New attorney takes on booze defense

By Jeff German

Wednesday, Oct. 21, 2009 | 2 a.m.

Las Vegas attorneys David Chesnoff and Richard Schonfeld are the architects of an unusual defense being mounted by high roller Terrance Watanabe in a $14.7 million Strip gambling debt case.

They contend the Nebraska philanthropist can’t be held responsible for not paying back two Harrah’s Entertainment casinos because the resorts kept him constantly intoxicated.

But the lawyers won’t get a chance to test their arguments in court. They have withdrawn from the case without explanation and are being replaced by well-known Los Angeles litigator Pierce O’Donnell — just as their motion to dismiss the criminal charges against Watanabe is set to be argued next month. The hearing is now likely to be delayed.

O’Donnell, a colorful attorney with a long list of big-name clients, is coming off a win in his own legal troubles. Federal campaign finance charges against him were tossed out in Los Angeles in June. The case stemmed from allegations O’Donnell had funneled $26,000 in campaign contributions through his law firm’s employees to the 2004 presidential campaign of John Edwards.

These days O’Donnell is known best for his role as lead trial counsel in litigation to hold the U.S. Army Corps of Engineers accountable in the Hurricane Katrina disaster in New Orleans.

In the past O’Donnell has taken on the wealthy Hollywood film industry, so going after the world’s largest casino company is a natural for him.

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Dr. Dipak Desai’s lawyers say a stroke left him unable to participate in the many legal proceedings he’s facing.

But U.S. Bankruptcy Judge Mike Nakagawa isn’t buying their argument.

On Friday, Nakagawa ordered the physician at the center of last year’s hepatitis C outbreak to submit to a sworn deposition in the bankruptcy case involving his three now-closed clinics.

Nakagawa also ordered Desai to “promptly” turn over to the bankruptcy trustee in the case his financial records dating to July 2007. That includes his 2007 and 2008 tax returns and those of his clinics.

Lawyers suing Desai for monetary damages in District Court on behalf of his former patients are champing at the bit to get those records.

The trustee, Brian Shapiro, expects to schedule the deposition within six weeks.

Desai, however, isn’t likely to be cooperative.

In Bankruptcy Court papers last month, Desai’s lead criminal defense attorney, Richard Wright, said Desai’s cognitive skills are so diminished that he “can’t accurately recall or articulate facts or comprehend legal concepts and proceedings.”

Wright advised Desai to assert his Fifth Amendment right against self-incrimination and not answer questions at previous depositions in the civil litigation. That’s because Desai is the target of a Metro Police investigation over the hepatitis outbreak.

So far, Desai has managed to avoid making any public appearances during the legal proceedings against him. Wright and his partners have taken the Fifth for him.

This time Desai will have to be on hand, but Wright is still expected to assert the privilege on his behalf.

The deposition will be conducted behind closed doors.

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Embattled Pahrump developer Hans Seibt has thrown in the towel in Bankruptcy Court.

Seibt has signed an agreement that prevents him from discharging his debts in his $70 million bankruptcy case.

That means Seibt’s creditors, many of them senior citizens who invested heavily with Seibt, can now file suit against him to recover their losses.

In court papers filed this year, Lenard Schwartzer, the bankruptcy trustee overseeing Seibt’s case, accused Seibt of defrauding his investors through an illegal Ponzi scheme.

Seibt denies the allegations, but Schwartzer’s investigator is continuing to look for evidence of fraud on the developer’s part.

The FBI also is investigating Seibt.