Secretive Woman at ‘Alliance’ Trial Is Fugitive’s Ex-Wife

As “the Alliance” insurance fraud and legal corruption trial slogged through its seventh week in U.S. District Court, a secretive, middle-aged woman in dark glasses sat in the back of the wood-paneled courtroom filling legal pads with notes, as she has since the trial began.

She has refused to give her name, saying only that she is an author gathering material for a book.

If so, it could be the inside scoop: The woman is Erma Lee Miller, also known as Erma Lee Stites, ex-wife of fugitive attorney Lynn B. Stites, the alleged mastermind and chief beneficiary of the Alliance scheme.

Lynn Stites, who formerly practiced law in Woodland Hills and West Los Angeles, dropped out of sight shortly before his indictment last year on fraud and racketeering charges.

Despite his absence, Stites has cast a long shadow over the trial of eight other attorneys--seven from the Los Angeles area and one from San Diego--accused of helping Stites defraud insurance companies of tens of millions of dollars in legal fees through frivolous litigation.

At times, the trial has seemed like a long-playing record recounting Stites’ alleged deception of insurers and even associates--some of whom he allegedly recruited for the scheme through intermediaries to keep his involvement secret.

What his 50-year-old ex-wife, a Moorpark resident, is doing at the trial, apart from book research, is something she wouldn’t discuss Thursday when a reporter called her by name.

“I’m not talking to you. I’m writing a book. . . . Leave me alone!” she shouted.

One possibility is that Miller hopes to be of some help to the defendants, whom, like her, Stites left holding the bag.

Another theory was that she hoped to discover what her former spouse was up to. “I’m sure she would have a natural curiosity to find out what was going on,” said Steven Ruben, a Los Angeles lawyer who formerly represented Lynn Stites.

Miller, Ruben said, was “absolutely kept in the dark, . . . and probably can’t believe what she’s hearing.”

Apparently, most participants and observers at the trial do not know who Miller is. Two who do are defendant Lewis Koss of Woodland Hills and his defense lawyer, Bradley Brunon. After the trial recessed late Wednesday, Koss and Brunon were seen talking to Miller next to her car a few blocks from the courthouse.

Department of Motor Vehicles records showed that the car is registered to a Lee Miller of Moorpark. The same car was stopped last year in Utah, and a speeding ticket was issued to Erma Lee Stites, also known as Erma Lee Miller, according to license information obtained from the DMV.

Koss and Brunon would not discuss Miller’s presence at the trial. Prosecutors refused to say whether they knew of her attendance, saying they would not discuss any aspect of the trial.

Fourteen people--eight of them Los Angeles-area lawyers--have pleaded guilty in the Alliance case, which is among the largest criminal prosecutions of lawyers in U.S. history.

The eight attorneys on trial--including Leonard Radomile of La Jolla--are the remainder of a batch of 18 defendants who were indicted by a federal grand jury in April, 1990.

From about 1984 through 1988, the lawyers allegedly infiltrated or initiated at least 10 civil litigations in San Diego, Orange and Los Angeles counties in which insurance companies were obliged to pay defense fees for policyholders who had been sued.

The lawyers are accused of resisting settlements and creating work for each other by conducting needless depositions and filing cross-claims for damages against each others’ clients. Some allegedly paid kickbacks to their clients so the clients would be content to remain defendants, rather than settle claims against them.

According to the government, most of the lawyers also paid Stites huge sums from their insurance billings, in return for being assigned insured defendants in the cases. Some of the alleged payments were in cash, but they also took the form of precious metals, office equipment and tuition for Stites’ children at Swiss schools, the government maintains.

The defendants have professed their innocence, saying the Alliance was limited to Stites and members of his inner circle who have entered guilty pleas.

Two defendants late Thursday announced that they would rest their cases without presenting any evidence in their defense.

Lawyers for Donald E. Sternberg and Steven D. Waisbren, both of Woodland Hills, told Judge Clarence Newcomer that the government had failed to meet its burden of proving any wrongdoing by them.

Earlier Thursday, defendant Richard B. Noyer of Calabasas finished his third day on the witness stand, testifying in painstaking detail about his motives and tactics in the suspect litigations.

Noyer testified that he never filed pleadings simply to expand cases or generate attorney fees. He said he never paid Stites or took instructions on legal strategy from Stites or Stites’ lieutenants.

Noyer also said he never paid kickbacks to clients, as the government alleges--and as several of those who pleaded guilty admitted doing.

Closing arguments in the trial may be heard next week.