|  | | 2008 News and Press Releases | | |
HEADLINE NEWS:
DOJ Charges 6 With $40M Class Action Fraud
Liz McKenzie
Securities Law 360. November 21, 2008
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EXCERPT: The U.S. Department of Justice is taking action against six people who allegedly organized an elaborate fraud scheme, including the formation of fake companies, to obtain more than $40 million in settlement funds from major class action lawsuits. […] “Class action lawsuits play a vital role in vindicating the rights of thousands of people with legitimate legal claims,” Magid said. “But in this case, as the grand jury alleges, the defendants exploited the system and created their own virtual world, full of false names, fake accounts and bogus corporations. The only thing real in their world was the intent to deceive.” The class actions involved — In re: Nasdaq Market-Makers Antitrust Litigation, In re: Cendant Corp. Litigation and In re: BankAmerica Corp. Securities Litigation — each were settled for between millions and billions of dollars. "This is a particularly serious criminal scheme, in that the defendants engaged in an organized and long-term effort to steal money from victims within the settlement classes who were dependent on that money to restore the losses that they had suffered," FBI Acting Special Agent in Charge Robert F. Downey said. “The massive fraud alleged in the indictment exploited our legal system, our economy and our system of taxation,” FBI Special Agent in Charge of IRS Criminal Investigation Leslie P. DeMarco said. DeMarco said the investigation will work closely with the law enforcement community and “vigorously” investigate individuals who commit financial fraud and “threaten our nation’s economy.” The DOJ said the defendants went to excruciating lengths to produce the false records necessary to appear as valid claimants in the class actions. In one instance, one of the defendants traveled to Singapore as the vice president of a fake company to make its records appear more valid. |
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