In Chile, the public defense of 3,200 people was in the hands of a bankrupt company

“We’re the biggest private criminal law firm in Chile,” the website of the now defunct firm Defensa Jurídico Penal Sociedad Anónima (Criminal Legal Defense S.A., or DJP) still states. It sounds like a sales pitch, but it was probably true at one point. DJP grew thanks to a public criminal defense model that handed private companies more than 70% of cases in which the Chilean government was responsible for representing criminal defendants. Most of the them had limited incomes.

Of the companies that profited from this new system, DJP won the most contracts when criminal justice reforms were enacted in 2005 in the Metropolitan Region, Chile’s most populated area. But despite millions of dollars in guaranteed income, the company’s finances eventually collapsed. Last January, DJP began the process of liquidating its operations.

The company’s failure has left numerous casualties in its wake and placed a giant question mark over the government’s model of private contracting for public defense. Currently, 508 of 703 government lawyers are privately contracted, and 35% of the Public Defender’s Office budget – the total budget is $82 million in 2017 – is spent on hiring private defense attorneys.

A suspicious contract

In June 2016, the DJP stopped paying salaries to attorneys it had subcontracted to defend low-income clients in Chile. The company claimed that business was bad, and that it was operating at a loss. Three months later, in September 2016, DJP terminated four contracts with the Public Defender’s Office by mutual agreement.

But the relationship wasn’t over: On Sept. 20, the public agency signed another three-year contract for $1.36 million with a new company, Asesorías Jurídicas Integrales SpA (Integral Legal Consultants, or AJI), founded by DJP – the same company that had declared itself insolvent and stopped paying its attorneys three months earlier.

Both companies – DJP and AJI – have the same legal representative, attorney Gonzalo Torre Griggs. And some of the attorneys and istrative staff from the first company were simply transferred to the second.

“It was part of the same holding company, but they promised to pay us and said they had different tax ID numbers. They said this company was clean,” an attorney who worked for both DJP and AJI said. The attorney asked that we not publish his name.

What happened next shouldn’t surprise anyone: Upon completion of the first month of its new contract in October 2016, the company failed to pay attorneys’ salaries. Two weeks later, the Public Defender’s Office urged the lawyers to quit in order to be directly contracted. The rest of the staff was out on the street.

“We had no legal reason to not sign the contract with AJI,” said Juan Pablo Montes, legal adviser at the North Metropolitan Public Defender’s Office. He said that although the two companies were separate, officials looked for legal arguments to avoid g the new agreement – which had been awarded in May of that year – but they couldn’t find any. The Comptroller General’s Office had already approved the bid, he said.

When the crisis exploded in mid-2016, DJP had more than 40 attorneys working for the Public Defender’s Office. Another eight defense attorneys were added in October following the new contract with AJI.

“We don’t know with certainty what the situation of workers is who haven’t been paid for months, some of them up to a year, because they weren’t on the payroll for attorneys or assistants that were connected to us through the contracts,” the head of legal affairs at the Public Defender’s Office, Álvaro Paredes, said.

The Centro de Investigación Periodística (Center for Investigative Journalism, or CIPER) discovered testimony from DJP attorneys who worked for public defense stating that at least a year before the crisis was publicly known, the company was aware of its lack of liquidity problem. It began to make only partial salary payments, and it stopped paying social security.

Despite the Public Defender’s Office being required to certify that the company complied with labor regulations before paying it, the office discovered no solvency issues at DJP. Following a complaint, the Prosecutor’s Office for Complex Crimes is now investigating if in recent months DJP forged employee signatures on documents ing compliance with labor requirements.

The crises in these companies placed at risk the defense of 3,523 criminal cases involving Chilean citizens, most of them with little income. The only reason the public defense system wasn’t thrown into chaos by these developments is because attorneys continued working their cases despite not being paid.

But serious problems existed. Registries of sanctions kept by the Public Defender’s Office show that in 2016, the number of fines against DJP increased, mainly due to noncompliance with visits to detainees, which are supposed to happen at least every 15 days.

Last year, DJP was sanctioned 20 times for various offenses, unlike the previous five years when its file was clean.

DJP’s rise and fall

Defensa Jurídico Penal was founded in October 2004 by lawyers Kleber Monlezun Cunliffe and Gonzalo Torre Griggs, and the Miguel de Cervantes University. The goal was to participate in public bids recently offered by the Chilean Public Defender’s Office in anticipation of criminal justice reforms in the city of Santiago, to be enacted the following year.

The gamble paid off. In the first public contract offering in 2005, DJP was awarded 48% of cases for the Metropolitan Region. The company began to position itself as an important legal defense firm. The firm was expected to handle more than 60,000 legal cases.

