A lawsuit accusing Prudential Insurance Co. of America of improperly collecting interest on unpaid veterans’ life-insurance benefits was expanded to include claims of fraud.
The plaintiffs, seeking to have the case certified as a class action, or group, lawsuit, on behalf of 60,000 beneficiaries of military life insurance policies, filed an amended complaint yesterday adding the fraud claims and additional claimants. The case was originally filed July 29 in federal court in Springfield, Massachusetts.
The suit claims Prudential fails to pay beneficiaries in a lump sum as required by U.S. law and the language of the policies, instead encouraging them to leave the money in accounts with the company, which pays them a small amount of interest.
Prudential is believed to have made “half a billion dollars or more,” the amended complaint said.
The plaintiffs, who are the beneficiaries of eight military life insurance policies, said Prudential puts death benefits into “Alliance Accounts,” which pay only 0.5 percent to 1.5 percent interest. The company invests the money at a higher rate of return and keeps the difference, according to the suit.
Bob DeFillippo, a spokesman for Newark, New Jersey-based Prudential Financial Inc. (PRU), declined to comment on the suit. He said the company informs death-benefit beneficiaries of their payment options and that they can immediately withdraw all the money from their Alliance Accounts and invest it wherever they choose.
More than 100 insurance carriers earn investment income on $28 billion owed to life insurance beneficiaries, Bloomberg Markets magazine reported last month.
The case is Lucey v. Prudential Insurance Co. of America, 10-30163, U.S. District Court, District of Massachusetts (Springfield).
Clemens Pleads Not Guilty to Obstruction, Perjury
Roger Clemens, who won a record seven Cy Young Awards as the best pitcher in his league, pleaded not guilty to charges he lied to the U.S. Congress when he denied using steroids and other drugs to boost his baseball performance.
Clemens, appearing before U.S. District Judge Reggie Walton in Washington, waived a reading of the indictment before entering his plea. The judge set an April 5 trial date.
Clemens, 48, was accused by a federal grand jury on Aug. 19 of six counts related to obstructing Congress, making false statements and perjury. If convicted, he faces as much as 21 months in prison under U.S. sentencing guidelines.
The right-handed pitcher, known as “the Rocket,” has repeatedly denied using banned drugs. The Federal Bureau of Investigation opened an inquiry in February 2008 after a congressional committee told Attorney General Michael Mukasey in a letter that Clemens may have lied under oath during the panel’s probe of drug use in Major League Baseball.
The case is U.S. v. Clemens, 10-cr-00223, U.S. District Court, District of Columbia (Washington).
Hedge Funds Seek to Block Payments From Ambac Insurance Unit
The policyholders filed a motion in the circuit court of Dane County, Wisconsin, to stop Ambac Financial Group from siphoning off dividends from its Ambac Assurance unit or using net operating losses without compensating the subsidiary, according to a statement issued yesterday. The holding company has said it may file for bankruptcy.
Ambac, the second-largest bond insurer before the onset of the credit crisis, was stripped of its AAA credit ratings in 2008 after a surge in losses on securities backed by mortgages. In March, Wisconsin Insurance Commissioner Sean Dilweg said he was splitting the insurance unit in two to segregate policies on which the bond insurer is expected to pay claims.
The policyholders own more than $1 billion in securities and other instruments insured by Ambac, according to the statement.
Calls after business hours to Peter Poillon, an Ambac spokesman, King Street Capital, and Dilweg’s office weren’t returned.
The case is In the Matter of Rehabilitation of Segregated Account of Ambac Assurance Corp., 10-cv-1576, Circuit Court, Dane County, Wisconsin.
Dubai Drydocks’s Suit Against Singapore Tycoon Tan Dismissed
A Singapore court dismissed a suit by Dubai’s Drydocks World LLC against Singaporean tycoon Tan Boy Tee for breaching an agreement tied to a S$2.4 billion ($1.8 billion) takeover deal.
Drydocks, which sued Tan for breaching a three-year non-compete clause, relied on “hearsay evidence,” Singapore High Court Judge Lai Siu Chiu said in an Aug. 25 ruling, publicly released today. Dubai World’s ship-repair unit is appealing the decision, according to the ruling.
