Keila Ravelo, former partner at Willkie Farr & Gallagher ()
A federal grand jury on Thursday indicted Keila Ravelo, a former Willkie Farr & Gallagher partner, for tax evasion and her alleged role in a scheme that used phony litigation support vendors to fraudulently obtain $7.8 million from two law firms where she was a partner, and from a former client, MasterCard.
Ravelo, 50, and her husband, Melvin Feliz, 49, originally were arrested in December 2014 and charged in a criminal complaint with conspiracy to commit wire fraud.
The grand jury indictment, announced by New Jersey U.S. Attorney Paul Fishman, charges Ravelo with one count of conspiracy to commit wire fraud, four counts of wire fraud and four counts of tax evasion.
Her attorney, Steven Sadow, special counsel at the Atlanta-based firm Schulten Ward & Turner, said she is not guilty.
In a statement, Sadow said Ravelo represented MasterCard in antitrust litigation for more than 18 years “and worked tirelessly to defend its legal interests at all times. Keila would not and did not betray MasterCard for greed or self-aggrandizement.”
Sadow put the blame on Feliz. He said Ravelo was unaware that Feliz had devised the scheme and that he took advantage of her. Had she known the entities were not legitimate, “she would not have used them,” Sadow said, adding that the prosecution told a “one-sided story designed to portray Keila in the worst light possible.”
Feliz’ attorney, Jason Orlando, a partner at Murphy Orlando in Jersey City, declined to comment on Sadow’s statement.
Feliz pleaded guilty to his role in the scheme in late August. In Newark federal court, he pleaded to an information charging him with one count of conspiracy to commit wire fraud and one count of tax evasion, and is now incarcerated and awaiting sentencing in December.
In an unrelated case, Feliz pleaded guilty in February to one count of conspiracy to distribute narcotics.
Ravelo was a partner at Hunton & Williams from July 2005 through October 2010. She was a partner at Willkie from October 2010 through Nov. 14, 2014, when she resigned.
According to federal prosecutors, from 2008 through July 2014, Ravelo and Feliz had two companies that purported to offer litigation support for Hunton and Willkie but provided no actual services.
Ravelo and Feliz controlled the vendors’ bank accounts, the indictment said. The couple allegedly submitted invoices to the two law firms and MasterCard, a client of both firms, for work that was never performed.
Ravelo, as a partner at both firms, approved payments to the vendors, prosecutors said.
The law firms paid the vendors a combined $7.8 million. The firms, believing the vendors had provided the litigation support services, in turn, billed and were reimbursed by MasterCard, according to the indictment and other court documents.
Federal prosecutors allege Ravelo and Feliz used the money for personal expenses and claim Ravelo failed to report the fraudulent earnings on her tax returns.
The conspiracy charge and each count of wire fraud carry a maximum punishment of 20 years in prison, according to federal prosecutors. The tax evasion charges are each punishable by a maximum of five years in prison.
The repercussions of Ravelo’s arrest last December were felt far beyond her criminal case.
After the U.S. Attorney’s Office subpoenaed Willkie for documents and the firm conducted an internal review, Willkie uncovered communications between Ravelo and plaintiffs attorney Gary B. Friedman that raised questions for massive settlements in two antitrust cases involving credit card companies.
Ravelo, while at Willkie, represented MasterCard International in one of the cases and Friedman, of the Friedman Law Group, was among the plaintiffs counsel in both cases.
The communications between Ravelo and Friedman prompted Eastern District Judge Nicholas Garaufis in August to reject a far-reaching settlement between retailers and American Express, citing “egregious conduct.”
Now some retailers, pointing to the same communications, are trying to undo a settlement in the second antitrust case, brought by merchants against Visa and MasterCard and various banks over credit card fees.
Eastern District Judge Margo Brodie has not yet ruled on the retailers’ motion to vacate that settlement.
Hunton & Williams said in a statement that the firm “is committed to meeting and exceeding the highest ethical and legal standards. The firm is a victim here and continues to cooperate fully with the investigation.”
A spokesman for MasterCard said the matter is for the courts and declined to comment further.
A spokeswoman for Willkie also declined to comment.