Friday, November 21, 2008

Federal Government Charges 6 In $40 Million Class-Action Settlement Fraud

From CNNMoney:

Six people have been charged with participating in a scheme to steal more than $40 million in settlement funds from class-action lawsuits.
According to the indictment unsealed in Philadelphia by Acting U.S. Attorney Laurie Magid, the accused submitted numerous false and fraudulent claims in three class-action lawsuits - all of which were eventually settled - between 2001 and 2007.
The class-action defendants were Nasdaq OMX Group Inc. (NDAQ), Bank of America Corp. (BAC) and the former Cendant Corp. agreed to pay a combined $4.5 billion in their settlements.
In each case, accounting firms were used to administer the massive settlements. But the accused used a number of devices, from setting up fake corporations to creating phony brokerage-account statements and other financial documents in an effort to snatch some of the settlement funds, Magid said.
"Class-action lawsuits play a vital role in vindicating the rights of thousands of people with legitimate legal claims," Magid said. The defendants " exploited the system and created their own virtual world, full of false names, fake accounts, and bogus corporations. The only thing real in their world was the intent to deceive."

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