Fulbright Lawyer Pens Letter Offering Source $500K if WSJ Story Is Killed

Updated: The former president of an investment group who claimed in arbitration that the CEO of the company defrauded investors was apparently offered $500,000 if the Wall Street Journal pulled a story about his allegations.

Fulbright & Jaworski lawyer Charles Schmerler, who represents the investment group—called Private Equity Management Group Inc.—wrote the letter (PDF posted by the Wall Street Journal) proposing the $500,000 payment from PEMGroup, the Wall Street Journal (sub. req.) reports. The money would be paid as part of an arbitration settlement with the former president, Nasar Aboubakare.

Schmerler also drafted a letter that Aboubakare could send to the Wall Street Journal saying that his statements were false and he made them partly because stress affected his judgment and mental well-being. The company says Aboubakare was fired for taking $3 million in kickbacks from a vendor and for sexual misconduct; Aboubakare says he returned the money and there was nothing wrong with the affair.

The Wall Street Journal story suggests that company CEO Danny Pang may have fabricated his educational background and work history. It also uncovered allegations that he stole $3 million from a former company and says his wife’s murder was never solved. Pang denies the accusations.

PEMGroup spokesman Mike Sitrick said in a statement e-mailed to the ABA Journal that the Fulbright letter was prepared at the request of Aboubakare’s lawyer. “It is entirely false that [PEMGroup] or [PEMGroup’s] attorney sought to induce Mr. Aboubakare to retract truthful statements made to the WSJ,” the statement says. Sitrick said Aboubakare’s lawyer had urged his client to sign the draft letter “on the basis that statements made to the WSJ in fact were inaccurate and that the case should be settled.”

The offer was part of a global settlement between the parties, according to PEMGroup.

The American Lawyer noted the Wall Street Journal story and the Fulbright & Jaworski tie. Schmerler did not return American Lawyer’s call for comment.

“Move over, Marc Dreier, Bernie Madoff and Sir Allen. There's a new financial villain on the scene, and this one makes ordinary (alleged) fraudsters look like Miss Manners at a tea party,” the American Lawyer writes. “What's more, his web has ensnared a Fulbright & Jaworski partner, who supposedly offered a $500,000 inducement to get a Wall Street Journal source to stop cooperating with reporters.”

Updated at 12 p.m. to include the PEMGroup statement and at 1:30 p.m. to add additional detail.