Litigation Practice Group Lawsuit: Bankruptcy, Clawbacks, Refunds

The Litigation Practice Group lawsuit landscape is really a bankruptcy: the Southern California debt-relief firm collapsed in March 2023 after allegedly taking up to $282 million from tens of thousands of clients, and a court-appointed trustee is now running more than 200 civil lawsuits to claw money back for creditors. A bankruptcy judge ruled in August 2024 that LPG had operated as a “significant criminal enterprise” and possibly a Ponzi scheme.¹ No criminal charges have been filed as of mid-2026. If you paid LPG, your path to any recovery runs through the bankruptcy case in the U.S. Bankruptcy Court for the Central District of California.

What LPG Sold and What Clients Got

LPG marketed itself as a debt-relief and litigation firm that would negotiate with creditors, send demand letters, and file suits to wipe out debts for “pennies on the dollar.” It claimed to operate in 48 states and fed itself through roughly 100 marketing affiliates. Some outreach was reportedly done through ringless voicemails disguised as a “National Financial Hardship Loan Center.”²

Clients signed 18- to 36-month payment plans, with fees drafted automatically from their bank accounts. One former client reported paying $385 a month. The money was supposed to sit in trust and go toward creditors or legal work; consumer advocates said the firm’s core product was really just form “debt validation” letters that did little to protect clients from creditor lawsuits.³

Former clients told reporters that after months of payments, nothing had gone to their actual debts. Credit scores dropped. Creditors sued. Some ended up with liens on their homes, and calls and emails to LPG went unanswered.⁴ When LPG filed for bankruptcy, only about $4,500 remained in its operating account. CEO Daniel Stephen March testified under oath: “No money, nothing was held on behalf of the client.”⁵

Who Ran LPG

On paper the firm was run by Daniel Stephen March, its sole shareholder, CEO, and only licensed attorney. The bankruptcy trustee and the California State Bar allege the real operator was Tony Diab, a twice-disbarred lawyer who used March as a “front man.” Diab was disbarred in Nevada in early 2019 after diverting a client’s $375,000 settlement and forging both an opposing counsel email and a judge’s signature; California disbarred him later that year on the same conduct. He allegedly ran LPG from the inside anyway, signing contracts in March’s name via DocuSign, emailing from admin@lpglaw.com, and telling employees to call him “Admin.” A desk nameplate reportedly read, “I don’t work here.”⁵ March was allegedly paid $600,000 a year to lend his license.²

The California State Bar filed disciplinary charges against March in November 2023 and again in February 2024, alleging he misappropriated between $78 million and $282 million in client funds, failed to keep client fees in a trust account, and employed the disbarred Diab to handle client money. The Bar also flagged a 2021 incident in which March allegedly kept a $1.365 million settlement won for a client, calling it “an act of moral turpitude, dishonesty or corruption.”⁶ March stopped defending himself, was placed on involuntary inactive status on July 1, 2024, and was formally disbarred by the California Supreme Court on March 17, 2025, with $5,000 in sanctions.⁷

How the Money Disappeared

Between November 2019 and March 2023, LPG collected an estimated $282 million from 40,000 to 60,000 clients, with $155 million in revenue at its 2022 peak.³ According to the trustee’s filings and reporting by Forbes and the ABA Journal, the money went out several ways:

Direct transfers from LPG trust accounts into March’s and Diab’s personal accounts.
Selling the same stream of client ACH payments to multiple factoring companies and investors. The trustee has called this a pyramid scheme.⁵
Payments to marketing firms Diab partially owned. Between July and October 2022 alone, Diab allegedly authorized more than $1 million in such payments and used more than $6 million in client revenue to buy new client accounts rather than pay existing obligations.⁸
An attempted transfer of tens of thousands of revenue-generating client accounts to a new entity, Teracel, which carried none of LPG’s obligations to investors or creditors.⁸

The Bankruptcy and the “Criminal Enterprise” Ruling

LPG filed a voluntary Chapter 11 petition on March 20, 2023 (Case No. 8:23-bk-10571, C.D. Cal.). The court removed LPG from managing its own bankruptcy and appointed Richard A. Marshack as Chapter 11 trustee.⁹ On August 27, 2024, Bankruptcy Judge Scott C. Clarkson ruled that LPG had operated as a “significant criminal enterprise” and potentially a Ponzi scheme, a finding that supports the trustee’s ability to claw back money from investors and other recipients of LPG funds.¹ A liquidation plan was confirmed in September 2024 and took effect on September 24, 2024.

How Money Is Being Clawed Back

Trustee Marshack has filed more than 200 adversary proceedings against marketing affiliates, other law firms, factoring companies, banks, and individuals. As of early 2026 the docket listed 268 related cases.¹⁰

A significant early win came on March 27, 2025, when Judge Clarkson granted summary judgment against marketing affiliate JGW Solutions. The court found LPG’s contracts with JGW were illegal “capping agreements” — paying an unlicensed party to solicit legal clients — and void under California law, ordering JGW to return $621,090.91 in fraudulent transfers and $417,329.34 in preferential transfers made in the 90 days before the bankruptcy.¹¹ The court also rejected JGW’s in pari delicto defense, holding that a bankruptcy trustee acts on behalf of creditors, not the wrongdoing debtor.¹²