At the time, public attention was focused on suspected political influence in the contracting process, due to the connections of one of DJP’s founding institutions, Miguel de Cervantes University.

The university’s former president and now rector is former lawmaker Gutenberg Martínez, from the Partido Demócrata Cristiano (Christian Democratic Party), who is married to Soledad Alvear, the former justice minister who ushered in criminal justice procedural reforms and signed the law that created the Public Defender’s Office. That law was based on the privatization of services. The university’s representative was Francisco Cumplido, also a former justice minister from the Partido Demócrata Cristiano, a party that included many of the university’s directors among its ranks.

Last September, Martínez told CIPER that due to the controversy, the university exited DJP in 2007. But the ties didn’t entirely disappear. Until its close at the end of 2016, the law firm’s main office was located in a Miguel de Cervantes University building.

One of the owners of this building is a company formed by Torre Grigs and Mercedes Aubá Asvisio, who are part of Miguel de Cervantes University Corporation, with Torre serving on the university’s council of directors and Aubá serving as its secretary-general.

In 2009, DJP – represented by Gonzalo Torre – created another company that provided services to the state: Mediación Integral SpA. Transparency registries indicate that since its founding in October 2015, the new company has received $1.7 million in payments from the Undersecretary for Justice.

In 2015, Mediación Integral SpA terminated its government contracts and changed its name to Asesorías Jurídicas Integrales SpA (AJI).

This is the firm the Public Defender’s Office contracted for $1.36 million in September 2016. At the time of the new contract’s g, the company’s shareholders were Gonzalo Torre Griggs, Mercedes Aubá Asvisio and Marco Antonio Lillo de la Cruz.

These three executives are partners in another company, Defensa Judicial de Personas S.A., which also was awarded contracts by the Public Defender’s Office. From 2007 to 2014, both companies – Defensa Jurídico Penal and Defensa Judicial de Personas – received at least $27 million in contracts with the office.

Last September, Torre Griggs told CIPER that DJP’s bankruptcy was due to its income being less than its expenditures.

In a request for voluntary liquidation filed on Jan. 22 at the 28th Civil Circuit Court in Santiago, the company claimed that its contracts with the Public Defender’s Office weren’t profitable.

Gonzalo Torre said that since 2005 the company has represented more than 300,000 people. A Finance Ministry report shows that between 2003 and early 2008, the Public Defender’s Office paid the company an average of $67,000 for each litigated case.

“Instead of improving, prices were gradually dropping as demands from providers increased, which meant that the costs were greater than the income,” the legal request for liquidation states.

That explanation seems strange for some of those who work in the system. Although one private defense attorney in northern Chile said he had recently been paid late, he knows of no other providers that have had serious financial problems.

In addition, DJP continued participating in one after another of the public bids. According to Álvaro Paredes, the head of legal affairs at the Public Defender’s Office, at one point an attempt was made to access providers’ profit information in each contract, but the Comptroller General’s Office blocked the effort. That prevented the Public Defender’s Office from determining profit margins for each contract.

In court, DJP acknowledged having a $615,000 debt, mostly to its employees. That amount is likely greater, because in one successful employee lawsuit the company claimed to owe the employee only $370, but a court ordered the company to pay her $26,000.

Another detail that raises suspicion is whom DJP says it owes. Most of the debt, the company claims, is owed to a former company coordinator and lawyer, José Rojas Silva, in the amount of $78,000. Rojas is Gonzalo Torre Griggs’ partner in several companies and works at the firm Torre y Cía.

ed by CIPER, Rojas said that all of the companies he founded with Torre are inactive and he only serves as a lawyer for the parent company.

Sounding the alarm

According to Paredes, the first warning that something was wrong with DJP came in May 2016 from the head of Southern Metropolitan Zone Studies, Jorge Moraga.

Moraga stated that he was worried about a possible drop in the quality of coverage. He said he learned about DJP’s situation during a meeting with the regional team, and from that moment on, efforts focused on preventing the situation from affecting services provided to clients.

A solution, according to Paredes, Moraga and Montes – all Public Defender’s Office officials – was implemented thanks to DJP attorneys who continued to represent their clients despite the company not paying salaries.

A total of 44 DJP lawyers were directly rehired by the Public Defender’s Office in August 2016. The bankrupt firm still owed many of them months of back pay, as well as severance and mandatory social security payments. Labor judges in Santiago itted 38 lawsuits against DJP, several of which included more than one complainant.

The Public Defender’s Office asked the lawyers who were rehired not to include it in lawsuits to recover unpaid money. Attorneys and istrative employees who weren’t rehired did sue the office.

In one of the labor trials, a private expert confirmed that DJP had forged the signature of an employee in a severance document sent to the Public Defender’s Office to demonstrate that salary and social security payments were current, a requirement for the company to receive money from its contract with the government.

