The American Lawyer by Douglas McCollam - June 26, 2009
The call that marked the beginning of the end for James “Jamie” Perdigao came in late August 2004. The accounting department at Boomtown Casino, one of Perdigao's biggest clients, had questions about a bill that the attorney had recently submitted. Neither Perdigao, a partner at Adams and Reese, the largest firm in New Orleans, nor his secretary was in, so a temp routed the call to the firm's accounting department, which could find no record of the matter in its system. The firm asked Boomtown—a riverboat casino business—to fax over the paperwork, and checked with other Adams and Reese lawyers whose time appeared on the invoice. No one had a file number matching the one on the bill. Further inspection showed that the invoice looked “nonstandard” (as the firm would later term it), as did some other billing statements to Perdigao's clients, which included many of the country's top gaming companies.
On the Friday before Labor Day, Perdigao, the firm's top-billing partner, was placed on mandatory leave and told not to return to the office until further notice. Despite that directive, over the long holiday weekend, security cameras at the 51-story office tower in downtown New Orleans where Adams and Reese is headquartered captured Perdigao carting off about 60 boxes of files. On the Tuesday after his Labor Day haul, Perdigao faxed in his resignation and admitted that he had been misappropriating funds. In the weeks that followed, the scale of his theft remained unclear. Initially, it seemed it might just be around $1 million. But after a series of meetings between firm management and Perdigao's lawyer, he agreed to return about $9 million to the firm. About a month after that, the U.S. attorney's office and the Federal Bureau of Investigation, which had been brought into the case by Adams and Reese, discovered that, even as Perdigao was negotiating with the firm following his resignation, he had transferred an additional $19 million to a branch of Credit Suisse Group in Zurich. The FBI arrested Perdigao on Oct. 16, 2004. At that time, agents found about $25,000 in cash and two cashier's checks totaling nearly $1.2 million in the trunk of his car. (He was released on $2 million bail.) After a long and often bitter four-year battle with the firm and federal prosecutors, Perdigao finally pled guilty in the fall of 2008 to 30 counts of bank fraud, money laundering and tax evasion. Perdigao further admitted making $23 million worth of unauthorized withdrawals from the firm between 1991 and October 2004, according to a summary of the case against him that he signed. As part of his plea agreement, Perdigao agreed to pay back about $23.5 million in restitution, nearly half of that amount to his former firm. (The other monies are for the Internal Revenue Service, the Louisiana Department of Revenue and Boomtown's parent company, Pinnacle Entertainment, Inc. An additional $6 million the feds seized has so far gone unclaimed.) In a statement, Adams and Reese labeled Perdigao's actions “among the most egregious of any lawyer who has ever been criminally prosecuted in our nation's history,” and the U.S. attorney prosecuting the case called him “a poster boy for all corrupt attorneys.”
At Perdigao's sentencing in March, federal district court judge Eldon Fallon fixed the wayward lawyer with a reproving eye. “Mr. Perdigao, every day I see defendants with no education, no family, no letters [asking the court for leniency], because there is no one to write for them, no opportunity, no job, very little to lose. You don't fall into that category,” Fallon said. Below him, Perdigao, manacled hand and foot and clad in an orange jump suit, slumped. His lawyer, Charles Griffin, a solo practitioner in New Orleans, caught him around the waist. Fallon continued: “You are a lawyer, an officer of the court, you took an oath to follow the law and the Constitution of this country. You let yourself down, your family down, let society down, let the country down. This was not aberrant behavior. For a decade you did this.” And with that, the judge gave Jamie Perdigao, Phi Beta Kappa key holder, 15 years and eight months in prison, with no possibility of parole. At first glance, Perdigao might seem like just another high-living rogue of our new gilded age. (Through his lawyer, Perdigao declined to be interviewed for this story.) But in interviews with almost two dozen colleagues, classmates and family friends, the picture that emerges is hardly that of a callous huckster. To the contrary, Perdigao is often described by those who know him as a “nice guy,” “personable” and “considerate,” hardly the adjectives usually invoked when describing a hard-driving attorney who routinely billed 3,000 hours a year. In contrast to the lifestyle one might suppose Perdigao lived, he was a notorious miser—wearing rumpled suits, scuffed shoes and driving a beat-up Mitsubishi sedan that doubled as a cluttered rolling office. Though he was paid more than $300,000 a year as a partner at Adams and Reese, at the time of his arrest he still lived in the same $500-a-month rental apartment he moved into just after law school. “He came across as something of a Boy Scout,” says William Scheffler, a New Orleans attorney who worked with Perdigao on litigation matters as outside counsel. “He was very polite, very hardworking. He was really the epitome of what you'd want your son to grow up to be.” Perhaps it was unsurprising, then, that despite the energy and ingenuity Perdigao put into stealing millions of dollars from his clients and partners, he was in a good position to pay them back. It turned out that he'd never spent a penny and was able to turn it all over to the U.S. Marshal's Service to be placed in the registry of the court.
