4 Lawyers Guilty in ‘Alliance’ Fraud Case : Courts: Jurors acquit four others. Prosecutors said defendants defrauded insurance firms of $50 million in fees for needless or phony litigation.

A federal court jury Tuesday returned a split verdict in “the Alliance” insurance fraud and legal corruption case, convicting four lawyers and acquitting four others accused of scheming to bilk insurance companies of millions of dollars in legal fees.

Attorneys Lewis M. Koss of Woodland Hills, Monty G. Mason II of Sherman Oaks and Leonard Radomile of La Jolla were found guilty of racketeering and multiple mail fraud counts. Richard B. Noyer of Calabasas was convicted of racketeering and a single charge of mail fraud, with jurors deadlocked on several other mail fraud counts against him. Mason also was found guilty of perjury.

Acquitted on all counts were lawyers Donald E. Sternberg and Steven D. Waisbren of Woodland Hills and Douglas Caiafa and B. George Dezes of Los Angeles.

As the verdicts were read, Sternberg clenched a fist in triumph and hugged and kissed his defense lawyer, Janet I. Levine.

“We’re going to Disneyland!” cracked Caiafa’s defense counsel, Stanley I. Greenberg. He said he was happy about the verdicts “but disappointed that my client had to suffer through this ordeal.”

Radomile was impassive as the verdicts were read, but his wife burst into tears.

Prosecutors claimed the lawyers--whom they refered to as “the Alliance”--defrauded insurance companies of at least $50 million in legal fees for needless or phony litigation.

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

Unlike staged traffic accidents or other such scams, the disputes in these cases were real. But prosecutors contended that the lawyers, after gaining a foothold, worked together to resist settlement and manufactured legal controversies in order to expand and prolong the cases.

The alleged mastermind of the ring, attorney Lynn B. Stites, disappeared shortly before he was indicted last year and remains a fugitive.

Sentencing for the four lawyers convicted Tuesday was scheduled for Sept. 23. The racketeering count carries a maximum sentence of 20 years in prison, and the mail fraud and perjury counts each carry maximum terms of five years. Under federal sentencing guidelines, those convicted appear to face no less than two years in prison.

The verdicts brought to a dozen the number of lawyers convicted in the Alliance case. Prior to the trial, 14 others--eight of them Los Angeles-area attorneys--had pleaded guilty in the case, one of the largest prosecutions of lawyers in U.S. history.

Before and during the 10-week trial, rumors of a new wave of indictments circulated among those close to the case. Shortly before the verdicts Tuesday, one well-placed source, who would not speak for attribution, predicted that more lawyers will be charged.

In a separate probe, a California State Bar investigator has told The Times that “50 plus” lawyers are under investigation for possible ethical misconduct in the case.

The jury took 12 days to reach verdicts “because there were so many different counts of mail fraud that had to be sorted through,” said foreman Tina Brady, 43, a school administrator from San Diego. The volume of exhibits “was just enormous,” she said.

The outcome had its share of ironies, including the conviction of Radomile, the man who reported the scheme to federal authorities.

Prosecutors acknowledged that it was Radomile, 44, who tipped them to the existence of the Alliance in 1987. Federal investigators even wired Radomile and two of his clients with secret recording devices so they could record conversations with the other lawyers. In May, 1988, Radomile proclaimed his undercover role on a “60 Minutes” segment about the scheme.

But prosecutors concluded that Radomile was involved before turning informant. In April, 1990, he was indicted with the others. He unsuccessfully sought dismissal of charges on grounds that authorities had agreed not to prosecute him.

Radomile’s defense counsel, John Heisner, said he would appeal Radomile’s conviction, saying Radomile “worked with the government to disclose this whole thing.”

The eight lawyers remained from a group of 18 defendants indicted in April, 1990. In the ensuing year, circumstances transformed the case from a trial of Stites, his top lieutenants and lesser associates to a trial mainly of lesser associates.