Lawyer Pleads Guilty and Agrees to Cooperate in ‘Alliance’ Case

A Los Angeles lawyer who worked for the alleged mastermind of a multimillion-dollar insurance fraud pleaded guilty Tuesday and agreed to cooperate with the government, a development prosecutors described as significant.

Gregory S. Bodell, 34, pleaded guilty to a single count of mail fraud, becoming the fifth attorney and eighth person convicted in the case, involving a network of Los Angeles-area lawyers whom prosecutors have called “the Alliance.”

The government contends that the lawyers cheated insurance companies out of $50 million in legal fees by manipulating complex lawsuits in Los Angeles, Orange and San Diego counties.

The Bodell plea, entered in federal court in San Diego, is the first since the indictment last month of 18 defendants, including Bodell’s former boss, Lynn B. Stites, whom the government has accused of running the scheme. The others have pleaded not guilty.

Bodell had worked since 1982 for the Stites Professional Law Corp., based in Woodland Hills and later in West Los Angeles. “The fact that he acknowledged his involvement is extremely significant, given the number of years that he was in close association with Lynn Stites,” said Assistant U.S. Atty. George Hardy, chief prosecutor in the case.

Along with Stites and the others indicted last month, Bodell had faced racketeering and multiple mail fraud counts. The single mail fraud charge to which he pleaded guilty carries a maximum penalty of five years imprisonment and a $250,000 fine. No sentencing date was set.

Bodell will be debriefed by the government and will resign from the California State Bar, said his attorney, John D. Vandevelde.

The attorney described Bodell as a young man who “first became involved in this when he was just out of law school.”

“It’s very traumatic, very, very difficult for him to deal with, and he has made a decision to try to deal with all these problems responsibly . . . and put it behind him the best way he can,” Vandevelde said.

Bodell’s plea bargain may induce other defendants to plead and provide evidence to be used against Stites, if he ever surrenders or is apprehended. In recent years, Stites, 45, divided his time between Switzerland and a home in Bell Canyon in eastern Ventura County, which he sold last November. His whereabouts are unknown, and a warrant is out for his arrest.

Thomas A. Mesereau, a Los Angeles attorney who has represented Stites, declined comment on Bodell’s plea.

Before last month’s indictment, seven people pleaded guilty in the midst of a lengthy investigation. Of the 25 charged, 18 have been lawyers, most of whom worked or lived in the San Fernando Valley. The other seven were law firm employees or clients.

The attorneys would appear together as defense lawyers in cases in which insurance companies had to pay legal fees for defendants. They allegedly worked together to torpedo settlements and to prolong and expand the cases through various legal maneuvers, such as conducting meaningless pretrial discovery and filing claims against each other’s clients, generating more insurance billings for all.

According to the government, Stites franchised litigation, helping some of the other lawyers set up their own offices and sending them insured clients, in return for fixed percentages of their insurance billings.

A lawyer who has already pleaded guilty said the attorneys in some cases paid kickbacks to their clients so they would not want cases against them to be settled.