BusinessReport.com

Is Adams & Reese the Al Capone of Louisiana law firms?

That’s the question at the heart of an incendiary civil lawsuit filed last month in New Orleans federal court.

James Perdigao⎯a former lawyer at the firm accused of swindling $30 million⎯offers an insider’s account that, if even partially true, makes John Grisham’s The Firm read like a child’s bedtime story and might cast some doubt on the conviction of former Gov. Edwin Edwards.

Through the Racketeering Influenced and Corrupt Organizations Act [RICO], Perdigao insists Adams & Reese’s rap sheet includes bribery, wire and mail fraud, obstruction of justice, witness tampering and retaliation, and other misdeeds.

The firm and eight of its lawyers--including Charles P. Adams Jr. himself--are named as the only defendants. But there’s a cast of heavy hitters in the 73-page filing, many of whom have their own troubles: U.S. Congressman William Jefferson [himself under indictment for unrelated racketeering], former U.S. Attorney [and fallen district attorney] Eddie Jordan, former Treasure Chest Casino owner and snitch extraordinaire Robert Guidry, former New Orleans Mayor Marc Morial, former Insurance Commissioner Robert Wooley, convicted former Film Commissioner Mark Smith [bribes for inflated tax credits], convicted WorldCom fraudster Bernie Ebbers and part-time Orleans Parish traffic court judge and aspiring appellate judge Ronald Sholes.

To hear Perdigao tell it, Adams & Reese looked the other way as Guidry allegedly paid Jefferson to bribe Jordan, guided their client in hiding millions from the government in offshore accounts, laundered money for the former New Orleans mayor, represented two clients competing for the same state Medicaid management contract, helped an insurance company circumvent consumer protection laws and routinely got that part-time judge on staff to fix tickets.

Conversely and questionably, Perdigao paints himself as a lone paragon of ethics, perpetually warning a scofflaw firm of the consequences of ignoring ethics rules and the law--and enduring ostracism, threats and gunfire for his unwavering commitment to the high road.

Adams vehemently denies any wrongdoing on the part of the firm, characterizing the elaborate allegations as “the latest episode in Perdigao’s continuing fantasy of blaming the government and our firm for his wrongdoing and lashing out at those who are holding him accountable for his actions. We look forward to his upcoming criminal trial, and we will continue to cooperate with the U.S. Attorney and the FBI to ensure that justice is done.”

But Perdigao, whose attorneys did not respond to written questions about the case, insists in his lawsuit that the firm and its lawyers “conspired with one another to defraud [me], other partners and others.”

Whether truth or intriguing fictional rantings of a bitter, desperate man, such sweeping accusations of corruption against a law firm⎯particularly one with the stature of Adams & Reese⎯is highly unusual, says Tulane Law School Professor Edward Sherman. “It’s been a powerhouse of a law firm, and its reputation has been tarnished a bit by this,” he says. “But it’s an excellent firm with a long history. I’d be surprised to think this is going to permanently damage it, but there certainly has been some fallout.”

Ethics adviser

Perdigao went to work for Adams & Reese in 1987 and made partner in January 1993, whereupon he was appointed ethics adviser for the business division. He claims he routinely worked 14- to 16-hour days, and his billable hours were among the highest in the firm.

He developed an expertise in gaming law and was one of the lawyers representing Robert Guidry, a multimillion-dollar casino owner, when the FBI raided the home of Guidry, former Gov. Edwin Edwards, his son Stephen Edwards and several associates. Guidry ended up being the key witness in the case against Edwards and others, testifying as to how he bribed Edwards to get a license to open the Treasure Chest Casino.

According to Perdigao, Guidry devised a scheme to bribe Jordan through Jefferson in hopes of minimizing his sentence and financial liability. Perdigao claims that when he reported that plan to his colleagues at Adams & Reese, Robert Vosbein, who also represented Guidry and was part-owner of the Treasure Chest, simply encouraged Perdigao to accompany Guidry on a drop so he could “have a multi-million dollar client for life” and warned him against reporting anything to the authorities.

At a meeting in Guidry’s penthouse apartment above his Harvey office, Guidry took Perdigao into the bathroom off the master bedroom, where he proceeded to fill a bag with cash hidden under some tiles next to the bathroom, purportedly for Jefferson.

“Guidry noted that he never placed the money directly in Jefferson’s hands, but rather under the back steps while Jefferson watched inside through the window,” Perdigao says. “Guidry then recounted the story of his first ‘drop’ under the back steps of Jefferson’s house in New Orleans. When Guidry entered the backyard, he found two sets of steps. With a puzzled look, he glanced through the window for directions from Jefferson. Guidry related that both he and Jefferson ‘cracked up laughing’ as Jefferson pointed him to behind a planter by the correct stairs.”

Although Guidry made more than $100 million from the Treasure Chest Casino riverboat license he allegedly secured with Edwards’ help, Jordan agreed to cap Guidry’s total financial exposure to $3.5 million⎯a decision that remains a mystery today. He was sentenced to five months in a halfway house.

Perdigao also alleges in the lawsuit that Adams & Reese lawyers Vosbein and Louis Wilson devised a plan to move Guidry’s money offshore and hide it from the government. Alleges Perdigao: “Tens of millions of dollars at a minimum were removed from his financial statement.”

Similar but less-detailed allegations about Guidry first emerged in a motion in Perdigao’s criminal case seeking to recuse the New Orleans U.S. Attorney’s Office from his case. A federal judge dismissed the matter; whether Perdigao’s lawyers will appeal remains to be seen.

“Basically, I think the Perdigao suit is a fairytale, with him portraying himself as Little Red Riding Hood and everybody else as the Big Bad Wolf,” says New Orleans lawyer Arthur Lemann, who now represents Guidry. “The only difference is Little Red Riding Hood didn’t steal $30 million. The one thing that [U.S. Attorney] Jim Letten and I have ever agreed upon is that Mr. Perdigao is a pathological liar. Technically, the dismissal of the criminal motion doesn’t affect the civil case, but I think it’s going to be equally doomed.”

Nevertheless, Perdigao’s claims on this issue serve to fan lingering questions about the case against Edwards, namely how Guidry managed to get such a sweet deal. Perdigao insists he reported the alleged bribery to federal prosecutors; Letten says an Office of Public Integrity investigation concluded a year ago that the claims were unfounded.

Even so, Letten’s office has responded to the Perdigao papers with unique fury, calling his motion “a shell of a vehicle giving expression to his unsupported vitriol against his accusers and victims.”

Alexandria attorney Mike Small, who is representing Edwards, says that given the judge’s recent decision, “I don’t view that there’s anything for me to do at this point. If the substance of the allegations were to come out in civil proceeding, it could be of interest to us. We’ll just have to wait and see. If some of the allegations are true, it could have bearing.”

No ‘Chinese wall’

Also of note in Perdigao’s civil lawsuit are charges that Adams & Reese made a practice of hiring former public officials and ignoring ethics rules that barred them from doing business with their former employers or its contractors for two years.

Perdigao mentions several by name, most notably Wooley and Morial, insisting the Chinese wall employed to screen both from any matters involving the public entities for which they once worked “was a sham.”

In response to questions from the Business Report, Wooley issued a statement saying only that “I am not a defendant in the suit filed by Jamie Perdigao. I have never worked with him on any matter before or during my employment with Adams and Reese; in fact, I’ve never met him.”

Perdigao alleges that during his two-year prohibition period, Wooley “directed an army of lawyers at the firm” charged with finding technicalities that would allow Allstate to drop long-standing customers in storm-prone areas of the state. The Louisiana Department of Insurance fined Allstate the maximum penalty of $250,000 for its three attempts during that two-year period to circumvent Louisiana’s consumer protection law.

“Not only was Wooley representing insurance company clients in matters for the Louisiana Department of Insurance and before the Louisiana legislature,” the lawsuit alleges, “he also participated, on behalf of insurance-company clients, in litigation in which the Louisiana Department of Insurance was involved.”

Adams & Reese also recruited Morial as he neared the end of his term and hired him as an independent contractor in June 2002. According to Perdigao, that arrangement was so the firm itself wouldn’t be barred from conducting transactions with the city of New Orleans.

But the lawsuit alleges that almost immediately after his arrival at Adams & Reese, Morial began working on matters for clients who had or were seeking contracts with the city or related entities⎯some of them during his own administration.

According to Perdigao, some of those companies allegedly paid Morial well--two of them up to $4,500 hour--leading Perdigao to speculate in his lawsuit about the reasons: “In light of the fact that the firm received hefty retainers from companies which received city contracts, and due to the method by which the firm billed these companies, a claim could easily be made that the firm provided the vehicle by which illegal payments by city contractors were being laundered for Morial.”

Efforts to reach Morial were unsuccessful. A spokeswoman at the National Urban League says he is “unavailable.”

Believe it or not?

Perdigao’s credibility is sure to be a central issue in the civil case. The embattled lawyer was expected to plead guilty after paying back the $30 million and giving federal authorities inside information, but the deal fell through and he was indicted last year on 59 counts, including mail and bank fraud, tax evasion, filing false tax returns, money laundering and transportation of stolen funds.

The indictment charges him with stealing checks from Adams & Reese and a tax refund check from Horseshoe Entertainment and depositing them into his own account. It also claims he concocted millions of dollars in phony invoices to Pinnacle Entertainment and Boomtown.

His tangled tale of corruption at Adams & Reese reads like “John Grisham’s The Firm plus one,” as LSU law professor John Baker notes.

The events Perdigao recounts aren’t entirely implausible, given the bribery charges against Jefferson and many of his family members, Smith’s conviction, lingering questions about Guidry’s deal and the fact that some allegations in the complaint are confirmed in the public record.

But given the laundry list of his own charges, Perdigao’s lily-white characterization of himself calls into question the legitimacy of his other claims. That a judge dismissed the recusal motion in the criminal matter without so much as a hearing doesn’t help matters.

Sherman says Perdigao makes a weak case for any kind of damages and the case “has the feel of a smokescreen to raise sympathy, whether in the court or in public.”

“It really is an unusual case of someone who I think was caught red-handed,” the Tulane professor says. “Nothing I’ve read indicates he has any defense on the merits. Initially, by all accounts, he admitted what he did and cooperated with the government over a period of several years. I think it’s strange at this late date to strike out against prosecutors and law firm. It’s almost a last desperate gasp in hopes of finding something there.”

Cast of characters

Here’s a look at the players in James Perdigao’s federal civil lawsuit and his accusations, none of which has been argued or proven in a courtroom. None of these individuals are named as defendants.

Player: Marc Morial, former New Orleans mayor

Allegation: Ignored Louisiana’s anti-corruption statutes and went to work temporarily as a lawyer for Adams & Reese, advising contractors who worked for the city while he was in office. In some cases, he allegedly earned as much as $4,500 an hour.

Player: Robert Wooley, former Louisiana Insurance Commissioner

Allegation: Ignored Louisiana’s anti-corruption statutes and went to work for Adams & Reese, advising one insurance company on how to evade Louisiana consumer protection laws.

Player: Bernie Ebbers, convicted WorldCom executive

Allegation: Adams & Reese allegedly represented both Ebbers and WorldCom at the same time and failed to get proper conflict waivers at the time WorldCom was giving Ebbers loans to cover his debts, against which he had pledged company stock.

Player: Tim Coulon, former Jefferson Parish president

Allegation: Allegedly helped Adams & Reese land a lucrative governmental relations contract with the parish after going to work as an independent contractor with the firm.

Player: Robert Guidry, former Treasure Chest Casino owner; key government witness against former Gov. Edwin Edwards.

Allegation: The Adams & Reese client bribed then-U.S. attorney Eddie Jordan through U.S. Congressman William Jefferson to get a sentencing deal that would let him keep most of his money.

Player: Mark Smith, convicted former Louisiana film commissioner

Allegation: Adams & Reese attorney Robert Vosbein bragged that his connections to Smith helped to build his own tax-credit brokerage business.

Player: Ronald Sholes, traffic court judge now running for the 4th Circuit Court of Appeal

Allegation: Adams & Reese hired him in 1999, largely to “fix” traffic tickets for its lawyers and clients and cultivate the firm’s relationships with other members of the bench. A federal investigation into traffic court snagged members of Sholes’ staff, but no judges.