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21 Lawyers Indicted in Bribe Scam

New York Post, September 22, 1995

By Mike Pearl

A Manhattan grand jury indicted 21 personal-injury lawyers yesterday in a widespread scheme to bribe insurance adjusters into faster - and bigger - settlements.

Sixteen insurance adjusters, two law-firm employees and six "middlemen" who allegedly negotiated and delivered the bribes were also indicted in the scandal.

Authorities said another 100 lawyers are under investigation in the probe.

Manhattan District Attorney Robert Morgenthau said the insurance companies were "victimized by their own employees, who they had a right to expect would deal with the attorneys at arms-length."

"What they got instead were adjusters lining their own pockets at the expense of the insurance companies and their policyholders who ultimately pay the price of this illicit conduct," he said.

Officials said the scheme began with a middleman - often a former insurance worker - offering to help a lawyer negotiate a better, faster settlement for a percentage of the award.

Under the scheme, the lawyer bribed the middleman and claims adjuster to get an inflated settlement. The middleman got a percentage of the final award, and the lawyer gets a larger contingency fee.

Morgenthau also announced a second indictment stemming from the same investigation.

It charged a lawyer, an insurance adjuster and two others who posed as accident victims with fraudulently obtaining more than $806,000 in settlements of five phony "slip and fall" personal-injury claims.

The corrupt adjusters shepherded the "totally fabricated" claims through the insurance companies in exchange for part of the settlement, Morgenthau said.

"The main indictment charges a pervasive pattern of criminal conduct in the settlement of personal-injury cases," he said.

The indictments followed a three-year investigation by Morgenthau and the NYPD.

Between 1991 and 1994, Morgenthau said, the middlemen negotiated more than $39 million in settlements. The indictment encompassed $19 million of that.

The investigation began after lawyer Jay Itkowitz balked when a middleman demanded a percentage of a settlement from him, and Itkowitz reported the demand to the DA.

"He was an honest lawyer," Morgenthau said of Itkowitz. "It pained him that this sort of activity was going on."

The investigation determined that more than $300,000 in bribes went to the adjusters.

"Some of the adjusters nearly doubled their salaries," Morgenthau said.

Investigators said another $500,000 went to the middlemen.

Authorities found nearly $1 million in cash last October at 49 locations, including lawyers' offices, insurance companies, middlemen's offices and safe deposit boxes.