By Michael J. Lello
HOENIX - (Mealey's) The law firm Greenberg Traurig LLP on June 20 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.).
(Motion for preliminary approval of settlement available. Document #88-120625-336M.)
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 $197 million.
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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