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In a landmark dispute on the boundaries of aggressive lawyering, a federal jury has delivered a resounding verdict against two Connecticut attorneys for fraudulent conduct in violation of the civil portions of the Racketeer Influenced and Corrupt Organizations Act. Lawyers involved in the case say, to their knowledge, the June 10 verdict against attorneys Leonard A. Fasano and Todd R. Bainer is the first in the nation in which the private cause of action provided in the federal RICO statute has been used successfully against lawyers for actions related to their representation of a client. Fasano and Bainer, the jury found, fraudulently helped a debtor, Charles Flanagan, hide assets from The Cadle Company, a Newton Falls, Ohio-based debt-purchasing business. Once damages are trebled, as the RICO statute mandates, Fasano and Bainer may be on the hook for nearly $2 million in damages and yet-to-be-awarded attorney fees, according to Cadle’s local counsel, Edward C. Taiman Jr., of Hartford’s Sabia & Hartley. Flanagan’s New Haven-based insurance company, Thompson & Peck, and its joint owner, Stanley Prymas, were also found liable for the RICO conspiracy. The jury awarded $500,000 in lost collection damages — Cadle’s expenses in chasing down Flanagan’s assets — and held all four defendants responsible for paying the award. Flanagan himself previously settled out of the case. Fasano is a partner with the New Haven firm of Fasano, Ippolito & Lee and a current Republican state senator and assistant minority leader. Bainer operates a solo practice in Branford. The jury found the pair committed wire, mail and bankruptcy fraud in a conspiracy to shield Flanagan from Cadle’s judgment collection efforts. The misconduct, jurors determined, dated back to at least 1998, when Cadle Co. tried to collect a $90,747 federal judgment against Fasano’s client, Flanagan, in connection with Flanagan’s default on one of several loans. Bainer was corporate counsel to Thompson & Peck. ‘CHILLING EFFECT’ The acrimonious three-week trial before U.S. District Judge Alfred V. Covello in Hartford pitted the defendants’ claim — that they were merely furnishing legal advice in their attempt to effect their client’s wishes within legal bounds — against Cadle’s assertion that each attorney “crossed the line from representation of a client to the swamp of co-conspiracy,” the plaintiff’s lead counsel, Illinois attorney F. Dean Armstrong, argued in his closing statement. The jury found Cadle’s viewpoint more convincing. In a written statement faxed to The Connecticut Law Tribune, Bainer said the use of RICO “to attack lawyers giving legal advice to Clients as a way to eviscerate the attorney/client privilege and intimidate attorneys to not represent Cadle debtors zealously, should be troubling to all lawyers.” In an interview, Fasano predicted that the verdict “will have a chilling effect on any attorney who is asked, ‘What do I do?’ by a client” facing legal action. Prymas is represented by William F. Gallagher and Barbara L. Cox of The Gallagher Law Firm in New Haven. Gallagher asserts that there was insufficient evidence of Cadle’s damages to sustain the jury’s verdict. Defense counsel all plan to ask Covello to set aside the verdict, among several other post-verdict motions. In a strongly worded summary judgment memorandum issued shortly before the trial started, Covello said the record “supports a finding that Flanagan, his business partner and his lawyers adopted fraud as a mechanism to defeat Cadle’s lawful claims.” In particular, Covello deemed Fasano’s misrepresentations to the court about his client were intentional and demonstrated “a disregard for the rule of law and the authority of this court.” The line between advocacy and impropriety is one of the hardest to draw in legal ethics, according to University of Connecticut School of Law Associate Dean for Academic Affairs Paul Chill, who teaches a course on the subject. “The casebooks are replete with cases where lawyers are alleged to have committed fraud in the course of their representation,” Chill said. Particularly perplexing, he said, are questions “about what did an attorney know, what should the attorney have known and when does an attorney’s conduct on behalf of a client become fraud.” Chief Disciplinary Counsel Mark DuBois, who also teaches legal ethics at UConn Law School, analogized an attorney’s duty to the points on a compass: “The duty to the client is the north point, with the other points being the duty to the system, to the community and to oneself.” The north point is prime, but the other points are important, too, DuBois stressed. Although he emphasized that he didn’t know the circumstances of this case, DuBois said that cases in Connecticut in which attorneys become blinded by the interests of their clients are rare but raise interesting issues. MANIPULATIVE CLIENT? Evidence at trial showed that Cadle obtained a writ of execution from Covello in January 1998, in order to collect on the judgment owed by Flanagan. Four fraudulent “schemes” outlined by plaintiff’s counsel Armstrong led Covello to issue an injunction in March 1998, enjoining Flanagan from transferring any assets, followed by a turnover order in April 1998, in which Covello ordered Flanagan to furnish to the court for inspection all documents pertaining to his Thompson & Peck stock. The jury found that the defendants, including Fasano