Investors reach $234.6 million settlement in LO Ponzi scheme case
What is believed to be the largest settlement of a securities lawsuit in Oregon history was announced Tuesday, with $234.6 million being awarded to about 1,600 investors in the now-defunct Lake Oswego company Aequitas.
The settlement was announced in a press release by the Stoll Berne and Hagens Berman law firms, which represented investors in a class action lawsuit at the U.S. District Court against a number of third parties who participated in the sales of securities at Aequitas. Earlier this year Brian Oliver, a former owner and executive vice president of Aequitas Management, LLC, pleaded guilty to conspiring to commit mail and wire fraud and laundering; Olaf Janke, another former owner and chief financial officer at Aequitas, pleaded guilty in June to the same charges as Oliver.
According to the press release from Stoll Berne and Hagens Berman, "Aequitas companies operated a Ponzi scheme from 2010 until finally collapsing and being shut down by the SEC in March 2016. … Aequitas sold hundreds of millions of dollars of securities and perpetuated the scheme for years, despite generating no profits, being dependent on new investor money, having no prospects for increasing revenues and being insolvent."
Investors estimated they lost a total of $263.8 million in the scheme.
On the heels of guilty pleas from Oliver and Janke, investors and their attorneys pivoted to the third parties which were alleged to be part of the scheme. Those defendants included the accounting firms Deloitte & Touche and EisnerAmper; the law firms Sidley Austin and Tonkon Torp; TD Ameritrade; Integrity Bank & Trust of Colorado; and Duff & Phelps, according to the press release.
The total recovery in the class action is estimated to be between $298.6 and $311.6 million. Class counsel is applying for attorney fees and reimbursement of litigation expenses to be paid from the settlement funds.
"This is a remarkable recovery, especially in the context of a Ponzi scheme," Tim DeJong of Stoll Berne said in the press release.
"This settlement is a testament to our strong state securities laws and our tenacity in fighting for the investors for three years," Keith Ketterling, also of Stoll Berne, said in the release. "We were prepared to take the case to trial, if necessary, but this settlement is a pretty extraordinary result that provides investors a substantial recovery without years of additional delay and risk."
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