One of the biggest antitrust settlements in US history just got one step closer to collapse

A former partner of one of New York's top law firms is being accused of defrauding her firm and her clients of more than $5 million, and now she's made an admission that could jeopardize one of the biggest antitrust settlements in history, The Wall Street Journal reports.

Keila Ravelo, who represented MasterCard in the settlement, acknowledged on Tuesday that she received confidential information about the case from a lawyer on the opposing side of the settlement, according to the Journal. MasterCard and Visa — also involved in the case — are fighting to keep the settlement together, but it may be on the verge of crumbling.

Until recently, Ravelo was a partner at Willkie Farr & Gallagher LLP, where she primarily dealt with MasterCard. She and her husband have been charged with fabricating paperwork for legal services to defraud MasterCard, her law firm, and another law firm out of $5 million.

But more damningly, Willkie Farr & Gallagher found while it was investigating the alleged theft that Ravelo received confidential information in emails from an opposing lawyer in a pair of antitrust lawsuits that retailers brought against big credit-card companies, according to The Journal, which cited court records.

That lawyer, Gary Friedman, was a longtime friend of Ravelo, and he represented the merchants who were suing the credit-card companies, according to court records cited by The Journal.

"I drew upon all the information in my possession that affected MasterCard’s interests, including the information I was provided by Gary Friedman," Ravelo said in a court filing cited by the Journal.

Steve Sadow, a lawyer at Schulten Ward & Turner representing Ravelo, said her declaration is a response to the "self-serving" positions from Willkie Farr & Gallagher, which is still representing MasterCard.

"Ms. Ravelo felt it was time to formally respond and stands ready to shed light on the entire settlement process, including matters involving Friedman," Sadow said.

One of the lawsuits led to a record-breaking $6 billion settlement in a lawsuit accusing MasterCard and Visa of conspiring to fix fees that retailers could charge customers, as the Associated Press reported. The other lawsuit led to a smaller $75 million settlement.

Now that these emails have been discovered, lawyers on both sides are arguing over whether they mean the settlement should be scrapped. Visa and Mastercard want to keep the settlement in place, and filed papers on Tuesday that said "none of the improper communications from Mr. Friedman to Ms. Ravelo was forwarded to anyone at MasterCard," according to the Journal. They also argue that while Ravelo and Friedman's conduct was improper, it was not significant enough to impact the settlement.

Lawyers representing merchants in the case already filed papers last week, asking to invalidate the settlement.

MasterCard and American Express both said last month that they were confident the settlements would stand, saying Ravelo and Friedman didn't play an important enough role to justify their collapse.

Last month, however, a judge rejected the $75 million settlement, citing text messages between Ravelo and Friedman, according to The New York Times. Those messages showed that Friedman consulted Ravelo on the settlement "every step along the way," the judge found.

The Times noted that the judge's decision "could have ripple effects" for the $6 billion settlement.

In a separate case, Ravelo's husband, Melvin Feliz, is awaiting sentencing "after pleading guilty in February to plotting to transport more than 40 pounds of cocaine from California to New York," according to The Journal. And last week, he pleaded guilty to conspiracy to commit wire fraud and tax evasion in the case in which he and Ravelo allegedly defrauded MasterCard and the law firms.

Sadow said in a statement that Feliz "coercively demanded" Ravelo's actions. He also sought to distance her from her husband, saying the two were estranged.

"The public must keep in mind that Feliz is a convicted drug trafficker and fraudster, facing a total of 14 years in federal prison, who deceived his wife and children in both his personal and business dealings for more than a decade," the statement said. "Unbeknownst to Ms. Ravelo, her estranged husband led a dual life, including having a secret second family and pretending to be a legitimate businessman."

We reached out to Friedman's lawyer, Ravelo's lawyer, and a representative for Ravelo's former firm, and we'll update this post with any comment we receive.

SEE ALSO: Major retailers want out of a $6 billion antitrust settlement with MasterCard, Visa and AMEX

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