In what Attorney General Bill Schuette is calling “good news for Michigan taxpayers,” a national class-action securities fraud lawsuit against Bear Stearns and Deloitte & Touche has been settled for $295 million.
Hon. Robert Sweet, U.S. District Judge for the Southern District of New York, granted preliminary approval to the proposed suit, in which Michigan was court-appointed lead plaintiff.
As part of the deal, the defendants will pay investors nationwide — including State of Michigan Retirement Systems (SMRS) — after being misled about the value and risks of Bear Stearns’ mortgage-backed assets.
The amount SMRS will receive as part of the settlement will be finalized Sept. 19.
In a statement, Schuette called the settlement “good news for Michigan taxpayers. … [This] demonstrates our commitment to holding accountable any bank or investment firm that violates the public trust.”
Michigan contended that Bear Stearns and auditor Deloitte & Touche misled the state’s pension fund and other investors about risky exposure to the U.S. housing market and subsequent write-downs to its assets, which led to Bear Stearns and its stock collapsing.
U.S. District Judge David M. Lawson has found John J. Bravata, accused in an alleged $53 million “Billionaire Boys Club” Ponzi scheme, in contempt of court for violating an asset freeze in the case, reports The Detroit News.
And, Lawson ruled, Bravata will go to jail on Oct. 8 if he doesn’t repay the funds.
Lawson froze Bravata’s assets shortly after the Securities and Exchange Commission filed a civil fraud suit that accused Bravata and others of operating Ponzi-style investment scheme.
From The News:
But the SEC recently learned that Bravata borrowed about $37,000 from his life insurance policies at the same time he was asking permission from Lawson to take out the loan. Lawson denied the request and Bravata’s request for him to reconsider his denial, all without being told Bravata had already taken out the loan. …
[Bravata] said he took out the loans due to “necessity” and because he believed the life insurance policies were not covered by the asset freeze … .
But when pressed by Lawson, Bravata agreed there was nothing in Lawson’s asset freeze order to lead him to believe he could borrow against his life insurance policies.
U.S. Magistrate Judge Steven Pepe is considering the Securities And Exchanges Commission’s request that Charles Conaway, the former head of Kmart Corp., pay a penalty in neighborhood of $13.5 million for misleading Kmart investors, reports The Associated Press.
Conaway’s attorneys argue that the maximum penalty Conaway faces is $60,000. Pepe is taking additional briefs before he rules on the matter.
Detroit Free Press columnist Brian Dickerson has a clever take about the settlement of a suit that involves lying bank executives, big bonuses, a heavy fine by the Securities and Exchange Commission, and a big scoop of taxpayer cash.
Read it here.
John Bravata, accused of a $50 million Ponzi scheme, must appear before U.S. District Court Judge David Lawson next month to explain away a $37,000 loan against two life insurance policies, reports The Kalamazoo Gazette.
U.S. Securities and Exchange Commission officials claim the loans violate a freeze Lawson placed on Bravata’s assets, and want Lawson to hold Bravata in civil contempt of court.
“Bravata’s attorney, Gregory Bartko, argued that the life insurance policies were purchased before the formation of BBC Equities, Bravata’s real estate investment firm, and therefore unconnected to the alleged fraud,” according to the Gazette.