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NY Judge Upholds Fraud Claims Against Wells Fargo, Fortis in $1.5 Billion Subprime Mortgage-Backed Securities Case

broadwayworld.com | April 9, 2014

NEW YORK, April 9, 2014 /PRNewswire/ A lawsuit filed by European bank LBBW Luxemburg S.A. over an alleged $1.5 billion subprime mortgage-backed securities fraud scheme cleared a significant hurdle last week when a federal judge denied the defendants' extensive motions to dismiss.

U.S. District Judge J. Paul Oetken let stand the fraud, breach of contract, negligent misrepresentation and constructive fraud charges against Charlotte, N.C.-based Wells Fargo Securities LLC (formerly Wachovia Capital Markets) and New Jersey-based Fortis Securities LLC. The two companies' alleged misrepresentations ensnared not only LBBW, but also the employee pension fund for the Zuni Indian tribe.

"This was a significant ruling in a massive fraud case where the sellers greedily squeezed money from investors despite knowing the underlying securities were riskier than represented and not even worth the price," says David Warden of the Houston-based litigation boutique Ahmad, Zavitsanos, Anaipakos, Alavi & Mensing P.C., or AZA. Mr. Warden and AZA lawyers John Zavitsanos, Jamie Alan Aycock, and Megan L. Bibb represent the European bank. Sharad Samy of the Connecticut-based Law Offices of Sharad A. Samy LLC is co-counsel.

The lawsuit stems from a 2006 deal in which Wells Fargo sold $40 million of what it claimed were highly rated securities to LBBW. The lawsuit filed by LBBW, a subsidiary of the German bank Landesbank Baden-Wurttemberg, alleges that its purchase was among nearly $1.5 billion in securities sold to LBBW and other customers even though Wells Fargo had determined that the securities were overvalued and riskier than promised. The securities were collateralized by subprime residential mortgages, and defaulted within a year.

LBBW's attorneys argue the alleged fraud was masked by the beginning of the economic crisis in 2007, and was discovered in April 2011 only after the U.S. Securities and Exchange Commission instigated administrative proceedings related to a $5.5 million investment made by the Zuni tribe's employee pension fund.

The lawsuit, LBBW Luxemburg S.A. v. Wells Fargo Securities LLC, et al., No. 12-CV-7311, was filed in 2012 in the U.S. District Court for the Southern District of New York.

Ahmad, Zavitsanos, Anaipakos, Alavi & Mensing P.C., or AZA, is a Houston-based law firm that is home to true courtroom lawyers with a formidable track record in complex commercial litigation, including energy, intellectual property, securities fraud, construction and business dispute cases. AZA is recognized by Chambers USA 2014 as among the best in Texas commercial law and by U.S. News & World Report and The Best Lawyers in America as one of the country's best commercial litigation firms in the 2014 listing of the nation's leading law firms. National corporate counsel named AZA one of the country's best in client service among law firms serving the Fortune 1000. AZA has been hired on many occasions by the same companies the firm has prevailed against at trial. Read more at http://www.azalaw.com.

 

Back to April 2014 Archive

CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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