Free Amended Document (NOT Motion/Complaint) - District Court of Arizona - Arizona

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RICHARD J. MCDANIEL, P.C. ATTORNEY AT LAW 11811 N. TATUM BLVD., SUITE 1051 PHOENIX, ARIZONA 85028 Telephone (602) 953-8721 FAX (602) 953-8731 Richard J. McDaniel #013329 Attorney for Defendants Woodcock IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Case No. CIV 04-78-FJM SHIMKO & PISCITELLI, Plaintiff, v. PAUL and BOBBI WOODCOCK, et. al. Defendants. DEFENDANT WOODCOCKS' AMENDED STATEMENT OF FACTS IN SUPPORT OF MOTION TO DISMISS CLAIMS AND MOTION FOR SUMMARY JUDGMENT

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Defendant Paul and Bobbi Woodcock amend their Statement of
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Facts to incorporate material evidence disclosed only last week by Shimko and to include his deposition testimony, a transcript of which was not ready until last week. 1. In December 2000 some of the individual defendants asked

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Shimko, who they knew from a previous representation, to come to
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Phoenix to review a new comprehensive outpatient rehabilitation facility (CORF) consulting business they were starting.

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(Excerpts from Deposition Tim Shimko, 3/24/08, p. 42-44,
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attached as Ex. A)

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Shimko admitted that he and his partner, Frank Piscitelli,

knew almost nothing about Medicare or other laws and regulations concerning comprehensive outpatient rehab facilities. (Ex. A, Shimko depo., p. 42-44) 3. Shimko & Piscitelli never sent a letter to their clients

explaining that they had little knowledge of business formation, Medicare, and regulatory law. Shimko and Piscitelli did nothing. They did not call their clients after the visit. They never issued an opinion letter, advisory, or any guidance. Shimko did not speak to any of the clients until almost one year later, when they called him. (Ex. A., Shimko depo. p. 17-21, 4244) 4. Nevertheless, Shimko billed the CORF entities almost

$8,000 in fees for the visit. (Shimko invoice for December 2000, attached as Ex. C ) 5. Shimko admitted that he and Piscitelli had almost no

experience representing defendants, particularly multiple defendants, at the time in November 2001, when they undertook the CORF related representations. He testified that 99% of his work was plaintiffs contingency fee cases. depo. p. 9-10, 36-37) 6. Shimko never explained to the Woodcocks or his other (Ex. A., Shimko

clients the dangers and risks involved in his representing multiple clients, including the business entities, officers and employees, and limited and general partners. For example, he

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never explained that he couldn't offer the testimony of one against the others in settlement because this would conflict with his duty to the other defendants. (Ex. A, Shimko depo p. 51-54, 58-61, 81-82; Paul Woodcock Affidavit, 3/28/08, attached as Ex. B, 13, 7) 7. Obviously since Shimko did not inform his clients of the conflict, he never received Paul and Bobbi Woodcock's consent to waive the conflicts involved in representing multiple clients. (Ex. B, T3, 7) 8. Shimko entered into business transactions with his CORE clients. He loaned about $250,000 to the CORP entities. (Ex. A, Shimko depo. p. 11-13, 63-64.) 9. Shimko did not inform Paul Woodcock that he had made the loan until after the fact. Shimko did not prepare a promissory note or disclose details of the transaction to the Woodcocks. Shimko did not advise Woodcock to have independent counsel review the loan transaction. 64; Ex. B 18-10) 10. Shimko never explained to any of his clients how he (Ex. A, Shimko depo. p. 11-13, 63-

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would allocate monies he received from CORF between his legal bills and loan repayment. Ex. B, T10) 11. On August 19, 2002, Shimko entered into another (Ex. A, Shimko depo. p. 11-15, 63-64;

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business transaction, acquiring an ownership interest in a tissue bank business, Aztec Medical Group Partners, LLC, with

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Guenther, Woodcock, Ross, Goldfarb at the same time that he was representing them in the CORF litigations. Shimko agreed to provide legal services to the business in exchange for an interest. (Ex. A, Shimko depo. p. 64-68; Ex. B, ¶11-13; Operating Agreement Aztec Medical and Table of Membership Interests, attached as Ex. E) 12. Shimko did not advise his clients to have outside

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counsel review the business transactions. He did not get their written consent waive conflicts that might be created. (Ex. A, Shimko depo. p. 63-64; Ex. B T8-13) 13. Shimko testified that he advised Ross, Goldfarb,

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Woodcock and Guenther to discontinue participating in seminars promoting the CORF consulting services, but Goldfarb did not follow his advice. (Ex. A, Shimko depo. p. 58-61) 14. Shimko never advised the Woodcocks of the risks and

potential conflict involved in his continuing joint representation of multiple clients with different levels of ongoing involvement and potential culpability. (Ex. A. Shimko depo. p. 58-61; Ex. B, T3-7) 15. Shimko testified that he had dinner with the lead

attorney prosecuting the underlying fraud lawsuits against the CORF entities and individuals. The attorney was offering to drop lawsuits against Brill and Richie, CORF employees and officers, in return for their testimony. p. 81-82) (Ex. A, Shimko depo.

