Lawyer Pleads Guilty in Telemarketing Scam

A lawyer who worked for a giant Los Angeles-based telemarketing fraud ring pleaded guilty Friday to conspiracy charges for aiding his clients’ effort to conceal proceeds from their scam.

Lindsay Wellman, 48, of Westlake Village is one of at least two California attorneys who did legal work for the ring in the mid-1990s while its telemarketers duped more than 3,000 investors out of $50 million, according to federal prosecutors.

Investigators say the lawyers used their client trust accounts to launder proceeds from the fraud, drafted the marketing materials used to lure investors and handled the paperwork to set up dummy corporations to act as fronts for the investment offerings.

Several leaders of the ring pleaded guilty last August to securities fraud, money laundering and tax evasion in connection with the scheme.

Armed with glossy brochures and other material, the ring’s telemarketers peddled a series of sham investments, including an online shopping mall and other Internet businesses. Investors were asked to put a minimum of $5,000 into a “general partnership.” But the partnerships were secretly controlled by the telemarketers and their bosses, who kept 85% of any investments as a hidden “management fee.”

Wellman said in court papers that he helped the ring with a legal memorandum that “failed to disclose [that fee] effectively.”

He pleaded guilty in U.S. District Court in San Diego to 17 counts of structuring transactions to avoid bank reporting requirements that would alert the Internal Revenue Service to the movement of large sums of cash. Prosecutors also said Wellman aided telemarketing bosses in stashing their money in the Turks and Caicos Islands.

Wellman, who is expected to receive a two-year prison term when he is sentenced Sept. 18, said he and attorney James M. Leonard “advised and assisted” the ring leaders in designing the sham investments and marketing materials, recruiting telemarketers and purchasing sales leads.

Assistant U.S. Atty. Steven Peak declined to comment on whether Leonard is a target of the ongoing probe.

Leonard said he provided “limited legal advice” but “had nothing to do with” the offerings or marketing materials. “I didn’t design them, draft them, review them,” he said.