Recently in Directors & Officers Liability Category

Today, Freedom Watch announced the filing of a class action lawsuit by shareholders of AIG to force the directors of the company to themselves pay back the millions in illicit bonuses, dividends and other perks they paid out to themselves and other officials who destroyed the company's financial standing.

The lawsuit, filed in the federal court in Los Angeles, is wide reaching and will accomplish what Congress cannot, given the patent illegality of its taxing scheme, which violates the U.S. Constitution as it would tax ex post facto and discriminately.

Larry Klayman, the Chairman and General Counsel of Freedom Watch, who represents the shareholders in their class action suit, issued this statement:

"Today, the American people, not the compromised ruling elite in Washington, D.C., have begun a second American Revolution to take the country back from the con men on Wall Street, and on Pennsylvania Avenue - who under successive administrations played a central role in the meltdown of the U.S. financial system and economy. Freedom Watch will not rest until justice is done and it won't come from the Obama administration, bent on deceiving the U.S. taxpayer that it intends to clean up this corruption, all the while lining the pockets of its friends at AIG with government bailout money, who gave handsomely to have the President elected."

The lawsuit also seeks to recover, from the directors, the losses of the shareholders of the last many months and years, as well as to make AIG whole under new leadership, without the use of government money.

A copy of the complaint can be found at www.freedomwatchusa.org

Source: Freedom Watch

Larry Lattig, Litigation Trustee for the First Magnus Financial Corporation Litigation Trust, through his lawyers, Lackey Hershman, L.L.P., filed a $1 billion lawsuit today against more than 40 defendants, including the former directors and officers of First Magnus Financial Corporation, and their new mortgage company, StoneWater Mortgage Corporation. Prior to its bankruptcy filing on August 21, 2007, First Magnus was one of the largest originators of "Alt-A" mortgages in the country and had over 5,500 employees nationwide.

The lawsuit alleges that First Magnus and "the rest of America" were "victimized by the avarice and greed of seven men -- Gurpreet Jaggi, Thomas Sullivan, Sr., Thomas Sullivan, Jr., Bill Gaylord, Gary Malis, Dominick Marchetti and Karl Young" and that "these seven men paid themselves hundreds of millions of dollars based on completely fictitious profits." The lawsuit, nearly 200 pages and containing more than 90 counts, details how the directors and officers stripped First Magnus of capital when it was required to reserve for repurchase and indemnity obligations owed to the commercial banks that financed the loans and the Wall Street firms that purchased them.

Lead counsel for the Litigation Trust, Jamie R. Welton, said, "The complaint details how the directors and officers originated bad loans, in the worst markets, paid themselves hundreds of millions in stock redemptions, bonuses, and distributions when they sold the loans to Wall Street, and then said 'sorry Charlie, we're broke' when Wall Street asked for their money back. Now the taxpayers are holding the bag. It's not right. It's why the economy is in the mess it's in. We will make certain that the creditors of First Magnus, including the thousands of employees left unpaid, recover every last penny they are owed from these defendants."

Most of the former First Magnus employees did not receive their final paychecks and had little to no warning from management that they were about to lose their jobs. According to the complaint, more than $22 million remained available on a line of credit from the parent company owned by the directors and officers prior to the bankruptcy filing, "more than enough to pay the approximately $13 million in would-be wage claims in full."

The complaint describes spending by the directors and officers that "would make even the most pampered and precocious movie star blush," including an entire wing of the headquarters building located at 603 N. Wilmot called the "Sullivan Wing" decorated in rich wood and marble, a $170,000 waterfall, a $16,000 fish tank, an air-conditioned garage for the officers, extensive personal use of corporate jets, and an all-expense-paid trip to a Hawaiian resort approximately two weeks prior to the bankruptcy filing. The lawsuit also details significant accounting errors, the theft of Debtor's proprietary materials during the bankruptcy, and violations of the Racketeer Influenced and Corrupt Organizations Act (RICO).

SOURCE Lackey Hershman, L.L.P.