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FTC Seeks Contempt Charges Against Lawyer Who Won't Turn Over Fees
The National Law Journal
November 11, 2009
The Federal Trade Commission has filed contempt charges against an attorney for refusing to fork over fees he was paid by the operators of an illegal Ponzi scheme.
The lawyer, solo practitioner Jeffrey Benice of Costa Mesa, Calif., was ordered in March 2009 to turn over $238,300 to the FTC by a federal judge in Nevada. The court also imposed an $18.9 million judgment on Benice's clients for running a fraudulent "Internet kiosk" business in violation of the FTC Act and the agency's franchising rule.
According to the FTC, the defendants -- Charles Castro, Network Services Depot Inc. and others -- paid Benice a $375,000 retainer in January 2005.
Judge Lloyd George of U.S. District Court for the District of Nevada in March 2009 determined that Benice's fee was derived from the defendants' unlawful conduct and was subject to consumer restitution. He allowed Benice to keep $136,700 for his work but ordered him to return the balance -- $238,300 -- within 10 days.
The FTC says it is still waiting for Benice's payment, and now asks the court to hold him in contempt.
Benice was a partner at Brobeck, Phleger & Harrison from 1986 until 1994, when he launched his own criminal and civil trial practice, according to his Web site. He is a 1978 graduate of UCLA School of Law and clerked for Justice F. Douglas McDaniel in the California 4th District Court of Appeal in 1978.
Benice could not be reached immediately for comment.
In court papers, Benice argued that he could not afford to comply with the order, but offered to pay $2,500 a month. The FTC says this is not enough, noting that Benice in a deposition said he makes an average of $400,000 a year. The FTC also noted that he spends more than $3,100 a month in car payments alone, for a BMW, a Porshe Turbo, a Jeep Wrangler and a motorcycle.
The FTC wrote that Benice and his firm "have not explained why they have not put money aside every month to restore the funds that the Court found rightfully belonged to consumers. Apparently Benice did not heed the Court's March 2006 warning that he should factor such a risk into his fee calculations."
This article first appeared on The BLT: The Blog of Legal Times.
