California attorneys allegedly billed Ford Motor Company for a 57.5-hour workday as part of a massive $100 million fraud scheme that has now triggered a federal RICO lawsuit against several prominent lemon law firms.
Key Takeaways
- Ford has filed a federal RICO lawsuit against multiple California law firms, alleging they orchestrated a $100 million fraudulent billing scheme through the state’s lemon law provisions.
- The lawsuit claims attorneys fabricated thousands of hours of work, with some lawyers billing for physically impossible workdays exceeding 24 hours.
- Named defendants include Knight Law Group LLP, Altman Law Group, Wirtz Law APC, and several individual attorneys who allegedly coordinated the fraud scheme.
- Ford has been cooperating with a federal grand jury investigation into the alleged fraud since 2021.
- The case highlights potential vulnerabilities in California’s consumer protection laws that may require legislative reform.
Massive Fraud Operation Uncovered
Ford Motor Company has launched a major legal counteroffensive against what it describes as a sophisticated criminal enterprise operating within California’s legal system. The automaker filed a federal lawsuit in Los Angeles federal court accusing several prominent lemon law firms and their attorneys of orchestrating an elaborate scheme to defraud Ford and other automakers of at least $100 million through falsified legal fees. At the center of the lawsuit are allegations that these attorneys systematically exploited California’s Song-Beverly Consumer Warranty Act, commonly known as the state’s ‘Lemon Law,’ which requires manufacturers to pay attorneys’ fees when consumers prevail in warranty disputes.
“The scheme was carried out through a sophisticated criminal enterprise of attorneys and law firms that ingeniously spread their fraudulent billings across thousands of cases against many auto manufacturers so that their fraudulent scheme would go undetected.” complained Ford.
The lawsuit specifically names Knight Law Group LLP, Altman Law Group, Wirtz Law APC, and several individual attorneys including Steve B. Mikhov, Roger Kirnos, Amy Morse, Bryan C. Altman, and Richard M. Wirtz as defendants. Ford’s complaint, filed by Kasowitz Benson Torres LLP, invokes the Racketeering Influenced and Corrupt Organizations (RICO) Act, a powerful federal statute originally designed to combat organized crime. This extraordinary legal move allows Ford to seek treble damages, potentially multiplying the financial impact on the accused attorneys and their firms if the allegations are proven.
Impossible Work Hours and Phantom Billing
Perhaps most shocking among Ford’s allegations are claims that some attorneys billed for physically impossible workdays, including a 57.5-hour single day attributed to Knight partner Amy Morse. The complaint details a pattern of deceptive practices including double-booking court appearances, billing for work never performed, and systematically inflating hours across thousands of cases. These ‘ghost hours’ allegedly generated millions in fraudulent fees that were ultimately paid by Ford and other automakers who were legally obligated to cover these costs under California’s consumer protection laws.
“Ford’s civil RICO against a number of lawyers and law firms is a result of a comprehensive investigation that uncovered what’s alleged to be a massive scheme to submit phantom invoices filled with ‘ghost hours’ for work that was never performed to deceive California judges, dupe their own clients and to defraud auto manufacturers. In Ford’s case, these fraudulent and inflated billings are alleged to total at least $100 million dollars over five years.” said Doug Lampe.
According to the lawsuit, the scheme was carried out through a coordinated enterprise with a structured hierarchy and division of responsibilities. Ford alleges the attorneys worked together to prepare and file fraudulent fee applications, negotiate settlements, and distribute inflated fees among themselves. The automaker claims this activity harmed not only its business through direct financial losses but also damaged its reputation and required substantial resources to investigate and uncover the alleged fraud.
Federal Criminal Investigation Underway
The civil lawsuit appears to be just one aspect of a broader legal reckoning for the accused attorneys. Ford’s complaint reveals that the company has been cooperating with federal prosecutors in response to a grand jury subpoena served in fall 2021. This suggests that parallel criminal proceedings may be developing alongside the civil RICO case, potentially exposing the defendants to criminal penalties beyond the financial damages sought by Ford. The involvement of federal prosecutors underscores the seriousness of the allegations and the potential systemic nature of the alleged fraud.
“Ford reported this conduct to the United States Attorney’s Office and has been cooperating with a grand jury subpoena served on it in the fall of 2021.” said Daniel J. Fetterman.
Edward McNally, representing Ford, explained how the alleged scheme remained undetected for years: “When you look at any single legal bill for a single case it might show only one or two hours for a given lawyer on a given day—nothing to draw suspicion. However, when Ford searched across public filings, as alleged in the complaint, the conduct in this case was carried out through a sophisticated and unlawful enterprise of attorneys and law firms that spread their fraudulent and inflated bills across thousands of cases and against many auto makers.” This strategic approach allegedly allowed the lawyers to hide their excessive billing by distributing it across numerous cases and manufacturers.
Calls for Legislative Reform
The case has already prompted calls for reform to California’s consumer protection laws. Business advocates suggest the current system creates perverse incentives for attorneys who can generate substantial fees through warranty litigation. Kyla Christoffersen Powell, representing business interests, stated, “The shocking attorney conduct outlined in today’s filing by Ford underscores the need for the Legislature to consider additional reforms to the lemon law that remove perverse incentives for attorneys.” This sentiment reflects ongoing tension between consumer advocates who value strong lemon laws and business interests concerned about legal exploitation.
“This criminal enterprise would have continued unabated, but for the tremendous expense incurred by Ford to audit and detect the fraud.” complained Ford.
As this case progresses through the federal court system, it stands to expose deeper issues regarding legal ethics and the potential for abuse within consumer protection frameworks. The outcome could reshape how lemon law cases are handled in California and potentially influence similar legislation nationwide. For Ford and other automakers, the case represents an aggressive stance against what they characterize as legal exploitation of consumer protection laws that were originally designed to balance power between individual vehicle owners and major manufacturers.
