The Temptation of Fraud

Innocent Young Lawyer Falls into Fraud Trap

In California, a person can pass the Bar Exam and practice law even if he or she does not attend law school or attends a non-ABA accredited law school. Finding employment with a law firm is almost impossible for young lawyers who did not attend a prestigious law school, so they hang out a shingle and attempt to create a law business. More often than not the attempt fails.

Gottlieb & Oheb

In early 1993, Oheb opened his own law practice, which he limited almost exclusively to plaintiffs’ personal injury. In October 1996, Oheb moved into an office in Tarzana, California, which he thereafter maintained as his permanent and principal office. Over the years, Oheb also opened “satellite” offices in a number of other cities such as Woodland Hills, California and Las Vegas, Nevada. Oheb testified that almost all of his satellite offices were open only for a short while because they were not profitable.

Oheb personally kept his financial records, maintaining particularly meticulous bank records for each of his accounts, including his client trust account. For each bank account, he kept a file containing a copy of each check written on the account and another file containing a copy of each check deposited into the account. Oheb was the only one who wrote or signed checks on his bank accounts.

When a case settled, Oheb personally prepared the “settlement sheet,” which set forth the division of the settlement proceeds, i.e., between the client, Oheb, medical providers, and any other party entitled to a portion of the proceeds. The client had to approve division of the settlement proceeds and sign the settlement sheet before Oheb would pay out any proceeds.

One morning in October 1997, chiropractor Richard Monoson telephoned Oheb. Oheb had met and dealt with both Monoson and Jack Hannah, Monoson’s office manager and only employee, some 10 years earlier while Oheb was in law school and worked as a law clerk for an attorney who referred clients to Monoson. Over the years, Monoson befriended Oheb and, inter alia, employed Oheb for three or four months in 1992 while he waited for his bar results at a salary of either $200 or $300 per week and apparently even loaned Oheb money. Oheb considered Monoson like a brother; believed that Monoson saved his and his family’s lives by employing him; and allegedly relied greatly on Monoson’s purported honesty, integrity, and good judgment. From the time he started practicing law in 1993 through mid-December 1998, Oheb referred all of his clients to Monoson for treatment.

When Monoson telephoned Oheb that morning in October 1997, he asked Oheb to come to his chiropractic office in Encino that afternoon to meet Kenneth Gottlieb, whom Monoson described only as a former attorney who could increase Oheb’s practice. When Oheb went to Monoson’s office that afternoon, Monoson introduced him to Gottlieb, as well as to Keith R. Ohanesian, a chiropractor with whom Monoson did business and who knew Gottlieb, and Tony Folgar, an investigator who worked with Gottlieb.

At the meeting, no one told Oheb that Gottlieb resigned with disciplinary charges pending in July 1992 or that Gottlieb had a criminal record and conviction for insurance fraud. Oheb was told and believed that Gottlieb had been a very successful “attorney for 25 years plus, that [Gottlieb] was a litigator, [that Gottlieb] had worked for a number of famous attorneys,” that Gottlieb had a “huge book of business” that he was willing to refer to Oheb, and that he was willing to teach Oheb how to litigate.

Public records did not disclose Gottlieb’s September 1991 convictions on two counts of insurance fraud, two counts of grand theft, and two counts of forgery.

The parties agreed at the meeting that Gottlieb would transfer all of the personal injury cases that he had with Attorney Hettena to Oheb, that Oheb would be substituted in place of Hettena as the attorney of record in those cases, that Gottlieb would find and, when necessary, buy new cases and refer them to Oheb to be the attorney of record, that Gottlieb would work for Oheb on the cases he referred to Oheb, and that the clients would be sent to either Monoson or Ohanesian for treatment. Moreover, as the hearing judge correctly found, Oheb and Gottlieb agreed at the meeting to split the attorney’s fees on each case Gottlieb referred to Oheb: 25 percent to Oheb and 75 percent to Gottlieb whenever Gottlieb had to buy the case or otherwise had to pay money to someone in connection with the case, and 50 percent each whenever Gottlieb did not have to buy the case or otherwise have to pay for some expense related to the case or whenever Gottlieb bought the case from a specific individual who did not charge much for cases.

