Circle of Greed Read online

  These historical comparisons were imprecise, however, and ultimately unhelpful to Lerach because they encouraged his prideful instincts. To this day, what most Americans know of the Scopes trial comes from the play Inherit the Wind. It was written in the mid-1950s as a metaphorical warning, not against religious extremism but against McCarthyism.* In the play Bryan (Matthew Harrison Brady) comes off as a backwoods blowhard, a kind of ultrareligious ignoramus. This is unfair to the memory of Bryan, who was a windbag but was also a prairie Populist with a deeply developed social conscience. Bryan’s true concern about Darwinism was rooted neither in science nor in the Bible; like many Populists of his day, he worried that the embrace of Charles Darwin’s theories would evolve into a doctrine of “Social Darwinism,” in which society turned its back on those less fortunate. In other words, William Jennings Bryan’s fears about the likely effects of unfettered capitalism on working people were not dissimilar to those harbored by William Shannon Lerach.

  Be that as it may, Lerach’s performance in the Pacific Homes case earned him rave reviews from allies and adversaries alike. Three decades later Sam Witwer, Jr., remembered Lerach as “nasty and belligerent” in his interactions with the Methodist attorneys and their clients—but also as a committed lawyer who had a firm grasp of the case law, a deftness with the media, and impressive powers of persuasion with a jury; and as a tireless advocate who would work in court all day and then adjourn to his law office at night and spin off insightful and effective motions and legal responses.

  “His work ethic was so prodigious that it was difficult to fathom,” Witwer recalls. And when the case ended, on his last day in San Diego, Sam Witwer, Jr., had to stop by Milberg Weiss’s high-rise office to deliver a document. Lerach spotted him and waved him into his office, crammed with bankers’ boxes of papers from the Pacific Homes case. Lerach looked worn out to Witwer, a human side of him emerging as the two men made small talk over coffee, discussing their families and hometowns. Lerach told Witwer that the trial had been a draining experience, adding that he wanted him to know that the process was “nothing personal.” Witwer found this unpretentious version of the fierce courtroom litigator disarming, even likable, and left San Diego wondering if he had judged the Methodists’ nemesis too harshly.

  Colin Wied, the lawyer who had first called on Lerach for his help with the case, also had conflicting feelings about his one-time colleague but no doubts at all about his legal prowess. “Bill was an absolutely brilliant lawyer in every respect,” Wied recalled later. “He could write briefs like nobody I’ve ever seen, and he handled all kinds of delaying tactics by the church’s lawyers. He was a tremendous tactician, cogent and compelling on his feet. He even dressed immaculately. He delivered the goods. He told the jury what was going to happen in that case, and it did. He could really tell a story.”

  Lerach had first come to San Diego to practice law in a support role representing Mellon Bank in its suit against U.S. Financial. After Pacific Homes he would never be a bit player again. “Yeah, he’d been here on the U.S. Financial case,” Wied said. “But this lawsuit, Pacific Homes, was the case that launched him.”

  The case foreshowed his success, and his fall. Many of the themes, good and bad, present in this case would weave through Lerach’s career: the easy relationship with the trial judge, his ability to outwit other lawyers during the day and outwork them at night, the meticulous legal preparation, the suing of secondary defendants such as Coopers & Lybrand, and the ability to ferret out fraud and to instill in his clients and his staff the sense that he was an avenging crusader who was indeed slaying dragons like the mythical knights of yore. All that would continue to the next case, and the case after that, until the day came when Bill Lerach’s net worth was often greater than the corporate titans he was suing. Which is a reminder that while the Pacific Homes lawsuit was about justice, it was also about money. And if the love of money is truly the root of all evil, it is worth noting that dark strands were also present back in the Pacific Homes case. Along with the good works were the other things: the hubris, the taunting, the acrimony with the opposing side, the hyperpartisanship born of a Manichean worldview.