Drydocks sued Tan in May after coming across a Feb. 4 Otto Marine Ltd. (OTML) statement which said Tan had taken a significant stake in the Singapore shipbuilder as part of a share placement that raised S$95 million.
Tan, Singapore’s 14th richest person, denied having an interest in the 11 million shares bought by his son in late January and sold on Feb. 14. Drydocks and DP World Ltd., the world’s fourth-biggest container-terminal operator, aren’t part of Dubai World’s $23.5 billion debt restructuring.
The case is Drydocks World LLC v Tan Boy Tee OS387/2010 in the Singapore High Court.
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Lehman Derivatives Records a ‘Mess,’ Barclays Executive Says
Barclays Plc (BARC) had no idea how big Lehman Brothers Holdings Inc.’s futures-and-options trading business was when it considered taking over the defunct bank’s derivatives trades at exchanges in 2008, a Barclays executive said.
In a trial that resumed after a summer break, Elizabeth James, a director of Barclays’s futures business, described Lehman’s books as “a mess” in her testimony yesterday in U.S. Bankruptcy Court in Manhattan. James worked on Barclays’s purchase of Lehman’s brokerage during the 2008 financial crisis.
She said she received an e-mail from former Barclays trading executive Stephen King saying Lehman had “absolutely no idea” if it had sold $2 billion more options than it had bought, or whether it owned $4 billion more than it had sold.
The e-mail was dated Sept. 22, 2008, the day Barclays completed its takeover of the brokerage and a week after Lehman filed the biggest bankruptcy in U.S. history. James was testifying in a trial to determine whether Barclays should pay Lehman as much as $11 billion for making an allegedly undisclosed “windfall” on the deal.
Lehman, its creditors and the brokerage trustee, James Giddens, brought the case against London-based Barclays last November. The disputed amount includes $4 billion in Lehman margin accounts at exchanges.
The trial pits the U.K.’s third-biggest bank against Lehman, which wants money from Barclays to pay creditors.
The cases are In re Lehman Brothers Holdings Inc., 08-13555, and Giddens v. Barclays Capital Inc., 09-01732, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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Rothstein Ordered to Repay $363 Million to Victims
Scott Rothstein, the former South Florida lawyer serving 50 years in prison for a $1.2 billion Ponzi scheme, was ordered by U.S. District Judge James Cohn to repay $363 million of restitution to his victims. He announced the order at a hearing where prosecutors said they have recovered from $50 million to $60 million in assets for 320 investors and clients who lost money in his scam.
Cohn is seeking to divide cash and the proceeds of homes, jewelry, a yacht and Rothstein’s interests in businesses seized after his arrest last November. Rothstein, 48, later pleaded guilty to fraud and conspiracy charges, admitting the Ponzi scheme financed his lavish lifestyle, bankrolled his firm and bought political influence.
The case is U.S. v. Rothstein, 09-cr-60331, U.S. District Court, Southern District of Florida (Fort Lauderdale).
Skilled Healthcare Appeals Court Order on Staffing
Skilled Healthcare Group Inc. (SKH) said it will appeal a court order requiring it to comply with California’s minimum staffing requirements at its nursing homes after failing to persuade a judge to declare a mistrial.
Skilled Healthcare, based in Foothill Ranch, California, was found liable July 6 by a Humboldt County jury for improperly staffing 22 facilities in the state. The $677 million verdict was the largest jury award in the U.S. this year, according to data compiled by Bloomberg News.
“Settlement discussions in the case are ongoing,” Skilled Healthcare said in a statement Aug. 27. No final judgment has been rendered in the case. The company said that its nursing facilities are properly staffed.
Humboldt County Superior Court Judge W. Bruce Watson, in an order filed Aug. 27, denied a motion for a mistrial, saying said Skilled Healthcare failed to establish juror misconduct in the case.
Skilled Healthcare had said a juror didn’t disclose before trial that she had worked for the county Coroner’s Office and had handled at least one corpse from one of the company’s facilities. The juror came to know the daughter of the deceased, one of the plaintiffs in the case, the company said.
