On The Case

Tom Girardi and reality star wife sued for alleged theft of Lion Air settlement funds

(Reuters) - Famed plaintiffs’ lawyer Tom Girardi of Girardi Keese and his reality star wife, Erika Jayne Girardi of “The Real Housewives of Beverly Hills,” were accused in a suit filed Wednesday in federal court in Chicago of misappropriating settlement funds that belong to victims of the Lion Air crash in order to fund their “outrageous lifestyles … in the glitz-and-glam world of Hollywood and Beverly Hills.”

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The suit alleges that instead of paying clients the settlement money his firm received from Boeing in the spring of 2020, Tom Girardi “resorted to embezzling the proceeds” to avert “a downward spiral of mounting debts and dwindling funds.”

The complaint was filed by and on behalf of the law firm Edelson, which acted as local counsel to Girardi Keese in lawsuits stemming from the 2018 Lion Air crash. Edelson said it became aware in the summer and fall of 2020, in a series of conversations with Tom Girardi and other lawyers at his firm, that Girardi Keese had not made full payments to clients whose cases Boeing had agreed to settle, even though Boeing had allegedly transferred settlement funds to Girardi.

Instead, according to the complaint, Girardi appears to have entered into agreements to redirect money received by Girardi Keese to the law firm’s creditors, including litigation funders from which Girardi borrowed millions of dollars. The suit names some Girardi creditors as defendants, alleging that they “knowingly demanded and received embezzled funds belonging to the Lion Air clients.”

Girardi did not respond to phone and email messages requesting comment on the suit. Erika Jayne Girardi’s publicist did not respond to an email.

The litigation funder California Attorney Lending, which is a co-defendant in the Edelson suit, denied receiving money that belongs to Girardi Keese clients. William Savino of Woods Oviatt Gilman, who represents the funder, said his client was “shocked” that Edelson attacked its good name. “We are very careful that no money comes from victims,” he said. “Every penny received by California Attorney Lending is money to which it was entitled.”

The Edelson complaint said that Girardi’s alleged embezzlement includes money due to Edelson for serving as local counsel to Lion Air plaintiffs who sued Boeing in Chicago federal court. Edelson said, however, that it will not accept its fees until clients have received their settlement funds.

Erika Girardi announced earlier this month that she and Tom Girardi are divorcing after 21 years of marriage. The new Edelson complaint alleges that the purported divorce is “a sham attempt” to shield the couple’s money from Girardi Keese creditors.

The suit seeks an accounting of all the money Boeing has transferred to Girardi Keese. That money, according to Edelson, must either be disbursed to Lion Air clients and Edelson or placed in a constructive trust. The complaint also asserts unjust enrichment, breach of contract, tortious interference with contract and conversion.

The case is Edelson v. Girardi, Docket No. 1:20-cv-07115 in the Northern District of Illinois.

Reporting by Alison Frankel