John Moores's former lawyer back in private sector

One of the dubious practices that journalistic scam sleuths focus on is the "revolving door" — lawyers working for the government, learning the ropes, letting bandits off lightly (or completely), then joining a defense law firm for a huge salary. Charles (Chuck) La Bella, former U.S. attorney in San Diego, knows all about the procedure.

On April 5, San Francisco's Barto, Zankel, Bunzel & Miller announced that La Bella is joining the firm as "of counsel”; That's a relationship with a law firm without being an associate or partner. The firm boasted that La Bella's "decade of experience" with government procedures gives him "specialized knowledge of the inner workings of governmental investigations."

Hmmm… Few in San Diego could argue with that. La Bella was a fraud investigator in the San Diego office of the U.S. attorney, eventually getting the top post. Then he left to set up his own law firm and become personal lawyer of John Moores, former Padres owner and principal of JMI Realty, now apparently trying to work another land deal downtown involving the solicitation of taxpayer funds. Previously, Moores and his colleagues pulled off a corporate-welfare coup downtown involving the Padres.

Moores was the longtime chairman of Peregrine Systems, the biggest corporate fraud in San Diego history. When federal investigators were zeroing in on Peregrine, Moores said, "I wonder if Peregrine should bring in Chuck La Bella." Moores had showered gifts on Valerie Stallings, then a councilmember and critical person in Moores's attempt to get a fat subsidy for his ballpark, as well as valuable land in the ballpark district at extremely low prices. Among other gifts, Moores arranged for Stallings to get stock in a hot new company he controlled. The stock soared and Moores tipped her off to sell when it was almost at its peak.

La Bella got Moores off the hook on that one, then La Bella went to work on Peregrine. Several officers, all close to Moores, faced criminal penalties. Moores had dumped $487 million worth of Peregrine stock during the 1999-2001 period when Peregrine was artificially inflating its sales by half a billion dollars. All in all, Moores had dumped $650 million of stock, almost all he controlled, while the company was publicly held. Moores had gotten those shares between 33 cents and 59 cents each.

La Bella quarterbacked a study by the law firm of Latham & Watkins. It concluded that boardmembers shouldn't take the blame for the fraud, despite evidence that Moores essentially controlled the company. Those members wound up paying $55 million, with Moores paying half — chump change. The creditors' committee called the Latham & Watkins report "a whitewash," but judges let the board off easily.

Gene Iredale, the San Diego lawyer defending an officer from criminal charges, said that the government's case against the officers was "based on the Latham & Watkins internal investigation [controlled] by Moores...the Latham & Watkins report was designed to cover for the board of directors." Others involved with Peregrine said the same thing.

A chief executive brought in to clean up Peregrine told the New York Times that the company was "a very complex labyrinth of international subsidiaries. It was a Bermudian entity, organized clearly to optimize tax issues for the company." I have no idea if the government ever followed up on that. The chief executive who said that to the Times would not talk to me. Peregrine was sold to Hewlett-Packard, which also wouldn't answer my questions.

The Securities and Exchange Commission lawyer handling the Peregrine case lauded the Latham & Watkins study — and later went to work for Latham & Watkins.

La Bella then went back to work for the Department of Justice, allegedly chasing fraud. Then just a few days ago, he went back to the private sector again — revolving twice.

It’s unknown as to whether he got a government pension upon leaving a second time.