W. Timothy Needham, an attorney for the plaintiffs, didn’t immediately return a call before regular business hours seeking comment.
The case is Lavender v. Skilled Healthcare Group, DR060264, Superior Court, Humboldt County, California (Eureka).
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CVS to Pay $2.65 Million in Massachusetts Price Case
CVS Caremark Corp. (CVS) agreed to pay $2.65 million under a settlement with the Massachusetts attorney general’s office, which accused the pharmacy chain of overcharging public entities for prescription drugs.
CVS will pay Massachusetts and about 200 cities and towns in the state that were allegedly overcharged under the workers compensation insurance system, state Attorney General Martha Coakley said yesterday in a statement.
The agreement grew out of a state investigation of prescription-drug charges by pharmacies. Coakley reached similar settlements with Shaw’s Supermarkets Inc. and the Stop & Shop Supermarket Co., her office said in the statement.
“The company has not admitted any liability or wrongdoing, and has agreed to settle this matter to avoid the time and expense of further investigation or legal proceedings,” CVS spokesman Mike DeAngelis said in a statement.
Under the settlement, CVS will repay $1.3 million in overcharges going back to 2002 and an additional $1.35 million to the state general fund, Coakley’s office said.
Time Warner’s TBS Settles McDavid Suit Over Atlanta Team Sales
A Time Warner Inc. (TWX) unit reached a settlement with Texas businessman David McDavid over the sale of the Atlanta Hawks and the Atlanta Thrashers sports teams after McDavid won a $281 million jury verdict over a failed deal.
Turner Broadcasting System and a lawyer for McDavid confirmed yesterday that an accord has been reached on McDavid’s breach-of-contract claim while declining to specify the terms.
McDavid persuaded a jury in state court in Atlanta in December 2008 that TBS broke a 2003 oral agreement to sell the National Basketball Association’s Hawks and the National Hockey League’s Thrashers to him. The jury award was upheld in March by a Georgia appeals court and a further appeal by TBS was pending in the Georgia Supreme Court.
Misty Skedgell, a TBS spokeswoman, said in a statement yesterday that the company chose to bring “this seven-year-long matter to a conclusion.”
The trial case is McDavid v. Turner Broadcasting System Inc., 2005-cv-101902, Fulton County Superior Court (Atlanta).
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Ford, Retirees, Employees Settle Stock Suit, Detroit News Says
The current and former employees sued Ford, alleging the company shouldn’t have allowed them to invest so much of their retirement funds in company stock through their 401(k) plans, Detroit News reported.
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SEC’s Conte Leaving Enforcement Unit to Join Steptoe & Johnson
The U.S. Securities and Exchange Commission said associate enforcement director Christopher Conte is stepping down next month and joining Steptoe & Johnson LLP as a partner in the law firm’s Washington office.
Conte, 49, who joined the SEC as a staff attorney in 1992, has overseen many significant enforcement cases ranging from accounting fraud and disclosure violations to unlawful market timing, the agency said yesterday in an e-mailed statement.
Wolters Kluwer Says ‘Explosive’ China Legal Growth Fuels Sales
Wolters Kluwer NV (WKL), Europe’s largest tax and legal publisher, said “explosive” growth in China’s legal profession will drive sales increases of more than 10 percent a year in the country.
China will have about 2 million lawyers by 2020, from 170,000 today, propelling demand for legal services, Chief Executive Officer Nancy McKinstry said in an interview in Beijing yesterday. The number of regulations and compliance work will increase as China’s financial markets come more in line with practices in the U.S. and Europe, she said.
The company began serving foreign law firms and multinational companies in China in 1985, when there was essentially no domestic legal profession, McKinstry said. China sales will increase more than 10 percent a year for the “foreseeable future,” she said. Growth in China will be primarily organic, and involve partnerships with Chinese companies, because of prohibitions on foreign acquisitions of Chinese publishing companies, McKinstry said.
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To contact the editor responsible for this story: David E. Rovella at firstname.lastname@example.org.