Baker & McKenzie sued for $600M in ‘looting’

By Mary Ellen Podmolik
Posted April 11 at 4:58 p.m.

Baker & McKenzie and one of its former partners were sued Monday for $600 million by a Pennsylvania company that alleges the law firm and Martin Weisberg willingly participated in a “looting” of the company.

The suit’s filing is part of the Chapter 11 bankruptcy of Industrial Enterprises of America Inc., which sought protection from creditors in April 2009.

According to the suit, Chicago-based Baker & McKenzie brought Weisberg, a securities lawyer, in as a partner because Industrial Enterprises was one of his clients. The suit claims Baker & McKenzie ignored the fact that Weisberg already had been indicted for conspiring to defraud investors.

The suit charges that Baker and Weisberg “knowingly drafted false documents with the express purpose of duping the investing public and regulators acting on their behalf,” activities that led Industrial Enterprises, an automotive aftermarket supplier of chemicals, to sustain financial losses and liability of more than $150 million. Weisberg was among the beneficiaries of the illegal issuance of millions of shares of freely-traded stock, the case states.

Industrial Enterprises “had the right not to have criminals for its attorneys,” the suit states. “Defendants violated the law and these ethical rules by participating in the looting of IEAM — a looting that could not have occurred without defendants’ legal expertise.”

Weisberg, who began working as a partner in the firm’s New York office in 2005, resigned at the firm’s request in October 2007. He was indicted on securities fraud charges by the U.S. Attorney’s Office for the eastern district of New York in August 2007, an indictment that was unsealed in October 2007, and on federal wire fraud and money laundering charges in May 2008. Neither of those criminal cases, which are pending, involved Industrial Enterprises.

In 1991, Weisberg was indicted, tried and acquitted of charges of conspiracy and money laundering in Texas.

“Baker only acts through their partners and he was a partner so everything he did, Baker did,” said Steven Thomas, a California-based attorney for Industrial Enterprises. “They hired him after he’d already been indicted once, so how close were they looking?”

Baker & McKenzie said it had no comment on the lawsuit, since it was a pending matter and it had not studied the complaint.

An attorney for Weisberg was not immediately for comment.

Read more about the topics in this post: ,

Companies in this article

One comment:

  1. DC April 11 at 11:08 pm

    Steven Thomas shows questionable ethics by making such statements to the public. This appears to be a desperate grasp for deep pockets by the shareholders estate of a poorly run company in an effort to create value where there otherwise would be none.

Leave a comment

Required. Your email address will not be published.