Receiver Sues Davis Wright for $400M, Claims Firm Aided Client’s Ponzi Plan
The receiver for a retirement home operator claims in a $400 million lawsuit that Davis Wright & Tremaine helped the company operate a Ponzi scheme.
The suit filed last week in an Oregon federal court claims the law firm played a critical role in creating and “propping up” Sunwest Management, later accused of securities violations by the Securities and Exchange Commission, the American Lawyer reports.
The complaint (PDF posted by the Am Law Daily) says Davis Wright wrote misleading offering memos for Sunwest investors and helped implement a business plan seeking investor cash despite knowledge of financial problems, according to the American Lawyer story and Courthouse News Service.
“Toward the end,” the lawsuit states, “DWT was literally churning out offering memoranda to induce investors to provide cash for the Sunwest Enterprise, despite their knowledge of its serious financial problems. In short, DWT played a critical role in creating, sustaining and propping up the Sunwest Enterprise.”
Davis Wright has also been targeted for its Sunwest work in lawsuits by investors in the failed chain of retirement facilities.
Portland, Ore., lawyer Joseph Arellano, who is defending Davis Wright, told the American Lawyer that the bad economy caused Sunwest to fail. “The firm believes it provided excellent, appropriate and ethical lawyering,” he said.
