Judge Settles Suit Alleging He, Others Laundered Money

A Los Angeles Superior Court judge has settled a civil suit alleging that he and others helped launder more than $1.8 million belonging to a wealthy physician friend, attorneys said Monday.

Judge Patrick Murphy will pay no money toward the $525,000 settlement, but his sister, Barbara Parsons Murphy, who allegedly handled part of the missing money, will pay $145,000, said Tracy Green, Murphy’s attorney. The settlement will become official when all the defendants pay their portions of the settlement today, attorneys said.

The lawsuit, filed in November 1998 by the Smith Barney and Prudential Securities brokerage firms, accused Murphy and several others of helping physician George Taus three years ago to wrongfully launder and conceal more than $1.8 million owed to Taus’ creditors and his ex-wife.

The alleged scheme also is the subject of a federal grand jury investigation and a probe by the district attorney’s office.

“Judge Murphy is glad to see the case settle,” Green said. “We are cooperating with the investigation and we are doing our best to show our client, Judge Murphy, isn’t guilty of any wrongdoing.”

Green said it was her understanding that the district attorney’s office had deferred its investigation to federal investigators, and the next step will be for Murphy to provide evidence to prove his innocence.

Under the civil settlement, none of the defendants admitted any liability, Green said. However, the settlement does not preclude the plaintiffs from asking for more money through restitution if criminal charges are filed.

Taus must foot most of the settlement, paying $271,000, attorneys said.

The rest of the money is coming from Murphy’s sister and eight other defendants, who include Murphy’s former paralegal and Stephen Alexander, a former Azusa mayor. Alexander could not be reached for comment Monday.

The suit alleged that in 1996, two years after Susan Taus filed for divorce, George Taus withdrew the money from a joint brokerage account and family accounts without her knowledge. The money was invested in a shell corporation, which in turn paid it out as part of a sexual harassment settlement to a ghost employee, the suit alleged.

That employee was a paralegal who once worked with Murphy when he was a private attorney, before his 1992 election to the bench. In a deposition filed in the case, the paralegal, Maryanne Baumgarten, testified that she then moved the money around at Murphy’s direction.

The lawsuit alleged that Murphy received $330,000 in cash, property and gold coins. It claims that the judge received nearly $14,000 for a new roof on his residence and $1,500 in car repairs. His attorneys have denied that he ever saw any money and claimed that others tried to implicate him to save themselves.

Attorneys for the brokerage firms confirmed the settlement Monday. Taus could not be reached for comment.

The settlement comes as Murphy is facing possible removal from the bench by the state Commission on Judicial Performance for missing more than 157 days of work on sick leave last year and more than 400 days of work since 1996. The commission oversees the conduct of California judges.

The state investigation was initiated after it was revealed earlier this year that, while on sick leave and collecting his $117,000 salary, Murphy apparently enrolled as a first-year student in a Caribbean medical school. An attorney for Murphy, Edward M. Moses, last month acknowledged that Murphy withdrew from a medical school because of illness.

Murphy last month returned to the bench and was reassigned from the Citrus Court in West Covina, where he had heard criminal cases, to Traffic Court near downtown.

Another of his attorneys subsequently filed a reply to the judicial commission charges, saying that Murphy had done nothing wrong, that his absence did not amount to an ethical violation and that judicial leave for illness is potentially unlimited.

A hearing to decide Murphy’s judicial future has yet to be scheduled before a panel of judges selected by the California Supreme Court.