PHOENIX - (Mealey's) The law firm Greenberg Traurig LLP
yesterday agreed to pay $61 million to settle a suit in the U.S. District Court
for the District of Arizona alleging that it aided an alleged Ponzi scheme that
bankrupted two companies and led to $900 million in losses (Robert Facciola,
et al., v. Greenberg Traurig LLP, et al., No. 10-1025, D. Ariz.).
The firm moved for preliminary approval of settlement in
the U.S. District Court for the District of Arizona. Also yesterday, U.S.
Judge Frederick J. Martone of the District of Arizona granted preliminary
approval of Quarles & Brady LLP's $26.5 million settlement of similar
claims in the same suit.
According to lead plaintiff Robert Facciola, Mortgages
Ltd. created a Ponzi scheme to conceal its insolvency and stay in business.
The plaintiff claims that the scheme entailed finding investors to buy into
Radical Bunny LLC, which provided funds to conceal Mortgages' debt. Mortgages
and Radical Bunny subsequently filed for bankruptcy.
'Façade of Legitimacy'
Mortgages was represented by Greenberg Traurig, and
Radical Bunny was represented by Quarles & Brady.
The plaintiffs allege that the law firms helped "create a
facade of legitimacy" through their representation of the companies that
enabled the Ponzi scheme and illegal securities sales to continue.
The Greenberg Traurig settlement consists of two
classes: the Mortgages class, which includes 975 investors who invested
$600 million, and the Radical Bunny class, which includes 770 individuals who invested
The Quarles settlement was proposed May 18 and also
includes a Mortgages class and a Radical Bunny class.
Facciola is represented by Andrew S. Friedman of Bonnett
Fairbourn Friedman & Balint and Jeremy James Christian and Richard Glenn
Himelrick of Tiffany & Bosco, all in Phoenix.
Greenberg Traurig is represented by Kenneth C.
Smurzynski, Colette Tyrell Connor, Ellen E. Oberwetter, Grace O. Aduroja, Kevin
M. Downey and Patrick Joseph Houlihan of Williams & Connolly in Washington, D.C., and
Martin Richard Galbut and Michaile Janae Berg of Galbut & Galbut in Phoenix.
Quarles & Brady is represented by Floyd P. Bienstock
and Michella Kras of Steptoe & Johnson in Phoenix
and Heather Condon, Jared S. Kirkwood, Robert E. Gooding Jr., Scott Garner and
Shawn M. Kennedy of Morgan Lewis & Bockius in Irvine, Calif.
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