(CN) – An Orange County lawyer has agreed to plead guilty to losing virtually all of a multimillion-dollar class-action settlement through high-risk day trading, the Justice Department announced.
In May 2007, Sandeep Baweja of Irvine, Calif., represented a class of real estate agents who accused ZipRealty of denying them sales commissions, business reimbursements and full wages.
Baweja won a $3.55 million settlement in March 2008, and U.S. District Judge S. James Otero ordered that the balance of the settlement — more than $2.52 million — be distributed among about 800 claimants.
Instead of immediately distributing the money, Baweja set up an online stock brokerage account in which he transferred most of the settlement funds, the Justice Department said.
Despite his lack of experience in trading, Baweja allegedly used the money to day trade securities on margin. By December 2008, the value of his stock account had plummeted to about $55,000 – meaning he lost nearly all the settlement money he’d invested, the Justice Department said.
ZipRealty informed Judge Otero that claimants were complaining about not receiving their settlement money. Baweja told the court that he was in the process of distributing the money, but failed to explain the reason for the delay and neglected to mention that only $121,500 of the settlement money had been distributed to just 46 claimants, the government said.
Baweja agreed to plea guilty to wire fraud and obstruction of justice, which carry a maximum penalty of 30 years in prison.
He will make his first appearance in court later this month.