Two attorneys filed a criminal complaint and the Prosecutor’s Office currently is investigating the company for alleged “forgery or malicious use of a private document.”

The crisis within

In the mixed system of Chile’s Public Defender’s Office, law firms awarded public contracts should treat clients as if they were of the same public institution. That’s why in the dark entryway at the Carmen 8 building – adjacent to Alameda Avenue, the backbone of Santiago – the only thing left as of a few weeks ago was a sign indicating that the Public Defender’s Office was located on the fourth floor. In reality, that office belonged to DJP.

Carmen 8 is a historic building in Chilean politics, and as with the origins of DJP, it is linked to the Christian Democrats (DC). The party’s headquarters were located between the building’s sixth and eighth floors during the dictatorship of Augusto Pinochet.

One of the biggest political scandals of that period was known as “Carmengate.” In 1988, during primaries to elect the first president following the country’s return to democracy, the DC’s winner was Patricio Aylwin. But his rival, Gabriel Valdés, alleged the vote was rigged at the party’s Carmen building headquarters. That event left a cloud over Chile’s political transition.

For the DJP, the history of Carmen 8 ended on Nov. 30, 2016. On that day, the office was simply “shuttered,” according to a labor lawsuit brought by istrative assistant Claudia Ramírez. Ramírez said she arrived to work that day and was unable gain access because the company hadn’t paid its rent. She was told she had been fired.

In another labor lawsuit, two attorneys recalled that already in September the situation was critical. On Sept. 7, electricity and water services were shut off due to lack of payment.

“We were working without the minimum conditions necessary to carry out our functions,” the attorneys said.

For non-professional-level employees, the situation was even more complicated than for the lawyers, because they were left without a job when the company stopped operating. Those employees received no offers for direct hiring from the Public Defender’s Office.

Nadia Toro is a legal expert and was pregnant when DJP closed. Not only did the company fail to pay her November salary and social security contributions dating back to January 2016, but it also violated her maternity rights. She still hasn’t found a new job.

“They don’t care about their employees,” she said, referring to company owners. “They won’t even show their faces.”

Some of DJP’s former attorneys say that in mid-2015, they started receiving only partial salary payments, and even those were late. For others, the problems started in 2016.

“Some people had to borrow money just to get to work. Others worked for free for months, and others took sick leave,” a former DJP lawyer said, explaining why some of them stopped visiting their clients in jail.

“I saw lawyers crying because they had no way to make it to the end of the month,” that attorney said.

Lawyer Jacqueline Stubing, who worked at the company for seven years, began working directly for the Public Defender’s Office in August 2016. Weeks later, she quit while raising hell during a court hearing.

Stubing said that she was willing to continue at DJP even though she wasn’t being paid because the company had always come through, and she was ionate about public defense litigation.

“But it was difficult to work under those circumstances. It was a tragedy in the end, my colleagues had no means to get anywhere,” she said.

Stubing said the attorneys had no way of thoroughly evaluating the Public Defender’s Office’s proposal for direct hiring. She said that because of the pressure they were under, attorneys were asked to accept the of direct hiring agreements without understanding what they entailed.

“We had to leave a deposit of 750,000 Chilean pesos [$1,150] at the Public Defender’s Office after not having received a salary for two months. [We also had to] rent an office and hire an assistant,” she said.

The final straw happened only a few weeks after she was installed in her new office, when she was advised that an inspector from the Public Defender’s Office would review the facility. She knew that some of her colleagues had already been forced to relocate their offices following inspections, and she was furious that inspectors had been stricter with them than they had been with DJP. The private firm hadn’t been tightly regulated at all.

Stubing refused to allow the inspection. When inspectors arrived, she wasn’t there to let them in. That cost her a fine.

She didn’t immediately quit, however. She said it’s difficult to stop defending people from one day to the next, because each client is someone with a family. She was working on a particularly complicated case in which her client was accused of aggravated robbery and had changed his testimony halfway through the investigation. His alibi witnesses also fell through.

Her client’s trial had an added element of anxiety, as the courtroom was filled with foreign judges who had come to observe Chile’s criminal justice reforms in action. Stubing recalls asking the judge to delay the hearing due to the witnesses being unavailable and because she would soon be leaving the Public Defender’s Office and would not be able to represent the defendant in future stages of the trial. But the judge wouldn’t allow it.

“Your honor, I quit the Public Defender’s Office,” she responded, prompting whispers behind her from observers who weren’t sure what was happening. Some called for her to be onished. The judge apologized to the foreign visitors, assuring them that nothing like this had happened since the reforms had been enacted.

That’s how Jacqueline Stubing’s career as a public defense attorney ended: just another number in the balance that DJP’s bankruptcy left Chile.

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