Banks, Investors Settle For $9.75M In MBC Suit

Banks, Investors Settle For $9.75M In MBC Suit - 3/13/2009

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2009 News and Press Releases

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News	News 2009
HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

SETTLEMENT NEWS:

Banks, Investors Settle For $9.75M In MBC Suit
Julie Zeveloff

Securities Law 360. March 13, 2009
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EXCERPT: A federal judge has granted final approval to a $9.75 million settlement between purchasers of viatical investments and three banks, including Citibank NA, that served as escrow agents for Mutual Benefits Corp., the insurance company accused of perpetrating a massive fraud that bilked investors of nearly $1 billion. Calling the $9.75 million settlement fund “an excellent result,” Judge Federico A. Moreno of the U.S. District Court for the Southern District of Florida on Thursday signed off on an order granting final approval to the class action settlement, which also relieves class claims against United Planters Bank NA and American Express Tax and Business Travel Services Inc. Under the agreement, AETBS will pay $4.75 million, Union Planters will pay $3 million and Citibank will pay $2 million. Judge Moreno also approved attorneys' fees of $2.925 million, or 30 percent of the total settlement fund, for co-lead counsel Hanzman Gilbert LLP and Podhurst Orseck PA. According to Judge Moreno's opinion, over 32,000 MBC investors could partake in the settlement. “This was a very novel and difficult case in an area that, when the case was filed, had been largely untested, legally,” said Michael Hanzman of Hanzman Gilbert, co-lead counsel for the plaintiffs. “The first question we had to consider was whether viaticals are securities, and therefore subject to the district courts' jurisdiction.” An attorney for AETBS did not immediately respond to a request for comment on the settlement Friday. The agreement effectively ends the investors' protracted case against MBC and its officers, who were targeted in a class action suit shortly after the U.S. Securities and Exchange Commission accused them in 2004 of fraudulently selling viatical and life settlement contracts to thousands of investors at inflated prices.

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