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Two Atlanta-based law firms are accused of helping clients hide assets to avoid an $18 million judgment, and then leap-frogging over other creditors to secure their legal fees. The allegations against Powell, Goldstein, Frazer & Murphy; attorney Randall M. Lipshutz; and Lipshutz, Greenblatt & King appear in a suit filed on behalf of 53 Mexican investors in U.S. District Court in Atlanta, Mier v. Signa Development Corp., No. 1:00-CV-1976-TWT (N.D.Ga. Aug. 2, 2000). Both firms deny the allegations. John M. Harmon of the Austin, Tex., firm of Graves, Dougherty, Hearon & Moody and Woodrow W. Vaughan Jr. of Atlanta’s Kidd & Vaughan, who represent the plaintiffs, wouldn’t comment on the case. The suit, which also names as defendants the real estate holding company Signa Development Corp., the First Citizens Bank of Georgia and Fayette County developer Dan V. Stinchcomb, stems from a 1999 civil racketeering trial that involved a Texas real estate developer, his Mexican partner, a Mexican investment house and suburban Atlanta real estate. In that case, a federal jury in Atlanta last October determined that real estate developers Amir Virani of Dallas and Ignacio Santos of Monterrey, Mexico, had defrauded Mexican investors of nearly $6 million in a series of suburban Atlanta land deals. The two developers secretly used their investors’ monies to buy land for residential subdivisions in Coweta, Fayette, Carroll and Cobb Counties, Georgia, through Signa Development Corp. Virani and Santos then would resell the properties for as much as triple the original purchase price to the investor partnerships they had helped establish, according to court records. The records say the two men netted $10 million from six real estate deals that were at the heart of the civil suit. Last October, a federal jury determined that the real estate scheme constituted civil racketeering and awarded the plaintiffs treble damages of $18.9 million. Santos and Virani have appealed. Virani v. Maiz, No. 99-14962 (11th Cir. Nov. 19, 1999). Lawyers from Powell Goldstein and Lipshutz, Greenblatt defended Virani, Santos and 11 of their business enterprises, and are handling their appeal. The Lipshutz firm also handled many of the developers’ corporate and real estate transactions, according to court records. RUSH TO JUDGMENT On Oct. 22 — two weeks after the verdict was handed down and only hours before U.S. District Judge Thomas W. Thrash had formally entered the judgment — investors’ attorneys in Atlanta and Austin learned that Signa Development Corp. was about to “conduct a fire sale of real estate in an attempt to avoid collection efforts,” according to an emergency motion sent to Thrash that day. The property consisted of 874 acres known as Deer Pointe, in Fayette County. According to court records, the same evening that the jury rendered its verdict, Virani called Fayette developer Dan Stinchcomb and asked if he wanted to buy it. Stinchcomb offered $6.6 million, about $1.5 million less than fair market value. Virani accepted with the condition that the sale be completed quickly, according to the complaint. Investors’ attorneys claim that to prevent their clients from collecting any of their pending $18 million, Virani and Santos sold the Deer Pointe property and funneled all but $3,600 of the $6.6 million sale into private trusts and their lawyers’ escrow accounts. CONCEALING OF ASSETS CLAIMED “Based on the timing and nature of this ‘fire sale’ transaction, plaintiffs are greatly concerned that defendants’ efforts to sell the Deer Pointe property before a judgment is entered is part of a scheme to conceal assets,” according to the emergency motion. Powell, Goldstein spokesman John T. Marshall, a senior partner with the firm, says, “The allegations concerning Powell Goldstein are just dead wrong. “I think that we will prevail if this matter goes to trial. Powell Goldstein had nothing to do with the transfer of that property.” Frederick M. Valz III, an attorney with Atlanta-based Webb, Carlock, Copeland, Semler & Stair who is representing Randall M. Lipshutz and the Lipshutz firm, declined to discuss specifics. But he says, “My investigation so far reveals that Lipshutz has done nothing wrong, and that they will be vindicated.” The Deer Pointe closing began at 9 a.m. on Oct. 22. According to the complaint, Stinchcomb and his bank were concerned Thrash would enter a judgment in the case before closing was complete. They called Powell Goldstein attorneys at least twice that day to ask whether a judgment had been entered. At the time of the sale, Powell Goldstein was holding a lien on Deer Pointe to secure a $2.8 million promissory note for legal fees, including $773,000 that the firm had already collected. Virani and Santos had drawn the $773,000 from what remained of the investors’ funds prior to the trial on the advice of Powell Goldstein lawyers, the complaint alleges. As part of the Deer Pointe sale, Powell Goldstein received a cashier’s check for $2.8 million and released the lien. “Approximately $1,933,000 represented unpaid legal fees and a deposit for future legal fees,” according to the complaint. Another check, payable to Signa for $200,000, was endorsed over to the Lipshutz firm, the complaint says. Other money went to a Virani and Santos partnership and to Santos’ daughter. By 5 p.m., Thrash had signed an order formally entering the jury’s $18.9 million judgment and granted the Mexican investors a judgment lien on all personal property — including Deer Pointe — owned by Santos, Virani and their companies that were named as defendants in the case. But by 5 p.m., the Deer Pointe sale was complete. The suit alleges that, “As a result of these fraudulent transfers, Signa was left with only $3,648.51 of the $6.6 million received from the Deer Pointe transaction.

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