Top Florida law firm accused of stiffing rich client and paying bribes to witnesses

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Never shy of the spotlight, William Scherer has stood out for decades among South Florida’s elite lawyers.

Born and raised in Indiana, the stalwart Republican helped save George W. Bush’s razor-thin victory over Al Gore in the 2000 Florida election recount for the presidency.

Scherer also led a team of attorneys who recovered hundreds of millions of dollars for wealthy investors burned by now-imprisoned lawyer Scott Rothstein and his $1.2 billion Ponzi scheme.

And just this past year, Scherer’s law firm won a $67 million judgment against Wells Fargo over a bungled real estate project backed by former Miami Dolphins quarterback Dan Marino and others.

But for all its apparent success, the venerable Fort Lauderdale law firm of Conrad & Scherer is under siege.

Scherer’s law firm is bitterly fighting a former client, prominent Rothstein investor Douglas Von Allmen, who claims the firm stiffed him on a $25 million loan that financed costly efforts to recover losses from Rothstein’s investment scheme.

His law firm is also battling a major Alabama-based energy firm, Drummond Company. Drummond has accused the law firm and a former partner of paying hundreds of thousands of dollars in bribes to witnesses to bolster their human-rights abuse cases against the corporation. The law firm lost the litigation with Drummond, and it is now facing a defamation case that gained significant momentum last week in a key ruling by an appeals court in Atlanta.

Potential damages in both the loan and libel lawsuits could deliver double-barreled blows to Scherer’s firm, according to legal observers.

Scherer founded the law firm in 1974 with the late Rex Conrad, and it now has 16 lawyers who work in a glass-sheathed office building on Federal Highway. Scherer, the firm’s rainmaker with connections to Gov. Rick Scott and other influential Republicans, owns the building and other real estate and business investments in the Fort Lauderdale area.

Scherer declined to comment for this story, but after Von Allmen filed suit last year, the firm’s feisty managing partner told a reporter: “We will fight this to the moon.”

His former partner, Albert Frevola, who now represents Scherer and the law firm, downplayed the suits brought by Von Allmen and Drummond, saying the firm was financially stable and “not concerned” about their potentially damaging impact.

But in South Florida, where survival of the fittest is a harsh reality among boutique litigation firms like Scherer’s, a misstep or two could spell doom, said Robert Jarvis, a Nova Southeastern University law professor who is familiar with both the loan and libel suits. He said the Drummond case is the greater threat because of the hostility between the two sides and the company’s demand for punitive and other damages in a federal court in Alabama.

“Certainly, if Drummond got everything they’re asking for, it would be a potentially huge amount of money and it would make it very difficult for the law firm to sustain itself,” Jarvis said. “I’m sure the law firm is very concerned, because with all the bad blood in that case it might be very difficult to work out a deal.”

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Fort Lauderdale lawyer Scott Rothstein is pictured with a collection of men’s watches in 2007, before he was charged with running a $1.2 billion Ponzi scheme.

Lilly Echeverria Miami Herald File

Of the two suits, Von Allmen’s case is far less complex, based on a series of loans he made to Scherer’s firm and Scherer himself dating back to 2010. Faced with carrying the costs of the Rothstein litigation, Scherer was the one who sought financial assistance from the one-time client, a wealthy investor and founder of a chain of beauty schools.

Frevola said Scherer and his law firm don’t owe Von Allmen any more money on his $25 million loan. “All I can say is the firm made a number of payments at different times [to him], but I cannot go into the details as to how the loan was satisfied,” Frevola told the Miami Herald this week.

Frevola said Von Allmen was among dozens of Rothstein investors represented by Scherer’s firm who have since recovered all of their losses from the decade-old investment scam, which involved the sale of fabricated legal settlements. He declined to say how much Von Allmen personally received from the sale of Rothstein’s assets and from damage settlements with the convicted lawyer’s former banks, and whether those payouts satisfied his loan.

Von Allmen’s lawyer, Paul Turner, said his client received about $70 million from the Rothstein settlements — accounting for his and his partners’ total investments — but he only got a partial $5 million payment on his loan to Scherer’s firm.

“The only way the law firm could make it [through the Rothstein litigation] was to borrow money from Doug, but they don’t have the money to pay him back,” Turner said. “We don’t believe they can ever pay him back, which is why I’m looking to go after Scherer’s personal assets and real estate holdings.”

By comparison, the battle between Scherer’s law firm and Drummond, an energy conglomerate known for coal-mining production, poses an even greater financial risk.

Some history on the complex dispute: In 2009, Scherer’s firm diversified into human-rights violation cases involving U.S. corporations such as Drummond doing business in Colombia and other countries. The firm hired a Washington, D.C.,-based lawyer, Terrence Collingsworth, of the International Rights Advocates, as a partner.

