Investor Sues Greenberg Traurig, Says Law Firm Helped Lender Client Defraud Investors
An investor in a bankrupt California-based real estate lender is suing Greenberg Traurig, contending that the law firm helped the client company, RE Loans LLC, conceal its liquidity issues and alleged violation of securities law from him and other investors, resulting in a $700 million loss.
The complaint (PDF), which was filed Monday in Alameda County Superior Court, seeks class action status. It contends that the Greenberg firm brought in another client, Wells Fargo—which also is a defendant in the suit—to provide a $50 million line of credit, even though both knew RE Loans had an agreement with investors not to take on third-party debt, the Am Law Daily reports.
Plaintiff David Nolan, who says he lost about $665,000, is seeking unspecified damages and attorney fees. The suit alleges counts of aiding and abetting, breach of fiduciary duty, fraud by concealment, fraud by misrepresentation and secondary securities fraud against Greenberg Traurig.
A spokeswoman for the law firm says it was retained “after the principal alleged wrongdoing occurred,” and then worked “to try to help the company deal with prior conduct,” the Am Law Daily reports.
“Anyone can allege virtually anything in a complaint,” the unidentified spokeswoman continued. “When the actual facts are developed and become clear, we believe that it will show that our firm acted properly and in no way wrongfully.”
