate to an employee in Monfort’s office who also had served as personal representative for Nagel’s estate.

Monfort also is accused of attorney misconduct in handling the estate of Anthony Kaczorowski, who died intestate in 2014. Among other things, the commission says as recently as 2019, Monfort swore an affidavit that Kaczorowski had no known heirs, which he knew to be false. The commission likewise levels allegations of criminal conduct and fraud in Monfort’s handling of that case.

The commission alleged Monfort consumed nearly all of the $114,000 in Kaczorowski’s liquid estate assets through estate administration expenses, inappropriate fees and“unjustified payments to respondent and his office staff,” and more.

Meanwhile, Monfort faces one other civil lawsuit alleging professional negligence in his office’s handling of a third estate case, that of John Garling. Garling’s estate alleges, among other things, that the case dragged on for more than five years while a personal representative appointed at Monfort’s request caused assets to be dissipated and “may have taken certain assets for his own personal use.”

The suit also alleges a house belonging to Garling’s estate was sold for an amount significantly below fair market value.

Monfort was judge of Jasper Superior Court 2 from 1994-2000. The Indiana General Assembly dissolved the court, a decision affirmed by the Indiana Supreme Court in 2000.

Monfort, who was admitted to the bar in 1988, was previously suspended for 30 days with automatic reinstatement for helping a client in 2009 who previously had been a defendant in a drunken-driving case in which Monfort had presided as judge.

The disciplinary case is In the Matter of: Robert V. Monfort, 20S-DI-284.

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Former judge accused of defrauding estates resigns from bar