You Too Can Ponzi

     There are times when I think the entire world’s economy is a Ponzi scheme. There seem to be Ponzis everywhere.
     When you think about it – and I don’t advise thinking about it – even the government’s response to the current economic problems is a Ponzi scheme: we pay off old bad debts with taxpayer money coming in now that we just might have a hard time paying back later.
     Any profession can use the Ponzi method. Even law firms.
     I know this, naturally, because we’ve had a lawsuit over an alleged law firm Ponzi scheme.
     How does a law firm Ponzi scheme work?
     Here’s what a suit filed in Los Angeles Superior Court against an outfit called Criminal Defense Associates, Inc. said:
     “At the time of retaining Criminal Defense Associates, defendant was not in a financial situation where they would use the retainer from the client to pay for the services contracted for. Defendant was using monies from one to pay for another case and this was not disclosed to plaintiffs.”
     Classic Ponzi.
     The pyramid allegedly collapsed when the firm had 150 active cases going.
     The irony of this is quite wonderful (at least it is if you’re not one of the clients).
     The group of plaintiffs is made up of people who may or may not be criminals but, if nothing else, were accused of crimes. And they found their Ponzi defense counsel on the Internet.
     According to the lawsuit, Criminal Defense Associates “was marketed exclusively on the Internet as a national law firm that handled most types of serious state and federal offenses throughout the United States.”
     It gets better.
     The creator and sole shareholder of CDA “had no experience handling criminal matters” and was taking in clients “for large advanced retainer fee deposits, typically in an amount approximately equal to $50,000.”
     Pause for a moment to digest this.
     You’ve been accused of a major crime. What do you do?
     Find a law firm on the Internet and send it 50 grand. What could be more obvious?
     Sometimes I think people deserve to be Ponzied.
     
     CREATIVE ACCOUNTING. If you’re going to bill for a large amount, at least make your invoices look plausible.
     The following is from an arbitration petition filed by an insurance company against a major national law firm (as opposed to one that just appears on the Internet):
     “The January 2006 invoice shows:
     “A total of 1,688.40 hours billed by 26 timekeepers, with time recorded on every day of the month, Saturdays, Sundays and holiday (Martin Luther King Day) included – with the exception of New Year’s Day. The fees totaled $569,606 for that single month….
     “Of the top 15 timekeepers who billed time during January 2006, one was a ‘bar pending’ law graduate, who billed 137.1 hours at a rate of $450 per hour….
     “With one exception, partners billed less than 25 hours…. The one exception recorded her time with very long, wordy entries that reveal essentially no productive work.”
     Yeah, but long wordy entries take time and effort.
     Now why do you think those lazy people took New Year’s Day off?

%d bloggers like this: