Woman Pleads Guilty in Mail Fraud Case

The former operator of a court reporting service pleaded guilty Monday to mail fraud and apparently will cooperate in a federal investigation of Los Angeles-area lawyers purportedly involved in an insurance fraud scheme.

Suzanne Rubin, 29, who was arraigned Friday on a single mail fraud count, on Monday changed her plea to guilty in federal court in San Diego. Her plea agreement with federal prosecutors was ordered sealed by U. S. District Judge John Rhoades. Rubin was the first person to be charged in the alleged scheme.

Neither Rubin nor her lawyer would say if she is assisting the government. But Assistant U. S. Atty. George D. Hardy said that was “a fair implication from the circumstances.”

Authorities are investigating about 15 Los Angeles-area lawyers who appeared together as defense attorneys in some of the same civil fraud cases in San Diego, Orange and Los Angeles counties. The investigation seeks to find out whether the lawyers, paid millions of dollars by insurers to defend policyholders, schemed to prolong litigation and fatten their fees by conducting unnecessary pretrial discovery and filing spurious claims against each other’s clients.

More Charges Anticipated

In the charge filed against Rubin last week, the government said the lawyers also had defrauded “the judicial systems” of the United States and the state of California by representing themselves to be “independent attorneys” when they really had “interlocking financial and professional interests.”

Assistant U. S. Atty. William Q. Hayes said last week that he “anticipated that more (people) will be charged”--but would not say whom or when.

In entering the plea, Rubin and her lawyer, Barry Utsinger, identified targets of the probe whom the government described last week without naming.

According to the charge against Rubin, she had operated a court-reporting service in Reseda, in the San Fernando Valley, that was kept busy taking depositions for the lawyers. Later, at the request of an “organizing attorney,” she also began supervising the operations and billing practices of two other firms that had a “secret financial connection” with the organizing attorney.

‘Organizing Attorney’ Identified

In remarks to the court, Utsinger identified the “organizing attorney” as West Los Angeles lawyer Lynn Boyd Stites. He said Rubin also managed billings for Woodland Hills attorney Alan Arnold and Calabasas lawyer Lewis Koss. The mail fraud charge against Rubin involved a bill submitted on Koss’ behalf in March, 1985. Stites, Arnold and Koss could not be reached for comment Monday.

The lawyers being investigated had taken a type of case in which insurers must pay them to defend policyholders without having the right to pick the lawyers or direct defense strategy. The situation arises when an insurer and policyholder disagree on whether legal claims are all covered by insurance. In such a case, the policyholder can pick a lawyer to defend him at insurance company expense.

The federal investigation has paralleled civil fraud suits filed by insurance companies against some of the lawyers.

Rubin is to be sentenced May 15 on the mail fraud count.