Lawyer adds another layer to ongoing Freed & Weiss dispute; sues accounting firm

By Jonathan Bilyk | Oct 2, 2014

A lawyer embroiled in a protracted legal fight with a former law partner over the messy dissolution of their erstwhile firm has set his sights on the firm’s accounting firm that happens to employ his former partner's father.

In his suit, Eric D. Freed claims a Skokie accounting firm tampered with the law firm's books and denied payments rightfully owed to him, costing him millions of dollars in lost income and artificially inflating his tax liability while allowing his former partner to allegedly embezzle money and escape detection for years.

Freed, now of Florida, filed suit Sept. 17 in Chicago's federal court against Neil Freidman CPA, P.C., doing business as Michael Silver & Company.

The complaint lodges eight counts of negligence and fraud against the accounting firm over what Freed asserts was its mismanagement of the finances of the controversy-plagued Freed & Weiss law firm, particularly in the years following the end of the business relationship between Freed and Paul M. Weiss, who now practices with Complex Litigation Group in Highland Park.

The two men had been partners since 2000, with Freed holding a 53-percent ownership stake and Weiss holding the remaining 47-percent.

That relationship stood for 11 years, until the firm broke up amid a struggle for control of the firm and its assets between the two lawyers, which has resulted in a stream of litigation engulfing the lawyers, their family members, financial service professionals and others.

The problems began in 2008, when Weiss became the subject of proceedings with the Illinois Attorney Registration and Disciplinary Commission (ARDC) over allegations he sexually harassed female former employees.

Weiss was never charged with any crimes in connection to the allegations. He has denied the allegations and the ARDC has recommended he be disbarred. The Illinois Supreme Court has the final say in disciplining attorneys. It has not issued any discipline in Weiss' case and he is still authorized to practice.

In 2011, Freed withdrew $1.5 million from the firm’s operating account without Weiss’ knowledge or approval, prompting Weiss to move to dissolve the firm.

Since then, both men have taken legal actions against each other, as well as others, and now Freed is now taking aim at their former accountants.

According to the suit, Silver & Company employs Weiss’ father, Ronald Weiss, who Freed asserts provided accounting services to the Freed & Weiss law firm throughout its existence, including providing statements of assets, liabilities and equity, tax returns and other financial related documents.

Ronald Weiss provided those services to Freed & Weiss first individually, then through Michael Silver & Company, which “merged” the elder Weiss’ accounting practice into its business in 2002, according to Freed’s complaint.

Freed said he relied upon financial statements and other documents from Silver & Company to calculate his tax liability and make other important financial decisions, even after his problems started with Paul Weiss.

However, during discovery for other litigation stemming from the law firm’s dissolution in March 2014, Freed said he discovered numerous instances in which Silver & Company “was manipulating the firm’s finances” for years.

Among other allegations, Freed contends the accountants manipulated financial documents to forestall to date the repayment of millions of dollars of “loans” Freed asserts he made to the firm, as well as the associated interest, and to put off the “purchase … of Freed’s distributional interest” in the firm, which Freed had demanded in a 2012 letter notifying Weiss of his intent to withdraw from the firm.

While Paul Weiss has asserted Freed expressed his intent to withdraw prior to August 2012, Freed said that was not true, and alleged the accounting firm manipulated records to back Weiss’ claim.

Freed further claims the accountants “failed to advise Freed” and “took steps to actively conceal … improper distributions” Paul Weiss took from the law firm’s accounts both before and after the law firm’s dissolution.

Freed contends the manipulations improperly inflated the income he reported to state and federal governments, costing him millions of dollars in tax overpayments, as well as millions more stemming from the alleged improper withholding of his financial stake in the firm and the unrepaid loans and associated interest.

Freed is seeking an unspecified amount in damages “to be determined at trial.”

He is being represented in the action by attorneys David B. Goodman, Thadford A. Felton and Courtney A. Adair of the firm of Greensfelder, Hemker & Gale P.C. in Chicago.

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