Thank you for sharing!

Your article was successfully shared with the contacts you provided.
It was the first day of summer, and Michael Thorman had reason to feel good: He had just sent federal prosecutors a document that seemed certain to spring his client from jail. The lawyer had been representing money manager Michael Edison for about a month, fending off the accusation that Edison stole $2 million from the widow of Brobeck, Phleger & Harrison’s Atherton Phleger. Edison maintained that Jean Phleger had loaned him the $2 million � and indeed, Thorman had found a promissory note supporting that claim in a stack of Edison’s business papers. So he told federal prosecutor Jeffrey Finigan about the document on June 8, and sent it over two weeks later. It was another two weeks or so before Thorman realized he’d been set up. Finigan and FBI agent Mandy Britton had been waiting for Thorman to present that letter since May, when the Alameda County jailers who were holding Edison intercepted a missive to his wife, Debra, then living in Switzerland. According to court filings, Edison wrote that “you must help me create a note.” He asked Debra Edison to forge a document that would convince prosecutors (and Thorman) that he’d only borrowed the money he was accused of stealing from Phleger. “It needs to be put with some other files that we send to the attorneys,” he wrote in a set of detailed instructions. “Send it with a bunch of other paper and let them find it themselves.” The document Thorman found seemed sure to at least lower Edison’s $2.5 million bail, if not get the charges dismissed outright. Instead, it made Thorman an unwitting accessory � and a potential witness � to an alleged scheme likely to put Edison in federal prison. The lawyer now faces a grand jury subpoena to testify against his own client. And after a baffling hearing last month, Thorman has to deal with a federal judge reluctant to let him off the case despite the obvious conflict Edison created for him. The kicker: Thorman’s millionaire client turns out to be pretty much broke. CREDIT CRUNCH Shuffling into hearings this summer, Edison, 62, cut a pathetic figure: Short and bald with a face creased by stress, his orange prison suit hung from bony shoulders. He’s been stuck in Alameda County’s 4,000-prisoner Santa Rita jail for the past five months or so. It’s where federal defendants who can’t make bail tend to end up in Northern California � and also where a sizable number of Thorman’s clients find themselves. In fact, it was another Santa Rita inmate who referred Edison to Thorman. The name partner at Hayward’s Bonjour, Thorman, Baray & Billingsley has made a career of representing people accused of violent crime, including one of the men eventually convicted of killing transgender teen Gwen Araujo in 2002, as well as a sports agent accused of having a business associate killed with a crossbow. In Edison, though, he had a white-collar client with a paper defense. In the years leading up to his arrest, Edison zigzagged from Minnesota to California, New York, China, Pakistan, Europe and the Virgin Islands, milking business ventures that always sat on the cusp of legitimacy. He was CEO of two public companies last year, and at the time of his arrest was on the verge of taking a Swiss company public. Edison appeared to be awash in cash, but there were also warning signs, according to court documents and former business associates � tax liens, jilted landlords, deals that never materialized, unpaid contractors, even an arrest in London for skipping out on a hotel bill. And in hindsight, it seems strange that a rich businessman couldn’t make bail (Edison told the government he had $6 million in liquid assets when he was arrested). But at the time, Edison had a convincing story: He said his first lawyer, John Hanlin � who acknowledges that he never visited Edison in jail � wasn’t doing his job. THE PHLEGER FORTUNE Jean Phleger has a considerable fortune � her husband was a Wells Fargo director, partner at Brobeck, Phleger & Harrison (and son of the firm’s co-founder) and a forebear to debutantes; he’d inherited massive real estate holdings that he left to Jean, and court filings say they’re worth more than $50 million.
Edison appeared to be awash in cash, but there were also warning signs, according to court documents and former business associates � tax liens, jilted landlords, deals that never materialized, unpaid contractors, even an arrest in London for skipping out on a hotel bill.

