This article originally appeared in the Daily Business Review, an American Lawyer affiliate.
Holland & Knight and a court-appointed receiver announced Wednesday that the Tampa-based law firm will pay $25 million to settle claims brought by investors who lost money in hedge funds operated by Sarasota Ponzi schemer Arthur Nadel.
The settlement, which must be approved by U.S. District Judge Richard Lazzara in Tampa, also would resolve a lawsuit that has been pending in Sarasota Circuit Court for more than three years, receiver Burton Wiand of Wiand Guerra King of Tampa said.
Wiand was appointed receiver in 2009 in a civil case brought by the Securities and Exchange Commission against Nadel and related companies. He originally sought more than $170 million from Holland & Knight after alleging in the state court suit that the firm committed malpractice and aided Nadel’s activities.
“H&K has not admitted any wrongdoing,” Wiand noted in an affidavit filed in federal court. He said he accepted the settlement partly because the hedge funds paid Holland & Knight “less than $500,000.”
“The settlement represents a compromise by the firm that reflects its consideration of various factors, including the substantial costs and investment of firm resources required to continue the litigation involving the funds,” Michael Chapman, partner and general counsel for Holland & Knight, said in a statement.
About $18.2 million of the settlement with the law firm will be distributed to investors.
Nadel, a disbarred lawyer, was found guilty of defrauding investors. He died in prison in April at age 80.