Business law firm to pay $8M to settle class action over its work for hedge-fund client
Posted May 8, 2014 10:50 AM CDT
By Martha Neil
Ater Wynne wasn't aware that a client was helping to run a million-million-dollar scam under the guise of a hedge fund, the lawyer for plaintiffs in a securities class action against the firm says.
But that didn't prevent the Portland, Oregon, business law firm being named as a defendant, due to its representation of Grifphon Asset Management from 2004 to 2006. Now Ater Wynne has agreed to pay $8 million to settle a claim that it materially aided fraudulent securities sales, reports the Oregonian.
Accounting firm Perkins & Co., which worked for Grifphon for nearly a decade, has agreed to pay $6.65 million, although its lawyer, Laura Caldera Taylor, says Perkins, too, was unaware of the fraud. Yusaf Jawed, a Reed College graduate who operated Grifphon, is serving a 78-month federal prison term.
A judge must still approve the settlement to conclude the Multnomah County Circuit Court case, following a July hearing to determine whether the settlement is fair to investors.
Working with another hedge fund operated by a friend of Jawed's and falsely claiming it was achieving a high rate of return on investments, Grifphon helped blow through some $43 million of client funds, including money invested by local business leaders, the newspaper reports.
"That's what really astounding about this case," says attorney Mike Esler, who represented the plaintiffs in the case. "How do you create out of whole cloth a fictional investment company and keep it going for 10 years?"
Esler's firm is seeking $4.6 million in attorney's fees.
Attorney Joe Arellano represents Ater Wynne, which he says "is pleased to have this matter resolved as part of a global settlement."