How do you keep a team of lawyers fighting for your cause when you don’t pay them? That continues to be the mystery surrounding Jeffrey Prosser, the now bankrupt former owner and CEO of Innovative Telephone, and his current team of four lawyers.
Under a court order from U.S. Bankruptcy Judge Judith Fitzgerald, three of Prosser’s four current lawyers, all from the U.S. mainland, have filed financial statements with the court; while the fourth, Jeffrey B.C. Moorhead of St. Croix, had not yet done so at the close of business June 2.
None of the three has been paid for his services since December 2008.
The court-imposed deadline for the filings was June 1. Fitzgerald told the lawyers to report precisely when they had received compensation, how much it was each time, and who paid the bills.
A much longer list of attorneys in recent years have argued for Prosser (and/or his family or interests) but have ceased to do so, often telling the court as they leave the case that they had not been paid. (In these courts a lawyer does not simply resign; the attorney must request the judge’s permission to stop serving a client. In fact, on at least one occasion in these hearings a lawyer who had been fired by the Prosser camp was told to continue to represent the client until a replacement could be found.)
The three lawyers filing financial statements were: Robert F. Craig of Omaha, Neb., whose connections with Prosser go back more than 10 years; Lawrence H. Schoenbach, a New York City-based criminal lawyer; and Norman A. Abood of Toledo, Ohio, who, in the last year or so has often played the role of Prosser’s lead lawyer.
The Omaha attorney, whose billing rate is $400 an hour, was last paid a fee in January 2007, almost three and a half years ago. He has, since that time, run up $82,405.27 in expenses (presumably, largely travel) and was reimbursed for $79,990 of that.
Both Craig and Abood often appear at monthly hearings in Pittsburgh, so that generates airline and hotel bills. None of Prosser’s lawyers are based in that city, where most of the hearings take place.
Regarding the source of the expense funds, Craig reported to the court: “As advised by the client, all funds received by Craig Law originated from debtor’s mother or spouse. Remittances have been mechanized through various checks, wire transfers and payments through PayPal. Some were mechanized through third-party accounts of Adrian Prosser [Prosser’s son] and John Breeze. Some expenses incurred for e.g. travel have been [paid] directly by Dawn Prosser [Prosser’s wife] through her American Express credit card.”
This is the first mention of Prosser’s mother that the Source recalls seeing in any of the court documents. We have no information on John Breeze.
In Craig’s filing, and in the two others, there was this statement about the possibility of payments in the future:
“No promises have been received by Craig Law or any of its lawyers as to payment or compensation in connection with this case, other than in accordance with the provisions of the Bankruptcy Code.” Just what that means in layman’s terms was not clear.
The New York attorney who has been handling Prosser’s suit against his creditors and others under the Racketeer Influenced and Corrupt Organizations Act (RICO), a sideshow to the main bankruptcy controversy, is also representing Dawn Prosser. Schoenbach, who bills at $500 an hour, said that some of his expenses were paid directly by Dawn Prosser’s American Express credit card.
He said that he had received two payments for legal fees, “one on October 6, 2008 for $7,282.20 ($7,500 minus PayPal fees) from Jeffrey Prosser’s PayPal account. Upon information and belief, the credit card associated with that PayPal account (and from which the payment was made) was Dawn Prosser’s American Express charge card.
“On December 1, 2008, I received a payment of $50,000 by a check drawn on the Regent Bank (Palm Beach branch) account of Adrian Prosser/Linda Hirsch. Upon information and belief, the funds were from the $1 million returned to Mrs. Prosser after the Court approved the sale of the Prosser’s Lake Placid [N.Y.] house. The funds were credited against the fees owed to me by Dawn Prosser.”
Of the three lawyers, Abood is the only one known to the Source as having had financial troubles in the past. He was, at one time, sent to a federal penitentiary for failing to pay his U.S. income taxes and was disbarred. He has since had his license to practice law restored.
He now bills at the rate of $330 an hour.
Abood also got a $50,000 check on December 4, 2008: “… a check drawn on the bank account of Adrian Prosser/Linda Hirsch. Upon information and belief, the funds were from the $1 million returned to Mrs. Prosser after the Court approved the sale of the Prosser’s Lake Placid house. The funds were credited against the fees owed to me by Jeffrey J. Prosser.”
Note that the wording in the two filings is identical, right down to a punctuation error – it should have been “the Prossers’ Lake Placid house,” not “the Prosser’s Lake Placid house.”
Abood also reported receiving four expense reimbursement checks during 2009, each smaller than the last. They were for $5,438, $4,855, $1,189 and $924.
An observer of these trials who had seen the electronic court filings for the case commented that none of the lawyers had recorded hours of work that had not been paid, though they must be large in each case. Since the judge did not ask the lawyers to provide a motivation for their continued work despite the lack of payment, there is no on-the-record information on that point.
The mystery continues.