Ford Motor Company has taken legal action against several law firms and attorneys in Southern California, accusing them of a major fraud scheme. The company claims these lawyers have collected at least $100 million in "phantom legal fees" by exploiting California’s Lemon Law, which is meant to protect consumers dealing with defective vehicles.
In a lawsuit filed in Los Angeles federal court, Ford alleges that the attorneys violated the Racketeer Influenced and Corrupt Organizations (RICO) Act. The automaker describes the invoices it received as a "magical mystery tour of fictitious billings." Ford asserts that the lawyers took advantage of a law designed to help consumers by inflating their billable hours and creating false records of their work.
The complaint identifies Steve B. Mikhov as the alleged leader of this scheme. He is associated with Knight Law Group, a firm based in Los Angeles. Ford claims that Mikhov and his colleagues orchestrated the fraudulent activities over several years.
Under California’s Lemon Law, automakers like Ford are required to cover legal fees and court costs for consumers with faulty vehicles. Ford argues that this requirement has led some lawyers to manipulate the system by claiming more hours than they worked or even billing for work that could not have occurred.
One alarming example cited in the lawsuit involves attorney Amy Morse from Knight Law Group, who reportedly billed more than 20 hours in a single day on numerous occasions, including an impossible 57.5-hour workday in November 2016.
Ford is represented by the New York-based law firm Kasowitz Benson Torres LLP. They have conducted an investigation that revealed payments made for legal work that could not have taken place, suggesting a widespread pattern of deceit. Former federal prosecutor Edward McNally, who is working with Ford, explained that while individual bills might seem reasonable, a broader look reveals a sophisticated and unlawful operation spanning thousands of cases.
The lawsuit names several other defendants, including attorneys from Altman Law Group and Wirtz Law APC. Ford has reported this alleged fraud to the United States Attorney’s Office and is cooperating with a grand jury investigation that began in 2021.
In response, Knight Law Group has denied the allegations, stating that Ford’s lawsuit is an attempt to silence those who seek justice for consumers. They argue that the lawsuit misrepresents the facts and does not claim any harm to Knight Law’s clients.
As the case unfolds, it raises questions about the integrity of legal practices surrounding California’s Lemon Law. Advocates for reform, like Kyla Christoffersen Powell from the Civil Justice Association of California, suggest that this situation highlights the need for legislative changes to prevent such abuses in the future. Ford is seeking damages to recover what it claims to have lost due to these alleged fraudulent activities, along with compensation for the extensive investigation costs and reputational harm.