Judge Sentences Key ‘Alliance’ Figure to Halfway House : Insurance fraud: A Tarzana man and another who had practiced law in Woodland Hills receive probation.

The former top lieutenant of fugitive attorney Lynn Boyd Stites was sentenced Monday to five months in a halfway house and two other lawyers were placed on probation for their part in the “Alliance” insurance fraud and legal corruption case.

“I am very sorry for my conduct” and have been “working diligently to make amends,” Gregory S. Bodell, 35, said before U. S. District Judge Judith Keep sentenced him to a halfway house for 150 days. Bodell was also placed on probation for five years and ordered to pay a $10,000 fine.

Richard Banks, 44, of Tarzana and Bruce Ficht, 42, who had practiced law in Woodland Hills, were placed on probation for five years and ordered to perform community service. In addition, Ficht received a $10,000 fine.

The three lawyers had already resigned from the State Bar of California.

Bodell, Banks and Ficht had pleaded guilty and appeared as government witnesses during a 12-week trial earlier this year. The four lawyers they helped convict last month received much stiffer sentences, ranging from 37 to 46 months in prison.

Overall, 12 lawyers and six law firm employees and clients have been convicted in the Alliance case, one of the largest prosecutions of attorneys in U. S. history.

Bodell, who is working as a law clerk, for years was the right hand of Lynn Stites, the alleged mastermind and chief beneficiary of the Alliance scheme. Stites disappeared shortly before he and 17 others were indicted in April, 1990, on fraud and racketeering charges.

Bodell pleaded guilty the following month to a single count of mail fraud, punishable by up to five years in prison and a $250,000 fine. In their plea bargain with Bodell, prosecutors said they would recommend that he get “no more than ‘halfway house treatment’ in the event the court feels that any custodial sentence is warranted.”

Bodell “was somebody who provided . . . substantial assistance in securing convictions of others,” Assistant U. S. Atty. William Q. Hayes said after sentencing. “The government has to pay a price to obtain that.”

The Alliance was the name used by prosecutors for a group of Los Angeles-area lawyers charged with using the court system to bilk insurance companies out of millions of dollars in legal fees.

From 1984 to 1988, the lawyers initiated or took control of 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 after gaining a foothold, prosecutors said, the lawyers worked together to resist settlements and to manufacture new legal controversies to make the cases grow in size and cost.

Stites, witnesses said, basically franchised the litigation, providing lawyer-recruits with start-up funds and legal advice and sending them insured clients in return for fixed percentages of their insurance billings. His alleged involvement was kept secret from some who participated in the scheme and dealt instead with trusted lieutenants such as Bodell and Marc I. Kent of Granada Hills, who also pleaded guilty and is awaiting sentencing.

Banks had pleaded guilty to a single charge of mail fraud and Ficht to one count of aiding and abetting mail fraud. Both were minor participants who were lured into the scheme by Kent.

In remarks to the court and in an interview, Ficht said he had been a criminal defense lawyer who was seeking a less stressful practice when Kent approached him in 1986.

“He gave me a fairy tale,” Ficht said. Now “I’ve lost everything that’s important to me.”

Ficht said he is divorced and unemployed, with both the criminal fine and a judgment for an insurance company hanging over him. “Who’s going to hire me? What am I equipped to do? Practice law,” Ficht said. “I hope there’s a brighter day for me.”

Banks said he was relieved and called his sentence “a chance to get on with my life.”