Fraud Figure Admits Guilt, Will Testify Against Brother

The sister of fugitive attorney Lynn B. Stites pleaded guilty to mail fraud Wednesday and agreed to testify against her brother and other defendants in “the Alliance” insurance fraud and legal corruption case.

Cheryl Dark of Granada Hills, a paralegal who worked for Stites, pleaded guilty in U.S. District Court to a single count of mail fraud, which carries a maximum sentence of five years imprisonment and a $250,000 fine.

But in a plea bargain, federal prosecutors agreed to recommend a sentence of no more than six months in custody or home detention in return for Dark’s cooperation as a government witness.

“The Alliance” is a term used by prosecutors for a network of San Fernando Valley and west Los Angeles lawyers who appeared together in numerous civil cases in San Diego, Orange and Los Angeles counties.

Although supposedly battling one another on behalf of individual clients, the lawyers allegedly conspired to expand litigation to bilk insurance companies of millions of dollars in legal fees. Some clients were paid kickbacks for their cooperation in resisting settlements and prolonging cases, some of those who pleaded guilty have said.

Dark was the 12th person, including six attorneys and five other law firm employees and clients, to plead guilty.

Altogether, 25 people stand accused, or pleaded guilty, in what is called one of the largest criminal prosecutions of lawyers in U.S. history.

Dark pleaded guilty Wednesday to a charge specifically involving the padding of bills mailed in 1984. At the time, Dark worked for the Stites Professional Law Corp., her brother’s firm. At least twice in November, 1984, the firm billed insurance companies for at least 24 hours of work by Dark on a single day. This was discovered when some of the insurers compared notes years later.

Dark told U.S. District Judge Judith Keep that on several occasions she questioned her brother about inflated bills, but was told “it was not my business, so I just let it go.”