$40 Million Settlement Agreed In Dominelli Case, Reports Say
SAN DIEGO (AP) _ The law firm that represented the now-bankrupt J. David & Co. investment firm has agreed to pay up to $40 million to settle lawsuits brought by people who invested in the fraudulent company, according to published reports today.
The Los Angeles Times and The San Diego Union reported today that the New York law firm of Rogers & Wells agreed to the settlement with more than 300 plaintiffs who lost fortunes in the J. David collapse.
Their suits alleged that Rogers & Wells aided in the J. David fraud by continuing to represent company founder J. David Dominelli after it realized the firm was operating illegally.
The J. David firm was forced into bankruptcy in February 1984. Dominelli is serving a 20-year federal prison term after pleading guilty to felony charges stemming from the firm’s collapse.
The newspapers said a 22-page agreement between Rogers & Wells and the plaintiffs was submitted Friday morning to San Diego Superior Court Judge Ben W. Hamrick, who ordered it sealed.
Six of the lawsuits against Rogers & Wells were scheduled to go to trial May 13. When Hamrick set the trial date, he also ruled that there was substantial probability the plaintiffs would prevail in their claims against Rogers & Wells.
The investors sought more than $120 million from the law firm, which is said to have insurance of less than $80 million. If Hamrick approves the proposed settlement, it would be the largest amount ever paid by a law firm to settle claims stemming from the representation of a client, according to the National Trade Law Journal, a trade publication.
The published reports said the settlement would total about $40 million, depending on a complicated formula contained in the agreement.
Confidential Rogers & Wells documents have shown that the firm knew Dominelli was selling unregistered securities more than a year before the J. David collapse.
Dominelli, 44, pleaded guilty last March to fraud and tax evasion charges. Dominelli admitted he fabricated his image as a savvy money trader to lure investors, then diverted their money into his personal accounts. Investors lost an estimated $80 million.
Rogers & Wells is headed by former U.S. Secretary of State William P. Rogers, who is now heading a blue-ribbon panel investigating the explosion of the space shuttle Challenger. Rogers personally participated in the settlement agreement, according to the National Law Journal.