Originally Published Aug. 20, 2013

The federal investigation into Pennsylvania Supreme Court Justice Seamus P. McCaffery over referral fees his wife received from law firms has deepened.

The Philadelphia Inquirer first reported that federal investigators have subpoenaed the law firms regarding referrals paid to McCaffery’s spouse, Lise Rapaport, as well as campaign donations made by those firms to McCaffery’s judicial campaigns, and sources have since confirmed that to The Legal.

The federal probe also is examining contacts that McCaffery made in 2012 about civil cases prosecuted by a law firm that also had paid his spouse a referral fee, sources have told The Legal.

In addition, sources have told The Legal that judges have been interviewed by investigators.

Sources with knowledge of the investigation told The Legal that subpoenas were issued this summer and that the firms are complying with them. One source said the probe has been staffed with multiple FBI agents.

Several knowledgeable sources said a likely focus of inquiry will center on how the referrals came about.

The Inquirer, citing unnamed sources, identified Assistant U.S. Attorney Robert A. Zauzmer as the person spearheading the investigation. Multiple sources told The Legal on Monday that if Zauzmer is handling the investigation, it means the matter is getting “serious attention” from the U.S. Attorney’s Office. Zauzmer was one of the lead prosecutors in the case against former state Senator Vincent J. Fumo, who was recently released from federal prison after serving time on corruption charges.

Several sources familiar with Zauzmer described him as aggressive, tenacious and very thorough.

According to sources and the Department of Justice’s website, those handling the investigation would have had to get approval from superiors in Washington, D.C., before issuing subpoenas to law firms.

According to the DOJ’s website, in order to subpoena a law firm in connection with its representation of a client, four conditions must be met: the information is necessary to the investigation, the information can’t be obtained through alternative means, the need for the information outweighs the potential adverse impact on the attorney-client relationship and the information is not protected by privilege.

“To obtain the approval of the assistant attorney general, the staff should submit a memorandum to the Office of Operations setting forth the factual circumstances, reasons for the request and any information bearing on the standards the assistant attorney general must apply,” according to the department’s website. “The Office of Operations will review the memorandum and, if appropriate, forward it to the assistant attorney general for his approval.”

The Legal reported in June that McCaffery contacted a high-level Philadelphia Court of Common Pleas leader about civil cases in 2012. Two of the cases, sources said, involved the law firm Saltz Mongeluzzi Barrett & Bendesky, which had previously paid a referral fee to McCaffery’s spouse.

In response to questions from The Legal, the firm’s founder, Robert Mongeluzzi, said his firm paid a referral fee to Rapaport for a case she referred 10 years ago, and that he had never appeared before McCaffery or asked him to do anything.

“Lise Rapaport was the referring attorney in a case that was referred to our office approximately 10 years ago,” Mongeluzzi said in an email. “It was handled by an associate and settled before trial in 2007 and a standard referral fee was paid to Ms. Rapaport, which, according to published reports, she identified on the financial interest form she was required to and did file. That is the only referral fee paid to Ms. Rapaport by our firm in the 32 years I have been practicing law. Our firm has never paid a referral fee to Justice McCaffery.

“I have never appeared or argued before Justice McCaffery while he was on the Municipal Court, Superior Court or Supreme Court, and neither has any other attorney at our firm to my knowledge.”

“I never contacted Justice McCaffery on the two cases you cited in your email and have never asked Justice McCaffery to contact the Court of Common Pleas of Philadelphia County about any of our firm’s cases,” Mongeluzzi said in an email response to another question.

Calls to a lawyer representing McCaffery were not returned.

One source who is knowledgeable about the court system told The Legal in June that the Philadelphia-based justice also has contacted court leadership regarding filling jobs and filling judicial leadership roles.

In terms of contacts about cases made to the Philadelphia Court of Common Pleas, Pennsylvania Chief Justice Ronald D. Castille said this spring “some information was given to me about attempts to manipulate the transfer of further cases and I ordered that they not be transferred.”

However, Castille said in the spring that he could not address whether it was McCaffery who made contact to the court system. Further, the chief justice said in the spring that he could not discuss any further action that was taken because of confidentiality.

Castille was liaison justice to the First Judicial District until January, when his colleagues tapped Justice J. Michael Eakin to take on that role.

Sources said two of the cases were ones in which Philadelphia Court of Common Pleas Judge Allan L. Tereshko was the presiding judge and ones in which the same plaintiffs firm was prosecuting the cases on behalf of clients.

In the first instance of contact about a case, sources said McCaffery in early 2012 contacted Philadelphia Court of Common Pleas Judge John W. Herron, who was appointed as the administrative judge of the trial division in November 2011. According to those sources, McCaffery complained that Tereshko, newly appointed as Herron’s pick to be supervising judge of civil cases, was handling older cases.

Later, multiple sources said, former Supreme Court Justice Russell M. Nigro contacted Herron about Tereshko’s handling of older cases, and indicated that McCaffery had raised the issue to him. One of those older cases was being prosecuted by the plaintiffs firm that had previously paid a referral fee to Rapaport, sources said.

The cases were not ultimately transferred, according to sources, and it is not clear whether the firm was aware of any efforts to make contact about the cases.

In the second instance of contact about a case, sources said McCaffery contacted Herron to complain that Tereshko had granted a forum non conveniens motion in another of the firm’s cases.

McCaffery, in a past statement of financial interest, has disclosed the firm as one of several firms that had paid income to Rapaport. Rapaport has worked in McCaffery’s chambers for more than a decade.

Asked in an initial interview if McCaffery had reached into the Philadelphia court system, Castille said of McCaffery that “he has an interest in the court system, having come from it. But I always said it would be inappropriate for him to be running that system or be liaison to it because he has too many friends over there.”

Later, Castille said “he has too many enemies over there. It would be improper for him to be reaching into the court system to try to affect cases or assignments or things of that nature.”

It is well known in legal circles and has been cited in published reports that Castille and McCaffery dislike each other and have been at odds over a host of issues, including administrative control of the Philadelphia courts.

One source who has knowledge of the court system said McCaffery’s interest in the system in which he once sat as a Philadelphia Municipal Court judge is a “mixed bag. He’s been very helpful in the criminal justice reform project, especially in the creation of the bench warrant court.”

But the negatives, the source said, are that McCaffery has been engaged in the FJD’s daily operations in terms of filling jobs and suggesting that someone besides Tereshko be the supervising judge of civil cases.

Tereshko resigned as supervising judge in October after he was taken to task by the Pennsylvania Superior Court for failing to disclose that his spouse worked for a law firm representing a defendant in a motor vehicle insurance case over which Tereshko was presiding.

Later, Tereshko was transferred from civil court to juvenile court. Transfers between divisions must be approved by the Supreme Court.

McCaffery’s statements of financial interest disclosed as sources of income through his wife the law firms of Saltz Mongeluzzi; Brookman Rosenberg Brown & Sandler; Martin Banks Pond Lehocky & Wilson; attorney Mark A. Cunningham of Marlton, N.J.; Silverman & Fodera and other related firms; “Jaffe, Friedman,” which is related to Peter S. Friedman; Fox Rothschild; and Schmidt Kramer.

Amaris Elliott-Engel can be contacted at 215-557-2354 or aelliott-engel@alm.com. Follow her on Twitter @AmarisTLI.

Hank Grezlak is the associate publisher and editor-in-chief of The Legal Intelligencer. He can be contacted at 215-557-2486 or by email at hgrezlak@alm.com. •