BigLaw Firm to Pay $25M to Settle Litigation over Its Representation of Convicted Ponzi Schemer
Posted Aug 29, 2012 01:15 pm CDT
Holland & Knight has agreed to pay $25 million to settle litigation filed on behalf of investors who lost money with convicted Ponzi schemer Arthur Nadel.
The law firm did not admit wrongdoing. In a statement, Holland & Knight general counsel Michael Chapman said the agreement with a court-appointed receiver is contingent on court approval and an order barring all other claims against the firm. “The settlement represents a compromise by the firm that reflects its consideration of various factors, including the substantial costs and investment of firm resources required to continue the litigation involving the funds.”
The settlement provides the largest source of money so far for defrauded investors who lost $162 million in hedge funds controlled by Nadel, who died in prison in April, the Sarasota Herald-Tribune reports. The deal calls for payment of $18.2 million to victims, with the rest going to the law firm that handled the litigation on a contingency basis.
Holland & Knight earned less than $500,000 for its work on behalf of Nadel, the Herald-Tribune says. The receiver’s suit had claimed the law firm failed to discover that Nadel, a former lawyer, had been disbarred for taking client money out of trust accounts. The suit also claimed Holland & Knight failed to uncover Nadel’s fraudulent scheme.