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October 03, 2005

Miers As Enron's Ken Lay

One of Miers only qualifications for her nomination is that she was the head of a major corporate law firm, Locke, Liddle & Sappe.

Where under her leadership, the firm had to pay a $22 million settlement for aiding a client in defrauding investors (scroll down to middle of screen):

Locke Liddell & Sapp's agreement to pay $ 22 million to settle a suit alleging it aided a client in defrauding investors is expected to serve as a warning to other firms that they must take action when they learn a client's alleged wrongdoing may be harming third parties. The Dallas-based firm agreed April 14 to settle a suit stemming from its representation of Russell Erxleben, a former University of Texas star football kicker whose foreign currency trading company was allegedly a Ponzi scheme. Erxleben pleaded guilty last November to federal conspiracy and securities-fraud charges and is to be sentenced in May.

"It's a very simple legal proposition a lawyer can't help people steal money," said George, of George & Donaldson. George represents investors who lost $ 34 million they placed in Erxleben's Austin Forex International. Daniel N. Matheson III, a former Locke Liddell partner who represented Erxleben, said in his deposition that he knew in March 1998 that $ 8 million in AFI's losses hadn't been reported to investors. AFI, which was founded in September 1996, shut its doors in September 1998. A few days later, Texas securities regulators seized its accounts and put the company into receivership.

Harriet Miers, co-managing partner of Locke Liddell, said the firm denies liability in connection with its representation of Erxleben. "Obviously, we evaluated that this was the right time to settle and to resolve this matter and that it was in the best interest of the firm to do so," Miers said.

But do we really want someone on the Supreme Court whose law firm is a poster child in Texas for lawyer malfeasance?

Hat tip to Professor Bainbridge.

Posted by Nathan at October 3, 2005 04:24 PM