Prosecutors: Nosal Should Foot O'Melveny's $1 Million Bill

, The Recorder

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Dennis Riordan..photo by Jason Doiy.12-9-2011.056-2011
Dennis Riordan..photo by Jason Doiy.12-9-2011.056-2011

SAN FRANCISCO — Federal prosecutors say David Nosal, the former executive recruiter convicted of computer crimes and stealing trade secrets, should have to cover his ex-employer's legal bills­­—a request that has stirred fierce opposition from Nosal's defense team.

In an unusual restitution motion, the government is seeking nearly $1 million in attorney fees billed to Korn/Ferry International by O'Melveny & Myers. Included in the calculation are $198 for 12 minutes spent by one O'Melveny partner to review amicus briefs in the appeal of Nosal's case to the Ninth Circuit and $99 for a six-minute review of oral arguments, according to court filings.

Federal prosecutors argue the legal expenditure to investigate Nosal's activity, aid prosecutors and monitor the criminal case qualifies for restitution under the Mandatory Victim Restitution Act. They are seeking $948,703 in legal fees, on top of other expenses for a total restitution of $1,392,498.

But Nosal lawyer Dennis Riordan of Riordan & Horgan argued this week in a competing memorandum that the restitution law was meant to protect individuals rather than corporations. He pointed out that the provision, which was initially enacted as part of the Violence Against Women Act, holds that defendants must reimburse victims for "lost income and necessary child care," among other expenses.

"Congress passed the MVRA to make victims whole, and it passed the particular provision at issue here to protect women who were victims of violent sex offenses," Riordan wrote. "It did not intend to give corporations a blank check to hire wealthy law firms to churn billable hours."

Assistant U.S. Attorney Matthew Parrella, one of Nosal's lead prosecutors, and Riordan did not respond to requests for comment.

Riordan urged U.S. District Judge Edward Chen not to order restitution, insisting that Korn/Ferry may try to recover what it lost in a pending civil case against Nosal. Besides, the U.S. Court of Appeals for the Ninth Circuit has set a high bar for victims seeking to win attorney fees in restitution, Riordan wrote. The veteran defense lawyer also chided prosecutors for asking Nosal to cover fees for monitoring the government's unsuccessful interlocutory appeal.

"These attorneys' fees are plainly not covered by the MVRA," Riordan wrote. "They were not a direct result of the offense. They were not a foreseeable result of the offense."

Nosal, who tapped into Korn/Ferry's database after he left to start his own recruiting firm, was convicted on charges of conspiracy, stealing trade secrets and violating the Computer Fraud and Abuse Act in April. Prosecutors have asked Chen to sentence Nosal to 27 months in prison.

In addition to the Ninth Circuit appeal, the government seeks restitution for the time O'Melveny lawyers billed discussing the case with colleagues, drafting letters to an arbitrator, filing and indexing documents and reviewing the docket, Riordan wrote. He slammed the firm for doubling up lawyers on many tasks.

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