Girardi Keese trust goes after litigation lenders

The trustee in the bankruptcy proceedings of Girardi Keese wants to hire a law firm to investigate litigation lenders who continued to provide the law firm money despite allegations that its co-founder, Thomas V. Girardi, had misused money.

In a motion filed Wednesday, trustee Elissa D. Miller of SulmeyerKupetz said she would like to hire class action firm Girard Sharp LLP to look into the matter.

Girardi is accused of stealing millions of dollars from personal injury clients to fund his lavish lifestyle. Creditors, including the litigation lenders, forced Girardi and his law firm into bankruptcy last year.

According to Miller's motion, an investigation into the law firm's finances showed that "three or more litigation lenders" provided loans secured by expected fees from lawsuits. The motion does not identify the funders. In re: Girardi Keese, 20-BK12022 (C.D. Cal Bankruptcy Ct, filed Dec. 18, 2020).

According to bankruptcy documents, Girardi Keese owes more than $101 million to former clients, law firms and creditors. Approximately $49 million of the claims came from six secured creditors: California Attorney Lending II; Stillwell Madison LLC; Virage SPV 1 LLC; KCC Class Action Services LLC; Nano Banc; and Joseph, Jaime, & Kathleen Ruigomez.

Lawyers for the lenders did not return requests for comments. A Girard Sharp lawyer also could not be reached for comment.

According to Miller's motion, loans were provided to Girardi despite the litigation lenders allegedly being aware of the misuse of the funds since the law firm provided bank statements, tax returns and financial statements.

"Based on the documents and financial information provided, the trustee is informed and believes that the lenders may have had information regarding the misuse of the debtor's funds for improper purposes including, but not limited to, the loan of over $25,000,000 directly and/or indirectly to Thomas Girardi's wife, Erika Jayne," Miller wrote in the motion.

The Girardis showcased a lavish lifestyle that included interest in two private planes, expensive jewelry and designer clothes and a posse of personal attendants on the TV show "The Real Housewives of Beverly Hills."

Miller has already hired a lawyer to investigate whether Girardi Keese assets were improperly transferred to Erika Girardi, who goes by the name Erika Jayne professionally.

This week, Edelson PC in Chicago asked the bankruptcy court to allow the law firm to pursue Erika Girardi's assets to repay attorney fees and funds owed to clients. Edelson sued Tom Girardi and his law firm late last year in federal court in Illinois seeking funds owed to the families of victims of a plane crash in Indonesia whom Edelson and Girardi Keese jointly represented.

Settlements from several Girardi firm cases, including the $1.8 billion deal reached last month with Southern California Gas Co. over the gas leak in Porter Ranch, are expected to yield enough money to repay many of the clients and creditors.

Representatives for Tom Girardi have said he has Alzheimer's disease. He has been placed in an assisted living home and his law license was suspended.