6th Attorney Pleads Guilty in Fraud Case

A Beverly Hills lawyer pleaded guilty Thursday in “the Alliance” insurance fraud and legal corruption case that has targeted lawyers in the San Fernando Valley, west Los Angeles and San Diego.

Kathleen Phipps, 44, pleaded guilty to a single mail fraud count in U.S. District Court in San Diego. The maximum penalty is five years imprisonment and a $250,000 fine. But in return for her cooperation, federal prosecutors agreed to recommend a sentence of probation with no time in custody other than a maximum of six months house arrest.

“This was an important resolution, and I think a fair one because her involvement with ‘the Alliance’ was minimal, in our judgment,” Phipps’ attorney Brian C. Lysaght said.

Phipps was the sixth lawyer and 11th person to plead guilty in the case, which involves a group of attorneys alleged to have secretly manipulated litigation in Los Angeles, Orange and San Diego counties to bilk insurance companies out of multimillion-dollar fees. More pleas are expected soon.

Legal experts say the case may be the largest single criminal prosecution of lawyers in U.S. history.

The case is being prosecuted by the U.S. attorney in San Diego, although many of those charged lived or worked in law offices in the San Fernando Valley.

Phipps was one of 18 lawyers, law firm employees and clients indicted in San Diego last spring. The first of two scheduled trials of remaining defendants is scheduled for April.