Antitrust lawyer admits to scheme to defraud New York law firms

(Reuters) – An antitrust lawyer pleaded guilty on Monday to federal charges that she conspired with her husband to use two bogus vendors to defraud two New York law firms out of $7.8 million.

Keila Ravelo, who prior to her 2014 arrest had been a partner at law firm Willkie Farr & Gallagher, pleaded guilty in federal court in Newark, New Jersey to conspiracy to commit wire fraud and tax evasion, prosecutors said.

The Englewood Cliffs, New Jersey-resident’s husband, Melvin Feliz, pleaded guilty in 2015. Ravelo, 52, is scheduled to be sentenced on March 5, prosecutors said.

Ravelo’s lawyers, Lawrence Lustberg and Steven Sadow, in a joint statement said that in pleading guilty, she accepted responsibility for failing to expose her husband’s fraud on the law firms and MasterCard Inc, which was also defrauded.

“Instead, and under intense emotional pressure to keep silent, she wrongfully covered up his fraud, and by doing so, allowed it to continue,” her lawyers said.

Prosecutors said Ravelo and Feliz set up two bogus vendors that from 2008 to 2014 billed the two New York law firms where she was a partner, Hunton & Williams and later Willkie, for litigation support services that were never performed.

Many of the payments were authorized by Ravelo, who along with Feliz used the money for personal expenses and investments, including $250,000 in payments to a jewelry store, prosecutors said.

Ultimately, the two law firms paid the vendors $7.8 million, prosecutors said. The law firms then in turn billed clients for the litigation support services, according to court papers.

While undertaking an internal investigation following her arrest, Willkie discovered communications in Ravelo’s files with a plaintiffs lawyer, Gary Friedman, who was representing retailers in a class action lawsuit against American Express.

Those communications revealed that Friedman had shared confidential information from the American Express case with Ravelo, who was one of MasterCard’s defense lawyers in a related class action.

U.S. District Judge Nicholas Garaufis in Brooklyn in 2015 said Friedman’s conduct “fatally tainted the settlement process.”

Garaufis as a result rejected a settlement that would have allowed merchants to impose a surcharge on American Express users and allowed Friedman’s law firm and two others to receive $75 million in fees.

MasterCard and Visa had at the time negotiated a $7.25 billion settlement with retailers that accused the card networks of improperly fixing credit and debit card fees. A U.S. appeals court tossed the deal in 2016. The litigation remains pending.

The case is U.S. v. Ravelo, U.S. District Court, District of New Jersey, No. 15-cr-00576.

Reporting by Nate Raymond in Boston; Editing by Steve Orlofsky

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