CHICAGO - A federal judge in Illinois on Oct. 17 entered a $2.46 billion judgment - the largest judgment following a securities class action trial, according to the lead plaintiff's counsel - against Household International Inc. (now HSBC Finance Corp.) and three of its former executives over allegedly fraudulent lending practices and financial reporting (Lawrence E. Jaffe Pension Plan v. Household International, Inc., et al., No. 02-5893, N.D. Ill.).
LOS ANGELES - Insurance agents breached their contract and acted in fraud of their agency agreement with a life insurer, a California federal judge ruled Oct. 15, awarding a judgment in excess of $175,000 against the agents (United of Omaha Life Insurance Co. v. Crane Financial & Insurance Agency Inc., et al., No. 12-4614, C.D. Calif.; 2013 U.S. Dist. LEXIS 130142).
NEW ORLEANS - A panel of the Fifth Circuit U.S. Court of Appeals on Oct. 2 affirmed the dismissal of a fraud lawsuit brought by a company against a lender related to the company's attempt to purchase the assets of a separate entity that had filed for bankruptcy on grounds that fraud was not shown (Scott Meyers v. Textron Financial Incorporated and Rocky Mountain Choppers LLC v. Textron Financial Corporation, No. 13-10023, Chapter 11, 5th Cir.; 2013 U.S. App. LEXIS 20175).
CEDAR RAPIDS, Iowa - The U.S. Commodity Futures Trading Commission (CFTC) on Aug. 15 filed a brief in the U.S. District Court for the Northern District of Iowa contending that U.S. Bank National Association is directly liable for the Ponzi scheme operated by Russell Wasendorf Sr., the former chief executive officer of bankrupt Peregrine Financial Group Inc. (CFTC v. U.S. Bank NA, No. 13-02041, Chapter 7, N.D. Iowa).
HOUSTON - Despite having twice amended its complaint, an insured still failed to sufficiently identify any false statements made by its insurer, a Texas federal judge ruled June 19, granting a motion to dismiss the fraud-based claims against the insurer (Protectors Insurance and Financial Services LLC v. Lexington Insurance Co., No. 4:12-cv-03469, S.D. Texas; 2013 U.S. Dist. LEXIS 85726).
FRESNO, Calif. - A federal judge in California on April 11 granted in part and denied in part a motion to dismiss a suit in which relators alleged that a school submitted false claims for federal student financial aid funds to the U.S. Department of Education (DOE), finding that the school's former employees sufficiently pleaded a violation of the False Claims Act (FCA) (United States of America, et al. v. Brightstar Education Group Inc., et al., No.11-0135, E.D. Calif.; 2013 U.S. Dist. LEXIS 52503).
ATLANTA - The 11th Circuit U.S. Court of Appeals on April 9 affirmed a lower court's finding that coverage for an insurance premium financing company's $7 million fraud losses is barred by the retroactive date rider in a financial institution bond (ABCO Premium Finance LLC v. American International Group Inc., et al., No. 12-14780, 11th Cir.).
CHICAGO - The trustee in the Chapter 7 bankruptcy of former financial company Peregrine Financial Group Inc. on March 19 moved in the U.S. Bankruptcy Court for the Northern District of Illinois for authorization to examine Peregrine's former accountant and other entities with which the accountant is affiliated (In Re: Peregrine Financial Group Inc., No. 12-27488, Chapter 7, N.D. Ill. Bkcy.).
CEDAR FALLS, Iowa - A federal judge in Iowa on Jan. 31 sentenced Russell R. Wasendorf, the former CEO of bankrupt Peregrine Financial Group Inc., to 50 years in federal prison for stealing more than $215.53 million in customer funds while he operated his commodities futures business (USA v. Russell R. Wasendorf Sr., No. 12-131, N.D. Iowa).
ATLANTA - A district court wrongly dismissed a suit against a resort developer and its financial partner, the 11th Circuit U.S. Court of Appeals ruled Jan. 25, finding that fraud claims arising from a $675 million Credit Suisse AG loan are not subject to a forum-clause agreement (Mark Bailey, et al. v. ERG Enterprises LP, et al., No. 11-11670, 11th Cir.; 2013 U.S. App. LEXIS 1757).
CEDAR RAPIDS, Iowa - The U.S. government, which sued Peregrine Financial Group Inc. CEO Russell R. Wasendorf Sr. alleging securities fraud related to Peregrine's Chapter 7 bankruptcy filing, on Jan. 22 filed a memo in federal court calling for Wasendorf to be sentenced to life in prison (United States of America v. Russell R. Wasendorf Sr., No. 12-2021, N.D. Iowa).
NEW YORK - A federal judge in New York on Jan. 7 denied a motion for reconsideration filed by an underwriter defendant in a securities fraud lawsuit charging Ally Financial Inc., its subsidiary and eight underwriters with violations of state and federal securities law in connection with the sale of more than $6 billion in toxic mortgage-backed securities to Freddie Mac (Federal Housing Finance Agency v. Ally Financial Inc., et al., No. 11-7010, S.D. N.Y.).
KANSAS CITY, Mo. - A federal judge in Missouri on Dec. 12 denied dismissal of a suit in which a college is alleged to have violated the False Claims Act, 31 U.S.C.S. § 3729-3733, by making fraudulent representations to secure financial aid funds under Title IV of the Higher Education Act of 1965, finding that an amended complaint makes sufficient claims to survive the college's motion to dismiss (United States of America, ex rel. Chickoiyah Miller and Cathy Sillman, relators v. Weston Educational Inc., d/b/a Heritage College, No. 11-00112, W.D. Mo.; 2012 U.S. Dist. LEXIS 175637). View a complimentary copy of the order in the pdf attached below.
