Vietnam-based lawyer Israel files libel lawsuit, reveals alleged $3M extort try

Attorney Barry J. Israel, one of the former counsels for Junior Larry Hillbroom, has alleged that Hillbroom colluded with the latter’s former trustee to extort $3 million from him and Guam attorney David J. Lujan.

Israel and Lujan used to serve as counsels for Hillbroom in Larry Lee Hillblom’s probate matter in Superior Court. Hillbroom is the “DNA-proven” son of the late business tycoon Hillblom.

Israel, through counsel Theodore W. Frank, filed last week in federal court a cross-claim against Hillbroom and Keith Waibel, the former trustee of Hillbroom.

Israel is suing Waibel for libel and slander for allegedly calling him a criminal. His other causes of actions against Waibel and Hillbroom are indemnification and breach of contract.

Israel asked the U.S. District Court for the NMI to hold Hillbroom and Waibel liable to pay him damages, attorney’s fees, court costs and expenses.

Frank stated in Israel’s cross-claim that Waibel, as trustee of the JLH Trust, mismanaged the assets of the JLH Trust from 2002—when Israel resigned as counsel for Waibel—to 2009.

Frank said the mismanagement include investing in high risk or scam investments, borrowing trust assets for Waibel’s own personal investments, joining personally with the trusts/Hillbroom to invest in various enterprises, overpaying himself, and charging JLH Trust for unjustified expenses.

Over this period, Frank said, JLH Trust lost significant assets and decreased substantially in value.

Frank said that in a desperate attempt to cover up Waibel’s mismanagement of JLH Trust and his breaches of fiduciary to Hillbroom, and to recoup the loss of assets, Waibel and Hillbroom agreed sometime in 2006 to shakedown Israel and Lujan by threatening to sue them in multiple jurisdictions.

Frank said the claims include those that Hillbroom and Waibel are now asserting against Israel and Lujan in a case pending in federal court.

Frank said that, in 2007, Waibel began to execute this shakedown scheme by demanding Israel and Lujan pay back fees they had properly received. Frank said Waibel demanded $3 million from Israel and Lujan.

Hillbroom apparently was aware of and consented to Waibel’s demand to Israel and Lujan to pay back the fees received.

Frank said that Israel and Lujan denied Waibel’s extortive demand for money and substantiated that the payments of fees they received were proper and not paid retroactively, as confirmed by Waibel’s accountant.

Frank said that in a fall 2007 meeting between Waibel and Israel at the Hyatt Hotel, Los Angeles Airport, Waibel escalated his demand by threatening to sue Israel and Lujan throughout the world and generate publicity, embarrassing them in front of family, friends, and business associates if they did not accept the $3-million demand.

Israel and Lujan, refusing to be extorted, reportedly rejected Waibel’s fraudulent demands.

Frank said that Waibel and Hillbroom then filed a lawsuit on behalf of Hillbroom against Israel and Lujan in the U.S. District Court for the Central District of California on Feb. 3, 2009.

He said the lawsuit falsely claimed that Israel and Lujan were paid retroactively under a new fee agreement on distributions already received by the JLH Trust prior to the closing of the estate as part of their scheme to intimidate and embarrass the two lawyers.

Israel and Lujan moved to dismiss the complaint, which the district court granted.

With Israel and Lujan dismissed, Hillbroom voluntarily dismissed Waibel, which Israel believes was in furtherance of Waibel and Hillbroom’s fraudulent scheme.

Hillbroom then refiled the case against Lujan on April 2, 2010, in the U.S. District Court for the NMI.

Frank said that Hillbroom refilled the case against Israel and Waibel on Dec. 15, 2010, in the U.S. District Court for the NMI, again falsely claiming that Israel and Lujan were paid retroactively under a new fee agreement on distributions already received by the JLH Trust.

Waibel did not challenge the complaint against him.

On the libel claim, Frank said that Waibel published statements that Israel is a criminal in correspondences with Jain Vail, Paul Flannery, and Hillbroom, including letters and emails.

Frank said Waibel sent an email to Vail in August 2008, asking for information on “that criminal in Vietnam.”

Frank said Waibel’s statements that Israel is a criminal are false as Israel has never been indicted or convicted of a crime.

Frank said that Waibel also verbally stated that Israel was a criminal. He said Waibel first made these statements in Cebu, Philippines, during a meeting involving an investment in a business started by Paul Flannery in which both Waibel and Hillbroom co-invested while Waibel acted as Hillbroom’s trustee.

The extortion try allegation was first disclosed in 2011 in Lujan’s motion to dismiss Waibel’s lawsuit. In that pleadings, Lujan did not mention the amount that Waibel and Hillbroom allegedly tried to extort from them.

Israel filed the cross-claims and answer to Hillbroom’s lawsuit after the U.S. Court of Appeals for the Ninth Circuit reversed the federal court decision that dismissed the lawsuit filed by Hillbroom against him.

The Ninth Circuit judges ruled that Hillbroom established that Israel deliberately “engaged in significant activities” within the CNMI.

The Ninth Circuit judges said the amended retainer agreement required Israel to represent Hillbroom in CNMI legal proceedings and to protect Hillbroom’s interests in assets located in the Commonwealth.

The judges remanded the case to federal court.

Hillbroom is suing Israel and Lujan for allegedly conspiring to inflate their attorney’s fee when Hillblom’s fortune was still undergoing probate proceedings.