  In San Diego Lerach put down roots and made his legal mark. He had challenged an entity held in high repute and had tarnished that reputation. Lerach had also taken on the cream of the Chicago legal establishment. A decade later he’d do so again, although that time it wouldn’t end well. As 1980 came to a close, he earned a paycheck of $150,000. “I thought it was all the money in the world,” he recalled. “We took a case against a popular religious organization, faced big-time lawyers from Los Angeles and Chicago and Philadelphia, fought in two judicial systems for nearly four years—and got a fantastic settlement. If we could do that, we could do anything.”

  There is a postscript to this story, however, and it comes from Colin Wied. Three decades later Wied and Granby were among those asked by Lerach’s defense lawyer to write character references for the federal judge who was preparing to sentence Lerach to prison. Granby complied, as did 150 others, but Wied did not. Asked why, Wied didn’t answer directly. He told this brief story instead: in a conversation long after their joint case had ended—when Lerach’s caseload mushroomed—Wied once asked Lerach casually, “How do you guys get all your cases?”

  “Bill quickly volunteered that it was illegal to pay prospective clients,” Wied recalled. “That wasn’t what I was implying, and I didn’t know what to say. It kind of ended our conversation.”

  * One of the authors, Carl Cannon, was assigned to the legal affairs beat for the San Diego Union-Tribune at the time. Cannon covered much of the Pacific Homes litigation and witnessed first-hand—and wrote about—the tense interplay between Bill Lerach and Sam Witwer. Coauthor Patrick Dillon, an editor for the paper then, edited some of those articles.

  * “I remember meeting with these guys and thinking that they have hearts of gold, but that they weren’t ready for what they were facing,” Lerach told the authors in 2008. “I guess they knew that, which is why they’d come to us. I was immediately enchanted with the case. It took about two minutes.”

  * The term respected for a judge can be a cliché, but in Schwartz’s case it is an understatement: upon his retirement, the federal courthouse in San Diego was named in his honor.

  * As Lerach faced off with federal prosecutors in 2007 and 2008, Inherit the Wind enjoyed a revival on college campuses before young audiences who saw it as a warning against the kind of blind obedience that had led the United States into the Iraq War.

  2

  THE YOUNG MAN FROM PITTSBURGH

  In later years, when Bill Lerach emerged as one of the most renowned trial lawyers in America, a legend would grow up about the Lerachs of Pittsburgh, one woven by Bill himself and peddled to a fawning media. In this telling, Lerach’s father was a broken man who had been sacrificed on the shoals of free enterprise—specifically the stock market crash of 1929. Typical of the news coverage, repeated time and again, is this 1999 excerpt in the San Francisco Chronicle:

  SON OF THE GREAT CRASH, 1946

  William Shannon Lerach—the attorney despised most by corporate America—was born a victim of the stock market.

  In September 1929, after receiving a substantial inheritance, Lerach’s father, Richard, went to work as a stockbroker. He invested everything he owned in the market. The next month, the market crashed, and the elder Lerach was ruined.

  In 1933 and 1934, President Roosevelt signed landmark securities legislation to prevent the kind of speculation, manipulation and outright fraud that triggered the crash and caused millions of Americans to lose their savings and jobs.

  The legislation came too late for Richard Lerach, who was relegated to selling metal parts for the rest of his days. But for his youngest son, William, it would provide the means for a career of wealth and notoriety.

  Bill Lerach could be dramatic in his telling of this stark parable, often at his father’s expense. He would never over
come a deep antipathy for “corporate America” after watching his father work “for almost nothing,” the Chronicle said in the same article. “They treated him like they treat pencils,” Lerach told the San Francisco reporters, “shaving him down until there was nothing left but a nub.”

  Bill related this account so often, he believed it himself. At times there were subtler versions. “I think what influenced me … was that the financial catastrophe that befell my father defeated him, and resulted in his becoming a little man,” he told the Pitt, his university’s alumni magazine, in 2002. “And I don’t mean that in a demeaning way. My father was a great guy, and he was very good to us, and I loved him very much … but he was a cog in a wheel.”

  This was the narrative that Lerach constructed for the jury of public opinion—and he kept relating it until the day he went to prison. The press never challenged it, which poses an interesting question: is it accurate? The answer seems to be that, although there is some truth in it, the story takes such liberty with the facts that it’s as much myth as reality. The full story is much more nuanced—and more interesting.

