Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Five law firms are among more than a dozen parties that have agreed to pay $109 million to settle investment fraud suits pending in federal court in Portland, Ore. The settlement, which was mediated by 9th U.S. Circuit Court of Appeals Senior Judge Edward Leavy, was announced May 14 by the lead plaintiff’s firm, Portland-based Bullivant Houser Bailey. The case stems from alleged fraud committed by Capital Consultants LLC, a Portland investment management firm that was accused of losing nearly $500 million invested by employer pension and health benefit trusts, as well as individual investors. Under the settlement, three law firms that did legal work for Capital Consultants agreed to settle. Lane Powell Spears Lubersky of Seattle agreed to pay $25 million, O’Melveny & Myers agreed to pay $8 million and Portland’s Weiss Jensen Ellis & Howard (which merged into Holland & Knight in October 2001) agreed to pay $2 million, according to Stephen F. English, the lead counsel for Bullivant. Stoel Rives of Portland, which represented Wilshire Financial Services Group, agreed to pay $12.5 million, English said. English and his partner, Chrys Martin, explained that Wilshire and Capital Consultants were involved in what they called an illegal scheme, whereby Capital loaned its investors’ money to Wilshire. The investors believed their money was insured or collateralized, but in fact it was not insured and was significantly undercollateralized, causing the huge losses, English said. The other firm settling was Newark, N.J.’s McCarter & English, for $2.5 million. According to Bullivant’s English, McCarter represented a firm that was involved in the loss of the funds. Referring to the law firms, English said, “They aided and abetted the perpetration of a fraud on the pensioners.” The firms denied participating in any fraud. They said they made practical decisions to settle because of the risk of costly and time-consuming litigation against sympathetic pensioners under a strict Oregon securities law that shifts the burden to the defense. Under the circumstances, said Stoel Rives’ Barnes Ellis, the courts put a lot of pressure on all the parties to settle. Milo Petranovich, a partner with Lane Powell, said, “The risks of trying a case like this were immense,” with potential liability in the hundreds of millions of dollars. James W. Colbert, a partner at O’Melveny, said there was no evidence of intentional wrongdoing or negligence by his firm. A lawyer representing McCarter & English, Patricia Refo of Phoenix’s Snell & Wilmer, said the firm acted appropriately in all respects, including immediately notifying authorities once it realized fraud was being committed.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

Reprints & Licensing
Mentioned in a Law.com story?

License our industry-leading legal content to extend your thought leadership and build your brand.


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.