Acquittal in ‘Alliance’ Case Brings Relief, Anger : Verdict: An attorney says the trial’s end unleashed ‘a host of emotions.’ He hopes to resume his practice, but civil suits and a State Bar inquiry are pending.

Steve Waisbren’s baby was just learning to talk in April when Waisbren and seven other attorneys went on trial in San Diego in the “Alliance” insurance-fraud and legal-corruption case.

For more than two months, the Woodland Hills lawyer only got home on weekends and the boy became confused, always saying, “Bye-bye, Daddy,” as though that had become Waisbren’s name.

Last week, the 33-year-old Waisbren came home for good. After a grueling federal court trial, Waisbren was one of four men acquitted on all charges.

Over the prattle of his child Wednesday morning, Waisbren said his acquittal the day before unleashed a “host of emotions, from anger to relief. . . . Yesterday was really the first time I looked forward to seeing my name in the paper.”

Waisbren was the only one of the eight defendants not accused of the most serious charge, racketeering. But he was charged with 21 counts of mail fraud, and conviction might easily have brought a substantial prison term.

“As I’m sure you can imagine, it’s a scary thing to go through. . . . I don’t wish it on anybody,” Waisbren said. “People who go through this and they’re guilty--it’s bad enough for them.” It’s even worse “when you go through this and you’re not guilty.”

The Alliance was the name used by prosecutors for a group of lawyers charged with manipulating civil litigation to defraud insurance companies of at least $50 million in legal fees. Eighteen people were indicted in the case in April, 1990, but in the months leading to trial, the number of defendants dwindled to eight as a result of guilty pleas, the flight of two defendants and the death of another.

Jurors deliberated 12 days before returning a split verdict, convicting four lawyers and acquitting four others. Found not guilty along with Waisbren were Donald E. Sternberg of Woodland Hills, Douglas Caiafa of Westwood and George Dezes, a former Los Angeles lawyer now residing in Maryland.

Convicted of mail fraud and racketeering were Lewis M. Koss of Woodland Hills, Monty G. Mason II of Sherman Oaks, Richard B. Noyer of Calabasas and Leonard Radomile of La Jolla. Sentencing is set Sept. 23.

The verdict brought to a dozen the number of lawyers convicted or pleading guilty in the case. Prior to the trial, 14 people--eight of them Los Angeles-area lawyers--had entered guilty pleas.

“We’re satisfied with the result, and we feel that it will have a substantial impact in deterring this kind of conduct in the future,” said Assistant U. S. Atty. William Q. Hayes, one of the prosecutors.

Between 1984 and 1988, the lawyers appeared together in a series of lawsuits--in Los Angeles, San Diego and Orange counties--in which insurance companies were paying legal fees for policyholders who had been sued. Once involved in the cases, prosecutors said, the lawyers resisted settlement and worked together to manufacture new legal controversies so that the cases would expand and become more expensive.

The government presented extensive evidence of payments from some of the lawyers to their clients, describing these as kickbacks paid to the clients so they would be content to remain defendants.

Prosecutors said the lawyers were under the control of fugitive attorney Lynn Boyd Stites, who would have been on trial himself had he not fled to avoid prosecution. Stites, according to prosecutors, essentially franchised litigation, assigning the lawyers their clients, directing litigation strategy and receiving a share of each lawyer’s insurance company billings.

Some of the lawyers acknowledged making payments to Stites, but they characterized them as referral fees that are routine in the practice of law. They said Stites might have headed an alliance of attorneys, but they weren’t part of it and only acted in the interest of their clients.

The government, they said, was suggesting guilt by association--as though merely representing clients in the subject litigations was evidence of wrongdoing.

The lawyers all saw their law practices collapse under the stigma of indictment and the strain of preparing for trial. Like some of the others, Waisbren said he hopes to resume his law practice eventually.

Although the worst is behind them, Waisbren and the others aren’t out of trouble yet. All four of those acquitted are defendants in civil fraud suits in which insurance companies are trying to recover fees they claim were improperly billed. Waisbren and some of the others have their own lawsuits against the insurers over unpaid legal bills.

In addition, the California State Bar is investigating potential ethics violations by “50 plus” lawyers in connection with the Alliance case, including all of those charged in the criminal case, a bar investigator said.

Caiafa, 34, who called the indictment and trial “one long nightmare,” said he hoped that the State Bar “will recognize that I didn’t do anything wrong and let me get on with my life.”

He also expressed bitterness toward the government and the insurance industry, which he believes inspired the prosecution.

“I’m relieved and happy with my complete acquittal . . . and I’m going to put this terrible chapter in my life behind me,” Caiafa said. He added that the verdict showed that he’d made “the right decision to fight what I was sure were baseless charges”--in contrast to others who elected to plead guilty to lesser charges.

Caiafa said prosecutors “threw out way too large a net in the hope of racking up as many convictions as they could.” They “acted against myself and others with no reliable evidence . . . and they really didn’t care if they ruined my life.”

That “reaction is not surprising,” said Hayes, the prosecutor. But, he said, “there was sufficient evidence to bring the charges” and, the government believed, to obtain convictions.

“The jury disagreed with us,” Hayes said. “Obviously, we accept the jury’s determination.”

Sternberg, 40, declined to be interviewed. “What happened happened and he wants to move on,” said his lawyer, Janet Levine. “Nobody who hasn’t been there can realize . . . how awful it is to be accused of something that you didn’t do.” But now Sternberg “has been vindicated, and he just wants to go on.”

Dezes, 33, also declined to be interviewed. Even before his indictment, Dezes had closed his law office and moved back to Maryland to help run his family’s restaurant. His lawyer, Edward M. Robinson, said it’s uncertain if Dezes will resume his practice.

But, right now, “he’s very happy,” Robinson said. Although Dezes is a man who rarely shows his feelings, he “teared up a bit” when he heard the verdict, according to Robinson. “I think that’s a lot of emotion for George,” he said.