After I published yesterday’s post on the arrest of prominent class action lawyer William H “Hugh” Sibley a reader sent me some court docs from Louisiana’s Eastern District that lent some needed context to why an otherwise highly successful class action lawyer would allegedly become mixed up with Mexican drug runners. The answer is simple – massive debts. Before I get to David Mitchell’s comprehensive article in today’s Advocate we’ll start with the court docs I was sent yesterday evening and Mr Sibley’s $1.3 million dollar unpaid debt to Harrah’s:
On February 2, 2004, this Court rendered a judgment in favor of Harrah’s and against William Hugh Sibley (“Sibley”) in the amount of $1,357,332.50, plus late fees $203,599.86 together with interest accruing from the date ofjudicial demand until paid, attorney’s fees in the amount of $8,775.92, and all costs of these proceedings, as fully set forth in the record of the captioned matter (the “Judgment”).
Harrah’s desires to re-examine Sibley upon all matters pertaining to assets and liabilities, estate or property, pursuant to Fed. R. Civ. P. 69(a) and La. Code ofCiv. Proc. Ann. art. 2451.
The time for appeal of this judgment has run, no appeal has been taken, and the judgment has not been satisfied.
To secure payment of the Judgment, Harrah’s perfected a UCC security interest in certain contingency fee agreements held by Sibley or The Sibley Law Firm in the following legal actions:
1. In Re: Bayou Sorrel Class Action, USDC, WDLA, Civil Action No.6:04CV1101;
2. Noretta Thomas and Demetrice Butler, each indiVidually, and on behalf of all others similarly situated versus A. Wilbert & Sons, 1.1. C. and XYZ Insurance Company, 18th IDC – Parish of Iberville, Suit No. 55,127 and all consolidated matters, Division B;
3. In Re: New Orleans Tank Care Leakage Fire Litigation, Civil District Court Parish of Orleans, Suit No. 02-13675;……
Harrahs was unable to collect from those legal settlements over the next 4 years when they took Mr Sibley back to court last year. They did ascertain he owned an interest in Train Car LLC of Greensburg Louisiana and Judge Feldman ordered it seized.
Though I never obtained the CFE credential, as an practicing GAAS auditor I’ve learned much about the psychology of white collar crime though time which brings us back to the post title and the term unshareable need, which is part of the fraud triangle developed by white collar crime pioneer and sociologist the late Dr Donald Cressey. Cressey’s triangle begins with the pressure to commit a crime for gain which he called the unshareable need which when coupled with perceived opportunity and subsequent rationalization completes the triangle. The list of unshareble needs is pretty short and gambling along with substance abuse leads the list.
Debt has a tendency to snowball, especially when someone is gambling trying to make their losses good which generally results in the loss of more money. As David Mitchell reports, William Sibley’s problems with debt extended far beyond a big gambling bill at Harrahs though I’d be willing to wager that is where his troubles began:
A Greensburg lawyer arrested on a criminal count of laundering drug money faced mounting financial problems as he allegedly worked with an international cocaine ring, court records show.
Between October 2001 and February 2008, William Hugh Sibley, 62, amassed $4.7 million in unpaid debts, unpaid federal income taxes, interest and associated fees, according to federal and state court judgments and Internal Revenue Service liens against Sibley.
In a May 2008 indictment unsealed earlier this year, prosecutors with the U.S. Attorney’s Office in Houston accused Sibley of using bank accounts to hide drug money and of accepting, counting and distributing that money for the ring that distributed “multi-kilogram” cocaine shipments, court records show.
Sibley’s alleged involvement with the ring goes back to September 2002 and extends up until he was indicted, the indictment says.
Extending into Mexico, Venezuela and the United States, the cocaine ring is headed by Alejandro Flores-Cacho, who was also named in the indictment but remains at large, federal prosecutors said.
Of that $4.7 million in unpaid debt, Sibley still has more than $2.5 million in unpaid loans and late fees owed to casinos in Baton Rouge, Atlantic City, N.J., and New Orleans, according to court records.
Between January 2007 and February 2008, the Internal Revenue Service filed nearly $2.2 million in tax liens against him for unpaid income taxes owed in 2003, 2004 and 2006, records in the Tangipahoa Parish Courthouse show.
The casino loans — in one case a series of 11 bounced $10,000 checks written on the same day — appear to have been made between October 2001 and January 2002, court records show.
Court judgments to force Sibley to pay the loans were filed between November 2002 and February 2004 after lawsuits were filed, records show. Judgments and other documents obtained do not indicate for what purpose Sibley sought the loans.
The debts are with the former Argosy Casino in Baton Rouge, now the Belle of Baton Rouge; the Atlantic City Hilton in Atlantic City; and Harrah’s Casino in New Orleans when it was still owned by the Jazz Casino Company LLC, records show.
Fellow lawyer and Sibley creditor Daniel Becnel humanizes Mr Sibley a bit for the readers as we continue the story:
Plaintiffs’ attorney Daniel Becnel Jr. said Sibley worked with him in the past but said that he saw less and less of him in recent years after Sibley lost his wife and his health worsened.
Becnel claimed Sibley owes him money, too: $250,000 for an old real estate deal. He said he did not push the issue until recently by filing suit in St. John the Baptist Parish — after he got an IRS lien against Sibley a few weeks ago.
“I really felt sorry for him because of his health,” said Becnel, who heads a Reserve firm that has handled several major class-action suits.
More recently, in suits filed in the 21st Judicial District Court in February and June 2008, First Guaranty Bank has tried to get Sibley to pay back two loans totaling about $927,800. Nearly $97,400 of that has been paid but the rest is still in litigation, records show.