Old age, poor health won't exempt Girardi from prison, US attorney says

Disbarred attorney Tom Girardi's old age, 85, and purportedly frail mental health will not exempt him from facing justice in December and serving a federal prison sentence for bilking four clients out of $15 million, U.S. Attorney Martin Estrada said Tuesday.

"The mere fact that he is older does not mean he will not see prison time. It's important in a case like this, not only to punish the wrongdoer, but to send a message to others out there who would think of doing the same thing. There will be serious consequences for this type of misconduct," Estrada said.

The U.S. Attorney for the Central District of California spoke with reporters outside the federal courthouse in Los Angeles after a 12-person jury found Girardi guilty on all four counts of wire fraud. Jurors found he misappropriated over $15 million in settlement funds from four clients between 2010 and 2020. U.S. v. Girardi et al., 2:23-cr-00047 (C.D. Cal., filed Jan. 31, 2023).

Estrada was joined by Assistant U.S. Attorney Scott Paetty, who prosecuted the case with Assistant U.S. Attorney Ali Moghaddas.
During closing arguments Monday, Paetty referred to the Girardi Keese firm - which collapsed in 2020 after 55 years -- as "a den of thieves" with Girardi being "the master."

Estrada was asked if the government is investigating other lawyers or personnel from the case. "I won't comment about any other potential targets ... except to say that our investigation is ongoing."

According to the wire fraud federal code, 18 U.S.C. 1343, Girardi faces a maximum of 20 years per count. However, Estrada said the government will not speculate, for now, about a realistic sentence Girardi could face at his scheduled Dec. 6 hearing.

"As for the sentencing in this case, we are not going to judge that. We will look at all the facts as they come in. There'll be a comprehensive report that is prepared by the probation department," he said.

"Another important part of sentencing is hearing from the victims. The victims will have a right to address the court, either personally or in writing, and that will certainly affect the ultimate sentence," Estrada said.

IRS Criminal Investigation Special Agent Tyler Hatcher was asked at the news conference how the government broke the case, and he implied the four victims came to them with concerns about how Girardi handled their cases.

"As you can imagine, victims need to be heard. That's one thing we pay very, very close attention to. ... So, in this case, the victims were very loud with their concerns," Hatcher said.

All four victims in the case testified they filed legal action -- via state lawsuits or State Bar complaints -- against Girardi and his firm to recover their withheld settlement money. Two were successful in recovering the funds. The others said they have still not been paid.

The two assistant U.S. attorneys who persuaded the jury to convict Girardi have extensive experience winning major fraud cases.

Scott Paetty has been a member of the Major Frauds Section since January 2017 and deputy section chief since February 2022. He has prosecuted a variety of complex financial crimes including, among other things, securities fraud, pandemic relief fraud, business email compromise and romance scam conspiracies, and corporate embezzlement.

Paetty obtained convictions against all eight defendants in the largest COVID-19 relief fraud trial in the nation, U.S. v. Ayvazyan, named the most significant prosecution of 2021 by IRS Criminal Investigation and featured on CNBC's "American Greed."

He also obtained the conviction of a Beverly Hills stockbroker for securities fraud and money laundering related to a $250 million market manipulation scheme after a six-week trial; and conviction of the corporate controller of a publicly traded company for insider trading.

Paetty is a graduate of Loyola Law School and Stanford University. He worked at Perkins Coie LLP and O'Melveny & Myers LLP before he joined the U.S. Attorney's Office in 2014. He was an extern to U.S. District Judge Dale S. Fischer in the Central District and a law clerk to the late 9th U.S. Circuit Court of Appeals Judge Alfred T. Goodwin.

Paetty may be familiar to juries. Before his law career he was an actor, with television appearances in "Dance with Me," "Friends," "Six Feet Under," "Felicity," "Beverly Hills 90210" and "JAG."

Moghaddas was admitted to the California bar in 2015 and has been prosecuting cases for the government since 2018. He previously was in private practice with Quinn Emanuel Urquhart & Sullivan LLP and was a judicial clerk in the Central District. He graduated from Loyola Law School.

In the Justice Department's first insider trading prosecution based exclusively on the use of a trading plan, Moghaddas persuaded a jury in June to convict the former CEO of Ontrak Inc., Terren Peizer, of engaging in an insider trading scheme by using material nonpublic information to file Rule 10b5-1 trading plans. Peizer is to be sentenced in October.

Among Moghaddas' other major court victories was the conviction of Orange County pharmacist Sandy Mai Trang Nguyen. She was sentenced last year to 180 months in federal prison for her role in a fraud scheme in which more than 1,000 bogus prescriptions for compounded medications were filled, costing the U.S. military's health care plan more than $11 million in losses. She was ordered to pay the whole amount in restitution.

In 2021, following a three-month trial, Moghaddas persuaded a federal jury to convict a former doctor, Julian Omidi, who fraudulently submitted $355 million in health insurance claims related to the 1-800-GET-THIN Lap-Band surgery business. In this case also, the U.S. military health plan was one of the victims.