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Fertility Case Attorney on Trial for Funds

Renowned for winning settlements from UC Irvine, Melanie Blum is accused of embezzling from victims' accounts.

August 06, 2004|David Reyes | Times Staff Writer

A prominent Orange County attorney embezzled money from clients in the UC Irvine fertility scandal to fund her expensive lifestyle, a prosecutor said Thursday as lawyers laid out their cases to a jury.

But the attorney for Melanie Rae Blum blamed her then-husband and law partner, saying he was responsible for the firm's finances.

Blum is charged with 12 counts of grand theft for allegedly siphoning more than $150,000 from settlements in a dozen cases from 1993 to 2000. In all, her clients were awarded $1.5 million.

Her former husband, Mark Elliot Roseman, 54, pleaded guilty in September to six counts of grand theft in the same case and was sentenced to four years in prison. He has resigned from the state bar and can no longer practice law in California.

Roseman is expected to testify against his former wife.

Prosecutor Douglas Brannan said Blum, also 54, used the cash to pay for a lifestyle that included driving a Jaguar and charging $45,000 to her American Express credit card.

"She wasn't taking money to run the clients' cases," Brannan said, "but taking the clients' portion of settlements entrusted to her."

Blum allegedly took the money from client trust accounts, which allow attorneys to deposit settlement funds and withdraw money to cover legal fees.

Blum has been in trouble before regarding her dealings with clients. In late 2002 she was accused of charging clients in a medical malpractice case an illegal fee and mishandling their funds. State bar officials suspended Blum for a month, and she was placed on two months' bar probation and ordered to submit quarterly audits.

Blum gained a national reputation in the late 1990s as lead attorney in a landmark series of lawsuits against UCI and its now-closed Center for Reproductive Health.

Three physicians -- Ricardo Asch, Jose P. Balmaceda and Sergio Stone -- were at the heart of the scandal. The federal government charged Asch and Balmaceda with mail fraud and conspiracy to defraud patients of their genetic material. Asch fled to his native Argentina and Balmaceda to Mexico. Stone was convicted of fraudulently billing insurance companies.

The 107 couples were paid nearly $20 million to settle their cases.

As the prosecutor laid out his case Thursday, Blum listened intently, sitting next to John Barnett, her defense attorney.

Barnett told jurors Blum's hard work in the case left her hospitalized from exhaustion and other ailments. Her marriage crumbled, he said, in part because of Roseman's "manipulative" manner.

Brannan said Blum knew about the depleted client accounts.

"She can't just blame her husband," he said.

The prosecutor said that in one case, a client received two checks for $100,000 on May 12, 1996, that were put into a trust account. Twelve days later, there was "a little more than $1,000 left in the account," Brannan said.

There was no financial monitoring at the law firm, Brannan said. The firm's bookkeeper is expected to testify that she had to call the bank to learn the status of client accounts, he said.

Some clients whose accounts had allegedly been siphoned were given small "advances" after they complained, he said.

Brannan said that although Blum tried to repay some money into the accounts, the funds already had been diverted "for the purpose of embezzlement."

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