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Settlement Details Neglected, Plaintiff Sues

Should a law firm keep $60 million in fees when they didn't pay enough attention to the case?

ST. LOUIS (CN) June 18, 2013 - A class action plaintiff turned the tables on a law firm, claiming in another class action that the firm breached its duty to him in a $490 settlement from which the attorneys got $60 million in fees.

David Oetting sued Green Jacobson PC and its attorneys Martin Green, Joe Jacobson and Jonathan Andres, in Federal Court.

Oetting claims the defendants sought to maximize their cut and minimize their work while representing him in a securities class action against BankAmerica Corporation in 1998. The case was consolidated in a class action along with NationsBank, and settled in 2002.

Oetting claims the defendants hired the nonparty CPA firm of Heffler, Radetich & Saitta without seeking competitive bids, without inquiring about the amount of professional and fidelity insurance coverage Heffler carried, and without considering Heffler's financial strength.

"After giving the proper notice to the class and conducting a fairness hearing as to the proposed settlement, on September 30, 2002, the court issued an order approving the terms of the settlement and revised the plan of allocation for the plaintiff classes against BankAmerica Corporation," the complaint states. "The total settlement fund was $490 million ($333.2 million to the NationsBank class and $156.8 million to the BankAmerica class). These sums were deposited into separate accounts. Despite notice and inquiry by Plaintiff Oetting, Green Jacobson continues to cause excessive bank fees to be charged against the NationsBank settlement fund account." (Parentheses in complaint.)

Oetting claims Heffler failed to process class settlement claim properly.

"In 2008, it was discovered through a criminal investigation conducted by the U.S. Attorney's office in Philadelphia that one of Heffler's employees, Christian Penta ('Penta'), while serving as a senior accountant in 2002-04, working with others outside Heffler, fraudulently submitted some 15 claims totaling approximately $5.8 million," the complaint states. "Green Jacobson should have detected the fraudulent claims, including because (a) they were for large amounts, (b) the claimants were not their clients, (c) the claimants were foreign entities with unusual names and (d) the claimants had no federal identification numbers. For example, 'Companhia Interamerican' submitted a claim saying that it was the holder of 3,870,000 shares of NationsBank stock. Without any investigation as to what this entity was it was sent a check for $1,904,171.64. Another claim submitted was by 'FBO Asia Reserve', a 'foreign entity'. It claimed to own 2,919,160 shares. It received a check for $1,436,326.02. Neither of these entities existed; however, Green Jacobson did not detect any of these fraudulent claims - or any other fraudulent claims - and instead allowed the $5.8 million to be diverted from the NationsBank settlement fund. It appears that Green Jacobson performed no substantive review of the list submitted to the Court.

"Although Green Jacobson (and Heffler) did little or nothing to detect or prevent the fraudulent scheme, the U.S. Attorney later notified Green Jacobson that these monies had been stolen from the NationsBank settlement fund. The U.S. Attorney's office has since been able to recover only a small amount of the $5.8 million. Green Jacobson has made no real effort on its own to recover and has recovered no portion of the $5.8 million stolen from its clients." (Parentheses in complaint.)

Oetting claims the defendants breached their duty to him by failing to try to recover the $5.8 million from Heffler.

"Green Jacobson ultimately filed a motion for leave to file a 'Supplemental Complaint' [Doc 749] against Heffler in the Action making the allegations that the class was due to be reimbursed by Heffler due to Penta's actions," the complaint states. "The court denied the motion on the grounds that the action against Heffler was a separate claim that had to be filed in a completely new lawsuit. Upon denial of Green Jacobson's motion, Green Jacobson seemed satisfied to take no further action against Heffler. Green Jacobson also attempted to frustrate Oetting's efforts to do something further to recover the $5.8 million taken from the NationsBank class, Green Jacobson's clients, including Green Jacobson refused to file a separate action with Oetting as the lead plaintiff and proceeded to negotiate a settlement with Heffler without the knowledge or consent of Oetting or the class.

"Plaintiff Oetting, having been frustrated at every turn as to the inactions of Green Jacobson, filed his own complaint in St. Louis seeking damages against Heffler for improperly authorizing and paying on false claims in the Action. The case was transferred to Philadelphia on venue grounds. It is now pending in the Eastern District of Pennsylvania (Case No. 2:11-cv-04757-JD) ('Heffler Case')."

Oetting claims Green Jacobson failed to monitor Heffler and breached their duty to class members by hiring Heffler in the first place. He claims the defendants also failed to keep Oetting informed, failed to take appropriate steps to try to recover the stolen money, negotiated a settlement without the informed consent of their clients and took action hostile to the interests of their clients.

The class consists of all members of the NationsBank class who have or who are to receive a payout from the 2002 settlement. Oetting seeks damages for legal malpractice, negligent hiring, negligence and breach of fiduciary duty. He also seeks disgorgement of $60 million Green Jacobson was awarded in attorney's fees.

He is represented by Frank H. Tomlinson in Birmingham, Ala

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