Law Firms

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A lawsuit filed Thursday claims that Akin Gump Strauss Hauer & Feld and its lawyers took advantage of a corporate CEO who was suffering from substance abuse and mental health problems.

The suit, filed in state court in New York, says Akin Gump took over finances and bookkeeping for Future Media Architects, a family-owned company that acquires and sells internet domain names. Akin Gump also directed and negotiated the sale of the domain names, often without input from its then-CEO and half owner, Thunayan Al-Ghanim, the suit says.

Akin Gump urged and facilitated the rapid sale of the domain names, often without getting competitive bids and for amounts far less than they were worth, the suit says. The aim, according to the suit was “to provide liquidity—Akin Gump’s primary concern was getting paid.”

“But eventually,” the suit alleges, “Akin Gump—aware that Thunayan was in no condition to monitor either FMA’s or Akin Gump’s activities—took advantage of the opportunity to loot FMA’s assets for personal profit.”

According to allegations in the suit, a then-senior counsel with Akin Gump’s New York office created joint bank accounts with Al-Ghanim and Future Media Architects and entered into a consulting agreement that installed herself as interim CFO of the company.

The suit identifies the senior counsel as Heidi Liss.

Liss allegedly used the company’s money for personal expenses, including credit card charges for Broadway tickets, department stores and an online retailer. She is also accused of receiving money from Future Media Architects through jointly owned accounts and a company that she controlled. Corporate money was also used to fund a travel spree to the Cayman Islands by Liss, during which little work was done for the company, the suit says.

The senior counsel’s daughter obtained a job as Al-Ghanim’s executive assistant at an annual salary of $120,000, according to the suit. The employment ended after nearly five months.

Liss tells the ABA Journal she was “blindsided” by the allegations in the lawsuit.

“I worked successfully for Akin Gump for over 18 years with senior partners and leadership on sensitive matters for high-value clients as part of the private client group,” Liss said in an emailed statement.

“As a member of a team of Akin lawyers, I worked on a day-to-day basis with the client, including taking approved business trips with the client and entertaining the client while he was in New York, but always with the knowledge and approval of the firm, including the partners with whom I worked.

“The allegations made in the complaint are not an accurate characterization of the work I performed for this client under the supervision of the team.”

The suit also takes aim at Akin Gump for alleged conflicts of interest and for allegedly enabling Liss to access client money.

The suit says Akin Gump represented both Future Media Architects and Al-Ghanim, and when their interests were at odds, Akin Gump frequently sided with Al-Ghanim. The CEO’s salary and compensation were “exorbitant,” and he received a $3 million loan from the company to buy a Cayman Islands condominium, the suit claims.

Akin Gump also used money from Future Media Architects to pay legal bills for work substantially benefiting Al-Ghanim, the suit says.

In addition, the suit alleges, Akin Gump undermined the interest of the other half shareholder in Future Media Architects, who was Al-Ghanim’s sister. The company never paid dividends, which would have benefited the sister, and never repaid the $450,000-plus she loaned it, the suit says. Akin Gump even billed the company for work on strategies to remove the sister from the business, according to the suit.

Even as Akin Gump conducted an internal investigation that uncovered wrongdoing, it submitted bills for legal fees incurred by Al-Ghanim, the suit says.

According to the suit, Akin Gump fired Liss after concluding that she had misappropriated funds belonging to Future Media Architects and Al-Ghanim, failed to place the client funds in a trust account, and created conflicts of interest by purporting to act on the company’s behalf in negotiations involving herself, her daughter and her consulting company.

After the investigation, some but not all of the wrongfully taken money was returned, the suit says. The firm also deducted fees billed to the company by Liss and her supervising partner, but hundreds of thousands of dollars in additional money should be refunded, the suit says.

Liss’ supervising partner is no longer with Akin Gump, which concluded that he did not commit any wrongdoing.

Akin Gump did not report Liss to ethics authorities, and it continued to represent Future Media Architects under a new engagement letter, the suit says. Akin Gump terminated its representation of the company in June 2016.

The suit alleges breach of fiduciary duty, malpractice, fraud, unjust enrichment and negligent supervision. The suit also seeks an accounting of funds.

An Akin Gump spokesperson provided a statement to the ABA Journal that called the event “painful for all at the firm who work to uphold our commitment to excellence and integrity.”

The firm said it discovered improper conduct by Liss “in late 2015” in connection with the representation of Future Media Architects.

“The firm immediately conducted an investigation, disclosed the results to FMA, terminated Ms. Liss, made appropriate reimbursements, and asked FMA to consent to the firm’s reporting her to disciplinary authorities,” the statement said. “FMA declined, which prevented the firm under applicable disciplinary rules from reporting the misconduct.

“We have made every effort to resolve this situation. The firm reimbursed FMA and asked the company to inform us of any other injuries which had not been remediated. FMA declined to provide that information, preferring instead to file this lawsuit.”

Adam Richards, a partner at Moses Ziegelman Richards & Notaro, represents Future Media Architects in its lawsuit.