Dreier, Lawsuit of the Day, Media and Journalism, Politics, Rudy Giuliani

Lawsuit of the Day: A Gallery of Rogues

Judith Regan (left) and Roger Ailes

The lawsuit captioned Dreier LLP v. Judith Regan was filed back in March 2008, months before Ponzi schemer Marc Dreier’s eponymous law firm went bust. But it’s back in the headlines as of today, thanks to some juicy documents unearthed by the New York Times.

The documents in question — affidavits that were supposed to be kept under seal, but inadvertently kept in the public case file (until their recent removal) — implicate a number of famous figures. The boldface names include controversial publisher Judith Regan, Fox News chairman Roger Ailes, former New York City mayor (and presidential candidate) Rudy Giuliani, former New York City police commissioner (and current prison inmate) Bernard Kerik, and, of course, the now-defunct Dreier law firm….

The New York Times reports:

It was an incendiary allegation — and a mystery of great intrigue in the media world: After the publishing powerhouse Judith Regan was fired by HarperCollins in 2006, she claimed that a senior executive at its parent company, News Corporation, had encouraged her to lie to federal investigators two years before.

The investigators had been vetting Bernard B. Kerik, the former New York City police commissioner who had been nominated to become secretary of Homeland Security and who had had an affair with Ms. Regan.

The goal of the News Corporation executive, according to Ms. Regan, was to keep the affair quiet and protect the then-nascent presidential aspirations of former Mayor Rudolph W. Giuliani, Mr. Kerik’s mentor and supporter….

[N]ow, affidavits filed in a separate lawsuit reveal the identity of the previously unnamed executive: Roger E. Ailes, chairman of Fox News.

This revelation will definitely please the hard-core liberals who regard Roger Ailes and Fox News as one point (a big one) along the axis of evil. As the Times piece notes, “[d]epending on the specifics, the conversation could possibly rise to the level of conspiring to lie to federal officials, a federal crime.”

And it seems that the allegations about Ailes might be backed up by evidence:

What is more, the documents say that Ms. Regan taped the telephone call from Mr. Ailes in which Mr. Ailes discusses her relationship with Mr. Kerik.

It is unclear whether the existence of the tape played a role in News Corporation’s decision to move quickly to settle Ms. Regan’s lawsuit, paying her $10.75 million in a confidential settlement reached two months after she filed it in 2007.

Why is this all coming out now? The NYT explains:

The new documents emerged as part of a lawsuit filed in 2008 in which Ms. Regan’s former lawyers in the News Corporation case accused her of firing them on the eve of the settlement to avoid paying them a 25 percent contingency fee. The parties in that case signed an agreement to keep the records confidential, but it does not appear a court order sealing them was ever sent to the clerk at State Supreme Court in Manhattan, and the records were placed in the public case file.

News Corp. executives, including in-house lawyers, must be mightily frustrated right now. They paid good money, an eight-figure sum, to keep this under wraps, but they’re not getting the benefit of their bargain. Thanks to a combination of Regan refusing to pay her legal bills and someone at the court failing to put the documents under seal, it’s all coming into public view.

This is all tied into the process of trying to recover for Dreier’s creditors. As noted by the Times, the lawsuit seeking the contingency fee from Judith Regan is now being led by the bankruptcy trustee handling the Dreier dissolution. Trustees can be dangerous foes for wrongdoers. See, e.g., Irving Picard, the trustee recovering for Madoff victims.

The case is complicated, and there’s lots of other juicy gossip, involving the worlds of politics, media, and law. Read more via the links below.

Affidavits Say Fox News Chief Told Employee to Lie [New York Times]
Regan Seeks Dismissal of Dreier Suit Over Disclosure [Bloomberg News]

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