Top lawyers at two metro Detroit law firms took part in schemes to illegally obtain police reports of auto accidents and solicit the crash victims for legal and medical services, according to recent federal indictments and a plea agreement.
Mathew C. Schwartz of Birmingham, the principal founder and managing partner of Southfield-based law firm Legal Genius, which runs frequent TV ads, pleaded guilty in October to two charges, including conspiracy to defraud the IRS, and is awaiting sentencing in U.S. District Court in Flint.
Glenn P. Franklin III of Harrison Township and Brent F. Sitto of Bloomfield Township, founding members and principals of Southfield-based Auto Accident Attorneys, whose website is Paid4Pain.com, were indicted last week in U.S. District Court in Flint on wire fraud charges. Both men entered not guilty pleas Monday and were released on $10,000 bonds.
The operator of a third Southfield-based law firm was described in last week’s indictment as being involved in the scheme, although he or she isn’t a defendant in the case and was not named. That person and their personal injury law firm are identified only as “Individual A” and “Entity A.”
Franklin and Sitto were among six defendants in the indictments handed down Dec. 16. The indictments make repeated references to Schwartz, although he isn’t among the defendants in the newest case.
The indictment claims that between July 2014 and April 2018, Franklin, Sitto, Individual A and others paid money to Schwartz and two businessmen for them to share stolen police reports about Detroit car accidents with a pair of Florida men. The Floridians then worked as phone solicitors for businesses that contacted Michigan accident victims to steer them to specific personal injury lawyers, chiropractors and MRI centers.
The police reports were illegally obtained before they were publicly available, courtesy of Detroit Police Department officers Karen Miller and Carol Almeranti, who took plea deals last year with federal prosecutors for their roles.
More:Aggressive solicitation comes after auto accidents in Detroit
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The unnamed Individual A and three others paid about $2,500 per week in checks to Schwartz for him to gain access to the police reports, according to the indictment. In addition, they paid Schwartz about $5,000 in cash every other week, which Schwartz then gave to the Detroit police officers and a metro Detroit businessman named Jayson Rosett in exchange for the trio emailing him the stolen police reports.
Rosett, a Bloomfield Hills resident who owned physical therapy clinics and a police report collection business, also took a plea deal last year along with the two police officers but has yet to be sentenced.
Insurance companies Allstate and State Farm claimed in civil lawsuits that high-profile attorney Mike Morse once received police reports from Rosett to get client leads, and also had Rosett pay contractors that were building an addition to Morse’s personal residence as payment for him referring legal clients to Rosett’s therapy clinics.
Morse’s lawyer has strongly denied the insurance companies’ allegations and Morse hasn’t been charged with any wrongdoing. Morse also wasn’t a defendant in the civil lawsuits, which have since ended.
Cash stash in grill
The indictment says that after Schwartz received his $5,000 biweekly cash payments, he texted Rosett and directed him to pick up the cash from a hiding spot in Schwartz’s backyard BBQ grill.
The indictment also claims that Franklin and Sitto paid $2,500 a week from their law firm’s checking account to two businessmen for providing access to stolen police reports and managing the solicitation of those accident victims, who could be steered to their law firm Auto Accident Attorneys.
A defense lawyer for Franklin declined comment and Sitto’s lawyer didn’t respond to a phone message.
A woman who answered the phone Tuesday at Auto Accident Attorneys quickly hung up on a reporter seeking comment.
Eric Nemeth of Varnum Attorneys at Law, who is representing one of the nonlawyer defendants in the indictment, businessman Cory Mann, said the government’s investigation has been going on for many years “and this appears to be the tail end of it.”
Nemeth said he didn’t know the identity of the unnamed lawyer in the indictment — Individual A — but “I’m sure it will come out in the coming weeks.” Mann also entered a not guilty plea.
Home visits, IRS troubles
Schwartz’s plea agreement says that between 2014 and 2017, he paid another unnamed person — Individual C — to visit the homes of potential Legal Genius clients and get them signed up. These payments were made in cash to conceal the paper trail to Legal Genius and also hide the payments from the IRS.
Schwartz also admitted to underreporting his income and making false statements to the IRS.
It has been illegal since January 2014 to solicit an accident victim in Michigan for commercial purposes within 30 days of a car crash or to access or buy police reports of crashes for solicitation purposes in that first month.
A lawyer representing Schwartz declined comment Tuesday.
A representative for the Legal Genius law firm didn’t return a message for comment.
The indictments were announced by the Department of Justice’s Tax Division.
ContactJC Reindl at313-222-6631 or [email protected]. Follow him on Twitter @jcreindl. Read more on business and sign up for our business newsletter.
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