LEADING US firm Latham & Watkins is making further investigations after its head of project finance resigned, following his admission that he submitted false information to obtain expenses.
San Francisco-based partner Timothy Flato – who earned almost $700,000 in 1993 – resigned at the start of the year after confirming the findings of an internal audit which showed discrepancies in his 1994 expenses totalling $100,000.
The firm – which has a strong London presence – claims the money came from both the practice and bills to clients. Flato has agreed to make restitution and the firm will reimburse all of the overcharged clients.
Founded in Los Angeles in 1934, Lathams operates a worldwide business practice. Clients include top investment banks, domestic and foreign banks and insurance companies, as well as companies in the aerospace, communications, oil and retail sectors.
Chair of the firm's finance and real estate department, Randy Bassett, says that partners have reacted with “shock and dismay” to these revelations.
An investigation of all expenses registered by Flato since he joined Lathams in 1991 is being carried out.
“It is inconceivable why anyone would do something like this,” says Bassett. “He basically betrayed the trust of his partners and his clients.”
He adds: “We commenced the investigation in late November and confronted him with our preliminary findings on 4 and 5 January.
“He was very contrite and admitted that he had submitted false expense reports. He had no explanation.”
Bassett says the firm asked Flato to resign rather than terminating his partnership in order to avoid calling a full meeting of the practice's 240 partners.
He says although the authorities have been notified about the matter, Lathams is not pursuing charges and it is not yet known whether Flato will face action from the California State Bar.
“As far as we are concerned it is a matter between us and him,” says Bassett. “We have no idea if it will go any further,” Bassett says.