Monday, October 15, 2007

Firm Probed on Asbestos Claim Billing

NEW YORK (Associated Press) - The Justice Department plans to seek a wider investigation into the billing practices of L. Tersigni Consulting PC, a firm that advised asbestos-injury claimants in several big bankruptcy cases.

The U.S. Trustee's Office, an arm of the department, has already asked the courts overseeing the Chapter 11 cases of Congoleum Corp., Federal-Mogul Global Inc., W.R. Grace & Co. and G-I Holdings Inc. to appoint examiners to investigate allegations that the consulting firm overbilled its clients in those proceedings.

In new court papers, the trustee's office said L. Tersigni Consulting could also have overbilled clients in other cases. The office said it would seek similar investigations "in all asbestos cases in Pennsylvania, New Jersey and Delaware, in which LTC was employed as a financial adviser."

Representatives of L. Tersigni Consulting couldn't be reached for comment Tuesday afternoon.

The consulting firm's clients were the official committees representing asbestos claimants in major bankruptcy cases.

Since April 2006, the U.S. Trustee's Office and federal prosecutors have looked into allegations that the firm's sole owner and principal, Loreto Tersigni, submitted bills for services that weren't performed. Tersigni died in May.

"The appointment of an independent fiduciary to investigate these serious allegations of fraud and dishonesty related to the affairs of the debtors is both warranted and necessary," the trustee's office said in court papers. An examiner, it added, could help companies that paid the bills discover whether they have "causes of action" against L. Tersigni Consulting.

The trustee's office is still waiting to hear whether the courts overseeing the bankruptcy cases of Congoleum, Federal-Mogul, W.R. Grace and G-I Holdings will appoint examiners.

However, the judge overseeing W.R. Grace's bankruptcy case has questioned whether she should appoint an examiner.

At a hearing in late September, Judge Judith K. Fitzgerald of the U.S. Bankruptcy Court in Wilmington, Del., pointed out that the federal government had been conducting a probe into L. Tersigni Consulting's billing practices for more than a year. "I don't know why the estates have to be charged with additional money to do an investigation that may already be complete," Fitzgerald said. "There are creditors in these cases who deserve at some point in time to get whatever little money they're going to get out of these cases and to the extent that this work has already been done, they shouldn't be charged with duplicating that work."

The judge also said money could be saved by appointing one examiner to look at the books and records for all of the bankruptcy cases in which the firm is suspected of overbilling.

At the hearing, Fitzgerald also criticized the trustee's office for requesting an examiner only in recent months when it knew for more than a year that there could have been a billing problem involving L. Tersigni Consulting.

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