and Bainer, deliberately disobeyed Covello’s orders as part of a scheme to defraud Cadle by shielding Flanagan’s stock and other Thompson & Peck-related assets. Documentary and oral testimony supported an inference that the defendants were motivated by an abhorrence of Cadle and a fear that the creditor would take Flanagan’s 50 percent ownership in Thompson & Peck and liquidate the company. A main theme to Fasano’s defense, led by Halloran & Sage’s David G. Hill, was that Fasano relied on the information provided to him by his client and had no reason to doubt its veracity. “Perhaps I should have investigated more,” Fasano said during a court recess. “But you want to trust your client. What would it do to the attorney/client relationship if you go investigating your client?” During his testimony, Fasano claimed that, during the course of his representation, he had no reason to doubt Flanagan’s statements. The defendants argued that Flanagan manipulated them by not disclosing fully the extent of his financial or legal problems. In his testimony and in interviews before and after the verdict, Fasano has insisted that there was nothing improper in the advice he gave Flanagan. Fasano said he didn’t learn until much later that Flanagan disregarded that advice. But the defense tactic of portraying Flanagan as a master schemer may have backfired once Flanagan took the stand. Instead of confirming the defense view that he was a smooth conman who used his attorneys and business partners as unwitting tools in his personal scheme to defraud Cadle, Flanagan appeared to at least one court observer to be an obvious and serial liar. In testifying, Flanagan seemed to have little understanding of the legal process and didn’t at all appear to be a man who could easily convince people that he was in control of his affairs. Armstrong played on that appearance in his closing statement, asking the jury whether Flanagan seemed clever enough to devise the complicated and nefarious legal maneuvers alleged to be the predicate acts in the RICO claim. DRESSED DOWN Bainer’s lead attorney, R. Bradley Wolfe of Hartford’s Gordon, Muir & Foley, argued in a well-crafted closing statement to the jury that Bainer was simply “doing his job as a lawyer for the corporation — dealing with an issue, rendering advice and moving on.” But as with Flanagan, Bainer’s demeanor may have helped thwart the success of that defense. Armstrong drew the jury’s attention to Bainer’s prolonged time on the witness stand, arguing that getting a straight answer out of Bainer was “like pulling teeth out of an alligator.” Bainer appeared antagonistic and hostile, Armstrong argued, noting that he “squirmed, fidgeted with his tie and changed his story” from that given in his depositions. Although Armstrong didn’t comment on Bainer’s physical appearance, the jury may have noticed that the attorney charged with deliberately disrespecting and disobeying a court’s orders came to court dressed in faded jeans and moccasins one day and donned a bright Looney Tunes tie the next. Cadle Co. founder Dan Cadle’s reason for bringing suit was the third main thread of Fasano’s and Bainer’s defense. Suggesting that Cadle was using the RICO suit against them to send a message to attorneys nationwide “not to mess with Cadle debtors,” the defendants tried to portray Cadle as a “bully.” But the evidence didn’t seem to support those assertions and may have proven, instead, the defendants’ resentment of Cadle. “The defendants peddled in prejudice against Cadle,” said Armstrong while waiting for the jury’s verdict. “Prejudice is like nitroglycerine. If not handled carefully, it blows up in your face,” he said. Dan Cadle, although he admitted to several eccentricities in his views about the legal profession, nevertheless testified that he only dislikes those attorneys who don’t “follow the rules.” He remained adamant that the only message he wanted to come from the trial is for attorneys to obey the law. In this case, Cadle claimed that the payment of the underlying judgment, which came only after Covello found Flanagan in contempt for violating his orders, didn’t end the defendants’ efforts to defraud Cadle. Rather than furnishing the stock certificates to the court, as the orders directed, Flanagan, represented by Fasano, paid the judgment. Covello subsequently granted Fasano’s motion to dissolve the orders. Shortly thereafter, Flanagan declared bankruptcy, which rendered the judgment payment a voidable preference. Cadle had hoped to use the proceeds from the sale of Flanagan’s stock to satisfy other unpaid judgments of nearly $1.7 million that the company had held against Flanagan. Though it awarded lost collection damages, the jury declined Cadle’s bid for lost debt damages — the amount the defendants prevented Cadle from collecting from Flanagan. To Cadle’s lead counsel, Armstrong, that verdict revealed the thoughtfulness of the jury. Since Flanagan entered bankruptcy, lost debt damages were speculative, Armstrong commented after the verdict. But to defense counsel, the absence of lost debt damages showed that their clients caused no injury to Cadle. Reached in Ohio soon after the jury’s verdict, Cadle said, “It was a very appropriate verdict.” He said he would have been happier with a higher damages award, but added, “I’m more interested in the verdict than the amount. The verdict is the most important thing.”

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