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Three Big Law Firms Face Federal Securities Suits (Corrected)

July 23, 2020, 5:54 PMUpdated: July 23, 2020, 7:05 PM

DLA Piper and Fox Rothschild face accusations of “knowingly” aiding and abetting a Ponzi scheme in Florida federal district court, while Davis Wright Tremaine removed state securities allegations to a federal district court in Oregon.

Oregon investors lost $17 million buying purported real estate securities from American Equities and said in state court that Davis Wright Tremaine LLP “participated and materially aided in the sales.” But the case belongs in federal court because the proposed class members are Oregon citizens and Davis Wright Tremaine’s principal place of business is in Washington, the firm said in the U.S. District Court for the District of Oregon Wednesday.

“These allegations are without merit,” Timothy S. DeJong, a Stoll Berne attorney who represents Davis Wright Tremaine, told Bloomberg Law Thursday. The firm hasn’t done work for American Equities in over a decade and the allegations “relate to events that occurred years after” the attorney-client relationship ended, he said.

“Our firm has no knowledge of those events or complaints by investors,” who “waited 17 years to sue,” DeJong said. “The plaintiffs are clearly grasping at straws and extreme legal theories to manufacture a case nearly a decade later.”

A separate group of investors placed some of the blame for their losses in the alleged $170 million EquiAlt Ponzi scheme on Fox Rothschild LLP and DLA Piper LLP. The scheme “was carried out by the managers of EquiAlt acting in concert with” a former Fox Rothschild partner now at DLA Piper, the investors alleged July 21 in the U.S. District Court for the Middle District of Florida.

Client confidentiality obligations “limit DLA’s ability to comment upon the specific allegations” except to state that the class’s claimed losses “were not the result of allegedly faulty legal services,” John K. Villa, a Williams & Connolly LLP partner representing DLA Piper, told Bloomberg Law Thursday.

“We understand that EquiAlt’s financial issues leave its former law firms as possible litigation targets, but that does not make the lawyers responsible for business and real estate conditions,” Villa said. “The firm is confident that the facts will show that the firm fulfilled its professional responsibilities.”

Fox Rothschild didn’t immediately respond to a request for comment.

Larkins Vacura Kayser LLP and Esler Stephens & Buckley LLP represent the investors in the American Equities-related case. Moskowitz Law Firm PLLC, Bonnett Fairbourn Friedman & Balint PC, and Sonn Law Group PA represent the EquiAlt investors.

The cases are Anderson v. Davis Wright Tremaine LLP, D. Or., No. 20-cv-01194, removed 7/22/20 and Gleinn v. Wassgren, M.D. Fla., No. 20-cv-01677, complaint filed 7/21/20.

(Corrects spelling of Stoll Berne.)

To contact the reporter on this story: Jennifer Bennett in Washington at jbennett@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Carmen Castro-Pagan at ccastro-pagan@bloomberglaw.com