AUSTIN, Texas - A federal judge in Texas on Nov. 13 ruled that the Securities and Exchange Commission may seek reimbursement of executive compensation against certain executives of a company under Section 304(a) of the Sarbanes-Oxley Act of 2002 even though they are not directly involved with a particular fraudulent action because the defendants held their executive officer positions within the company and signed SEC quarterly and annual financial statements that were subject to restatements as a result of the alleged fraud (Securities and Exchange Commission v. Michael A. Baker, et al., No. 12-285, W.D. Texas; 2012 U.S. Dist. LEXIS 161784).
WATERLOO, Iowa - Russell R. Wasendorf Jr., the son of former Peregrine Financial Group CEO Russell R. Wasendorf Sr., on Sept. 19 sued U.S. Bank in an Iowa state court, alleging that it committed fraud by not fulfilling its fiduciary duty to inform Peregrine that it was comingling customer funds with other money used for running the company (Russell R. Wasendorf Jr. v. U.S. Bank, No. LACV119935, Iowa Dist., Black Hawk Co.). Subscribers may view the complaint available within the full article.
WATERLOO, Iowa - The U.S. government on Sept. 17 moved in the U.S. District Court for the Northern District of Iowa to detain CEO of bankrupt Peregrine Financial Group Russell Wasendorf Sr. pending his sentencing for fraud and embezzlement (USA v. Russell Wasendorf Sr., No 12-2021, N.D. Iowa). Subscribers may view the decision available within the full article.
WATERLOO, Iowa - A federal judge in Iowa on Sept. 13 ruled that Russell R. Wasendorf Sr., the former CEO of bankrupt Peregrine Financial Group Inc., could be released while he awaits sentencing after pleading guilty to committing fraud while he was the company's CEO (United States of America v. Russell R. Wasendorf Sr., No. 12-2021, N.D. Iowa). Subscribers may view the order available within the full article.
WATERLOO, Iowa - A federal grand jury in Waterloo, Iowa, on Aug. 13 handed down an indictment against Robert Wasendorf Sr., the CEO of bankrupt Peregrine Financial Group Inc., on 31 counts of fraud related to official reports he filed with the U.S. Commodity Futures Trading Commission (CFTC) (United States of America v. Russell R. Wasendorf Sr., No. 12-2021, N.D. Iowa). Subscribers may view the indictment available within the full Mealey's article.
MIAMI - A financial institution bond's retroactive date rider provision precludes an insured's claim for losses caused by fraud, a Florida federal judge ruled Aug. 9, granting an insurer's cross-motion for summary judgment (ABCO Premium Finance LLC v. American International Group Inc., et al., No. 11-23020-CIV-SCOLA/BANDSTRA, S.D. Fla.; 2012 U.S. Dist. LEXIS 111833).
NEW YORK - Bank of America Corp. and its Countrywide Home Loans Inc. affiliate will pay $375 million to a financial guarantee insurer to settle claims that Countrywide misrepresented the standards used in underwriting mortgage loans that served as the basis for five securitizations of mortgage-backed securities, according to a press release issued on July 17 (Syncora Guarantee Inc. v. Countrywide Home Loans Inc., No. 650042/2009, N.Y. Sup., New York Co.).
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CEDAR RAPIDS, Iowa - The U.S. government on July 13 filed a criminal complaint against Russell Wasendorf Sr., the CEO of bankrupt Peregrine Financial Group Inc., alleging that he committed fraud in the operation of Peregrine (The Unites States of America v. Russell Wasendorf Sr., No. 12-131, N.D. Iowa). Subscribers may view the criminal complaint available within the full article.
CHICAGO - The U.S. Commodities Futures Trading Commission (CFTC) on July 10 sued Peregrine Financial Group Inc. and its CEO in the U.S. District Court for the Northern District of Illinois, seeking penalties for alleged violations of federal commodities law; the same day, Peregrine filed for Chapter 7 bankruptcy (U.S. Commodities Futures Trading Commission v. Peregrine Financial Group Inc., et al., No. 12-05383, N.D. Ill. and In Re: Peregrine Financial Group Inc., No. 12-27488, Chapter 7, N.D. Ill. Bkcy.). Subscribers may view the CFTC complaint and bankruptcy petition available within the full article.
SAN FRANCISCO - A former partner with bankrupt law firm Dewey & Leboeuf on June 12 filed a lawsuit in a California state court against principals in the firm, seeking damages for alleged fraud and contending that the principals deliberately misrepresented the firm's financial condition to attract attorneys to join Dewey (Henry Bunsow v. Steven H. Davis, et al., No. 12-521540, Calif. Super., San Francisco Co.). Subscribers may view the complaint available within the full update.
NEW YORK - A monoline insurer has properly pleaded its fraud-based claims against Goldman, Sachs & Co. for allegedly fraudulently inducing it into providing guaranty insurance for a collateralized debt obligation, but it has failed to plead its claim for unjust enrichment, a New York justice ruled April 23 in granting in part and denying in part Goldman Sachs' motion to dismiss (ACA Financial Guaranty v. Goldman, Sachs & Co., No. 650027/11, N.Y. Sup., New York Co.). Subscribers may view the order available within the full update.
SEATTLE - An excess directors and officers liability insurer fails to conclusively establish that its insured's former chief financial offer (CFO) anticipated a financial reporting fraud claim by the Securities and Exchange Commission before applying for insurance, a Washington federal judge found April 9, concluding that a fact issue as to whether the insurer was reasonable in denying coverage precludes summary judgment in favor of the insurer on two claims (Isilon Systems Inc. v. Twin City Fire Insurance Company, No. 10-1392 MJP, W.D. Wash.; 2012 U.S. Dist. LEXIS 50320).