PHOENIX (CN) – Heavy-hitting law firms Greenberg Traurig and Quarles & Brady will together pay $77.5 million to settle a class action that accused them of aiding a $900 million Ponzi scheme.
Greenberg Traurig has agreed to pay more than $61 million to investors in the defunct real estate investment company Mortgages Ltd., according to preliminary approval orders filed Wednesday. Quarles & Brady will pay $26.5 million to investors in Mortgages Ltd.’s financier, Radical Bunny.
The federal class action claimed that the firms had helped the companies bilk about 2,000 investors out of nearly $1 billion from 2005 and 2008.
Mortgages Ltd. and Radical Bunny collapsed with the economy in 2008. Scott Coles, who had been CEO of Mortgages, committed suicide the same year.
The class said that Greenberg Traurig, which represented Mortgages Ltd., and Quarles & Brady, which represented Radical Bunny, created “a facade of legitimacy” that allowed the Ponzi scheme to continue.
U.S. District Judge Fredrick Martone said in court papers that he will consider objections to the proposed settlement until 21 days before a final approval hearing, which is scheduled for Aug. 24.
“While we have always stood behind the work we did in this matter, entering into this settlement is a sensible step for the firm,” a Greenberg Traurig spokeswoman said.
Quarles & Brady similarly defended its work in a statement.
“Although the firm believes its conduct was at all times lawful and ethical, in order to avoid the burden, expense and uncertainty of continued litigation Quarles & Brady agreed to settle the class action for $26.5 million,” the firm said.