Law Firm Insurer Will Pay $6.2M to Settle Document Prep Suit
An insurance company for a Nevada law firm has agreed to pay $6.2 million to settle litigation claiming that by preparing financial documents, attorney David Garcia and his law firm helped an Oregon-based real estate company bilk investors of some $18 million.
Although a lawyer for Hale Lane Peek Dennison Howard & Anderson contended that Pac Equities founders Michael and Phyllis Rich lied to the firm and altered documents, the insurer agreed to the settlement within hours after an Oregon jury heard opening arguments in a Multnomah County Circuit Court case, reports the Oregonian. The settlement concludes it and two other investor suits against Garcia and the law firm.
The Riches violated state securities laws when they raised money for their real estate investment company, and Garcia and his firm helped them do so by preparing prospectuses and financial documents, plaintiffs attorney Mike Esler of Portland said in his opening argument last week. “Scammers scam only with the help of professionals,” Esler stated.
Another law firm, Oregon-based Merrill O’Sullivan, earlier paid an $890,000 settlement concerning its work with the Riches, according to Esler.
The $6.2 million settlement in the current case represents the so-called wasting policy limit, less the cost of legal defense, he says.
The Riches were convicted earlier in a fraud case related to their real estate company, which federal investigators described as a Ponzi scheme. Phyllis Rich is still serving a 33-month prison term, but Michael Rich died in custody during his 19-year sentence.
Investors should get about 60 cents back for every dollar they invested, when the settlements and a receiver’s sale of assets are combined, Esler tells the Bulletin, a newspaper in Bend, Ore., where Pac Equities was based. “Overall, we are happy with the results,” he says.
Attorney Milo Petranovich, who represented Garcia and the law firm, didn’t respond to a Bulletin request for comment.
