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Lawyers Eyed in Suit Scam

New York Times, September 22, 1995

By Jim Dwyer

One day a few years back, a road crew pulled onto the shoulder of a Westchester highway and spilled a load of loose asphalt. It made a small mess that they forgot about. Quickly, the asphalt hardened into a solid lump. A few days later, a truck driver pulled onto the same shoulder, hit the newly minted bump, spun out of control and crashed.

That was nearly five years ago, but people are still tripping over that asphalt.

Starting tomorrow, a parade of 20 to 25 lawyers and an unknown number of insurance adjusters will be marched into Supreme Court in Manhattan and charged in a scheme to fix lawsuit settlements.

The asphalt bump has turned into the biggest legal scandal in decades. The wholesale arrests will take two days, with fingerprinting to begin tomorrow and court appearances to be held Thursday. “My client has been told to appear for processing on Wednesday and to come back on Thursday for the arraignment,” says Sal Russo, a prominent defense attorney.

Manhattan District Attorney Robert Morgenthau has sketched a picture of corruption on a grand scale, with personal injury lawyers hiring bagmen to push the right buttons in insurance companies. In turn, he said, lawsuits would be settled faster and for more money. So far, his investigators have grabbed $800,000 from vaults and lawyers’ offices.

But defense lawyers say none of this is news, that the pay-offs weren’t bribes but ordinary business deals that helped lawyers and clients find short-cuts around crowded court calendars that delay civil trials for years.

The shortcuts began with that crash in Westchester.

The driver, who was badly hurt, hired a lawyer to file a suit. Not long after, the truck driver’s attorney received a call from a stranger.

The stranger was familiar with the case. He wanted to help move it along. To get on the court calendar for a trial could take two years. So the stranger had a proposition: For a 10% cut, the stranger could speak with his contacts in the insurance business and urge them to settle the case quickly – and generously.

The truck driver’s attorney, Jay Itkowitz, heard the whole proposition and thought it was intriguing – so much so that he called the Manhattan district attorney’s office after the stranger left the room. That was in the fall of 1992.

For the next two years, Itkowitz and the stranger, a man named John Prins, came to know each other much better – with all the meetings taped at Itkowitz’s midtown Manhattan office. They spoke about other lawyers, middlemen and lawsuits.

Prins himself had worked as an insurance adjuster for big companies.

He now was trolling the waters as a freelance middleman, looking for lawyers who needed to cut fast deals.

Early last year, Itkowitz settled the crash case for $700,000.

In June, he was visited by Prins, who said he was entitled to a piece of the settlement. He had contacted the insurance adjusters and made sure the papers didn’t get lost.

Itkowitz said he didn’t want to pay: he had negotiated the settlement himself, and Prins had done nothing.

This was very bad, Prins said.

No one in the insurance business would be able to take Itkowitz’s word.

He would get a reputation as a man they couldn’t do business with.

People familiar with the tape of this conversation put different spins on this conversation.

Pure extortion, says the district attorney’s office – a personal injury lawyer, Itkowitz was threatened with being blacklisted by insurance companies.

But Prins’ attorney, Sal Russo, claims the whole arrangement was perfectly legal.

“If a case can be settled today as opposed to two years from now, an attorney has done a client a service,” says Russo. “Prins could make a phone call and talk to an insurance adjuster in a way that an attorney could not. An expediter like Prins could save an attorney a year or a year and half. Attorneys know how hard it is to get even a conversation with an adjuster.”

No extra money was awarded in the settlement, claims Russo. It just was paid faster.

In any event, Prins was handed $52,000 in checks by Itkowitz last October.

As Prins walked out of the lawyer’s office, he was met by a throng of detectives from the district attorney’s office.

That same day, the detectives raided 45 offices and banks, looking for records and cash.

Now, a year later, the case has widened.

A huge gang of middle-age men in suits is about to find out how it feels to trip on a lump of asphalt.