Orange County, Bond Lawyers Settle
SANTA ANA, Calif. (AP) _ Orange County has agreed to accept $45 million from New York law firm LeBoeuf, Lamb, Greene & MacRae to settle lawsuits over the county’s 1994 bankruptcy.
The county had sold $975 million in bonds with LeBoeuf’s help and then saw its finances unravel on risky investments. The bankruptcy in December 1994 was the nation’s largest municipal failure.
Schools, water districts, cities and others saw $1.6 billion disappear from the county investment pool.
The New York law firm offered $45 million in October to settle allegations it failed to alert government officials to approaching calamity.
LeBoeuf made a separate settlement of $10.2 million earlier this year with the North Orange County Community College District.
The district gave LeBoeuf its share of future settlements, including its $2 million share of Tuesday’s deal. As a result, the two settlements will cost LeBoeuf $53.2 million, LeBoeuf attorney Gary Cohen told The Orange County Register.
``This is a very significant settlement from a defendant who is not one of our primary targets,″ said J. Michael Hennigan, a lawyer for the county.
The county also has sued major financial houses to recover money to pay its debts. Merrill Lynch & Co., the county’s main securities broker, is the defendant in a $2 billion suit scheduled for trial Sept. 15.
The LeBoeuf settlement ranks among the largest against an American law firm. The New York firm of Kaye Scholer Fierman Hayes & Handler paid $61 million _ $20 million to investors in 1990 and $41 million to federal regulators in 1992 _ to settle lawsuits over its representation of failed savings and loan operator Charles Keating.
The county and LeBoeuf both will ask U.S. District Judge Gary Taylor to approve the settlement, the county said.
Actual payout could take a while, however, since defendants in other suits could contest LeBoeuf’s fair share of total damages.
Schools are entitled to roughly the first $25 million from the LeBoeuf settlement.
Before the agreement, the county had won $32 million in settlements from others.