NEW ORLEANS — Even as state and federal authorities suspended his law firm and accused it of massive fraud involving thousands of Louisiana storm victims’ insurance claims, Houston-based trial lawyer Zach Moseley spoke to his beleaguered staff in New Orleans in March and vowed to press on, by operating “in the background.”
Moseley has declined interview requests about the trouble surrounding his law firm, McClenny Moseley and Associates. But in a secret recording of a March 6 staff meeting obtained exclusively by WWL-TV, Moseley addressed harsh rulings by the Louisiana Department of Insurance, the Louisiana Supreme Court and two federal judges that led to the departure of MMA co-founder James McClenny and the suspension or resignation of the firm’s entire stable of Louisiana-licensed attorneys.
Moseley mostly struck a defiant tone in the recording, using an expletive to describe U.S. District Judge James Cain for wanting to freeze MMA’s bank account. Even though Cain and federal Magistrate Judge Michael North had stopped thousands of homeowners’ lawsuits because they were filed by MMA, Moseley touted his plans to partner with other law firms to get the cases moving again, share the legal fees and keep litigating in Louisiana, out of the view of the courts.
“We’re leaning right now towards filing motions to withdraw on every single case that we have filed, but then we’ll just be operating in the background,” Moseley said.
He said he was negotiating with another Texas attorney, Mikal Watts, to take over MMA’s cases, but Watts told WWL-TV the deal never materialized.
“In the month of March, I worked to create a solution that would protect Mr. Moseley’s clients. Unfortunately, no agreement with Mr. Moseley was attainable,” Watts wrote in an email.
Moseley told his staff that Louisiana’s legal establishment had it out for him because he was young, an outsider and using new, technologically advanced methods to sign up clients and file more lawsuits against insurance companies than ever before.
“I’m a Houston guy. I came into New Orleans big and bad. I told everyone to f—k off. I didn’t want any help from any New Orleans attorneys. And then they all turned their backs on me, and they’re trying to get me in trouble. So, that’s what happened here,” he said.
Moseley admitted making some crucial mistakes, such as signing up so many clients that MMA couldn’t keep up with the workload and often failed to respond to clients’ requests to speak with an attorney.
“We’re just going to be much more controlled in our scale and not just, like, be on a rocket ship,” he said. “Yeah, 15,000 claims in less than two years. Kind of insane. Thought we could do it. Louisiana told me to f–k off.”
He acknowledged paying an Arizona marketing firm called Velawcity to “generate the leads, convert the leads into signed contracts” using automated text messages. But he also said he has a plan to get around Louisiana’s attorney conduct rules on soliciting clients, which ban lawyers from using “employees or agents of the lawyer to solicit on the lawyer’s behalf.”
He said former Velawcity executive Phil Vottiero was now MMA’s chief operating officer and told the staff, “Phil is going to build an internal Velawcity at our company so now we don’t have to worry about them coming after us for an improper relationship with a third-party.”
He blamed insurance defense attorney Matt Monson for relying on a loophole to get MMA in trouble for its relationship with Velawcity.
But then he said MMA relied on a loophole to use an Alabama-based roofing company called Apex Roofing and Restoration to sign up more clients.
“I just s—t on people who use loopholes. Apex was a loophole for us. Again, it was my decision to do this. It was my fault. I’ll take full responsibility for that,” he said.
MMA was Apex’s lawyer when the roofing company knocked on doors of homeowners who had sustained roof damage in southeast Louisiana, either from Hurricane Ida in 2021 or several hailstorms last year. Apex had customers assign their insurance benefits to the roofing company to cover repairs. That is prohibited in some states but allowed in Louisiana. However, some insurance carriers have language in their policies expressly forbidding homeowners to assign any of their benefits to third parties.
Court records show Apex employees signed some agreements “on behalf of” their customers to allow MMA to act as the customers’ lawyer. Some of those customers testified in court that they didn’t know they had hired MMA as their lawyer until they learned the law firm had negotiated a settlement and collected the proceeds.
The federal court in New Orleans found at least 850 cases where MMA told insurers it represented Apex’s customers when it did not.
Here’s how Moseley explained the arrangement to his staff in March: “If we tell the insurance company we represent the roofing company, they’re going to tell us to f–k off and they’re not going to ever negotiate with us. But since we have the rights of the homeowner, let’s tell the insurance company we are the homeowner and that’s going to be, you know, they’ll negotiate with us quicker.”
When WWL-TV told Louisiana Insurance Commissioner Jim Donelon what Moseley said, he was flabbergasted.
“That’s the most egregious example of misrepresentation I can imagine,” said Donelon, who has already found MMA committed “fraudulent insurance acts” and fined the firm, as well as Moseley, McClenny and MMA’s former Louisiana managing partner William Huye, a total of $2 million.
Moseley did acknowledge after explaining how the firm portrayed itself to Apex customers’ insurers: “We should’ve never done that. Lesson learned.”
Apex is now suing MMA for malpractice, alleging MMA gave the roofer bad advice to sign agreements on the homeowners’ behalf. Apex hired Peter Butler to replace MMA as its attorney, and Butler said MMA failed to check if each homeowner’s insurance policy allowed assignment of benefits.
Moseley “admitted making mistakes,” Butler said. “And we believe those mistakes extend to the advice MMA gave Apex.”
Moseley’s plans to partner with Watts and operate “in the background” never got off the ground, but they showed how he hoped to defy the Insurance Department’s cease and desist order and the courts’ efforts to stop MMA from handling cases.
“We will still be operating as a litigation firm. It’s just when we submit documents, we won’t be submitting them to PACER,” he said, referring to the federal court’s online filing system. “We’ll be submitting them to Watts and his team will file them. It might even be a case where they give us the right to file with their name on it. We’re filing it; it just won’t be an MMA filing.”
Watts successfully defended himself against a criminal indictment for how his San Antonio-based law firm signed up 30,000 damage claims against BP after the 2010 Gulf oil spill. In that case, Watts proved that his contractors had filed claims with fake Social Security numbers and other red flags without his knowledge, and a jury convicted them and acquitted him and his partners.
Moseley crowed to his staff that Watts knew how to beat the government, had reviewed MMA’s documents and the court record and determined MMA had done “nothing wrong.”
But Watts told WWL-TV, “I made no assessment of MMA’s actions; instead, I focused solely on potential solutions for his clients.”
Court records show MMA negotiated and collected insurance settlements for hundreds of homeowners who never hired the firm. Donelon called the “brazenness” of MMA’s actions “unimaginable.”
“This is fraud on a level that I’ve not seen in the legal profession, and I’ve seen some pretty upsetting things in the decades that I’ve been around,” he said.
Donelon took the failure of Moseley’s efforts to partner with Watts or another law firm as a sign that the government’s sanctions and suspensions are working.
“Certainly, Mr. Watts has learned not to venture into arrangements such as MMA perpetrated, and I hope our action will discourage any others considering it as well,” the commissioner said.
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