  ON MARCH 14, 1946, the day of William Lerach’s birth, Harry Truman held a press conference to explain his unsuccessful attempts at presidential mediation while trying to avert a national steel strike. The strike, when it came, rippled out from Pittsburgh, crimping the rest of the economy, as Truman had feared. Truman’s gambit did not help him in Pennsylvania, a state he would lose to Thomas Dewey in 1948, and it certainly did not help him in the Lerach household. Bill’s father, Richard Emil Lerach, worked for many years as a salesman and in middle management for an outfit called Williams & Co., a Pittsburgh metal-supply operation that purchased steel tubing and other products from the mills and sold them to firms too small to do business directly with behemoths such as U.S. Steel. Richard Lerach was a middleman. He was pro-business by nature and staunchly conservative at a time when that term had nothing to do with social issues such as abortion or gay rights, or even necessarily the Republican Party. But Richard E. Lerach was definitely a Republican. He not only didn’t vote for Harry Truman—he would proudly tell friends that he’d voted against Franklin D. Roosevelt every time FDR ran for president.

  Richard and his wife, Evelyn, possessed a personal conservatism born of experience. They were born and raised in Pittsburgh, first-generation Americans of parents who had come to the United States as infants. They met in the mid-1930s in a Pittsburgh neighborhood called Northside, where both had grown up, and they married in 1938 when he was twenty-nine years old and she was twenty-six. Richard’s father had died when he was ten years old, after which he was raised by his mother and his mother’s sister in a house on Kennedy Avenue. That street traverses a distressed African-American area today, but it was then at the heart of a bustling community whose residents were in the middle of the middle class. Richard and Evelyn had a son, Richard F. Lerach, born in 1940, whom the family called Dick. Six years later came a second boy, named William Shannon, his middle name deriving from his paternal grandmother, Anna Shannon, who came from County Armagh in Ireland. Richard Emil Lerach was uncommonly devoted to his mother. Except for one year at nearby Allegheny College, he never lived farther than one hundred yards from her.

  Bill and his older brother grew up in that Kennedy Avenue house and attended public elementary schools. With the neighborhood boys they played baseball, basketball, football, hockey, and indoor games including pool, cards, and a nearly addictive board game called APBA Baseball. They attended Perry High School a few blocks from their home, where Dick, but not Bill, was a celebrated athlete, starring on the football team and playing tennis and golf as well.

  Growing up, Bill spent the most time with two other Kennedy Avenue kids, Gene Carney and Jim Kerr. Their favorite playground was an abandoned clay tennis court at the end of Kennedy Avenue and surrounded on three sides by woods, where, after school or on weekends—or all summer long—the Kennedy Avenue crew would play sandlot baseball. The field held hazards, including a metal bolt that stuck from a pole near third base. Bill Lerach received his emergency room baptism when he ran into that bolt, puncturing the top of his head and producing, Carney noted later, “the bloodiest mess I’d ever seen.”

  Jim Kerr, Bill’s first cousin (their mothers are sisters), still calls his old playmate “Billy” when he reminisces about their boyhood days—just as Lerach still calls him “Jimmy.” He was a year and half older than Bill, and some of Kerr’s fondest memories involve playing wintertime hockey in the Lerach family basement when the boys were elementary school age. Bill was an undistinguished scholar at Perry High and didn’t play on the school’s varsity athletic teams, although he was sports editor of the high school newspaper and worked on the yearbook. Other than dating girls—his first serious girlfriend was Peggy Hayes, a cheerleader who attended Carnegie Mellon on a music scholarship—the extracurricular activity that most inspired him was acting. In 1963 he landed the coveted male lead in the senior play, Ask Any Girl.

  The girl who starred opposite him was Tricia Sutton, also a cheerleader, who was popular and active in school activities. Sutton liked Lerach then and likes him now. In an e-mail exchange with the authors after Lerach went to prison, she described her long-ago costar as “a great guy” and “BFF,” instant-message-speak for “best friends forever.”* In her memory Bill Lerach was charming; a “fast talker” and “a wheeler dealer” whose busy schedule required that he cut a corner now and then. “One day, however, his ‘slickness’ caught up with him when he placed his own foot firmly in his own mouth,” she recalled, not unfondly.

