CHALLENGE TO PENN STATE SANCTIONS IS DISMISSED
PHILADELPHIA — A federal judge has dismissed an antitrust lawsuit filed by the state of Pennsylvania challenging heavy sanctions the National Collegiate Athletic Association imposed against Pennsylvania State University’s football program following the Jerry Sandusky sex-abuse scandal.
U.S. District Chief Judge Yvette Kane said the complaint, which argued that the NCAA sought to bolster its reputation by levying unprecedented penalties, did not rise to the level of "commercial activity" under the federal Sherman Act.
Kane added: "In another forum the complaint’s appeal to equity and common sense may win the day, but in the antitrust world these arguments fail to advance the ball."
SETTLEMENT REACHED UNDER PRESSURE IN PONZI SCHEME
MIAMI — Platinum Partners Value Arbitrage Fund L.P. announced on June 6 that it had reached a settlement with TD Bank N.A. in its lawsuit over losses suffered from Florida attorney Scott Rothstein’s $1.2 billion Ponzi scheme.
"Platinum is likely to recover nearly $70 million from TD Bank and other sources, which will recoup investors’ losses and pay for legal fees," said Uri Landesman, president of the New York-based hedge fund.
Platinum had been under pressure to reach a settlement with TD Bank, which obtained a bar order in bankruptcy court from the trustee of the estate for Rothstein’s defunct law firm. With a few exceptions, most plaintiffs would not be able to bring complaints to trial because of the order.
CITI SETTLES CLAIMS ARISING FROM FINANCIAL MELTDOWN
NEW YORK — Citigroup Inc. has settled a long-running suit brought by institutional investors over the bank’s role in the financial crisis.
In a two-page stipulation filed on May 31, a coalition of about 20 investors — mainly European pension funds — agreed to a confidential settlement and to drop claims that Citi misrepresented its exposure to a panoply of subprime investments.
The plaintiffs covered by the settlement chose not to join a pair of class actions raising similar claims. One of those cases settled for $730 million in March and the other settled for $590 million in August 2012. Both deals have yet to be approved by U.S. District Judge Sidney Stein in New York.
WELLS FARGO BANK SLAPPED FOR ‘FLAGRANT’ BAD FAITH
NEW YORK — A state trial judge has imposed harsh sanctions on Wells Fargo Bank N.A. for "wanton and flagrant" bad faith in a residential foreclosure action, ruling that the bank must forfeit all interest accrued on the underlying loan since 2009 and pay the mortgage borrower’s attorney fees.
Kings County, N.Y., Supreme Court Justice Yvonne Lewis ruled on May 29 that the bank had repeatedly frustrated the efforts of the borrowers, brothers Frances and Michael Ruggiero, to obtain a loan modification by demanding ever more financial information.
Lewis said the record "is replete with persuasive indicia of the plaintiff’s lack of good faith, evidenced by conflicting information, a refusal to honor agreements, unexcused delay, unexplained charges, and misrepresentations, and sets forth, in no small measure, a failure to deal honestly, fairly, and openly."
JUDGE REFUSES TO DISMISS CLAIMS AGAINST TRADER
NEW YORK — A former Goldman Sachs & Co. trader, accused of duping clients into investing in a failed collateralized debt obligation, has lost a bid to trim the U.S. Securities and Exchange Commis­sion’s case against him.
U.S. District Judge Katherine Forrest refused on June 4 to dismiss claims that Fabrice Tourre defrauded two foreign banks, ABN AMRO Bank N.V. and IKB Deutsche Industriebank A.G.
She rejected Tourre’s argument that those claims should be barred under a 2010 U.S. Supreme Court decision, Morrison v. National Australia Bank, which bars federal securities fraud suits in the United States for securities traded on a foreign stock exchange. The ruling clears the way for a civil fraud trial slated to begin on July 15.
LITIGANT OFFERED TO SPLIT AWARD WITH KEY WITNESS
NEW YORK — A federal judge has thrown out the verdict in a police brutality case because the plaintiff promised to give his girlfriend a percentage of any winnings if she testified for him.
A jury awarded Sean Thomas $450,000 thanks in part to the testimony of his then-girlfriend Letitia Marrow, who described the police actions she purportedly witnessed. But U.S. District Judge Andrew Carter said the ink on his damages order was "barely dry" when one of Thomas’ attorneys informed the court that Thomas had promised Marrow one-fifth of any damages he received.
Carter noted that in New York an agreement to pay a fact witness, when payment is contingent on a favorable outcome, is not permitted. Marrow’s testimony "was high-stakes for both Thomas’s case and her own wallet," Carter said.
SETTLEMENT RAISES TAB FOR WEDDING BY $2.5 MILLION
SAN FRANCISCO (AP) — The California Coastal Commission and Facebook Inc. co-founder Sean Parker said on June 3 that they had reached a $2.5 million settlement after Parker built a large movie-set-like wedding site in an ecologically sensitive area of Big Sur without permits.
Officials were tipped that Parker had built a cottage, fake ruins, waterfalls, staircases and a huge dance floor near iconic redwoods and a stream with threatened steelhead trout.
When commission staff inspected, they found the structures had already been built, but they allowed the wedding to proceed. The commission started negotiating a settlement with Parker instead of shutting the event down.
CLAIMS HEADED TO TRIAL AGAINST BOSTON SCIENTIFIC
NEWARK, N.J. — A federal judge on May 31 refused to dismiss whistleblower claims brought by two former employees against Boston Scientific Corp.
The lawsuit alleges that the company bilked Medicare and Medicaid by filing fraudulent reimbursement reports, concealing defective equipment and giving kickbacks to doctors to promote off-label uses of its Precision Plus SCS System spinal cord stimulation device.
U.S. District Judge Susan Wigenton also rejected Boston Scientific’s motion to strike confidential information in the complaint and its motion to disqualify the whistleblowers’ attorneys at Blank Rome. She found that the whistleblowers adequately alleged that Boston Scientific knowingly defrauded the government.
LAWYER INVENTED IRS PROBE TO SHAKE DOWN INVESTORS
NEWARK, N.J. — A lawyer pleaded guilty in federal court on June 3 to charges that he scared clients into hiring him to protect themselves against nonexistent Internal Revenue Service investigations.
U.S. District Judge Joel Pisano in Trenton, N.J., accepted Thomas Frey’s plea to conspiracy to commit extortion under fear of economic harm and conspiracy to commit wire fraud. He faces 20 years in prison and a fine of up to $250,000 for each of the two counts.
According to court records, the investors included two police officers who learned by contacting the IRS that there was no probe. One paid Frey a $10,000 advance on his fee, and both officers agreed to make video and audio recordings of meetings with Frey and a mortgage broker who was in on the scheme.
JUDGE HOLDS NOSE, TOSSES WRONGFUL DEATH CLAIM
NEW YORK — A judge reached the "very unpleasant" decision to dismiss a wrongful death claim filed on behalf of a disabled woman who drowned in New York state’s care.
Court of Claims Judge Renee Forgensi Minarik ruled that she had no choice but to dismiss the claim filed on Cheryl Thurston’s behalf following her 2008 death at an Office for People with Developmental Disabilities facility.
The claim maintained the woman drowned while taking a bath after being left unattended by an aide who went to get her clothing. But Thurston had no income or assets, and expert medical testimony indicated she suffered a seizure and drowned without gaining consciousness, closing off the possibility of any award for conscious pain and suffering.