Perdigao, 47, grew up in New Orleans. He graduated with honors from Tulane University and Tulane Law School before joining Adams and Reese as a first-year associate in 1987. He arrived at the firm at an auspicious time. Long known as a no-frills insurance defense, admiralty and product liability firm, Adams and Reese was on the cusp of a rapid expansion. Within five years it opened offices in Washington and Mobile. Two years later it established a branch in Houston, and later, offices in Jackson, Miss., and Birmingham. Part of this growth was led by current managing partner Charles “Chuck” Adams Jr. (no relation to the firm's name partner), who brought in a host of big clients, including telecom giant WorldCom Inc., when he joined the firm in 1996 from Jackson-based Brunini, Grantham, Grower & Hewes. Last year Adams and Reese had 233 attorneys and revenue of $103 million. Within New Orleans legal circles, the term frequently used to describe Adams and Reese is “entrepreneurial,” that is, a firm where the partners often maintained a variety of outside business ventures, including ownership stakes in local sports teams and casinos. The firm is also known as very politically connected. Its blend of dealmaking and politics, in a state where politics is often a dirty business, fosters some ambivalence about the firm in the more buttoned-down precincts of New Orleans's legal community. “I always thought of A and R as a little schizophrenic,” says one former managing partner of a big competing firm in town. “One set of guys would have fit in at [other prominent New Orleans firms] Liskow & Lewis, Jones Walker, and Phelps Dunbar. But another set were more of the wheeler-dealer ... political types.” One practice that meshed well with the firm's mix of business and politics was gaming law. In the early 1990s, Louisiana passed a series of measures allowing the operation of video poker machines, riverboat casinos and other forms of legalized gambling. One of Adams and Reese's longtime clients, Robert Guidry—a local businessman with strong political ties to then-Gov. Edwin Edwards—decided to bid on one of the coveted licenses to operate a riverboat casino. Guidry retained Adams and Reese partner Robert Vosbein to assist him on the deal.