  The two were students in an Advanced Placement class assigned to read The Fall of the House of Usher by Edgar Allan Poe. “As we were discussing the book in class, our teacher, knowing what a rascal he was and trying to catch him on a point, asked him to relate the exciting end of the tale,” she recalled. “Bill had never read the book, but had seen the movie and figured he could ease through the oral exam. Bill was on a roll of recitation and was getting more and more excited about the gruesome story and when he was just about to tell the climax of the story said, ‘And then Vincent Price …’

  “Everyone, including the teacher, burst out laughing.”

  In truth, Bill Lerach developed an appreciation for reading while at Perry High, especially nonfiction. His intellectual curiosity was unlocked by “Miss Roberts,” the tenth-grade history teacher. Ethel Roberts appeared to her students as an unprepossessing spinster with bunched white hair and long black dresses, but her love of history infected an entire generation of kids on Pittsburgh’s Northside. Later, a scholarship was endowed in her name at West Virginia University, Miss Roberts’s alma mater.

  Dick graduated in 1958, five years earlier than Bill, and enrolled at the University of Pittsburgh, where he eventually attended law school. In later years Bill would talk of a childhood of “used cars and hand-me-down clothes,” but that description owes more to his parents’ conservative attitudes about money—and in particular, to their mother’s idiosyncratic frugality—than to circumstances of actual want. The Lerach boys had after-school and summer jobs, Bill’s being less strenuous than his brother’s. Bill worked in a pool hall, and a funeral home, and one summer in a plant nursery, while his older sibling held down a more lucrative, and physically demanding, job digging and tending graves at Uniondale Cemetery.

  Money was valued but not scarce. When Dick went to see the dean of the law school, he was asked a single question: “Can you pay the tuition?” When the older Lerach son answered affirmatively, he was admitted. As Bill entered his last week of high school, preparing to enroll at Pitt himself, his brother completed his first year of law school. Then their close-knit little family was struck by tragedy.

  RICHARD EMIL LERACH was only twenty years old on the day of the 1929 stock market crash, an event that occurred a full seventeen years before Bill was born. Apparently it’s accurate that his father had taken a job in a stock brokerage, and evidently he did inve
st a small inheritance, as well as some of his mother’s money, in the market. Richard E. Lerach lost his family’s investments, as did many Americans, and became risk averse. There is scant evidence that this was the seminal event in Richard Lerach’s life, however. The man worked, saved, married, and bought a house, grew berries in the backyard, voted Republican, and took up golf. He and his wife raised their sons to believe in the rewards of steady employment, a paycheck, and a pension. Certainly there had been internal tension in the household, which Lerach would allude to later in life, perhaps without realizing it: his own father was very close to his mother—Bill’s grandmother—but staying close to home was not something Bill really respected. “He never got out of the starting blocks,” he told the authors in reference to his father. “His big move to freedom was that he moved fifteen houses away from his mother. Went to visit his mother every single day of his life, I swear to God, on his way home from work. She made him pies and ice tea. He never separated from that, never got a degree of independence.”

  Sitting in the lobby of Pittsburgh’s William Penn Hotel in January 2008, during a nostalgic visit to his hometown prior to his sentencing in a California courtroom, Bill Lerach petted his beloved dog Tommy and reminisced about his father’s instinctive prudence. During his last year in high school, as Sputnik and the ensuing space race suddenly conveyed new status to scientists, Bill’s father had gently nudged him to think about a career in engineering. Engineers made $1,000 a month, the man told his younger son, and could usually find work for big companies that offered nice retirement benefits. Although he said little in response, his father’s notion was a nonstarter to young Bill, who had trouble mastering high school math, let alone the advanced calculus required of engineers. Nor was the teenage boy impressed by his dad’s conventional aspirations for his sons, and his fixation on a profession that offered job security. It seemed, well, so provincial.