More Background on James Perdigao from the ABA Journal

We are in the process of matching up the dates contained in the government indictment of James Perdigao against those in the civil complaint. For now I’ll throw out this article from 2007 that ran in the ABA Journal on the criminal side of the case.

Before I post the article I’ll share a few things from it that strike me as strange such as Perdigao getting away with skimming Adam and Reese receivables undetected for as long as 13 years. In the world of financial fraud such time length is not unheard of but is certainly very unusual and speaks volume to the abysmal internal accounting controls that had to be in place at Adams and Reese. Simply put no one was minding the store.  Typically fraudsters also exhibit behavioral/lifestyle changes that were evidently absent in James Perdigao’s case. Of course none of this means he is innocent or guilty, rather it simply means the criminal case is unusual in respects.

It also reminds me in certain ways of a lawyer in Jackson with the first name of James and his attorney Keith Shelton who were railroaded by the justice system in Hinds county.

Here is the ABA Journal story which I retrieved from the google cache.

A New Orleans lawyer has been indicted on federal charges of stealing tens of millions of dollars from clients and his former law firm, and he faces a maximum prison term of 1,023 years if convicted on all 59 counts.

The Eastern District of Louisiana indictment includes a $30 million money laundering forfeiture if James G. Perdigao is convicted. But his former law firm says Perdigao showed no sign of spending a lot of money.

Perdigao built his practice around representing casinos, and he is alleged to have stolen the money from as early as 1991 through 2004, according to the indictment. The charges also include mail fraud, bank fraud, transportation of stolen funds and tax evasion.

Perdigao is a former partner with Adams and Reese in New Orleans. The firm in September 2004 reached the conclusion that he sent clients fictitious billing statements. Self-addressed envelopes, directed to Perdigao’s attention, were included in the mailings, says managing partner Charles P. Adams Jr.

Perdigao deposited the money to the firm’s trust account, Adams claims, and then asked the firm’s accounting department to write checks from the trust account to businesses he set up and controlled. Those businesses were disguised as transaction participants, Adams says, and Perdigao allegedly created phony paperwork, such as closing documents, to make the transactions appear legitimate.

A month after Perdigao was asked to leave Adams and Reese, he wired $20 million to a Swiss bank account, according to the indictment. He later repaid Adams and Reese $9 million. That money, Adams says, was turned over to the U.S. attorney’s office.

In some cases Perdigao was doing actual work for clients, according to Adams, but not reporting the work to the law firm. “Some clients were not on our books. Other clients were sent bills on our books and had matters he was doing on the side.”

Before being asked to leave Adams and Reese, Perdigao often worked until 10 p.m. The work was excellent, Adams says, and Perdigao’s annual billable hours were always within a 2,000-hour range. According to Adams, Perdigao spent little if any of the money he allegedly stole.

“That’s why he still has it all,” Adams adds. “He wasn’t married, lived in a modest house, drove an old car—he had no conspicuous lifestyle at all.”

Charles F. Griffin, a New Orleans lawyer who represents Perdigao, did not return phone calls seeking comment.

Michael H. Ellis, a Metairie, La., lawyer, represents one of Perdigao’s former clients, Jack Binion, who at one time owned several casinos under the Horseshoe name and hosted the World Series of Poker.

“He was doing quite a bit of work for Mr. Binion during this period, and Mr. Binion was satisfied with the work,” Ellis says. He would not say whether Perdigao billed Binion for work that was not done.

Binion previously owned Horseshoe Entertainment, which was acquired by Harrah’s Entertainment in 2004. Adams and Reese received a $485,492 tax refund for Horseshoe Entertainment, according to the indictment, shortly after the company was acquired by Harrah’s. Perdigao stole the check, the indictment states, falsely endorsed it and deposited it into his personal account.

Perdigao would intercept checks from the firm’s mail substation, Adams says, in addition to asking clients to send money directly to him.

Perdigao’s alleged behavior came to the firm’s attention when one of his clients contacted the firm, asking whether a bill had been paid. Perdigao had instructed staff to direct all billing inquires to him, Adams says, but Perdigao was out of the office that day. The phone call was received by a temporary employee who transferred the call to the firm’s accounting department.

“Clients paying money seem to be satisfied,” Adams says. “You tend to trust your partners, and we know they don’t want to lose their license, so we assume they will be extremely careful with client money.”

Adams reported Perdigao to the U.S. attorney’s office and the Louisiana State Bar Association’s Office of Disciplinary Counsel. In 2004, Perdigao was suspended from the practice of law on an interim basis.

“He’s obviously in trouble now, and if any of this is true, I’m sure the state ethics system is watching him like a hawk,” says Leslie Schiff, an Opelousa, La., lawyer who defends lawyers in discipline matters.

The amount Perdigao is alleged to have stolen is extremely high, Schiff says. And others note that when lawyers do take money from clients, they usually spend it.

“Usually, we don’t find that the lawyer just squirrels the money away,” says Timothy J. O’Sullivan, executive director and counsel of the New York Lawyers’ Fund for Client Protection.