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GLOBAL CROSSING SUIT ALLOWED TO PROCEED NEW YORK � JPMorgan Chase and a syndicate of major banks may proceed with their suit against the former general counsel and an in-house lawyer of Global Crossing Ltd., though a federal judge expressed strong doubts about the claims against the attorney defendants. James Gorton, the telecommunications company’s general counsel from 1998 to 2001, and counsel Jackie Armstrong, were among 23 former Global Crossing executives named in the $1.7 billion suit. The banks, which loaned the company more than $2 billion, claim the executives, led by former Chairman Garry Winnick, engaged in a scheme to inflate revenue and disguise the true financial condition of the company, which sought bankruptcy protection in 2002. The former in-house lawyers had moved to have themselves dismissed from the case on the grounds that they either did not know, did not assist or, in the case of Gorton, actively opposed the sham transactions through which Global Crossing allegedly inflated revenue. Southern District Judge Gerard Lynch denied the motion by Gorton and Armstrong, finding in JPMorgan Chase v. Winnick, 03 Civ. 8535, that the banks had made a sufficient showing that a fact-finder could infer that the lawyers were actively and knowingly involved in the transactions. But the judge also said the claims against the lawyers did not strike him as “particularly potent,” noting that many of the facts were subject to “conflicting interpretations and robust dispute as to whether they prove anything of much significance with regard to the knowledge and involvement of [the lawyers] in the fraud alleged here.” � New York Law Journal

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