First Commodity Corp. Agrees To Settle Lawsuit
BOSTON (AP) _ First Commodity Corp. of Boston has agreed to settle a class-action lawsuit against it for $5.3 million, a move that could leave owners of the now-defunct investment firm with millions of dollars.
But the agreement seems likely to provide ex-investors with only pennies for every dollar lost, The Boston Globe reported Friday.
First Commodity owners Donald and Richard Schleicher are required to provide the money to partially repay thousands of former investors in return for being protected from further lawsuits. The settlement must be approved by a federal judge in Boston.
Edward F. Haber, a lawyer representing the investors said the settlement requires the Schleichers to prove their claims that they are worth $9 million, less than lawyers in the case had previously estimated.
If the Schleichers can prove they are worth $9 million and the $5.3 million settlement is accepted, the brothers would be left with nearly $4 million.
Haber said the Schleichers’ lawyers argued that they should be allowed to keep that amount to help pay for other legal battles.
The Schleichers, their company and several former executives are targets of a federal criminal racketeering investigation and a major sale fraud case filed by the federal Commodity Futures Trading Commission. They have been expelled from a Chicago commodity exchange and fined a record $3.5 million.
They are contesting the fine.
According to Globe reports last year, First Commodity convinced thousands of investors, many with little room for loss, to invest more than $500 million, took more than one-third of the money in fees and lost much of the rest.
Exact figures are not available, but The Globe estimated that the settlement at best would give ex-investors roughly 10 cents on the dollar.
Under terms of the settlement, the Schleichers must submit reports on their finances by Aug.1, and a hearing before U.S. District Judge Mark L. Wolf is scheduled for Aug. 18.