Greenberg Traurig, Quarles to Pay $88M to Settle Suit by Mortgage Investors
Greenberg Traurig and Quarles & Brady have agreed to pay $88 million to settle a suit by investors who claim losses in an alleged $900 million Ponzi scheme run by a mortgage company.
Greenberg will pay $61 million and Quarles will pay $26.5 million, report Reuters and the Milwaukee Journal Sentinel. A federal judge in Phoenix gave preliminary approval to the deal on Wednesday.
The class-action case was based on Arizona securities laws that provide greater protection for investors than federal law. Quarles was targeted for its advice to Radical Bunny and Greenberg for its advice to Mortgages Ltd. Radical Bunny raised money for the mortgage firm, which provided high-interest bridge loans to real estate developers. The two companies declared bankruptcy in 2008 and Mortgage Ltd.’s CEO Scott Coles committed suicide.
The suit had claimed that Radical Bunny was not registered to sell securities and continued to raise money for Mortgage Ltd. after it became insolvent in 2005. The plaintiffs alleged Coles used investor money to pay expenses and investor interest, and to fund a lavish lifestyle.
Greenberg Traurig issued this statement: “While we have always stood behind the work we did in this matter, entering into this settlement is a sensible step for the firm.”
Quarles & Brady issued this statement on behalf of on Jon Pettibone, managing partner of its Phoenix office: “Although the firm believes its conduct was at all times lawful and ethical, in order to avoid the burden, expense and uncertainty of continued litigation Quarles & Brady agreed to settle the class action.”
