A prominent Texas Republican has sued Rudy Giuliani’s law firm and a close friend and partner of Giuliani’s, Kenneth Caruso, alleging that Caruso, the firm and others "schemed and conspired to steal $10 million."

J. Virgil Waggoner, a Houston businessman and philanthropist, filed the in New York State Supreme Court in Manhattan in July. He alleges that Caruso, his former lawyer, conspired with Waggoner’s investment adviser to cover up the disappearance of $10 million Waggoner invested through a Caribbean bank, the British Trade & Commerce Bank.

Waggoner claims Caruso "may have also been romantically involved"with the investment adviser.

The Caribbean bank was shut down after its handling of Waggoner’s investment came to light, and its president was later jailed for money laundering.

Caruso, Bracewell & Giuliani, and Caruso’s two former firms — all named as defendants — have filed motions to dismiss the complaint on largely procedural grounds, and Caruso’s personal defense lawyer, Fred Warder, called it "meritless."

"It’s a pretty familiar tale of a deal gone bad and the principal trying to scapegoat his lawyers,"Warder said. "We expect it will go away on motions."

The Waggoner lawsuit is the latest messy allegation to hit Giuliani’s private businesses, which include the law firm and his consulting firm, Giuliani Partners, located five blocks from each other in Midtown Manhattan.

His former police commissioner, Bernard Kerik, left the consulting firm after his nomination to head the Department of Homeland Security collapsed amid questions about his personal ethics. Kerik was convicted and fined in 2006 for illegally accepting gifts and failing to report a personal loan while running the police department.

Giuliani and his firm have also faced protests for employing a Giuliani childhood friend and Catholic priest, Alan Placa, who was barred from priestly duties after being accused of molesting boys more than two decades ago. Placa has insisted the charges are false, and Giuliani has stoutly defended him.

Caruso, who joined Bracewell & Giuliani in 2005, was, like many of the former New York mayor’s tight inner circle, an assistant U.S. attorney when Giuliani was U.S. attorney for the Southern District in the Reagan administration.

Later, he worked on Giuliani’s mayoral campaigns. In Giuliani’s book, "Leadership," he describes Caruso as "a close friend"whose advice he sought when he was diagnosed with prostate cancer in 2000.