To help advise Guidry on gaming issues, Vosbein tapped Perdigao, then a young partner at the firm. Perdigao quickly built a reputation as one of the top legal experts in the field. Within Adams and Reese, he was seen as a rising star with a prodigious work ethic. Though not an early riser, Perdigao routinely worked until after 10 p.m. and almost every weekend. He regularly exceeded his annual billing quota and, as his gaming practice grew to include industry heavyweights like Pinnacle, Harrah's Entertainment Inc. and Bally Gaming International Inc., he became Adams and Reese's top-billing lawyer for several years in a row. According to attorneys who worked with him, Perdigao was viewed as very bright and well-liked, but he had a reputation as a loner who was intensely focused on his work and kept his social life to himself. In retrospect, Perdigao's profile as a brilliant soloist takes on a more ominous cast. Even before he made partner, according to federal prosecutors and court filings, Perdigao began to engage in fraudulent billing. At first he simply added time to legitimate bills. Later, Perdigao fashioned dummy bills to look like legitimate Adams and Reese invoices and sent them out with special return envelopes addressed to him that he personally collected from the firm's mail room. These bills were usually for no more than $15,000 and included time attributed to other lawyers at the firm. When the checks arrived, he would deposit them in the firm's trust account (which prosecutors say was not closely audited at the time). Then he would have checks from that account cut to one of several outside entities he controlled, such as Atlas Development Corp. and Capital Services Group. These companies were sham businesses created to help Perdigao launder the proceeds from his billing operation, according to federal investigators. Later, as Perdigao became more brazen, he would intercept checks from clients and deposit them directly into his personal accounts, stamping “Adams and Reese” on the back as an endorsement. The firm has sued at least one bank, JP Morgan Chase & Co., for allowing Perdigao to do this. A lawyer for the bank declined to comment except to say that his client denies any liability. Why didn't the clients catch on? Robert Murphy, a partner with New Orleans-based Murphy, Rogers, Sloss & Gambel who is representing Pinnacle in a suit against Adams and Reese, says that even though Perdigao submitted $5.2 million in fictitious or inflated bills to the company between 1999 and 2004, “no bell went off” in his client's accounting system. Murphy says Perdigao and the firm did so much legitimate work for Pinnacle that the extra billing didn't seem out of the ordinary. Perdigao alone was billing the company about 1,000 hours a year and did about $2.5 million worth of legitimate work during those same five years. “There were so many bills, it just didn't jump out,” says Murphy. He adds that Perdigao's stature in the gaming world also bolstered the scheme: “He had our confidence. He was the top guy in gaming law. I know that the Louisiana Gaming Control Board used to call him up when they had questions about how something worked.” In the end, the court granted Pinnacle $6.5 million in restitution from Perdigao. Pinnacle's suit against Adams and Reese has yet to be dismissed pending receipt of that payment. Among aficionados of the Perdigao case in New Orleans (and there are many), there is frank skepticism that one lawyer, however talented, could have pulled off a billing scheme involving almost $30 million at a medium-sized regional firm without someone at the firm getting wise. (No charges have been brought against anyone else at the firm.)
Managing partner Chuck Adams declined to be interviewed about the case, but he said in an e-mail that Perdigao's “elaborate crimes unexpectedly evaded standard safeguards that law firms routinely employ and that otherwise have served us well for decades.” Speculation about a wider conspiracy in the case was fueled, in part, because after he was arrested, Perdigao signed a cooperation agreement and was debriefed by federal law enforcement officials for more than two years before being formally indicted. That was partly due to exigent circumstances, says U.S. Attorney James Letten, such as the disruption caused by Hurricane Katrina in 2005. But partly it was because Perdigao had some fantastic tales to tell about his former law firm. He told prosecutors that Adams and Reese partners had buried documents to obstruct the government's investigation into the administration of former New Orleans mayor (and Adams and Reese partner) Marc Morial, who now heads the National Urban League. (Though members of his administration have gone to jail, Morial has never been charged with wrongdoing.) Perdigao told prosecutors that Chuck Adams had helped his client Bernard Ebbers, the now-jailed former CEO of WorldCom, obtain fraudulent loans by disguising the true state of Ebbers's personal finances. All of these allegations—and many, many more—found their way into a voluminous Racketeer Influenced and Corrupt Organizations suit Perdigao filed against the firm and eight of its top partners in May 2008. “It read like a damn Grisham novel,” one former Adams and Reese lawyer said of the lawsuit's explosive allegations. Indeed it did—and was about as popular around New Orleans when it was filed, with Perdigao casting himself as the lone voice of virtue, forever battling the dark designs of his nefarious partners. The problem, according to federal prosecutors, was that none of Perdigao's stories checked out. “We talked, but we came up goose eggs on his information,” says prosecutor James Mann. Another prosecutor in the office even referred to Perdigao as a “pathological liar.” (Along with Mann and Letten, other prosecutors on the case included Sal Perricone, Brian Klebba and Mimi Nguyen.)
Even though Letten and his team didn't find Perdigao's allegations against the firm credible, the charges nevertheless seemed to contain oddly detailed knowledge of certain meetings between prosecutors and Adams and Reese. Mann went so far as to suggest to the firm's leaders that they had a leak in their shop. Adams and Reese had similar concerns. For example, they found it odd that the only common thread among the eight partners named in Perdigao's civil suit was that they were the ones assigned to handle the investigation of Perdigao's billing, and liaise with the government. How could he know this? Eventually, an explanation surfaced. On Oct. 11, 2008, about six weeks before Perdigao's criminal trial was to begin, David Erwin, then the chief information officer of Adams and Reese, was reviewing computer user logs when he noticed some unusual activity. Someone using Perdigao's user name had tried to log in to the firm's network in the early morning hours. Though the attempt had been unsuccessful (Perdigao's name had been deleted from the system), one minute later someone from the same IP address had successfully logged in, using the name of a lawyer in the firm's Baton Rouge office. Curious, Erwin called the lawyer and asked if he had been on the network the night before. He said he had not. The IP address used by the trespasser was ultimately traced to the home of Perdigao's longtime girlfriend, where he had been staying. A search of her home by the FBI turned up two laptops belonging to Adams and Reese, as well as information stolen from the files of an Adams and Reese partner. In all, it turned out that Perdigao had hacked into the firm's computer network more than 400 times since his initial October 2004 arrest. Perdigao was rearrested, and his $2 million bail (secured by his parents' homes) was revoked. Prosecutors determined that, in addition to stealing information related to his case and personal information about firm lawyers and staffers, Perdigao was attempting to create a false paper trail in the firm's system that would have authorized his billing activities, which he could then obtain in discovery. With his rearrest and the revocation of his bond, all resistance within Perdigao seemed to crumble. Though he had previously rejected a plea deal (against the advice of his lawyers and others) that would have given him a maximum of five years in prison for one count of mail fraud, he now agreed to plead guilty to 30 counts of a 61-count indictment.
As part of the sentencing process, family and friends (including former Republican congressional leader-turned-lobbyist Bob Livingston) wrote to Judge Fallon asking for leniency. In the letters, those closest to Perdigao struggle to reconcile the good man they knew with the man facing the prospect of spending years behind bars. Many noted that his parents' bitter divorce while he was a teenager, and a subsequent seven-year estrangement from his mother, had a profound impact on him. His father, H. Gunther Perdigao, a New Orleans psychiatrist, described how after the divorce Jamie became much more of a loner, and how, despite the family's wealth, he began shopping for clothes at the Salvation Army because he was sure he would become destitute. Jamie, his father wrote, developed “a dark side” and would carefully manage information, “never telling any one person everything ... he began to lie so no one knew exactly what he was doing.” His son, Dr. Perdigao wrote, never had any intention of spending the money he stole, comparing him to a “homeless man found dead with a million dollars under his mattress.” Perhaps the keenest insights came from Perdigao himself in a letter he wrote to Judge Fallon. “I am not sure what is wrong with my judgment and decision-making process, but it relates somehow to the fact that I don't have much balance in my life,” he wrote, noting that at firm Christmas parties he'd been given a blanket and pillow for his office. “My life was my work. On most nights for many years, I left the office after the night cleaning crew. I never bought a house, never married, never had children.” His years as a corporate defense lawyer, he noted, had taught him how “to deflect the focus of the charges and allegations against my clients by raising all sorts of misdirections, counterpoints and counterclaims, which did not necessarily have any basis in fact. Unfortunately, trying to be my own lawyer, I used this same approach to try to deflect the charges against me.” As for what his ultimate plans were for the money, or why exactly he stole it, Perdigao offered no clue. Nor do those around him claim any special insight. As one of his defense lawyers put it: “I'm no closer to understanding that than I was in the beginning.” Douglas McCollam is a New Orleans-based freelance writer, who contributes to The American Lawyer.