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John O. Murrin III, who built a successful Twin Cities law practice around the referral service he founded called DIAL L-A-W-Y-E-R-S, was suspended by the Minnesota Supreme Court on Wednesday over a series of verbose, "frivolous" lawsuits he filed seeking to recover his losses from a purported Ponzi scheme.

The court issued a 28-page order suspending Murrin's license to practice law in Minnesota for six months.

Murrin founded a legal referral service in 1977, shortly after the U.S. Supreme Court ruled that lawyers could advertise to the public. He sold that business in 2003 but continued to practice law. He is now semi-retired in Long Beach, Calif.

The ruling is just the latest of Murrin's headaches, which began in 2004, when the 61-year-old attorney and his wife invested $600,000 in Avidigm Capital Group Inc., a defunct real estate business based in Lake Elmo. In 2006, Avidigm stopped making interest payments and failed to return the Murrins' principal. A $900,000 security interest Avidigm granted the Murrins to protect their investment turned out to be worth just $200.

Avidigm turned out to be a Ponzi scheme. Murrin helped spur a federal investigation that led to felony charges for Avidigm CEO Steve Mattson and Jim and Teresa Gay Hoffman. Mattson was sentenced to a year in prison. The Hoffmans await sentencing in November on mortgage fraud charges.

'Court got it wrong'

Meantime, Murrin pursued civil remedies with a vengeance, and that led to his suspension.

"I got hit for doing the right thing," Murrin said. "And I'll never back down. I have to say that the court got it wrong and I'll consider a rehearing on this thing."

In 2007, Murrin and his wife filed a 131-page lawsuit in Hennepin County District Court against nearly 50 defendants. Judge Denise Reilly agreed with the defendants that it was so confusing as to be incomprehensible. She said the suit cited statutes that had been repealed, renumbered or never existed. After several amendments, Reilly said the suit was still deficient. Murrin alleged claims against some defendants who had agreed to settlements or who were dismissed from the case. The judge ordered the Murrins to pay sanctions exceeding $463,000.

The court of appeals dropped the penalty against Murrin's wife, DeVonna Kae Murrin, in 2010. Meantime, she filed a similar, 153-page lawsuit in Ramsey County District Court . The defendants moved the suit to federal court. A proposed amendment to that suit, under John Murrin's signature, drew a rebuke from U.S. District Judge Patrick Schiltz. He described Murrin's tactics as "a method of torture by which heavier and heavier weights are placed on the chest of a defendant until the defendant either confesses or suffocates."

Murrin persisted, eventually winning a judgment of $1.76 million against Avidigm and Mattson. But he balked at paying the $463,000 sanction and was forced into involuntary bankruptcy.

Judge filed complaint

In the interim, Reilly filed an ethics complaint against Murrin with the Office of Lawyers Professional Responsibility. An independent referee recommended the suspension of his law license for a year. Murrin appealed. The Minnesota Supreme Court upheld the referee's findings but cut the suspension in half.

"The nature of Murrin's misconduct is serious," the court found. "Murrin ... required three courts and nearly 50 defendants to spend time and money necessary to wade through thousands of pages of frivolous, unnecessary, or convoluted claims."

Dan Browning • 612-673-4493