Oheb admitted that he agreed to permit Gottlieb, for the first couple of months of their business relationship, to operate his office in Van Nuys as an extension of Oheb’s law office and to work on the cases Gottlieb referred to him in that Van Nuys office without Oheb’s or another attorney’s supervision.

In total, Gottlieb referred 50 to 60 automobile accident injury cases involving about 150 plaintiffs to Oheb. Virtually all of the Gottlieb-referred cases were based on fraudulent insurance claims arising from staged automobile accidents under a sophisticated scheme involving, at least, Monoson, Ohanesian, Gottlieb, and possibly Folgar. In a typical case, Monoson and Ohanesian bought the cars that were involved in the staged accident, which were ordinarily older model cars, and fraudulently obtained and paid for insurance on the cars.

The hearing judge found that Oheb’s testimony that he did not know about the staged accidents was credible and supported by Gottlieb’s and Hannah’s testimony, which the hearing judge also found credible, that they did not tell Oheb about the staged accidents because they were afraid that he would not participate in filing the insurance claims on the accidents. For reasons we discuss post, we adopt this finding.

Oheb admitted that he often did not even meet the clients in the Gottlieb referred cases until an insurance company or someone wanted to take the clients’ statements. However, Oheb also admits that he was not always present when a client’s statement was taken. Oheb explained that, whenever it was inconvenient for him to be present when a client’s statement was taken, he sent Gottlieb to appear with the client.

During his 14-month association with Gottlieb, Oheb’s practice increased substantially. In total, Oheb paid Gottlieb about $148,300 (about $7,500 in 1997; about $127,000 in 1998; and about $13,800 in 1999) as Gottlieb’s 75 percent share of the attorney’s fees recovered on the cases that he brought into Oheb’s office. Moreover, Oheb admits that, once or twice when he had a case with a particularly large settlement, he attempted to conceal the nature of his payment to Gottlieb by writing an incorrect description of the payment in the memo section with the intent to disguise or hide his fee splitting from the State Bar.

In mid-December 1998, both Hannah and Gottlieb were arrested. Hannah was apparently released relatively soon, but Gottlieb remained in jail until sometime around February 24, 1999. Oheb quickly learned of the arrests. It was not until after Oheb learned that Gottlieb had been arrested in mid-December 1998 that Oheb retained Jeffery Sklan as his criminal attorney. At that time, Sklan advised Oheb to end his relationship with Gottlieb and to change his office locks, which Oheb did after Gottlieb was released from jail.

Even though Oheb and Sklan claimed not to know whether cases referred to Gottlieb involved staged accidents, Sklan advised Oheb, after the February 26, 1999, meeting “to get rid of any pending cases” referred to Oheb by Gottlieb. By the end of March 1999, Oheb had “dropped” all such pending cases.

Oheb was arrested on June 29, 1999, and charged with a total of 36 counts of making false insurance claims, conspiracy to commit grand theft, and capping. Oheb pleaded nolo contendere to two felony counts of violating Penal Code section 549 for accepting referrals of personal injury clients with reckless disregard for whether the referring party or the referred clients intended to make false or fraudulent insurance claims.

Even though Oheb was sentenced to 364 days in the county jail, 304 of those days were stayed, so Oheb spent only 60 days in jail. Oheb was also put on three years’ formal probation. In addition, his sentence included a $200 fine, 500 hours of community service, and $40,000 in restitution, but did so only to the four insurance companies he admitted defrauding.

ZALMA OPINION

When I was an adjuster, and later as a young lawyer, Gottlieb was still practicing law and was well-known as a person who dealt in insurance fraud. Any claim he presented was easy to settle since his clients often did not exist or could be paid off for small sums. After he was convicted and no longer a licensed lawyer, he continued his practice by taking advantage of young lawyers like Oheb. I can only guess what he is doing now, but since he is not in jail he is probably presenting insurance claims with other young lawyers.