LOS ANGELES — Disbarred Los Angeles lawyer Tom Girardi funneled more than $1 million in gifts and payments to an investigator at the State Bar of California and the investigator’s wife, a University of Southern California accounting professor, according to a report released Friday.
The long-anticipated report, the result of a year-and-a-half investigation by a law firm working for the State Bar’s governing board, detailed how Girardi cultivated and sustained an “extensive network of connections at all levels” of the agency tasked with regulating California’s legal profession and described corruption beyond what is publicly known.
The investigator, Tom Layton, and his wife, Rose, received more than $600,000 in payments from Girardi, and Layton enjoyed the use of a credit card paid for by Girardi’s law firm, among other perks, according to the report.
The report also documented how numerous State Bar officials with close ties to Girardi killed complaints that came into the agency or improperly closed cases about the lawyer’s alleged misconduct.
At least eight complaints were quashed by State Bar employees whose ties to the wealthy attorney “taints the discretionary decisions made in those cases and means that they were improperly handled,” according to the report by the law firm Halpern May Ybarra Gelberg LLP. In addition, two agency prosecutors who advocated taking action against Girardi’s law license were fired under questionable circumstances by top executives close to the lawyer, according to the report.
“The magnitude and duration of the transgressions reveal persistent institutional failure and a shocking past culture of unethical and unacceptable behavior,” said Ruben Duran, chair of the State Bar’s board of trustees, in a statement.
The release of the report was part of the board’s attempt to move the agency beyond the Girardi scandal. Despite more than a hundred lawsuits against the lawyer and more than 155 complaints over the decades, the State Bar did not take action against him until March 2021. By then, his law firm had collapsed, and a federal judge had referred him for criminal investigation related to alleged misappropriation of millions of dollars from clients’ settlement funds.
Bob Baker, an attorney who has represented Layton during the investigation, said Friday that he had not seen the law firm’s report. Asked for comment about the report’s findings, Baker said, “I don’t give a damn,” before ending the call.
None of the officials alleged to have inappropriate relationships with Girardi still works for the State Bar, according to the agency. Layton was fired in 2015. The Los Angeles Times has detailed how he functioned as Girardi’s social secretary and chauffeur while collecting a State Bar paycheck. Girardi provided free legal representation when the Laytons sued their general contractor, and employed two of their children at the Girardi Keese firm.
The report identified payments to the Laytons from Girardi’s law firm dating back to 2002. Some payments went to Layton or his wife directly, but more than $460,000 went to “Layton & Layton” between 2006 to 2014. Layton told investigators that the entity provided consulting services to Girardi Keese, mainly by his wife.
Rose Layton told investigators that the payments were “for unspecified services ‘related to the financial aspects of a case,’” according to the report, which said she had no documentation supporting the services she claimed to provide.
From 2013 to 2020, Layton charged an average of $45,000 per year on the American Express card he had, which was paid for by Girardi’s law firm, the report said. Girardi also guaranteed a $150,000 bank loan to Layton in 2006, while he worked at the State Bar, and the law firm made payments on the loan for several years. In addition, Girardi’s law firm leased two BMWs and a Cadillac Escalade to Layton while he worked at the State Bar and afterward.
Of the cash and valuables Girardi directed to the Laytons, the report said that these “payments and gifts were never properly disclosed.”
Other State Bar employees and members of the agency’s governing board also secretly took gifts and other perks from Girardi, the investigator’s found.
Even when complaints against Girardi were referred outside the agency because of acknowledged conflicts of interest, top bar officials and staffers continued to meddle in their handling, the report said. In one cited example, Bob Hawley, a longtime bar employee who rose to the post of interim executive director, “ghostwrote decisions in matters assigned to outside counsel without disclosing the fact, including a decision to recommend closure of a complaint against Girardi,” the report said.
The findings of the 16-month investigation were drawn from a review of more than 950,000 documents and interviews with 74 witnesses, some of whom, including Layton, had to be compelled by a state judge to sit for questioning.
Duran highlighted several reforms that the agency had instituted in recent years in an attempt to identify and prevent unethical behavior.
“Providing this disclosure is a necessary step to demonstrate our commitment to transparency and accountability and restore public trust,” Duran said.
Once one of the state’s most powerful lawyers, Girardi is suspected of stealing tens of millions of dollars from clients and colleagues. Now 83, he is bankrupt, facing federal wire fraud charges in two jurisdictions, and has been diagnosed with Alzheimer’s disease.
