Included in the plaintiffs of the suit filed in Arizona Superior Court are various entities in Arizona. The state, along with various city and county agencies reportedly lost in excess of $131 million in National Century investments. Further public losses were experienced in the City of New York’s quintet of pension funds, which suffered an $80 million hit in a securities lending imbroglio between the city and Citibank, the custodian and securities lending agent of the plans (See Securities Lending Loss Not NYC’s To Take, Comptroller Says ).
The 184 plaintiffs allege “massive fraud” surrounding the sale of asset-backed securities by National Century and its backers between 1998 and 2002. This investment vehicle created to sell billions of dollars of asset-backed securities to investors was “nothing but a Ponzi scheme” kept afloat through repeated issuances of worthless notes,” the suit contends, according to a Wall Street Journal report.
Defendants in the suit include:
- Bank One Corp
- JP Morgan Chase & Co.
- Credit Suisse First Boston Corp.
- Deloitte & Touche
- Ohio law firm Purcell & Scott
Also included are about a dozen other entities and individuals including Harold Pote, head of J.P. Morgan Chase’s regional banking group, and Lance Poulson, former chief executive and chairman of National Century.
The Ohio health care finance firm filed for protection under Chapter 11 of the U.S. Bankruptcy Code late last year with creditors claims totaling more than $5 billion. As a result of its problems, more than 15 health-care providers that relied on the company for operating funds were forced to file for Chapter 11 bankruptcy (See Hard Hit Health Financing Agency Schedules Shutdown ).