When Corporations Pay–and Pay Again

It’s a tragedy, but over the past years, as middle-class working Americans have been forced to struggle in an upside-down, lopsided and dysfunctional economic system fueled by a culture of corporate greed enabled by an indifferent Congress and White House, there has been an exponential growth in the number of scams offering to ease their pain with sub-prime mortgages, “get rich on the Internet” schemes, “eliminate debt without bankruptcy,” low-cost medical insurance that winds up covering nothing, etc. With the virtual tsunami of asbestos litigation, even the big corporations aren’t safe from such scams.

What L. Tersigni Consulting did may not have necessarily been a scam, but it wasn’t exactly ethical. L. Tersigni Consulting is a Connecticut firm that advises corporate clients facing bankruptcy due to asbestos liability and litigation. When U.S. Bankruptcy Judge Judith Fitzgerald approved payments to L. Tersigni, however, federal prosecutors failed to inform her that the company was under investigation by the Justice Department for overcharging its clients. This in the end is what may have cost the W.R. Grace Corporation several million dollars over and above its legal obligations, according to Judge Fitzgerald. Grace, Owens-Corning and many other companies that have been bankrupted because of asbestos liability have paid L. Tersigni fees amounting to millions of dollars.

The company’s owner, the late Loreto Tersigni, was also a trustee of a $1.4 billion trust fund that was set up to cover claims against Combustion Engineering, a U.S. subsidiary of Swiss-based ABB, Ltd. Corporations facing bankruptcy pay legal fees and bills from financial advisors to official committees that are named in the case documents. L. Tersigni worked for such committees, but was paid by defendant companies. The Justice Department investigation was triggered by a tip from one of Tersigni’s employees, Bradley M. Rapp, that he was padding client’s bills by as much as 15%. Loreto Tersigni passed away on 30 May 2007. The day after Tersigni’s passing, defense counsel for W.R. Grace learned about investigations into the inflated bills. When Fitzgerald asked why neither she nor the asbestos committee was informed about the allegations, she was told that the federal investigators whom Rapp had informed about the billing scam had instructed him not to discuss the case. Meanwhile, Bradley Rapp has started his own consulting firm. Once of his first clients was W.R. Grace, Inc.