Backed by Scherer’s law firm, Collingsworth sued Drummond, accusing it of collaborating with a right-wing paramilitary group known as the United Self-Defense Forces of Colombia, AUC after its Spanish initials, to kill union leaders who were trying to organize workers at the company’s coal mines in Colombia. In 2001, the U.S. government designated the AUC a terrorist organization.

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This July 2002 file photo shows members of the United Self-Defense Forces of Colombia, known by its initials in Spanish as AUC.

Fernando Vergara AFP/Getty Images

Collingsworth eventually lost the legal battle against Drummond in Alabama federal court. But before the cases were dimissed, he wrote a series of letters on Conrad & Scherer letterheads to the Dutch government and a Japanese company, accusing Drummond of hiring paramilitary forces to kill Colombians.

In a January 2011 letter, Collingsworth urged top Dutch officials to stop doing business with the energy company because “hundreds of Colombian citizens … had a family member murdered by paramilitary forces working on behalf of Drummond.”

That fall, Drummond filed a libel suit against Collingsworth and Scherer’s law firm, saying the Washington partner deliberately smeared the company while scheming with a Dutch Oil company to steal business from Drummond in Colombia.

In 2015, a federal judge in Alabama said evidence showed Collingsworth and his partners at Scherer’s firm had been misleading about the firm’s payments to Colombian paramilitary witnesses in the human-rights cases against Drummond.

U.S. District Judge David Proctor ruled that Collingsworth’s failure to disclose those payments was a “fraud on the court” and as a result allowed Drummond’s lawyers access to privileged communications involving Scherer’s law firm, its clients and the paramilitary witnesses. The judge’s decision was based on a crime-fraud exemption, which bans lawyers and their clients from using attorney-client privilege to commit wrongdoing.

“Collingsworth repeatedly made knowingly false representations in pleadings, affidavits, correspondence, and open court,” Proctor found, adding that the “unfortunate truth” for Scherer’s law firm is that it is also responsible for the partner’s alleged misconduct.

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Attorney Terrence Collingworth

Handout photo

Proctor found that Collingsworth repeatedly said he was aware only of payments to three paramilitary witnesses when, in fact, he had paid six of them. The payments for five of the Colombian witnesses flowed through Scherer’s law firm, while the payments for a sixth witness went through a business associate of Collingsworth’s in the Netherlands.

The judge’s ruling was a major breakthrough in Drummond’s libel case not only against Collingsworth but also Scherer’s firm. Proctor’s decision was upheld by the federal appeals court in Atlanta, which last week denied the firm’s request to rehear the issue. It now means Drummond will be able to make more sweeping demands for once-secret communications about the law firm’s payments to Colombian paramilitary witnesses — an aggressive strategy used with some success by other U.S. corporations accused of human-rights violations in Latin America.

In Drummond’s libel case, the central question remains unanswered: What were the witness payments for?

Drummond’s lawyers, who declined to comment for this story, claim the payments were bribes in exchange for tailoring witness testimony to support the human-rights cases against the giant energy company. One witness was paid $150,000, court records show.

But Collingsworth and Scherer’s law firm say the payments, totaling hundreds of thousands of dollars, were for security services to protect family members of the paramilitary witnesses who backed up Colombian citizens’ abuse claims against Drummond.

In a deposition, Collingsworth admitted that there had been payments made to witnesses that he and Scherer’s law firm had failed to disclose to Drummond and the judge.

Scherer, in his deposition, said he had not known about the witness payments.

But Proctor wrote in his ruling that “it would be incredulous to believe that no one at Conrad & Scherer other than Collingsworth knew of the payments made to witnesses in this case,” noting that “payments were made on a monthly basis by the firm” for several years.

The judge, noting it is a “crime” to pay witnesses to influence their testimony, condemned Collingsworth’s alleged misconduct even further. He concluded he had “no hesitation in finding that there is (at least) probable cause to believe that Collingsworth … engaged in witness bribery.”

Seemingly unfazed by the setback, Collingsworth said in an interview Friday that Drummond’s libel suit was “frivolous.”

“I have absolutely no concern on our side about winning it on the merits,” said Collingsworth, who left Scherer’s law firm in 2015. “Everything I said about Drummond is true.”

Collingsworth said that although he “initially failed to disclose arrangements” to pay for the protection of the paramilitary witnesses and their families, there was no wrongdoing on his part because it was for a legitimate purpose — not to buy their testimony. “There’s nothing improper that we have done,” he said.

Frevola, the lawyer for Scherer and his firm, called Drummond’s bribery allegations a “side show” and said the facts were “distorted” in the court record. He said the firm was confident of prevailing in the libel suit, but even if it were to lose, he said Drummond would seek only “nominal damages.”

Frevola said the firm and several partners, including Scherer, were aware of making payments to at least three paramilitary witnesses in the human-rights cases against Drummond, but they were for the “safety and security” of their relatives, not bribes.

Said Frevola: “It was solely intended to help protect family members of the AUC witnesses.”


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