Jury Convicts Central Figure in ‘Alliance’ Fraud Scheme : Crime: An attorney who once practiced in Woodland Hills is the 13th lawyer found guilty in the insurance case.

Lynn Boyd Stites, the central figure in “the Alliance” insurance fraud and legal corruption case whose colorful odyssey as a fugitive ended last year in a speed trap, was convicted Thursday of 13 felony charges in U. S. District Court in San Diego.

Stites, 48, who formerly practiced law in Woodland Hills and West Los Angeles, was found guilty of racketeering and a dozen counts of mail fraud, becoming the 13th lawyer convicted in the Alliance case, one of the largest prosecutions of attorneys in U.S. history.

After deliberating 3 1/2 days, jurors also acquitted Stites of 13 other mail fraud counts, and returned a special verdict allowing the government to seize up to $50 million worth of Stites’ assets. The amount--deemed to be proceeds of racketeering activity--was the government’s estimate of insurance industry losses resulting from the scheme.

“I’m very satisfied with the verdict in all respects,” said Assistant U. S. Atty. William Q. Hayes, chief prosecutor in the case.

Thomas A. Mesereau Jr., one of Stites’ attorneys, said Stites “is very disappointed” but “believes that in the long run justice will prevail.” Mesereau said several evidentiary and pretrial rulings provide a strong basis for appeal.

Stites, who will remain in custody pending sentencing in January, faces the prospect of a long prison term. The racketeering charge carries a maximum 20-year sentence and each mail-fraud conviction is punishable by up to five years in prison. The stiffest sentence in the case so far has been 46 months in prison.

Prosecutors portrayed Stites as the mastermind and chief beneficiary of the Alliance scheme, involving a ring of Los Angeles-area attorneys whom the government accused of defrauding the judicial system along with the insurance industry.

The lawyers infiltrated complex civil litigations in Los Angeles, Orange and San Diego counties in which insurance companies were obliged to pay legal fees for customers who were sued. They took pains to prolong and expand the suits--working together to resist settlements and manufacture new legal controversies so the cases would grow in size and cost.

Among their tactics was paying kickbacks to clients so they would be content to remain defendants rather than resolve the claims against them.

The lawyers became known as the Alliance after an associate of the group used the term in a conversation secretly taped by a government informant. They occasionally were also referred to as the “Ventura Boulevard boys” because many were from the San Fernando Valley.

Between 1989 and 1991, a dozen attorneys and six law firm employees and clients pleaded guilty or were convicted in the case, while four other lawyers were acquitted.

Stites was indicted in April, 1990, but remained in hiding until his arrest in November, after an Illinois state trooper who had stopped him for speeding spied a pile of cash in his car.

It later emerged that during Stites’ time underground, he had proposed marriage to two women under two different names, and had bought a string of yachts in Florida--conducting negotiations under two aliases to create the impression of two buyers.

He purportedly used a phony help-wanted ad to obtain false identities, tricking applicants into sending birth certificates and other documents to get a security clearance.

During the four-week trial, prosecutors also tried to show that Stites, while in hiding, filed a false insurance theft claim for a boat that was never stolen.

Mesereau said Stites’ case was unfairly prejudiced by this and other testimony that was not pertinent to the charges against him. Chief defense counsel Jennifer Keller had sought to persuade jurors that Stites’ prosecution was politically inspired--and that insurance companies were using the government to crush one of their most effective opponents.

She portrayed Stites as a coverage specialist who incurred insurers’ wrath by forcing them to defend customers in legal peril, as their insurance contracts required. Even worse, the defense claimed, Stites used his expertise to help other lawyers who were having similar trouble getting insurers to meet their legal obligations.

Several prosecution witnesses had been granted immunity or had been allowed to plead guilty to reduced charges in return for helping the government.

Mesereau said he thought these witnesses had been “discredited as having done a large number of illegal and unethical things, and as having been intimidated by the government. . . . You wouldn’t buy a used car, based on what any of those witnesses said, let alone convict someone,” he said.

With Stites’ conviction, the only remaining Alliance defendant is Stites’ former bookkeeper, Roberto Rufino. Like Stites, Rufino disappeared at the time of indictment but has not been caught.