Lawyer May Have Aided Taves in Violation of Order, Report Shows
A Santa Monica lawyer who represented accused swindler Kenneth H. Taves early in his case may have assisted Taves in the operation of his Cayman Islands accounts in violation of a court order, according to a report in U.S. District Court in Los Angeles.
Documents turned over by a Cayman Islands bank show that Lee Sacks, an attorney with Sacks & Zweig, authorized the transfer of funds to his firm after a federal judge ordered Taves’ assets frozen, according to a report filed by the receiver appointed in the case.
Sacks also received a document trumpeting the lack of exchange controls or currency reporting in the South Pacific republic of Vanuatu, where Euro Bank was later instructed to send $7.4 million of Taves’ money, the report states.
A document on Sacks & Zweig letterhead found in the bank files instructs Euro Bank to wire $25,000 to its account and $50,000 to another firm--Fried, Frank, Harris, Shriver & Jacobson, which also worked for Taves. The direction was made on behalf of “Jiminy,” which the receiver believes to be a reference to Jiminy Cricket, an apparent code name for Taves.
Those transfers were made Jan. 20 and Jan. 26.
All told, Sacks & Zweig and Fried, Frank, Harris, Shriver & Jacobson received payments of more than $210,000 from the then-secret accounts after the court-ordered Jan. 6 asset freeze, according to the report filed by receiver Robb Evans.
Sacks didn’t return phone calls seeking comment.
Days after Euro Bank paid the law firms out of the undisclosed accounts, Taves’ lawyers were in court lamenting the effects of the asset freeze order and asking to be paid their legal fees.
At a Feb. 11 court appearance, Harvey Saferstein of Fried, Frank told the judge that Taves and another defendant “have repatriated all the foreign funds that they have or can get ahold of and that they are not hiding anything.”
The receiver ultimately released $100,000 from Taves’ frozen accounts to cover Fried, Frank’s fees.
Sacks, in a sworn declaration supporting his request to be released as Taves’ attorney April 14, wrote that his clients had “failed to pay agreed-upon attorneys’ fees” and that he was owed more than $100,000.
In an interview, Saferstein said, “We did not make any misrepresentations to the court. That did not occur.” He declined to comment further.
On the day the receiver’s report was filed, Fried, Frank announced it would turn over more than $208,900 of Taves’ money held in a previously undisclosed client trust account, Evans’ office said.
Both law firms withdrew from the case in May. Taves is now represented by Santa Barbara attorney Robert Ornstein and federal public defender Guy Iverson.
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