4 Lawyers Convicted, 4 Acquitted in ‘Alliance’ Case

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 T. Radomile of La Jolla were each 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 was also 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 verdict was 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 verdict “but disappointed that my client had to suffer through this ordeal.”

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

Sentencing 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 verdict brought to a dozen the number of lawyers convicted in the Alliance case. Prior to the trial, 14 other people--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. And shortly before the verdict Tuesday, one well-placed source, who would not speak for attribution, predicted that more lawyers will be charged.

It was unknown if the split verdict would discourage more indictments. Prosecutors were unavailable for comment late Tuesday.

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 12-member jury took 12 days to reach a verdict “because there were so many different counts of mail fraud that had to be sorted through,” said jury 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 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 activities on a “60 Minutes” segment about his role in exposing the scheme.

But prosecutors concluded that Radomile was involved before turning informant. In April, 1990, he was indicted with the others, then unsuccessfully sought dismissal of charges on the grounds that prosecutors 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.”

Prosecutors claimed the lawyers--whom they referred 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 litigations 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 manufacture new 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.

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.

One of Stites’ key lieutenants also fled, another died and several pleaded guilty and became government witnesses--prompting defense lawyers to complain that the real culprits were all “fled, pled or dead.”

The defendants said Stites may have orchestrated a scheme, but that they were not part of it and all their actions were in the interests of their clients.