Tribe, Attorney Must Pay $1 Million in Sanctions

MIAMI (CN) - The Miccosukee tribe and its attorney must pay $1 million in sanctions for mishandling an embezzlement lawsuit against a former tribal chairman, a federal judge ruled.

The Florida-based tribe sued Billy Cypress, its former chairman, in 2012, claiming he mismanaged and misappropriated millions of dollars with the help of former counsel for the tribe and other co-conspirators.

The Miccosukee brought claims for fraud, breach of fiduciary duty, embezzlement, civil theft and racketeering violations against eight defendants, including Morgan Stanley Smith Barney, the bank where the tribe's accounts were established.

A federal judge in Miami ordered the tribe to arbitrate its claims against the bank and subsequently dismissed its lawsuit for lack of jurisdiction in September 2013. The tribe filed a similar complaint in state court following that dismissal.

Two of the defendants in the federal lawsuit, attorneys Guy Lewis and Michael Tein, asked the federal court to sanction Miccosukee and its new counsel for the alleged lack of evidence to support the claims in the tribe's amended complaint.

Miccosukee had alleged that Lewis and Tein, who served as the tribe's attorneys during Cypress' term, had aided and abetted the former chairman's fraud. Among other claims, Miccosukee said Lewis and Tein charged the tribe excessive and unreasonable legal fees and participated in a kickback scheme under which the attorneys returned some of those fees to Cypress to support his luxury and gambling expenses.

"Defendants Lewis and Tein view this lawsuit as 'nothing more than political retribution against counsel engaged and retained by the tribe while under control of different officials no longer in these positions, and filed at the behest of their successors as "payback" for the Lewis Tein defendants' perceived allegiance to the tribe's former leadership,'" U.S. District Judge Marcia Cooke wrote in a Jan. 16 ruling.

Dexter Lehtinen, a co-defendant in the lawsuit, also asked the court to sanction Miccosukee and its new counsel, Bernardo Roman of Roman Law, for filing "completely frivolous" claims against him. Miccosukee had argued that Lehtinen, who had also provided legal services to the tribe, had failed to disclose Cypress' embezzlement.

In considering the motions for sanctions, Cooke agreed that Miccosukee had failed to prove the existence of a kickback scheme or bring evidence to support its other claims.

The judge noted that "rather than conducting an objective investigation to ascertain whether the tribe had valid claims against the defendants, Roman initiated the investigation with a conclusion in mind and searched for facts to accommodate his presupposed conclusion."

In his inadequate investigation, Roman disregarded facts that did not support his theory and failed to interview key witnesses, the order states.

Moreover, Roman, who admitted he charged the tribe $3 million a year for his own services, had no basis to call the defendant attorneys' charges unreasonable, according to the ruling.

The tribe's evidence against Lehtinen is equally precarious, the court found.

Although a witness testified recalling that Lehtinen had made false statements about the existence of a tax reserve account, the tribe failed to produce audio recordings or transcripts to support those claims. Likewise, the tribe presented no evidence that Lehtinen knew about Cypress' unreasonable spending, the ruling states.

Cooke said the court had no jurisdiction to rule on the validity of the tribe's claims, but that it could assess how attorneys used the information uncovered during pretrial investigations.

Roman and the tribe knew at the time they filed the amended complaint that the tribe's claims were based on shaky evidence, but went ahead with the filing. The plaintiffs' conduct, therefore, warrants sanctions designed to prevent frivolous lawsuits, according to the ruling.

Roman and the tribe must pay $975,750 to Lewis Tein and $95,640 to Lehtinen, the order states.

The Florida Bar must determine whether disciplinary action against Roman is necessary.

Cooke refused to sanction Roman's associates who worked primarily as legal researchers and drafters on the case and had no authority to withdraw pleadings.

She also found that Lehtinen is not entitled to attorney fees for the time he spent representing himself in the lawsuit.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit