(Reuters) – When big-firm lawyers stop acting as lawyers, bad things can happen.
That’s the message of a ruling on Thursday from U.S. District Judge Carlton Reeves of Jackson, Mississippi, denying Baker, Donelson, Bearman, Caldwell & Berkowitz’s motion to dismiss claims that the law firm helped a fraudster named Lamar Adams attract investors in what turned out to be a $164.5 million Ponzi scheme.
Baker Donelson did not spend much time on traditional legal services for Adams, who is serving a 19.5-year prison sentence for orchestrating the scheme, which falsely promised investors outsized returns on timber sales to lumber mills. That work was limited, according to Reeve’s opinion, to drafting subscription agreements and some other investment documents.
The firm’s main job for Adams was allegedly to bring in investors, according to the opinion. A Baker Donelson partner and a non-lawyer lobbyist from the firm’s Jackson, Mississippi, office allegedly leveraged the firm’s prestige – and escrow account – to persuade Baker Donelson clients, lawyers and other “friends and family” to pony up for Adams’ scheme.
Procuring investments was allegedly so alluring for the lawyer and the lobbyist that they created a limited liability investment company to pool the millions of dollars they intended to raise for Adams. As they contemplated potential returns of $18 million for every $1 million their fund invested, the lobbyist emailed the lawyer: “We pull this off, we get…