Defense argues 'bad accounting' to blame as government rests in Girardi case

As the government rested its federal wire fraud case against Tom Girardi on Monday, the defense pointed to "bad accounting practices" allegedly led by Girardi Keese's former financial chief as to why clients were not being paid while money flowed through the now-defunct law firm's various operating and personal banking accounts.

The prosecution's final witness, IRS agent Ryan Roberson, testified that his investigation of Girardi Keese financial records traced some $70 million that was being spent out of the firm's bank accounts from 2010 to 2020. Several charts shared with jurors throughout Roberson's three-day testimony showed that during the final decade of the firm's 55-year existence, Girardi Keese accrued around $1.2 billion.

However, the Assistant U.S. Attorneys Ali Moghaddas and Scott Paetty argued that as the money came into the firm's many trust accounts, Girardi deviously cheated personal injury clients. He has been sued in civil cases and faces federal prosecution in Chicago.

This case focuses on four former clients, whom the government says were bilked out of more than $15 million of agreed settlement funds because Girardi was sending the money to his personal bank to support his high-profile lifestyle with his wife, an entertainer known as Erika Jayne. U.S. v. Girardi et al., 2:23-cr-00047 (C.D. Cal., filed Jan. 31, 2023).

Among the first of Girardi's defense witnesses was Pasadena attorney Michael V. Severo, who represents Christopher Kamon, the former financial officer Girardi's federal defenders are blaming for the money not being paid to clients. Severo has been taking notes in the gallery during the trial. The jury has not been told about his connection to Kamon and his testimony was not related to Kamon, who is a severed defendant.

Severo said he sued Girardi in a 2020 state lawsuit that settled months later. After the first payment was made in August 2020, Severo said Girardi sent him a letter that he was "concerned" about.

During cross examination, Paetty for the government asked Severo about those concerns. Severo said he felt Girardi was trying to renegotiate the agreement and clarified that he didn't feel he "forgot about the settlement."

A letter Girardi sent to Severo months before the settlement occurred was also shown to jurors. "We can do these two ways. We can try to get along or I could file a cross-complaint," Girardi wrote in the letter.

Severo said he did not feel Girardi was bullying him because "he was arrogant all the way through."

"You can't bully me at my age," Severo added.

Another witness Monday was Amber Wringler, who testified she was Girardi's travel agent and interacted with him professionally for 24 years. She said she began staying in his house every weekend after his wife moved out in 2020.

"I was afraid he was going to fall down the stairs," she said.

In late 2020, she said she recalled waking up to Girardi screaming that he couldn't hear. After visiting the doctor, hearing aids that were stuck in his ear were pulled out. She testified about noticeable cognitive and behavioral decline starting in 2015, such as Girardi changing his habit of dressing well.

Under cross-examination she was asked why she continued making appearance bookings and referring clients, including a friend of hers, to Girardi, given her stated observations.

In one of Roberson's charts, the flow of money during a 2020 period when a client was awaiting a $500,000 settlement showed the funds were deposited into the Girardi Keese trust account on June 25, 2020. That same day, $183,000 in attorney fees and costs were wired to the firm's operating account. Then $50,000 of those funds were wired to Girardi's personal banking account, which Roberson testified Girardi used to pay for several golf country clubs.

During cross-examination Monday morning, Federal Defender Charles J. Snyder questioned the information Roberson omitted from the chart, including a footnote that the firm was owed a $200,000 cut of that settlement - which was agreed upon at the consent stage with the client.

Snyder said Girardi "has a right" to use his firm's portion of the settlement because "it's his money" that was wired out of the firm's operating account. Roberson agreed.

A second chart that was dated July 2020 showed a $100,000 wire from the firm's trust account directly to Giradi's personal bank. The funds were then traced to several golf country clubs.

Snyder raised the same point, that it was Girardi's right "to do whatever he wanted" with the money because it was the firm's cut.

Roberson, in this instance, disagreed and said the method of wiring personal banking funds directly from a trust account was improper.

Snyder argued the second chart could've been a result of "bad accounting practices" and although the step of wiring to the firm's operating account was skipped in this instance, the result was essentially the same as the first chart and Girardi was entitled to those funds.

"The reason you chose country clubs is because it makes him look like a rich guy," Snyder said. "He could've used this money on grocery and medical..."

However, Roberson argued Girardi's expenditures in this instance were merely a luxury expense that wasn't needed while clients were still not being paid.

"Everyone needs medical and groceries. ... Not everyone needs country clubs while clients are waiting to be paid," Roberson said.

Snyder then questioned Roberson about Christopher Kamon's role as the head of financing at Girardi Keese. According to the defense, Kamon was the main perpetrator of the alleged scheme who used Girardi's old age and early dementia symptoms to steal millions of dollars from the firm without his knowledge.

Although both agreed that Kamon should share responsibility of the alleged misconduct, Roberson said during re-direct that Kamon's role did not excuse the fact that Girardi was directly giving reasons why the people "he was fighting for" were not being paid.

Throughout the course of the trial, jurors have seen and heard several memos and voicemails Girardi sent to clients about why they were not getting their agreed settlement money for months and years. Some of the reasons Girardi gave them were that checks were awaiting judge signatures and that because their personal injury claims were taxable, he had to fight with the IRS to exempt them from the purported law.

When Paetty, for the government, asked Roberson if there was any evidence he found that showed Kamon giving the same reasons to clients about why their money was not being paid, the agent said, "no."

During re-cross, Snyder asked Roberson if it would have been useful to investigate items such as a "delusional" letter Girardi had sent to President Joe Biden in 2020 about being his secret lawyer to understand how Girardi's frame of mind may have been off.

Roberson said Girardi's "frame of mind and understanding" of why clients were not being paid were made clear to him with the memos and voicemails that "held more weight" than the Biden letter, for example.