Lawyer selection protested in Southwest Exchange case

What happens when a criminal defendant accused of embezzling $23 million from investors says she cannot afford a defense attorney?

In the case of Nikki Pomeroy, officials appointed Dominic Gentle, one of the most prominent defense attorneys in Nevada and a shareholder at law firm Gordon Silver, to represent her at county expense in a criminal case stemming from the collapse of Henderson-based Southwest Exchange in January 2007.

About 120 investors had entrusted Southwest Exchange with $95 million, but virtually all of the money was gone when the firm closed its office. Pomeroy worked at Southwest Exchange and was indicted on 11 counts of embezzlement and 11 counts of being an unlawful intermediary in tax-free exchanges at the company.

Chief Deputy Attorney General John Kelleher on Friday filed a motion, urging the court to reconsider Gentile's appointment by Drew Christensen, director of the office of appointed counsel.

"The appointment of Mr. Gentile to represent defendant Pomeroy in this matter is improper on all levels," Kelleher said in the motion.

Kelleher said that Pomeroy has too much income to have the county pay her attorney fees, that a salaried public defender should have been selected instead of a private attorney, and that Gentile has a conflict of interest.

Gentile also represents Pomeroy's father, Donald McGhan, former chairman of Southwest Exchange, in a related criminal case. McGhan is accused of being an unlawful intermediary in tax-free exchanges.

Criminal Arraignment Master Kevin Williams on April 16 held a closed session in his chambers over Gentile's appointment to represent Pomeroy. Receiver Larry Bertsch told Williams that Pomeroy was receiving $48,000 a year, almost twice the $25,000 annual figure that usually is the limit of income allowed for defendants getting public defenders, according to the motion.

Williams did not return calls for comment. Gentile declined comment, a spokesman for Gordon Silver said. An attempt to reach Gentile after the motion was filed failed Friday.

Christensen was asked about a potential conflict of interest in having one attorney represent two criminal defendants in related cases.

"That is something Dominic is going to have to work out," Christensen said.

Kelleher said the law requires that Gentile should have obtained a waiver from Pomeroy and said the court records don't contain a waiver.

Christensen said he selected Gentile to defend Pomeroy because the private attorney has extensive background on the civil cases, rather than assigning a deputy public defender who would "start from scratch." Christensen decided it would be more cost-effective to hire Gentile at $100 a hour, the standard fee for appointed attorneys.

Clark County Public Defender Phil Kohn said Pomeroy's case is "very complex." While he praised the skills of his attorneys, he said they have more experience representing murder defendants than defendants in white-collar crime cases.

In the Pomeroy case, the defense attorney deals with allegations involving Internal Revenue Code provisions. Under a section of the federal law, real estate investors may delay taxes on gains from sale of real estate if they have an intermediary handle cash proceeds and use the proceeds to buy another property. The Internal Revenue Service will tax the investor immediately if the investor directly handles the sales proceeds.

Kohn agreed and said it was a better use of taxpayer dollars to hire someone already familiar with the case and the crimes alleged.

Kelleher disagreed, saying the law prohibits appointment of a private attorney unless the judge cites "the reason or reasons for disqualification" of salaried public defenders.

Kohn doubts Gentile's was motivated by the county pay. "A hundred dollars (an hour) is a lot less than he is charging at Gordon and Silver," Kohn said. "I think he is doing it, because of an obligation to a client."

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.