- Greenberg Traurig
"" The American Lawyer
By Susan Beck
May 12, 2010
This article first appeared on The Am Law Daily.
When the U.S. Supreme Court last year rejected the concept of aider and abettor liability in its Stoneridge decision, it was a huge win for law firms that might otherwise be sued by angry investors. But that doesn't mean that firms are completely insulated from lawsuits like these.
On Tuesday, for example, Greenberg Traurig and Quarles & Brady were named as defendants in an investor class action filed in federal district court in Arizona for allegedly aiding and abetting a Ponzi scheme run by a real estate loan company called Mortgages, Ltd. and a financing company called Radical Bunny. In an attempt to bypass Stoneridge, the defendants are accused of violating Arizona state securities laws. A copy of the complaint is here.
The case was brought on behalf of 2,000 investors who claim to have lost more than $900 million. The plaintiffs are represented by Richard Himelrick of Phoenix's Tiffany & Bosco and Andrew Friedman of Phoenix's Bonnett, Fairbourn, Friedman & Balint.
Mortgages Ltd. was an Arizona company that made loans to real-estate developers and then sold most of the loans to investors. Radical Bunny helped raise money for Mortgages Ltd. by illegally operating as an unlicensed securities dealer, the complaint alleges.
According to the complaint, Mortgages Ltd. adopted a Ponzi approach in which new investor money was used to cover operating expenses, investor interest, investor redemptions, and the lavish lifestyle of company CEO Scott Coles.
The company filed for bankruptcy in 2008, and investigations followed by the Securities and Exchange Commission and Arizona regulators. Earlier this year the Arizona Corporation Commission issued a cease and desist order against Radical Bunny, and the SEC found that a Mortgages Ltd. affiliate had willfully violated securities law.
The law firms, according to the complaint, "played an integral role in facilitating the fraudulent scheme." The firms are accused of violating Arizona securities laws, negligent misrepresentation and nondisclosure, and aiding and abetting breach of fiduciary duty.
The plaintiffs have also sued auditors CBIZ Inc. and Mayer Hoffman McCann, and several former executives at Mortgages Ltd. and Radical Bunny.
Mortgages Ltd. hired Greenberg Traurig in April 2006, the complaint states, and over the next two years the firm, led by partner Robert Kant, prepared 11 private-offering memorandums for investors.
The complaint alleges that from at least December 2006, "Kant was fully aware that Mortgages Ltd. was being funded with proceeds collected from Radical Bunny’s illegal securities sales.
The illegality of this fundraising was so apparent to Kant that he told Coles and [Radical Bunny executive Tom] Hirsch (during a meeting with lawyers from the Quarles & Brady firm) that 'people go to jail' for such misconduct....
Kant’s concerns about the illegal securities sales were so great that he admonished the Radical Bunny managers in late 2006 to obtain securities counsel, so that their pictures would not wind up 'on the front page of the Arizona Republic.'"
The complaint further alleges that a Quarles partner "even questioned in a file note whether Mortgages Ltd.’s relationship with Radical Bunny had 'a Ponzi scheme feel' to it."
The Quarles lawyers later stated in SEC testimony that they told Radical Bunny’s managers to stop selling the securities and to contact the SEC and Arizona securities regulators to admit they had violated securities laws, according to the complaint.
But the client said he didn't want to talk to regulators and disclose past securities violations, the complaint alleges. The firm did not disassociate itself with the client, the complaint alleges, and continued to assist in new securities sales.
Quarles & Brady gave us this statement from Jon Pettibone, the managing partner of its Phoenix office: "During a portion of 2007, Quarles & Brady represented Radical Bunny, but we have not represented it since.
At no time have we represented Mortgages Ltd. Both federal and state enforcement authorities have thoroughly investigated the dealings between Mortgages Ltd. and Radical Bunny and brought enforcement actions against Radical Bunny and its principals. Quarles cooperated fully with both investigations.
No enforcement action has been brought against our firm or any of its lawyers and we do not expect any such action will be filed. Our conduct was at all times lawful and ethical....We will defend ourselves against any claim that we acted improperly in any way." The firm is represented by Robert Gooding Jr. from Howrey.
Greenberg Traurig likewise maintained it acted properly.
"These claims are without merit," the firm said in an email. "We believe our representation was appropriate in all respects. The firm is prepared to vigorously defend against these unfounded claims." The firm said that it expects it will be represented by Williams & Connolly. ""
Source of Post
Speaking of Investor Class Action - Intel Corp. , Warner Bros., Time Warner Inc., Sony, Lockheed Martin, AOL, IBM and more involved in the Stolen Iviewit Technologies Patent - you will be next - when investors find out how long these companies have KNOWN and failed to disclose a TRILLION dollar liability WELL I don't think these Smart, Savvy Investors will be to Happy.. and those Millions hand over fist the CEO's of the Company made - well they will lose it. .. as there are over a thousand documents of proof online of their guilt, and their Knowledge of the Iviewit Stolen Patent and they continue to this day to violate licensing agreements, and to make billions off of the Iviewit Technology..
Guys life Bruce Sewell, Jeffrey Bewkes, Paul Otellini, Kenneth Rubenstein, Christopher Wheeler and tons more... will soon face and Investor Class Action Lawsuit of their Own.. as the PROOF is Plentiful to anyone who Can READ !!!
Oh and don't forget to note that in the RICO complaint and lots of documentation... the CBIZ connection... see CBIZ bought Goldstein Lewin Company RIGHT? and they were directly involved in the Iviewit Stolen Patent. I thought it ridiculously risky for CBIZ to make this purchase, they were all over my blogs before and after the purchase...
Now I believe, from what I am seeing.. IN MY OPINION.. that CBIZ, Mayer Hoffman McCann P.C. and Steven L. Gerard knew exactly what they were getting and they bought Goldstein Lewin to protect them and to hide corruption and illegal activity.. they are all in Bed Together just as the RICO Complaint by Iviewit Technologies Owner - and One of the Iviewit Inventors Eliot Bernstein has documented so well in his RICO Complaint.
Just my thoughts.. as all this is adding up to
a VERY solid and Well Laid Wall Of Corruption.
Iviewit Stolen Patent Crime Chart.
More on the Iviewit Techonologies Stolen Patent and Greenberg Traurig 's role in it go to www.DeniedPatent.com and www.iViewit.TV