SAN DIEGO — A federal grand jury Tuesday indicted 14 Southern California attorneys and four other people on charges of defrauding insurance companies of huge legal fees by manipulating complex lawsuits.
Legal experts have characterized the case as one of the largest criminal prosecutions of lawyers in U.S. history.
The indictment, charging the defendants with mail fraud and racketeering, caps a lengthy investigation by postal inspectors and assistants to U.S. Atty. William Braniff, who said the lawyers had inflicted "a money hemorrhage" on insurers and "a malignancy on the legal system."
One of those indicted was San Diego attorney Leonard Radomile, who worked secretly as a government informant during the investigation of the lawyers' network, which prosecutors called the "Alliance." Radomile was portrayed on "60 Minutes" last year as a crime-buster who "infiltrated the Alliance."
Radomile was the only lawyer charged in the 37-count indictment who is not from the Los Angeles area. Three law-firm employees and one client also were charged.
Authorities said all defendants but one were charged with some of the 36 mail fraud counts, and all but two were accused of violating the federal racketeering, or RICO, statute. Each mail fraud count is punishable by up to five years' imprisonment and a $250,000 fine. A RICO conviction can bring up to 20 years' imprisonment, plus forfeiture of any illegally obtained assets.
The lawyers were accused of conspiring to prolong civil litigations in Los Angeles, Orange and San Diego counties, defrauding insurers of up to $50 million in the process, the government said. Federal officials in San Diego conducted the investigation because some of the lawsuits involving the Alliance were there.
Prosecutors allege the lawyers fattened their fees through a variety of legal maneuvers, filing spurious suits against each others' clients and paying kickbacks to clients for the right to conduct their insurance-paid defense.
The defendants are all expected to surrender except for the alleged mastermind of the scheme, Lynn B. Stites, 45, whose whereabouts are unknown, Assistant U.S. Atty. George D. Hardy said. A bench warrant has been issued for his arrest, Hardy said.
In recent years, Stites has divided his time between Switzerland and a home in eastern Ventura County that he sold last fall. Stites' sister, Cheryl Dark, who worked for him as a paralegal, was also among those charged Tuesday.
