Compliance November 5, 2003

Law Firms Settle Capital Consultants Charges

May 23, 2002 (PLANSPONSOR.com) - Five law firms are among more than a dozen defendants who have agreed to shell out a total of $109 million as part of a settlement of lawsuits charging they helped an investment company defraud pension funds and other investors.
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According to a National Law Journal news report, the settlement came in the case against Capital Consultants LLC, of Portland, Oregon, which was accused of losing almost $500 million for company pension funds, health benefit trusts, and other investors. Judge Edward Leavy, a retired federal appeals judge, brokered the settlement.

Law firm payments called for in the settlement include:

  • $25 million from Lane Powell Spears Lubersky,
  • $8 million O’Melveny & Myers,
  • $2 million from Weiss Jensen Ellis & Howard,
  • $12.5 million from Stoel Rives, and
  • $2.5 million from McCarter & English

The firms denied to the National Law Journal that they had participated in any fraud. They said they made practical decisions to settle because of the risk of costly and time-consuming litigation.

According to the charges, Wilshire Financial Services Group and Capital participated in a scheme where Capital loaned its investors’ money to Wilshire in significantly undercollateralized deals.

Earlier this year, union officials who were Capital Consultants victims settled lawsuits against their pension fund trustees for not more carefully monitoring Capital’s investing practices (see Union Funds to Recoup Investment Losses ).
 

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