Law Firms
Paul Hastings’ Apparent $4.25M Settlement of Ponzi Scheme Liability Suit Is Approved
Posted Mar 28, 2008, 06:03 am CDT
By Debra Cassens Weiss
A federal judge has approved an apparent $4.25 million settlement by Paul, Hastings, Janofsky & Walker in a lawsuit by a bankruptcy receiver. The suit had targeted the law firm for its review of circulars for a billboard company accused of running a Ponzi scheme.
The settlement was sealed, but an order by U.S. District Judge Charles A. Pannell Jr. of Atlanta apparently referred to the settlement amount, according to the Fulton County Daily Report. The order said Paul Hastings "would have little incentive to pay $4.25 million" unless it received assurances that it would not be subject to further liability in suits by purchasers of the securities.
The purchasers will share in the settlement and are barred from suing the firm under the order.
The receiver’s suit had contended Paul Hastings helped Mobile Billboards of America convince California regulators that the company’s billboard sales to investors were a business offering rather than securities that were subject to additional oversight. It also said offering materials contained false information and that investors relied on the documents.
Paul Hastings has maintained its lawyers weren’t aware of fraudulent activities and that it had a reasonable basis to portray the investment program as a business opportunity instead of a security.
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