Saturday, January 28, 2006

Fla. Attorney General and 2006 Gubernatorial Candidate Charlie Crist's Views Sought on Selective Enforcement of Deceptive & Unfair Trade Practices Act

TALLAHASSEE, FLA---Florida Attorney General and gubernatorial candidate Charlie Crist has been asked for his views on selective enforcement of Florida's Deceptive and Unfair Trade Practices Act where well-connected law firms are concerned.

Crist announced on Dec. 6, 2005 that his office sued two Palm Beach County men for unfair and deceptive trade practices stemming from allegations that their cabinet and countertop business took customers' deposits but failed to provide the requested items. Crist's complaint alleges the two men never delivered promised services. Affidavits from consumers reportedly reflect that victims were cheated out of more than $175,000 in deposits. Crist's office reportedly maintains the two Palm Beach County men are being sued under Florida's Deceptive and Unfair Trade Practices Act, which allows a penalty of $10,000 per violation, or $15,000 if the victim is a senior citizen or disabled adult.

In sharp contrast, Crist's office failed to even investigate reports of a well-connected Jacksonville law firm's widescale misappropriation of clients' funds. I am an attorney who was employed by FARAH, FARAH & ABBOTT, P.A. (a/k/a The Law Offices of Eddie Farah) in 2004 when I discovered it was frequently 'padding' costs charged to personal injury clients by $300 or more per case and had been doing so for several years. It overcharged hundreds of unsuspecting clients and the combined misappropriated funds are estimated at several hundred thousand dollars.

According to the firm's web site, it is now known as the Law Offices of Farah & Farah, P.A. The principals in the firm are Eddie Farah and his brother, Charlie E. Farah.

The law firm practiced as a professional association ("P.A."), an authorized business entity under The Rules Regulating The Florida Bar. Florida Bar Rule 4-8.6(a) specifically provides, "Authorized Business Entities. Lawyers may practice law in the form of professional service corporations, professional limited liability companies, sole proprietorships, general partnerships, or limited liability partnerships organized or qualified under applicable law. Such forms of practice are authorized business entities under these rules."

There are many reasons attorneys choose to form professional associations for their legal practices. The owners of a professional association are called shareholders and ordinarily do not have personal liability for liabilities that arise in the ordinary course of business or from the malpractice of other attorneys at the law firm. This is one of the major benefits of operating a law practice as a professional association.

My Jan. 10, 2005 letter to Crist's office reported The Law Offices of Eddie Farah's repeated acts of consumer theft/fraud in the years 2002 through 2004. That letter included supporting documentation from ten cases in which the firm grossly overcharged clients. The letter emphasized, “Given the frequency and duration of [the firm’s] overcharging practice, many clients and considerable sums of money are involved in these matters."

Crist's office responded by letter dated Jan. 24, 2005, simply identifying The Florida Bar as the agency responsible for reviewing grievances against Florida lawyers. That letter gave no reason for his office's failure to investigate the offenses being reported as committed by the firm itself, a professional association. I am aware of no legal authority exempting law firms operating as professional associations from being investigated and, if appropriate, prosecuted under Florida's Deceptive and Unfair Trade Practices Act.

My concerns over The Law Offices of Eddie Farah's overcharging practices had already been reported to The Florida Bar by letter dated Sept. 28, 2004 to Donald M. Spangler, Esq., Chief Branch Discipline Counsel. Supporting documentation of the firm's overcharging practices was also provided. To my surprise, a full year went by with no contact from anyone on behalf of The Florida Bar to investigate the reported widescale fraud and misappropriation of clients' funds by The Law Offices of Eddie Farah. Not a single inquiry from The Florida Bar by letter, email or telephone.

I followed up with Spangler by email dated Sept. 1, 2005, letter dated Sept. 6, 2005 and email dated Oct. 25, 2005. By email dated Oct. 27, 2005, Spangler rather succinctly responded, "The file to which you refer was closed. The grievance committee considered the matter after investigation and an audit by the bar staff auditor, and found there was no probable cause to pursue disciplinary proceedings. They did elect to send a letter of advice to the firm."

According to The Florida Bar's web site, "The Florida Bar has an important role in the regulation of lawyer misconduct. A complaint of unprofessional conduct against a Florida Bar member is a serious matter. The processing and investigation of inquiries and complaints are a basic responsibility of the Bar as mandated by the Florida Supreme Court. The Bar seeks to protect the public from unethical lawyers."

It's difficult to fathom how The Florida Bar's grievance committee could reach an informed decision concerning probable cause to pursue disciplinary proceedings without ever even contacting the person reporting the misconduct as part of its investigation.

Questioning the thoroughness of the grievance committee's investigation and audit by the staff auditor, I sent a public records request to The Florida Bar for its complete file. It was only after repeated follow up requests that the Bar finally complied and produced the records. Unfortunately, the records produced offer no clues as to the basis for the grievance committee's finding of no probable cause for disciplinary proceedings. There are no indications any Bar investigators even contacted any of the witnesses I identified by name. Even the grievance committee's Nov. 8, 2005 Notice of No Probable Cause and Letter of Advice fails to explain the basis for its finding.

It's undisputed The Law Offices of Eddie Farah overcharged many clients by substantial sums. Attorney John A. Weiss, Esq. of Tallahassee represented the firm's principals, attorneys and brothers Eddie and Chuck Farah, before the Bar. Weiss admitted the firm's overcharges in a Sept. 22, 2005 letter to The Bar stating,

"As an aside, I would advise you that the firm has refunded in excess of $120,000.00 ... to those clients who were inadvertently overcharged for costs. Approximately $10,000.00 remains undisbursed because the firm, and the private investigator it subsequently hired, could not find the individuals."

That certainly sounds like a lot of money to be 'inadvertently' overcharged. The firm would have to overcharge 400 clients by $300 each to reach $120,000. Even The Florida Bar's own audit of the firm's trust account confirmed $130,000 in overcharges and a lack of substantial compliance with Bar rules governing trust acounts in the years 2002 through 2004.

According to a Jan. 6, 2006 letter from Spangler, "The Florida Bar cannot impose disciplinary action against a law firm, only against individual lawyers." This case demonstrates a dangerous loophole unscrupulous attorneys can easily exploit to the public’s detriment. If law firms themselves aren't subject to disciplinary action by The Florida Bar, why won't Attorney General Crist's office investigate a professional assocation's documented overcharging practices under Florida's Deceptive and Unfair Trade Practices Act? Is it because the professional association in question just happens to be a law firm rather than some other business?

It's been over eighteen months since The Law Offices of Eddie Farah's overcharging practices were reported to The Florida Bar and to Crist's office. Someone must be responsible for protecting clients defrauded by law firms and the public needs to know who that is. If it's not The Florida Bar or the Florida Attorney General's Office, who the heck is it?

Selective enforcement of Florida's Deceptive and Unfair Trade Practices Act when well-connected law firms are involved is gaining increasing attention. By email dated Jan. 28, 2006, I asked Crist to explain for voters what his office's position is concerning this issue. No response has been forthcoming.

Copyright © 2006 by Jeffrey R. Hill. All rights reserved.

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