The FBI is investigating Pennsylvania Supreme Court Justice Seamus P. McCaffery over fees his wife received for referring clients to personal-injury law firms, The Inquirer has learned.
The investigation is examining 19 referral fees paid to Lise Rapaport, the justice's wife, who has been his chief aide for most of the last 16 years, according to several people with direct knowledge of the investigation.
In March, The Inquirer reported that Ms. Rapaport received an $821,000 referral fee in 2012 after a Philadelphia law firm successfully settled a multimillion-dollar medical-malpractice case.
Dion G. Rassias, an attorney for the justice and his wife, called any suggestion that there was a federal investigation "complete nonsense." He also said Justice McCaffery has not done "anything at all improper."
"You're indulging rumors without any facts, which is sad," he said.
A federal investigation of Philadelphia's Municipal Court also is underway, according to sources who spoke only on condition that they not be identified. It could not be determined whether the two investigations were related.
Municipal Court, the lower tier in the Philadelphia judicial system, hears drunken-driving cases and minor criminal and civil violations. The federal inquiry into Municipal Court was first reported Sunday by the Legal Intelligencer on its website.
Since 2003, the year Justice McCaffery first ran for the appeals bench, he has reported that his wife has received income from referral fees every year.
Such fees, which are legal in Pennsylvania, are paid to compensate a lawyer for bringing a client to a firm if the litigation is successful. Typically, the referring lawyer gets a third of any fee paid to the firm.
Mr. Rassias, along with principals in the firms that received the referrals from Ms. Rapaport, described the fees as routine and proper. In a March 1 letter to The Inquirer, Mr. Rassias said the justice's wife was sought out by clients because she is a lawyer with an "excellent reputation and magnetic personality."
Mr. Rassias said that former clients of Ms. Rapaport, dating to when she was in private practice, sought her out for legal advice and that she in turn referred them to other lawyers.
Pennsylvania Chief Justice Ronald D. Castille has sharply criticized the referrals, telling The Inquirer in March that he was troubled that a court aide would be collecting fees while "employed in a judicial chamber."
Interviewed recently, Justice Castille said he has urged fellow justices to consider whether Justice McCaffery might have violated the state Ethics Act if he gave his wife permission to make the referrals and earn the fees.
The Ethics Act bars public officials from using their authority "for the private pecuniary benefit" of their families.
"By giving her permission, he's feathering his own nest," Justice Castille said. "It's an obvious conflict."
In another letter to The Inquirer, dated March 14, Mr. Rassias said in part that the rule governing court employees called for Justice McCaffery to be the key decision-maker in determining whether aides such as his wife could practice law while employed by the court.
A former police officer, Justice McCaffery, a Democrat, became a Municipal Court judge in 1994, rising there to become administrative judge, a top position.
He began serving on the state Superior Court in 2004 and on the Supreme Court in 2008. Justice McCaffery is paid $199,606 a year. As his chief administrative judicial assistant, Ms. Rapaport is paid $75,395 a year.
In his personal financial disclosure, which must be filed annually, Justice McCaffery has reported that his wife received payments from settlements or verdicts in matters pursued by eight different law firms.
The most recent disclosure report, filed in May, cited two firms as sources of referral fees. One was SchmidtKramer, based in Harrisburg, which also was a source of referral fees in 2009 and 2011.
State law requires officials to include only the names of those who provide income to the official's household, not amounts or other details.
Justice McCaffery also listed a 2012 payment from the firm of Philadelphia lawyer Leonard Fodera. In this instance, other court records reveal that the firm paid Ms. Rapaport $821,000 last year. That was her share of a multi-million-dollar settlement stemming from a civil lawsuit filed by the family of a Northeast Philadelphia boy left severely impaired after treatment at a Philadelphia hospital.
Mr. Fodera's firms are listed as a source of referral fees for Ms. Rapaport over five years, since 2003, the most of any firm, according to the justice's financial-disclosure reports.
Asked about the investigations, Carrie Adamowski, a spokeswoman for the FBI in Philadelphia, said Monday that under U.S. Justice Department policy, she could not confirm or deny the existence of either.
It is not uncommon for the FBI and the Justice Department to look into a matter, sometimes for lengthy periods, and to conclude there is no wrongdoing and no need to bring charges.
The inquiries come at a time of heightened federal interest in the Philadelphia courts. In January, a federal grand jury indicted nine former and current Traffic Court judges on charges of fixing tickets.
Late last year, a consultant's report commissioned by officials of the Philadelphia courts suggested that Justice McCaffery had fixed a ticket given to his wife. Justice McCaffery has adamantly denied involvement. He was not among those charged by the grand jury, and the grand jury's indictments include no reference to the ticket involving his wife.
Ms. Rapaport holds an undergraduate degree from Harvard University and a law degree from the University of Pennsylvania. Before joining her husband's judicial staff in 1997, she worked for four years as an assistant district attorney and 13 years as a private lawyer specializing in family law.
The Inquirer has reported that Justice McCaffery ruled on a number of cases before the Supreme Court involving firms from which Ms. Rapaport had derived referral fees. He did so without advising lawyers involved in the cases about the fee arrangement.
There is no evidence to suggest that he voted on cases in which his wife had received fees.
Justice McCaffery did, however, sit on other cases in which law firms that had received referrals from his wife were representing other clients before the court.
Five authorities on judicial ethics were consulted by The Inquirer for its March article. Lawrence J. Fox, a Philadelphia lawyer who counsels law firms on ethical issues, agreed with Justice Castille and said Ms. Rapaport should not have been paid for referrals while serving as her husband's judicial aide.
Mr. Fox added, however, that he did not think Justice McCaffery had to disclose the fees to lawyers in cases before him. Two other experts disagreed and called for disclosure: Monroe H. Freedman of Hofstra University Law School and Leslie W. Abramson of the University of Louisville Law School.
Geoffrey C. Hazard Jr., an emeritus professor at the University of Pennsylvania Law School and the Hastings College School of Law in San Francisco, went further. He said Justice McCaffery should not have participated in any case involving a firm that had been a source of referral fees for his wife.
However, Bruce Ledewitz, professor of law at Duquesne University, said he did not think Justice McCaffery was under an obligation to tell litigants about the referral fees.
In three letters to The Inquirer in March and April, Mr. Rassias, of the Beasley Firm, strongly defended Justice McCaffery and Ms. Rapaport. He said the newspaper had engaged in a "slanderous campaign" to pry into "Ms. Rapaport's legitimate and proper legal business relationships with her colleagues."
Mr. Rassias has noted that in 2007, the year Ms. Rapaport made the referral that eventually led to the $821,000 fee, she was on unpaid leave from the court. That year, she was a paid staffer in her husband's Supreme Court campaign, receiving a $29,750 salary and a $12,000 post-victory bonus, campaign records show.