Prosecutors say Edison took $2 million of that fortune via a home loan that he arranged for Phleger in 2005, after her son-in-law � the actor Don Johnson � told her Edison could help her get a stream of cash to manage her bills. Edison agreed to refinance Phleger’s house, pay down her old mortgage, and use $2 million in leftover cash to pay Phleger’s bills. That money was deposited into a joint bank account in Phleger’s and Edison’s names. Instead, court filings say Edison used that money to pay for a private jet, a boat docked in Malta, cars, and goods at K-Mart, Foot Locker and other stores. By the end of 2005, he’d become difficult for Phleger to reach. Edison was getting involved in marketing a European debit card business and landing the CEO position at two small publicly traded companies � a high-security doorknob maker and a construction truss manufacturer. Donald Stoecklein, a San Diego solo who serves as outside counsel to the truss maker, Hesperia Inc., said Edison did little other than try to get the company to buy a film archive for $5 million on the basis that he could use his connection with Johnson to market it. “I think he got paid handsomely for doing very little,” Stoecklein said. Phleger sued Edison last year, and Rick Smith � a private investigator working for her lawyers � told the FBI about her claims. Agents investigated, and arrested Edison in February after tracking him via credit card purchases from New York to Atlanta. DAZE IN COURT Testifying at a bail hearing after her husband’s arrest, Debra Edison seemed flustered. She cited the debit card company’s imminent IPO and a plan � dismissed by others � to buy a union-affiliated life insurance company for $284 million as proof that her husband was legitimate. She was apparently unconvincing � an Atlanta magistrate judge in February set bail at $2.5 million, about 40 percent of what Edison had told pretrial services he was worth. Afterward, Debra Edison went to Switzerland and awaited word from her husband. According to the prosecutors, that came in May with the request to fake a document. She arrived in California in the summer, and was arrested on a DUI charge. The FBI already had a warrant out based on the promissory note, and she was soon transferred to the feds. Since last month, she’s been confined to a halfway house in the Tenderloin, wearing a GPS anklet. At recent court appearances, Shawn Halbert, the assistant federal public defender who represents Debra Edison, has indicated that a plea deal is in the works that would resolve both spouses’ cases. On Aug. 1, Debra Edison waived her right to be indicted by a grand jury, which, in the federal system, is done in preparation for a guilty plea. Her husband’s case has been harder to resolve, in part because of the role thrust upon his lawyer. At a hearing last month, Thorman had to explain his situation to U.S. District Judge William Alsup. Thorman showed up for a hearing late last month looking perfectly calm. But he was in a nightmare situation for any lawyer who’s defended an alleged con man: Thorman’s client had apparently used him in a fraud that went way south � and the judge was nowhere near sympathetic. Thorman explained that he had been “subpoenaed to testify as a witness before the grand jury” investigating his client � and that he could avoid having to testify if he arranged a plea deal for Edison. The lawyers figured that with such a glaring conflict of interest, Thorman would immediately be released from representation. After all, as Thorman put it to the judge, how could any deal he arranged while facing that conflict � and while representing a client who had allegedly victimized him � survive on appeal? “My result will be irrevocably tainted,” Thorman told Alsup. But Alsup wasn’t convinced. “Even if you are a witness, maybe that’s waiveable,” the judge said, suggesting that appointing an advisory lawyer for Edison could allow Thorman to stay on the case. At that remark, the faces of every lawyer in the courtroom froze. But prosecutor Finigan didn’t say much. Nor did Thorman, who’d been in Alsup’s courtroom last summer when the judge delivered a red-faced philippic against prosecutors in a capital gang case (he said they “thumb their nose” at the court by disagreeing with a discovery order, and accused them of disrespecting his work in crafting the order). So Alsup went ahead with the appointment of a second lawyer to advise Edison. (Roger Patton, the East Bay criminal defense specialist now on the case, declined to comment). And Thorman remains as counsel. As the hearing neared its close, Alsup returned to an earlier question: Was Thorman seeking to drop the case because Edison couldn’t pay his bills? What would he do when Edison’s money ran out? He offered a quick assurance: “I’ll do it pro bono.”

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.