Tom Girardi Indicted for Embezzlement

Disgraced California lawyer Tom Girardi was indicted for embezzlement by a federal grand jury. The charges stem from allegations that Girardi engaged in highly unethical and illegal behavior, which included using private judges affiliated with the national arbitration company JAMS to steal millions of dollars from his clients. The U.S. Department of Justice (DOJ) announced the felony charges against Girardi after the grand jury formally indicted him. U.S. Attorney Martin Estrada observed that Girardi “preyed on the very people who trusted and relied upon him the most—his clients—and brought disrepute upon the entire legal profession.”

For more information about Tom Girardi’s indictment and his connection with JAMS, keep reading this blog.

Who Are Tom Girardi and Erika Jayne?

Tom Girardi used to be a well-respected attorney. For many years, the prominent Los Angeles lawyer was known for being a dogged defender of the powerless as they filed class action lawsuits against corporations. As the founder of California law firm Girardi & Keese, he represented plaintiffs in a number of high-profile cases, including Brian Stow’s civil suit against Major League Baseball. Stow was the San Francisco Giants fan who sustained severe injuries during an attack at a Los Angeles Dodgers game. Girardi also represented the plaintiffs in the case against Pacific Gas & Electric Co. dramatized in the Julia Roberts movie Erin Brockovich.

Outside of the courtroom, Girardi became known for being the husband of “Real Housewives of Beverly Hills” star Erika Jayne, who eventually filed for divorce from Girardi. They were married for 21 years. After the split, the couple listed their Pasadena home for sale at a price of $13 million. Jayne has also been accused of illegally using funds meant for Girardi’s clients to cover her own personal expenses, including the purchase of expensive diamond earrings.

Federal Grand Jury in California Indicts Tom Girardi on Wire Fraud Charges

As a plaintiff’s attorney in California, Tom Girardi was responsible for negotiating settlements in mass tort lawsuits. Instead of sending the settlement funds to his clients, however, Girardi allegedly deposited the money into law firm accounts that he later accessed for his own personal use. A federal grand jury in California has now indicted Girardi on charges that he embezzled $15 million from clients over a period of 10 years, resulting in the DOJ bringing formal charges against him for five counts of wire fraud. If Girardi is convicted of wire fraud, he could be sentenced to 20 years in federal prison.

Martin Estrada, the United States Attorney for the Central District of California, issued a statement about the case after the grand jury indictment was announced. Estrada said that Girardi is “accused of engaging in a widespread scheme to steal from clients and lie to them to cover up the fraud.”

FBI Acting Assistant Director in Charge Amir Ehsaei also weighed in on the charges against Girardi. Ehsaei said that the disgraced attorney “created a mirage over several years in order to disguise the fact that he was robbing clients of large sums of money…to fund his lavish lifestyle.” Ehsaei observed that Girardi’s alleged theft came at the expense of clients who were enduring significant hardships of their own as they desperately awaited settlement funds to cover medical bills and other expenses. The clients’ unfamiliarity with the legal process made it possible for Girardi to take advantage of them.

What’s Next in the Criminal Case Against Tom Girardi?

Last year, Tom Girardi was reportedly diagnosed with Alzheimer’s and dementia. At his initial appearance in federal criminal court, United States Magistrate Judge Karen L. Stevenson ordered a mental competency hearing to determine whether Girardi is fit to stand trial on the criminal charges. In the meantime, Girardi’s bond was set at $250,000 and he was released to the custody of his brother Robert Girardi. The next hearing will occur in the U.S. District Court for the Central District of California.

The Girardi Keese law firm is no longer operational, having declared bankruptcy with more than $100 million in total debt. Additionally, Girardi was disbarred as a result of the alleged embezzlement and cannot act as an attorney in California. He has been living at the Belmont Village Senior Living Facility in Burbank, CA.

Erika Jayne and Others Accused of Business Fraud with Tom Girardi

Also criminally charged along with Tom Girardi is Christopher Kamon, who served as the chief financial officer of Girardi’s law firm for more than a decade. According to law enforcement officials, Kamon was the person who handled financial accounting for the firm. Federal prosecutors believe that Kamon committed wire fraud offenses by embezzling client funds for personal expenses.

Additionally, Girardi’s son-in-law David Lira has been accused of fraud in connection with the Girardi & Keese firm. A federal grand jury in Chicago issued an indictment against both Girardi and Lira on charges filed by the U.S. Attorney’s Office. They have been accused of stealing more than $3 million in settlement funds from clients whose families were killed in the 2018 Boeing Lion Air Flight 610 crash in Indonesia.

Erika Jayne Sued for Fraud

A civil suit has also been filed that accuses Tom Girardi’s estranged wife, reality TV star Erika Jayne, of participating in the illegal fraud scheme. The trustee overseeing the bankruptcy of Girardi’s law firm filed the lawsuit against the Real Housewives star after reportedly discovering that Jayne received $25 million in transfers from the law firm to her company, EJ Global LLC. She then allegedly used the money to pay personal expenses, such as her credit card bill, personal assistant salaries, and a fashion and makeup team. Jayne has denied having any knowledge of Girardi’s alleged embezzlement of client funds.

JAMS Mediators Allegedly Helped Tom Girardi Embezzle Money from Clients

According to the Department of Justice, Tom Girardi was able to get away with embezzling client funds by placing onerous requirements on clients to access their settlement money. For example, Girardi often told clients that they needed to get authorizations from JAMS judges in order to receive the funds. The JAMS private judges were overseeing the lawsuit settlements and had control over how and when the funds were distributed. Many of these judges had personal relationships with Girardi, creating an obvious conflict of interest for the alternative dispute resolution company.

Over the years, there have been many other instances of JAMS judges being biased in favor of certain litigants and showing favoritism in their rulings. In fact, several JAMS mediators and arbitrators benefited financially from their involvement in Girardi’s fraud by charging as much as $1,500 per hour for their work on his cases. Beyond that, JAMS reportedly made millions of dollars by providing mediators to oversee Girardi’s settlements.

Contact the Los Angeles Arbitration Attorneys at Tauler Smith LLP

Tauler Smith LLP is a California law firm that helps individuals, small business owners, and others bring class action lawsuits against JAMS. If you were involved in an arbitration or mediation that was administered by JAMS, you may have a legal claim against the company for the way they handled your case. Call 310-590-3927 or email us today to discuss your options with one of our experienced Los Angeles arbitration attorneys.