Let us state the question directly, because it deserves to be stated directly: A man was disbarred twice for stealing client money and forging a judge's signature. After being disbarred, he allegedly created and secretly controlled a law firm that collected approximately $282 million from tens of thousands of vulnerable consumers, left $4,500 in the accounts when it filed for bankruptcy, continued collecting money after the bankruptcy was filed, and allegedly transferred the client base to new secretly controlled entities to prevent creditors from recovering anything.

That man, as of this writing, has not been criminally charged.

How is that possible in the United States in 2026? The answer is simultaneously simple and structurally damning.

The Jurisdiction Maze: Who Is Actually Responsible for Prosecuting Tony Diab?

The first obstacle to criminal accountability for conduct like Diab's is jurisdictional confusion. Multiple agencies have overlapping but imperfect jurisdiction over different aspects of what allegedly occurred.

The California State Bar has jurisdiction over the professional misconduct of licensed California attorneys — specifically, Daniel March, the licensed attorney who served as LPG's front man. The Bar has pursued March vigorously, placing him on involuntary inactive status and initiating disciplinary proceedings. But the State Bar is a regulatory body, not a prosecutorial one. Its maximum sanction is disbarment — and Diab is already disbarred. The Bar has no authority to put anyone in prison.

State prosecutors — the California Attorney General and local district attorneys — have jurisdiction over state-law theft, fraud, and related crimes. The conduct alleged against Diab clearly constitutes grand theft, elder financial abuse (many of his alleged victims were financially vulnerable seniors), and multiple counts of fraud under California law. But state prosecutors face severe resource constraints. Complex financial fraud cases require years of investigation, armies of forensic accountants, and trial lawyers with specialized white-collar experience. The LPG case involves 60,000 victims across multiple states, dozens of corporate entities, layered financial transactions, and a fact pattern that requires extensive reconstruction. Many DA offices simply do not have the bandwidth.

Federal prosecutors have jurisdiction over wire fraud, mail fraud, and bankruptcy fraud — charges that would clearly apply to the alleged conduct in the LPG case. The U.S. Trustee Program, which oversees bankruptcy proceedings, is a DOJ component and can refer matters for criminal investigation. But federal prosecutors also make resource allocation decisions. High-profile securities fraud cases — with clear, quantifiable investor losses, documentary evidence, and wealthy defendants whose assets can be seized — tend to move to the front of the line. Consumer fraud cases involving thousands of small individual losses are harder to build and harder to prosecute efficiently.

The FTC and CFPB have jurisdiction over deceptive consumer financial practices, including abusive debt relief services. Both agencies have pursued debt relief companies before — but their standard remedy is a civil judgment and an injunction, not a prison sentence.

Diab falls into the space between all of these institutions. He is not a licensed attorney (so the Bar has no jurisdiction over him directly). He is not a securities issuer (so the SEC has no obvious hook). He is not a federally chartered bank (so banking regulators are irrelevant). He is a disbarred lawyer running illegal legal services operations — a category of offender that is squarely in the crosshairs of no single agency.

The Cooperation Question: Informant or Escape Artist?

The May 2025 report that Diab had begun cooperating with bankruptcy trustee Marshack — telling the trustee "everything he did and where the money went" — adds a layer of complexity to the accountability question. Cooperation with a civil trustee is legally separate from cooperation with criminal prosecutors, but the two are not unrelated.

Federal prosecutors routinely communicate with bankruptcy trustees when investigating potential criminal conduct. If Diab has been cooperating with Marshack while simultaneously cooperating with DOJ investigators — providing information about the broader ecosystem of debt relief fraud, the affiliate network, the factoring company relationships, and the alter ego firms — he may be trading that information for prosecutorial restraint: a non-prosecution agreement or a delayed prosecution that depends on the value of his cooperation.

This would be, in some respects, understandable. The debt relief industry is vast, under-regulated, and riddled with fraud that extends well beyond Tony Diab. A cooperating witness with detailed knowledge of how 100 marketing affiliates, multiple factoring companies, and a network of nominal attorney front-men all functioned together could potentially expose wrongdoing at a scale that dwarfs the LPG case itself. From a prosecutorial standpoint, using Diab to climb a larger tree is a rational allocation of resources.

From the standpoint of the 60,000 clients who paid their monthly fees in good faith and got nothing in return, it is a bitter pill. Cooperation agreements mean that the architect of a $250 million consumer fraud may receive less punishment than a first-time drug offender. The criminal justice system's tendency to trade severity of punishment for investigative utility is not irrational on its own terms — but it produces outcomes that are genuinely difficult to defend to the people who were most directly harmed.

The Deeper Structural Problem: Consumer Fraud Is Under-Prosecuted by Design

The near-impunity of someone like Tony Diab is not an accident. It is a predictable output of a system that structurally under-resources the prosecution of consumer financial fraud relative to its actual social harm.

Consider the math. LPG allegedly defrauded 60,000 people of some portion of the $282 million collected. The average loss per victim — even at the lower end of estimates — was thousands of dollars. For individuals already in financial distress, the loss of several thousand dollars is catastrophic: it can mean missed rent, medical bills unpaid, credit scores destroyed. The aggregate human harm of the LPG collapse is enormous.

But each individual case is too small to drive its own prosecution. A victim who lost $3,000 cannot afford a lawyer to pursue it. The civil justice system's class action mechanism is one response — but class action settlements routinely deliver cents on the dollar to individual plaintiffs while generating substantial fees for class counsel. The bankruptcy trustee may recover assets and distribute them to creditors, but the secured creditors (the factoring companies) have priority over the unsecured individual clients who actually lost their money.

The person who designed and executed the scheme that caused all of this harm sits outside any prison cell, reportedly telling a bankruptcy trustee what he knows. This is not justice — it is institutional triage. And the ethical weight of that triage falls on the victims, not on the system that failed them.

The Everest Question

Farva Scott, The Ethics Reporter's publisher, noted that Tony Diab appears to be associated with an entity called Everest Law. We were unable to independently verify this specific connection through the public record at the time of publication. What we can say with confidence, based on the documented pattern of conduct, is that Diab's operating methodology — creating or infiltrating legal entities through licensed attorney fronts while controlling operations from behind a veil of anonymity — is specifically designed to survive the collapse of any individual entity.

If Diab is indeed connected to a new legal services business, that connection deserves serious scrutiny. The track record — two disbarments, one $282 million collapse, allegations of bankruptcy fraud and asset concealment — is not the track record of someone who has changed. It is the track record of someone who has refined a method.

The question is whether any regulatory or prosecutorial institution will answer that scrutiny before the next set of victims writes the next set of checks.

This is Part 4 of The Ethics Reporter's investigative series: "The Ghost in the Law Firm: The Tony Diab Story." Read Part 3 here. The Ethics Reporter will continue to monitor this case and report on any criminal charges or regulatory actions as they develop. Tips on Tony Diab's current business activities can be submitted to our editorial team.