Ex-Girardi Keese Lawyer Pleads Not Guilty to Fraud, Contempt

Ex-Girardi Keese lawyer David Lira, accused of wire fraud and criminal contempt after his former law firm fraudulently diverted millions of dollars in settlement funds from its former Lion Air crash clients, pleaded not guilty to criminal charges in the Northern District of Illinois on Friday.

Lira entered his plea before Magistrate Judge Jeffrey I. Cummings in Chicago. He will be released pending resolution of the charges on a unsecured bond of $75,000.

Each count of wire fraud is punishable by up to 20 years in federal prison. The maximum penalty for each contempt count is determined by the court.

The misappropriated funds had been paid by Boeing Co. to Girardi Keese to resolve lawsuits brought by family members of individuals who died when Lion Air Flight 610 crashed into the Java Sea in October 2018. Judge Thomas M. Durkin made a criminal referral to federal prosecutors in December of 2020, after Thomas Girardi admitted that the firm had spent their client’s money.

Lira was one of two signatories on the now defunct law firm’s interest-bearing client trust account, according to the indictment filed on Feb. 1. The other signatory was his father-in-law and codefendant Thomas Girardi. He has claimed, however, in related civil contempt proceedings, that was Girardi who controlled the the finances and direction of payments. He also said that he had seen forgeries of his signature on checks.

The firm’s former financial officer, Christopher Kamon, is also charged in the indictment. He pleaded not guilty at his arraignment on Thursday. Although Kamon wasn’t a signatory on the IOLTA account, he was authorized to initiate wire transfers from the firm’s IOLTA account, the indictment claims.

Edelson PC, Girardi Keese’s local counsel on the Lion Air matters and the firm that alerted Durkin to the missing client money, eventually brokered a settlement with its insurance carrier to get their clients paid in full, leading to Durkin to decline to impose sanctions in November.

“Evaluation of counsel’s conduct is now left to more proper authorities, whether they be a state bar, criminal prosecutors, or one of the several ongoing civil proceedings addressing the relationship between these parties specifically or Girardi’s actions more generally,” Durkin said then. By that time, a grand jury had already been convened.

Kamon and Girardi are facing separate criminal charges in the US District Court for the Central District of California for earlier alleged thefts of client funds. Kamon separately faces charges for allegedly cheating the firm while it was allegedly cheating its clients.

Girardi, who allegedly has dementia, may or may not be fit to stand trial. His brother, Robert Girardi, is acting as his conservator and signed his $250,000 appearance bond.

‘Salient Facts’

Although Durkin didn’t ultimately impose contempt sanctions, his November order laid out the “salient facts that emerged from the three-day hearing,” in the interest of the “larger goal of unwinding Girardi’s fraud.”

While the money trail is complex and unclear, the knowledge of Griffin, Lira, and the Edelson firm is relatively uncontested and straightforward,” Durkin said.

The clients’ settlements had been funded by March 30, 2020, and they should have been paid to them in full within 30 days. Instead, the firm only made partial payments, and they were late.

To try to justify the delays, Girardi sent letters that “contained outrageous lies,” Durkin said. Before they were sent, the letters were sent to Lira as well as former Girardi Keese attorney Keith Griffin. Griffin, who wasn’t a signatory on the relevant client trust accounts, isn’t among the firm’s executives who have been criminally charged.

At the time, Lira sent a letter to Girardi’s secretary saying, “I wouldn’t send any of these letters. They are lies and can come back to haunt Tom,” according to evidence submitted at the contempt hearing.

According to Durkin, the series of email communications among the parties “proves that Griffin and Lira knew that the clients should have been paid the full settlement amounts by April 30, 2020 at the latest,” but neither informed anyone at Edelson that Girardi “had lied to the clients about the reasons for the delay in payments.”

Edelson wouldn’t learn that he payments were only partially funded until the following June, Durkin said. The firms lawyers were then lied to when Girardi provided false assurances that the clients had finally been paid in full.

As for Girardi, Durkin said his actions were “a stain on the legal profession” that have seriously damaged the reputation of the American legal system both in the US and abroad.

Lira is represented by Cheronis, Parente & Levitt LLC.

The case is United States v. Girardi, N.D. Ill., No. 1:23-cr-00054, docket 2/10/23.