Lawyers Reportedly Told of Probable Indictment : Letters: Federal prosecutors notify 15 to 20 attorneys and associates, offering them a chance to meet with Justice Department officials before an indictment is handed down.

About 15 to 20 Los Angeles-area lawyers and their associates have been informed by federal prosecutors that they are likely to be indicted on racketeering charges stemming from an elaborate insurance fraud, The Times has learned.

Letters sent Thursday and Friday by the U.S. attorney in San Diego offered the lawyers and others a chance to meet with Justice Department officials in Washington on April 2 or April 3, before an indictment is handed down.

Assistant U.S. Atty. George D. Hardy acknowledged that the letters had been sent but declined to give further details. “All I want to confirm is letters went out to different individuals, giving them an opportunity to meet with officials in the Department of Justice, and that’s all,” Hardy said Friday.

Another source close to the case expressed concern about the letters becoming public, saying, “It clearly wasn’t intended to be known.”

During the past year, four lawyers and three other people have pleaded guilty to mail fraud in the case, involving a group of Los Angeles-area lawyers whom prosecutors have called the “Alliance.” Two other attorneys have been indicted on charges of lying to a federal grand jury.

But the letters suggest that the massive indictment long expected in the case may be close at hand. Rumors have circulated since last fall that as many as 20 more attorneys and their associates might be indicted under the federal Racketeer Influenced and Corrupt Organizations Act, leading legal experts to say the case may emerge as one of the largest prosecutions of attorneys in U.S. history.

The act, known as the RICO law was meant to be used to prosecute organized crime, but also has been used extensively in drug and white-collar crime cases that involve a pattern of criminal activity. In RICO cases, the government has sweeping powers to freeze suspects’ assets before trial.

Justice Department policy affords RICO targets a pre-indictment hearing with the department’s organized crime and racketeering section, in which the suspects can explain why they should not be indicted.

Juanita Brooks, a lawyer for attorney Lynn B. Stites, whom prosecutors had previously identified as the key target in the case, declined to say whether Stites had received a letter.

A San Fernando Valley attorney said in the past to be a target told The Times on Friday that he had not received a letter. “Maybe that’s a good sign,” he said.

The Alliance case involves a network of lawyers who allegedly conspired to manipulate complex civil cases to extract huge defense fees from insurance companies.

The lawyers, most of them sole practitioners or members of small law firms in the Valley, West Los Angeles or Beverly Hills, appeared together in a number of complex civil litigations in Los Angeles, Orange and San Diego counties from about 1985 to 1988.

According to prosecutors, insurance companies and those who have already pleaded guilty in the case, the lawyers sometimes paid kickbacks to their clients for the right to defend them at insurance company expense.

They allegedly performed exhaustive and needless pretrial discovery work to run up defense bills, and filed baseless cross-claims, or secondary lawsuits, against one another’s clients, to increase each attorney’s workload and fees.

In some cases, both defense and plaintiffs’ attorneys purportedly were Alliance members.

The defense lawyers helped draft the lawsuits filed against their clients, taking care to include precise language from insurance policies that would require insurers to pay defense costs.

According to some estimates, the lawyers may have billed insurers as much as $200 million, but it is uncertain how much of that may have been unnecessary or fraudulent.