Davis Wright, K&L Gates, Thompson & Knight Sued in Sunwest Collapse
Investors in a failed retirement home operator have sued three law firms that represented the company.
Targeted in the suits are Davis Wright Tremaine, K&L Gates, and Thompson & Knight, the outside law firms for Sunwest Management, the AmLaw Daily reports. The Securities and Exchange Commission accuses Sunwest of operating a Ponzi scheme that used more than $300 million raised from new investors to repay old lenders seeking to recoup losses on the company’s retirement facilities, the story says.
One of the suits against Davis Wright, filed in state court in Oregon, accuses the law firm and partner Timothy Dozois of preparing documents that misled investors into thinking they were buying into specific properties, the Portland Business Journal reported last month. The investors were never told their money was commingled and used to fund less profitable properties, the suit claims.
The suit was filed by Cohen Milstein Sellers & Toll and Portland solo practitioner Justine Fischer, according to the AmLaw Daily. Another plaintiffs lawyer, Michael Esler of Esler, Stephens & Buckley in Portland, Ore., has filed three suits against Davis Wright, a lawsuit against K&L Gates, and a suit against Thompson & Knight, the Amlaw story says.
“Davis Wright were the principal lawyers used by Sunwest for their securities work,” Esler told the AmLaw Daily. “K&L Gates was used when Sunwest had too much work for Davis Wright to handle. The firm did mostly bare land projects where Sunwest invested in land to build its assisted living centers on.” And Thompson & Knight provided tax opinions for Southwest, Esler told the publication.
A lawyer representing Davis Wright, Joseph Arellano, told the AmLaw Daily that plaintiffs lawyers are apparently seeking to do an end run around the Supreme Court decision limiting investor suits against third parties, Stoneridge Investment Partners v. Scientific-Atlanta.
