A daily look at legal news and the business of law:
Major Law Firm Helps "Nigerian" Scam Defraud Americans
Two Baker Hostetler partners helped defraud nine investors of over $1 million in a classic version of the famous Nigerian email scam, as reported by the ABA Journal and Above the Law. Investors were told their money was needed to pay the taxes on a $14.5 million fortune held in the West African nation of Burkina Faso. Once the taxes were paid, the fortune would be released and the investors would make a profit from the proceeds. The investors forked over the cash five years ago in reliance on Baker Hostetler's involvement, according to a recently filed lawsuit, and have now realized they were defrauded.
The FTC Punishes N.J. Telemarketers for Scamming Public
A telemarketing firm soliciting donations for police, firefighter and veterans' charities pocketed between 85% and 90% of the money it raised, despite telling donors that 100% of the funds went to the charities. This slimy behavior was a repeat performance: The Federal Trade Commission had already caught the firm, Civic Development Group, soliciting similar donations and claiming the money went for bulletproof vests and the like, when it didn't. After catching CDG the first time, the FTC ordered it to stop misrepresenting where the donations went.
As a result, the FTC was particularly irate this time. Now the company is banned from soliciting donations for any charity and must fork over $18.8 million -- the largest FTC penalty ever in a consumer protection case, reports the Blog of Legal Times. In fact, the fine is so big the company doesn't seem to have it, so its owners' assets are being liquidated, including two $2 million homes, artwork, a guitar collection, jewelry and six cars. Proceeds from a recent sale of their wine collections are also being added to the pot.
The Fed Releases Some of the Bailout Documents
The Federal Reserve has been sued over its bailout secrecy, and now it's finally dishing out some of the details, particularly relating to assets it accepted as part of the Bear Stearns/JPMorgan Chase deal. As The Wall Street Journal notes: "The data show the government is now in the same situation as many U.S. banks: dealing with a portfolio of loans and property that have lost their value, and which borrowers are struggling to pay off." Oh, goody.
State Laws Don't Bar Federal Class Actions
An unusual alliance of Supreme Court justices -- Scalia, Roberts, Thomas, joined in part by Sotomayor and in the judgment by Stevens, versus Ginsberg, Kennedy, Alito and Breyer -- held that state laws barring certain types class actions were trumped by the federal rule of civil procedure that defines when a class action can be brought. The state laws targeted suits in which the damages were statutory or otherwise minimal to individual plaintiffs. The case, Shady Grove Orthopedic Associates v. Allstate Insurance Co., charged that Allstate routinely failed to pay interest on late benefit payments, although it was required to do so by statute.
And in the Business of Law...
• What is it with patent work and malpractice? Yet another case was reported by the New York Law Journal today. This one is a $100 million claim filed against Greenberg Traurig by electronics giant Leviton Manufacturing.
• Grade inflation is a well-known phenomenon, but Above the Law reports a version I've never heard of before: Loyola Law School is prospectively changing its grading curve, and retroactively raising the grades of the entire school by one third (ditching a minus or adding a plus). The move is designed to help Loyola's graduates get jobs, but as Above the Law points out, cutting tuition and thus reducing student debt would be a much bigger help in a recession.