Sidley Seeks Escape From Second Con Artist-Related Suit
A con artist who once promoted his ties to Sidley Austin and recently got out of federal prison is still causing trouble for the global legal giant.
April 10, 2018 at 05:31 PM
6 minute read
A con artist who once promoted his ties to Sidley Austin is still causing trouble for the firm.
Sidley has been fighting a suit filed in California state court brought by a divorcee who claims she was bilked out of more than $1.2 million by Joseph Dean Garcia, who at one time had access to Sidley's office in Washington, D.C., and handed out Sidley-stamped business cards that said he was involved in “special projects.”
Sidley had previously been dismissed from the California suit before the plaintiff, Polly Coleman, filed a third amended complaint in February. In a motion filed last month, Sidley sought to be dismissed from the case yet again, arguing that Coleman's conspiracy to commit fraud claims fail because the firm never represented her.
Garcia was released from federal prison in October after serving part of a 37-month sentence he received in exchange for pleading guilty to a criminal investment scheme.
The California suit comes on the heels of another Garcia-related claim that Sidley settled for an undisclosed amount last year out of a Chicago courthouse. That complaint alleged that Sidley partner Edward McNicholas helped Garcia secure a $5 million investment from another California-based divorcee, Carrie Birkel, in a sham company in 2014.
Sidley has argued that Coleman only added the firm and McNicholas to her case after that Chicago suit became known. While Coleman asserts the Chicago case is “remarkably similar” to her own, Sidley claims it is not. For one thing, Coleman was not a client of Sidley or McNicholas.
Either way, the suit adds more detail—if not outright clarity—to the strange relationship between Garcia, Birkel and Sidley.
Coleman's suit alleges that she met Birkel, whom she is also suing, while the two were neighbors on Balboa Island in Newport Beach, California. The two became friends in early 2014 and Birkel introduced Coleman to Garcia, whom the suit states was Birkel's “romantic partner.” Coleman says she once went shopping for a wedding ring with Birkel, whom the suit claims was contemplating marrying Garcia.
That would have been a quick turnaround for Birkel. She met Garcia in January 2014, according to her own suit. Through Garcia, Birkel alleges that she retained McNicholas to vet divorce lawyers, paying $25,000 to the Washington, D.C.-based co-leader of Sidley's privacy and cybersecurity practice for the engagement.
Birkel was awarded $10 million in her October 2014 divorce, according to her suit. Shortly thereafter, she claims she was approached by McNicholas and Garcia about an investment in a company, purportedly in the defense contracting business, called ToyBox.
According to her complaint, McNicholas told Birkel that he was going to leave Sidley to become general counsel at the company, which he allegedly said was set to receive a large government contract.
In October 2014, Birkel invested $5 million in ToyBox and provided another $1 million loan to the company, documents in the case show. Her total investment, including legal fees she advanced for the company, was $6.3 million, according to exhibits attached to Birkel's complaint.
The extent of the relationship between Garcia and McNicholas is still unclear. McNicholas did not reply to several requests for comment. Sidley declined to comment on the case. Sidley's lawyer in the California case, former DLA Piper partner Betty Shumener, now of Los Angeles-based Shumener Odson & Oh, did not return a request for comment on the matter. Birkel's lawyer in Chicago, Edward Clinton Jr., declined to comment. And Coleman's lawyer, Colin Holley of Newport Beach-based HamptonHolley, did not return an email message.
But there is some evidence that suggests Garcia had gained the trust of McNicholas.
According to testimony by Garcia's former accountant in his criminal case, Garcia and Sidley had an “information sharing partnership” in regard to cybersecurity initiatives and insurance policies. The accountant testified that Garcia's company “spent several weeks” meeting with companies on the matters at Sidley's office in Washington, D.C. Eventually, the accountant said Garcia gained “24-7” access to the Sidley's office in the nation's capital.
Dean's email address ended with “sidleyconsulting.com,” which is not typical of the Am Law 100 firm's email addresses. And internet domain name registration records show that Karen Ransom, Garcia's wife, who also pleaded guilty last year to a fraud charge, registered the sidleyconsulting.com name in 2014.
While Birkel alleges she was bilked by both McNicholas and Garcia, Coleman claims that Birkel played up Garcia's connection to Sidley.
Coleman was pursuing a settlement related to mold in her California home in late 2014 when she claims that Birkel promoted Garcia as someone who could help her negotiate a settlement. As a result, Coleman alleges she eventually paid a $60,000 retainer to Garcia.
“Birkel assured Coleman that she had fully vetted Sidley and [Garcia's company] and had visited their offices, and stated that Sidley, [Garcia's company] and [Garcia] had been instrumental in consulting with Birkel on her own divorce, as well as several other business matters,” states Coleman in her suit.
But instead of pursuing a fair settlement for Coleman, Garcia was busy with other things, according to her complaint. For one, he was indicted in November 2014 on federal wire fraud and conspiracy charges. Coleman also alleges that Garcia was working to expedite any kind of quick settlement on Coleman's behalf so he and others could use the money. Even still, he asked for $40,000 more from Coleman, which she sent his way that same November.
Just days after the mold settlement came through, Coleman wired $1.6 million to ToyBox. That came after Coleman claims she was convinced by Garcia and Birkel that her ex-husband was trying to get at the money. She also handed over $20,000 in cash and jewelry for safe keeping to guard against the threat that Garcia said her ex-husband posed.
The $1.6 million was said to be an interest-free loan to ToyBox that would be repaid in December 2019. Coleman claims she later learned that the ToyBox funds were directed toward Birkel. For her part, Birkel said she recovered most of the more than $6 million she invested in ToyBox before filing her own suit. Her litigation states she is seeking the remaining $1.51 million from her investment, but did not detail where the funds she recovered came from.
During Garcia's criminal trial, an FBI special agent testified that Garcia had been under investigation for up to six years prior to his arrest. The agent was asked whether he had ever discerned any legitimate business interests served by Garcia's company, Strategic Intelligence Services.
“I have found nothing to support that in the case that we've already done so far and the information we've received,” the agent, Marcus Kirkland, responded.
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