CHICAGO (CN) – Kansas City Chiefs quarterback Kyle Orton is lead plaintiff in a class action that claims a Chicago law firm cost investors millions of dollars with bad advice about a landfill energy investment that was supposed to generate big tax breaks.
Orton and Edward Rappaport sued the law firm of Chuhak & Tecson and its partners David Shiner, Jeanne Kerkstra, Gary Stern and Lindsey Markus, in Cook County Chancery Court.
Suing for themselves and as class representatives, Orton and Rappaport say, “Chuhak allowed plaintiffs to invest in worthless entities under false pretenses.”
They claim that in 2005 the defendants persuaded investors to put money into 10 tax shelters which “were created to own ‘working oil and gas interests’ and were designed for the principal purpose of providing tax credits to investors.”
They claim the law firm provided legal advice on “how to create the tax shelter entities in compliance with Section 29 of the Tax Code. Chuhak was also hired to give advice to portention investors in order to induce them to invest in the tax shelter entities.”
They say, “Chuhak worked together with the syndicators to design and form the tax shelter entities and in matters unrelated to the tax shelter entities.”
The complaint states: “Chuhak advised the plaintiffs and other potential class members that Section 29 tax credits would be available because the tax shelter entities properly sold biomass gas, convertible into electricity, from landfills operated by the tax shelter entities in which plaintiffs and other potential class members would hold an interest.”
But Orton says the law firm did not disclose to investors “that there was a possibility that they would not receive tax credits under Section 29 because the tax shelter entities did not meet the statutory requirements of Section 29.”
“In fact, Chuhak advised plaintiffs and other potential class members that their investment would result in significant tax credits because the requirements under Section 29 had been met.”
Orton says that in 2010 “the plaintiffs and other potential class members learned for the first time that they had been financially damages as a result of Chuhak’s advice.”
The class seeks damages for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, fraud, and aiding and abetting fraud.
They are represented by Daniel Konicek with Konicek & Dillon.
Orton was a quarterback with the Chicago Bears, then was traded to the Broncos, but when Tim Tebow became a phenomenon this season he was released, then picked up by the Chiefs.