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Shimko testified that he could not make a deal

offering the testimony of Woodcock, Ross, Guenther, or Goldfarb because since he represented them all, they would all sink or swim together. (Ex. A, Shimko depo p. 51-54, 58-61, 81-82) 17. Jeff Finley, an attorney at Beus Gilbert, representing

some of the underlying plaintiffs suing the CORF entities and individual defendants, sent Shimko a letter on March 3, 2003, stating his belief that Shimko was CEO of Aztec Medical and that Shimko & Piscitelli were using Aztec Medical to fraudulently convey monies from the CORF entities to Mexico. (Finley's letter attached as Ex. F) 18. In April 2003, with the CORF entities facing

bankruptcy, Shimko demanded that the Woodcocks and other individual defendants pledge their homes as collateral to pay attorneys fees. Shimko never explained to the individual defendants that doing so might deny them the homestead protection. Shimko did not warn his clients to seek advice of independent counsel. 19. (Ex. A, Shimko depo. p. 84-86; Ex. B, ¶14)

Shimko admitted that he has known since April or May

2003, that his firm's billing statements contain excessive fees for David Welling, who was a law clerk at the time, but had been billed at $350 per hour. (Ex. A, Shimko depo. p. 126-127) 20. Shimko billed 347.1 hours for David Welling @ $350 per

hour for a total of $121,485. (Summary time billed by Welling, attached as Ex. I, based upon S&P billing records at Ex. D)

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Shimko acknowledges Welling should have been billed at the rate of $125 per hour, which would have given a total charge of $43,387.50. Thus, Shimko over billed $78,097.50. (Ex. A,

Shimko depo. p 126-127; Shimko & Piscitelli billing records, attached as Ex. D) 21. Shimko testified at Guenther's trial and at his

deposition that his firm was paid only approximately $135,000 in fees and that his firm is still owed the balance showing on his last bill of April 2003 for $359,000. (Ex. A, Shimko depo. p.

6-7; excerpts from Guenther trial transcript 5/17/05, p. 91, attached as Ex. H ) 22. Shimko's trial and deposition testimony about fees

materially misrepresents the facts. Shimko's own records, which were only disclosed last week, show his firm was paid $603, 816.80 (Checks and wire transfer records received from Shimko, attached as Ex. I, first page of exhibit is summary prepared at direction of defense counsel) 23. Shimko and Welling had a duty under Rule 11 to make

certain their claims, pleadings, and representations to the federal courts were reasonably grounded in fact and adequately investigated. 24. (Rule 11, Fed. R. Civ. P.)

Shimko acknowledged at his deposition that his firm's

bill was never corrected to remove the $78,000 in excess charges for Welling's time. (Ex. A, Shimko Depo. p. 137-138)

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Nevertheless, Shimko and his attorney, David Welling,

have continued to maintain and aver in pleadings, affidavits, and testimony before the federal courts that Shimko's firm is still owed the full $359,000. Shimko and Welling have falsely claimed entitlement to the $78,000 they knew had been overbilled for Welling's time before Judge Sedgwick: "I provided legal services which were accepted and up to a point paid for; however, my firm and I are still owed $354,949 for the services provided." (See excerpts Shimko Affidavit, 11/8/06, T74, attached as Ex. H, affidavit was part of Shimko's Motion for Summary Judgment filed in 2:05-CV-01387-JWS on 11/9/06.) 26. Shimko and Welling falsely claimed entitlement to the

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$78,000 they ]cnew had been overbilled for Welling's time before the Ninth Circuit Court of Appeals: "Plaintiff Shimko and his firm provided $ 359,668 in services to Appellant and his partners for which he and his firm have not been paid." "Appellant and his partners received the benefit of those service and have been unjustly enriched to the amount of $359,668 plus interest." (Appellees' Response Brief, 3/28/06, p. 20 and 22, attached as

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Ex. J)
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And Shimko and his attorney, Welling, have repeatedly

and knowingly continued to assert the claim for $78,000 in excess billings before this Court:
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"The reasonable value of my legal services rendered to each and all of the Defendants is $359,668.00."

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(Shimko Affidavit 5/17/04, submitted to this Court with Shimko's Motion for Summary Judgment on 5/17/04.) 28. As recently as last month, Shimko and his attorney,

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Welling, falsely represented to this Court that they were entitled to the $78,000 in excess billings, which they knew were on the Guenther remand, Shimko and Welling represented: "Plaintiff Shimko and his firm are still owed $359,668 for services provided to Dr. Guenther and his partners." "Dr. Guenther and his partners received the benefit of those services and have been unjustly enriched in the amount of $359,668 plus interest." (Plaintiffs' Post-Trial Memorandum on the Issue on Remand,

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3/3/08, p. 12, 14; Judgment of Court against Guenther) These
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misrepresentations have resulted in fraud and injustice, when,
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for example, this Court relied upon the misrepresentations made
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in Shimko and Welling's Post Trial Memorandum on the Issue on
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Remand of March 3, 2008 to rule that Guenther owed one-fourth of
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the total bill which included the excess charges.
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29.
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Piscitelli billed approximately $314,868.42.

(Ex. D.,

Shimko billing invoices)
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Dated this 18th day of April 2008.
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RICHARD J. MCDANIEL ATTORNEY AT LAW By /s/ Rich McDaniel Richard J. McDaniel 11811 N. Tatum, #1051 Phoenix, AZ 85028 Attorney for Defendants Woodcock

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Original electronically filed and copy sent electronically this 18th day of April 2008 to: David Welling Timothy Shimko & Associates 2010 Huntington Building 925 Euclid Avenue Cleveland, Ohio 44115 Roger Cohen JABURG & WILK 3200 N. Central, 20 th Floor Phoenix, AZ 85012-2440 Attorney for Ross Copy mailed to:

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David and Rhona Goldfarb 11437 N. 53 rd Place Scottsdale, AZ 85254 Pro Per /s/ Rich McDaniel

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