$4.5M BigLaw firm settlement in investor case should be approved, magistrate judge says
U.S. Magistrate Judge Jeffrey Armistead of the District of Oregon recommended approval of a settlement in which Davis Wright Tremaine would pay $4.5 million to settle a proposed class action lawsuit. Image from Shutterstock.
A federal magistrate judge is recommending approval of an agreement in which Davis Wright Tremaine would pay $4.5 million to settle a proposed class action lawsuit claiming that it aided the sales of fraudulent real estate securities.
Investors had alleged that they were misled about the securities sold by American Equities Inc. and American Eagle Mortgage Management, according to Armistead’s findings. The companies and two defendants had claimed that the securities represented pooled receivables secured by underlying real property, and that the securities were responsibly managed, according to investors.
In reality, the investors said, investor money was used to hide earlier losses, to pay loans and to pay returns to earlier investors. The investors also claimed that the real estate collateral that supposedly secured the investments was transferred to secure loans and lines of credit. The investment funds eventually collapsed.
Davis Wright Tremaine had drafted private placement disclosure documents, offering materials and other documents needed to complete the securities sales.