Ford Motor Co. has uncovered what it alleges is a massive $100 million fraud scheme perpetrated by California lemon law attorneys who billed for “ghost hours” including one lawyer who claimed to work 57.5 hours in a single day.
Key Takeaways
- Ford has filed a federal RICO lawsuit against several California law firms, claiming they extracted over $100 million through fraudulent billing practices in lemon law cases
- The lawsuit names Knight Law Group, Altman Law Group, Wirtz Law APC, and specific attorneys as defendants in an alleged coordinated enterprise to defraud automakers
- Attorneys allegedly billed for impossible workdays, including one lawyer who claimed 57.5 billable hours in a single day
- Ford has been cooperating with a federal grand jury investigation since 2021, suggesting potential criminal charges may follow
- The case highlights potential abuses in California’s consumer protection laws that could lead to legislative reform
Ford Uncovers Massive Billing Fraud Scheme
In a major legal counteroffensive, Ford Motor Company has filed a federal lawsuit against several prominent California lemon law attorneys and their firms, alleging a sophisticated scheme that defrauded the automaker of more than $100 million through falsified billing records. Filed in Los Angeles federal court, the complaint accuses the defendants of violating the Racketeering Influenced and Corrupt Organizations (RICO) Act by systematically submitting fraudulent fee applications across thousands of consumer warranty cases. The lawsuit represents a rare and aggressive stance by a major corporation against attorneys who specialize in representing consumers under California’s Song-Beverly Consumer Warranty Act.
“Ford’s civil RICO against a number of lawyers and law firms is a result of a comprehensive investigation that uncovered what’s alleged to be a massive scheme to submit phantom invoices filled with ‘ghost hours’ for work that was never performed to deceive California judges, dupe their own clients and to defraud auto manufacturers. In Ford’s case, these fraudulent and inflated billings are alleged to total at least $100 million dollars over five years.” said Doug Lampe.
Named Defendants and Impossible Work Hours
The lawsuit identifies several prominent lemon law firms as defendants, including Knight Law Group LLP, Altman Law Group, and Wirtz Law APC. Individual attorneys named include Steve B. Mikhov, Bryan C. Altman, Richard M. Wirtz, Roger Kirnos, and Amy Morse. Ford’s complaint contains detailed allegations of egregious billing practices, including claims that attorneys routinely billed for more than 24 hours in a single day. In one particularly shocking example, Knight Law partner Amy Morse allegedly billed for 57.5 hours of work in a single day—a physical impossibility that Ford cites as clear evidence of fraud.
“When you look at any single legal bill for a single case it might show only one or two hours for a given lawyer on a given day—nothing to draw suspicion. However, when Ford searched across public filings, as alleged in the complaint, the conduct in this case was carried out through a sophisticated and unlawful enterprise of attorneys and law firms that spread their fraudulent and inflated bills across thousands of cases and against many auto makers.” said Edward McNally.
Criminal Investigation Underway
The civil RICO lawsuit appears to be just one component of a broader legal response to the alleged scheme. According to court filings, Ford has been cooperating with federal authorities since 2021 in what may become a parallel criminal investigation. This revelation suggests the attorneys involved could potentially face not only civil liability but also criminal charges if the allegations are proven true. The combination of civil and criminal proceedings highlights the severity of the alleged misconduct and the determined response by both Ford and federal authorities to address it.
“Ford reported this conduct to the United States Attorney’s Office and has been cooperating with a grand jury subpoena served on it in the fall of 2021.” said Daniel J. Fetterman.
Exploiting California’s Consumer Protection Laws
At the heart of the case is California’s Song-Beverly Consumer Warranty Act, commonly known as the state’s ‘Lemon Law.’ This consumer protection statute requires automakers to repurchase or replace vehicles with persistent defects and, crucially, mandates that manufacturers pay reasonable attorney fees in successful cases. Ford alleges the defendant law firms exploited this fee-shifting provision by systematically submitting grossly inflated billing records, knowing that automakers would be legally obligated to pay these fraudulent fees when cases settled or resulted in judgments against them.
“The scheme was carried out through a sophisticated criminal enterprise of attorneys and law firms that ingeniously spread their fraudulent billings across thousands of cases against many auto manufacturers so that their fraudulent scheme would go undetected.” complained Ford.
Calls for Legislative Reform
The lawsuit has prompted renewed calls for legislative reform of California’s lemon law to prevent such abuses in the future. Critics argue that the current structure of the law, while well-intentioned to protect consumers, creates perverse incentives for attorneys to inflate fees or extend litigation unnecessarily. Ford is seeking treble damages under the federal RICO Act, attorney fees, and declaratory relief to prevent any further payments to the defendants. The case could potentially reshape how lemon law litigation is conducted in California, the nation’s largest auto market.
“The shocking attorney conduct outlined in today’s filing by Ford underscores the need for the Legislature to consider additional reforms to the lemon law that remove perverse incentives for attorneys,” said Kyla Christoffersen Powell.
