Articles Posted in Class Actions

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On October 27, 2015, Vanguard Funds (Vanguard) filed suit against VEREIT, Inc. (VEREIT), VEREIT Operating Partnership, AR Capital, ARC Properties Advisors, RCAP Holdings, RCS Capital Corporation, and five company executives in Arizona federal court.

15.10.21 building explodesVEREIT (formerly known as American Realty Capital Properties)  is one of the largest real estate investment trusts (REITs) in the world.  VEREIT was founded in 2010 and is based in Phoenix, Arizona.

In the complaint Vanguard alleges that VEREIT cost investors billions of dollars in a multiyear accounting fraud.  From February 2013 to July 2014 VEREIT implemented an “acquisition strategy”  purchasing seven major real estate companies at an average of $3 billion.  VEREIT’s assets grew from $132 million to $21.3 billion in 2014.  During this growth VEREIT allegedly  assured investors that its internal controls “were effective” and that the company financial statements “were accurate and could be trusted.”

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Christopher J. Gray, P.C. and its co-counsel have filed a petition for certiorari with the U.S. Supreme Court seeking review of the dismissal of the complaint in an action alleging that the major underwriters of title insurance conspired to fix the premiums for title insurance at an artificially high level.  The U.S. District Court for the Western District of Texas dismissed the complaint based on a technical legal principle known as the filed rate doctrine, which essentially holds that rates approved by a government regulator cannot be challenged under the antitrust laws even if it is alleged that those same rates were achieved via anticompetitive conduct. The U.S Court of Appeals for the Fifth Circuit in New Orleans affirmed the dismissal. 

The certiorari petition (which contains the orders appealed from as appendices) is accessible below.  

10.6.28 certiorari petition winn v alamo.pdf (332.61 kb)

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Chistopher J. Gray. P.C. and its co-counsel filed an Amended Complaint in the consolidated class action lawsuit against, among others, Bank of America and certain commodities Futures Commission Merchants alleging aiding and abetting commodities fraud in connection with a fraudulent "Ponzi" scheme known as Agape operated by a man named Nicholas Cosmo (who has also been charged with several crimes by the United States government arising out of the same scheme).

The Amended Complaint, filed July 17, 2009, alleges that Bank of America aided and abetted Cosmo and Agape's scheme by: 

  a.   allowing Cosmo, a convicted felon, to open, direct, control and haveextraordinary access to at least two dozen accounts under different names (among which accounts Cosmo regularly made multi-million dollartransfers of funds);

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Christopher J. Gray and his co-counsel, Louis F. Burke and Benjamin L. Del Vento, have filed a class action case against Nicholas Cosmo, an alleged Ponzi scheme promoter, as well as Bank of America and several commodities brokerages that carried accounts to which Cosmo allegedly diverted investor funds.  The class action complaint alleges that starting in 2003, Cosmo, a convicted felon who had just completed a 21 month sentence in Federal Prison in Allenwood, Pennsylvania, commenced a fraudulent investment scheme through Agape, which was eventually comprised of two companies he controlled and approximately 12 brokers acting on Agape’s behalf. Agape obtained approximately $400 million from investors using false pretenses. Thousands of blue collar investors, including police officers, post office employees, social security clerks, and widows investing life insurance proceeds, lost their entire life and retirement savings. Cosmo then surreptitiously transferred a large portion of these funds to commodities trading accounts, in which he traded the investors’ funds and operated an unregistered commodities pool.

The class action complaint further alleges that Bank of America substantially assisted this fraud as follows: (a) Bank of America assigned one or more representative to work directly out of Cosmo’s office, which was approximately 28 miles from the branch where Agape and Cosmo had their bank accounts; (b) Bank of America provided its onsite representatives at Agape with on site bank equipment and/or computer systems to enable direct access to Bank of America’s accounts and systems; and (c) Bank of America’s onsite representatives at Agape had the ability to monitor and check account balances, accept deposits and issue checks. The class action complaint alleges that based on this arrangement, Bank of America had knowledge of all of Cosmo’s financial activities, including his transfers of funds to commodities accounts to operate Cosmo’s unregistered commodities pool.

The class action complaint can be accessed below.

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The antitrust class action filed by Christopher J. Gray, P.C. and several other firms in the U.S. District Court for the Eastern District of Texas (Winn v. Alamo Title Insurance Co., et al.) alleging price-fixing in the market for title insurance has been transferred to the U.S. District Court for the Western District of Texas in Austin on the judge's own motion.  U.S. District Judge Ron Clark ruled that the case may more appropriately proceed in Austin because, among other reasons, as the capital of the State of Texas, Austin is a more convenient venue for Texas state government officials who may wish to intervene in or otherwise participate in the case.  The class action alleges that the major title insurance companies operating in Texas conspired to artificially inflate the premiums that they charged to customers over a multi-year period.

The transfer order and the complaint in the antitrust class action are accessible below.  The case has been assigned to Judge Sam Sparks.

09.3.4 order transferring case to wd tex.pdf (119.42 kb)

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Christopher J. Gray today argued before a panel of the U.S. Court of Appeals for the Second Circuit seeking reversal of an order granting dismissal of class action claims against Morgan Stanley arising out of Morgan Stanley’s alleged conceealment of, misrepresentations concerning the existence of, and destruction of, e-mail evidence.  The three-judge panel reserved decision, meaning that it will issue a written decision at a later date. 

Also representing the plaintiffs/appellants was Louis F. Burke, Esq. of Louis F. Burke, P.C.  Arguing for defendant/appellee Morgan Stanley was Richard A. Rosen of the firm of Paul, Weiss, Rifkind, Wharton & Garrison LLP. 

The complaint that was dismissed by the U.S. District Court and the briefs filed by appellants can be accessed immediately below. 

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