The trustee has also sued banks including BCB Bancorp, BCB Community Bank, and BankUnited, alleging they processed LPG’s ACH transactions and helped move receivables fraudulently. In October 2025, the court dismissed the trustee’s aiding-and-abetting RICO theory without leave to amend, finding the trustee hadn’t shown the banks had actual knowledge of the fraud; other aiding-and-abetting claims were dismissed with leave to amend, and a Third Amended Complaint was filed by the end of 2025. That litigation is ongoing.¹³¹⁴

On May 21, 2025, a bankruptcy judge approved a cooperation agreement in which Diab admitted wrongdoing and agreed to provide information to the trustee to help recover money. The full terms have not been made public.¹⁵

What Happened to Client Files: Morning Law Group

In July 2023, the bankruptcy court approved selling roughly 35,000 LPG client files to a newly formed firm called Morning Law Group (MLG), which had been in existence about a year and employed a single attorney, Joshua Armstrong. The U.S. Trustee’s Office objected, calling LPG a scam, but Marshack argued that liquidating without a transfer would leave thousands of clients stranded.³

MLG had to obtain client consent to continue drafting fees. Of the clients contacted, 1,745 opted in and 4,673 opted out; the rest never responded and, under California ethics rules, were treated as having given “presumed consent” after 90 days. MLG reported pulling $12.3 million from client accounts over four months. Former clients described experiences similar to LPG. In April 2025, MLG agreed to pay roughly $1 million to the bankruptcy estate to settle a payment dispute with the trustee.¹⁶

If your file was transferred to MLG and you no longer want the firm withdrawing fees, that is a separate relationship from the LPG bankruptcy claim and needs to be addressed with MLG directly.

Class Action, Regulators, and Criminal Status

A separate class action, Eaton v. The Litigation Practice Group, PC (N.D. Ga., Case No. 1:22-cv-00917), was filed on behalf of Georgia residents. It alleges LPG violated the federal Credit Repair Organizations Act by collecting fees before completing services and misrepresenting credit improvement, and the Georgia Debt Adjustment Act by retaining more than 7.5 percent of debtor funds. The case has been administratively stayed because of the bankruptcy.¹⁷

The Consumer Financial Protection Bureau served a subpoena on the Chapter 11 trustee in November 2024.¹⁶ Despite the “criminal enterprise” finding, the forgery allegations against Diab, and the hundreds of millions missing, no criminal charges have been filed against Diab, March, or any other LPG principal as of mid-2026. Everything active is civil: the bankruptcy, the trustee’s clawback suits, and state bar discipline.²

If You Paid LPG: What You Can Actually Do

Recovery for former clients runs through the bankruptcy claims process, administered by Omni Agent Solutions. The general claims bar date passed on February 23, 2024. If you missed it, you may still want to contact Omni to ask what options remain in your specific circumstances, because late-claim treatment is case-specific. Omni can be reached at (747) 226-5672, (888) 741-4582, or LPGInquiries@omniagnt.com, and the case website has filings and updates.¹⁸¹⁹

Set expectations. Marshack has described the liquidation as a process that will take “a few years,” and professional fees in the case have already exceeded distributions to creditors. In January 2025 the court tentatively approved an additional $2.1 million in professional fees alone.¹⁶ What former clients will ultimately recover, if anything, is not yet clear. New adversary complaints were still being filed as recently as March 2026, with hearings scheduled through July 2026.⁹

If a creditor sued you or put a lien on your property while you were paying LPG, that debt is still yours and needs its own response; the bankruptcy claim against LPG does not resolve it. And if you are still being drafted by Morning Law Group and want it stopped, contact MLG to withdraw consent rather than waiting on the bankruptcy.

1
Law360. Calif. Debt Relief Firm Ran Criminal Enterprise, Judge Says
2
Forbes. Attorney Alleged to Have Embezzled Up to $282 Million From Clients in Purported Debt Resolution Scam
3
Law360. Problems Linger Amid Efforts to Clean Up Debt Firm’s Mess
4
Bronx News 12. Consumers Say Debt Relief Company Bilked Them Out of Thousands of Dollars
5
ABA Journal. Lawyer Accused of Misappropriating $282M Allegedly Handed Firm to Disbarred Attorney
6
Courthouse News Service. Southern California Attorney Facing Disbarment After Claims of Stealing $282 Million From Clients
7
Supreme Court of California. Minutes, March on Discipline (S288744)
8
Courthouse News Service. Naz II Holding LLC v. The Litigation Practice Group PC et al.
9
Omni Agent Solutions. The Litigation Practice Group P.C. Case Information
10
PACER Monitor. The Litigation Practice Group PC Bankruptcy Case
11
ACIC Law. Rocky Mountain and Western Update: Marshack v. JGW Solutions LLC
12
American Bankruptcy Institute. In Pari Delicto Defense Doesn’t Apply to a Trustee Exercising Avoidance Powers
13
U.S. Bankruptcy Court, C.D. Cal. Order on Motion to Dismiss, Marshack v. Marich Bein LLC et al.
14
U.S. Bankruptcy Court, C.D. Cal. Third Amended Complaint Filing
15
Law360. Ex-Atty’s Cooperation Deal OK’d in Calif. Debt Firm’s Ch. 11
16
Law360. The Litigation Practice Group P.C. Case Articles
17
ClassAction.org. Litigation Practice Group’s Credit Repair Practices Violate Federal Law, Class Action Alleges
18
Omni Agent Solutions. LPG Claims Information
19
Omni Agent Solutions. LPG Contact Information