The former billing coordinator at Digges, Wharton & Levin has told a federal jury that she changed lawyers' time and billing records to reflect changes made on "pre-bills" by managing partner Edward S. Digges Jr. without his partners' knowledge.
Loretta Poole said that Digges manipulated the pre-bills after his partners reviewed them, and that he continued to do so for years without their knowledge.
Poole, who left her $45,000-a-year job at the firm in late 1989, said Digges routinely increased lawyers' time to inflate charges on bills that were sent to Dresser Industries Inc., his major client, and inflated bills sent to his partners' clients as well.
Poole said the other senior partners, James T. Wharton and David A. Levin, didn't know what Digges was doing.
"He told me they were not to know," she said.
Poole testified yesterday as a witness for Dresser, the defendant in a civil trial in U.S. District Court in Baltimore, where St. Paul Fire and Marine Insurance Co., the plaintiff, is trying to avoid having to pay $3.6 million in negligence judgments levied against Wharton, Levin and their law firm as the result of Digges' massive billing fraud.
Dresser, which won the judgments in an earlier case, has been trying to collect from St. Paul under the law firm's professional liability policy. St. Paul claims the policy is void because Wharton and Levin knew of Digges' fraud when they applied for the coverage.
Poole told the trial jury that Digges gave pre-bills to Wharton and Levin monthly on cases concerning their clients. She said Wharton and Levin reviewed the pre-bills and gave them to her to print final bills that were mailed to their clients.
However, without their knowledge, Poole said, Digges instructed her to give him the pre-bills after his partners had reviewed them. He increased the hours charged for legal work and the final billing amounts without their knowledge, then gave the papers to Poole to produce final bills.
Poole said Wharton and Levin routinely signed cover letters attached to the final bills, but did not detect the changes Digges had made.
Poole said she asked Digges about the markups he made on bills to Dresser Industries and he explained that he had an "arrangement" with Dresser to charge the client a certain amount monthly.
"Dresser paid the bills like clockwork," she said, so she never questioned Digges' billing practice after that.
Richard McMillan, St. Paul's lead counsel, attacked Poole's credibility on cross-examination by suggesting that Digges couldn't have conducted his fraud without her help.
McMillan got the witness to say she had known Dresser was being overcharged, then got her to admit she had known clients of Wharton's and Levin's were being overcharged as well.
Poole flatly denied that Wharton or Levin ever falsified bills.
But she admitted that she lied, in earlier sworn deposition testimony, when she said none of the law firm's partners ever inflated lawyers' billable hours on pre-bills.
"How do we know that you're telling the truth today, when you didn't under oath in the deposition?" McMillan asked.
"You don't," Poole replied.