CHICAGO, March 21, 2024 /PRNewswire/ — A $70 million settlement in a whistleblower lawsuit against eight of the nation’s largest banks has been finalized and executed, making it the largest reported settlement ever under the Illinois False Claims Act.
The whistleblower, identified in the lawsuit as Edelweiss Fund LLC, alleged that various affiliates of Bank of America, Barclays, Citigroup, JPMorgan Chase, Morgan Stanley, Fifth Third Bancorp, BMO, and William Blair engaged in widespread fraud and collusion in the fees they charged and the interest rates they set for tax-exempt municipal bonds known as VRDOs. Specifically, Edelweiss alleged that while Illinois hired the defendant banks to market and price the bonds at the lowest possible interest rates, the banks engaged in a scheme to inflate the rates to collect millions in fees without providing the services for which they were retained and to avoid having the bonds tendered back to them.
Edelweiss has brought similar lawsuits involving VRDOs on behalf of California, New York, and New Jersey, and those lawsuits are continuing.
Johan Rosenberg, the principal of Edelweiss with more than 30 years’ experience advising municipalities and other clients on VRDOs and other types of municipal bonds, stated: “I am gratified by the settlement. My goal when I started scrutinizing the manner in which rates on VRDOs were reset in about 2010 was to shine a light on this market because of the benefit the public receives from the critical government projects that VRDOs fund. In the years since the litigation began, we have uncovered much that was unknown about how this market is operated and how remarketing agents behave. I remain hopeful we will obtain similar results for the other states.”
Under the False Claims Act in Illinois and numerous other states, whistleblowers can bring lawsuits on behalf of the government against those committing fraud against the government. In return, successful whistleblowers can receive up to 30% of what the government recovers from the lawsuit. For its successful settlement in Illinois, Edelweiss received the maximum reward of 30% of the government’s $48 million portion of the settlement. The remaining $22 million went towards Edelweiss’ legal fees and expenses in bringing the suit.
Edelweiss is represented in these matters by a large team of lawyers across the country, which includes: Constantine Cannon; Schneider Wallace Cottrell Konecky; McKool Smith; Behn & Wyetzner; DiCello Levitt; Steyer Lowenthal Boodrookas Alvarez & Smith; Whistleblower Law Collaborative; Stone & Magnanini; and Howard Law.
For Edelweiss Fund LLC’s original press release via PR Newswire, read here.
The DiCello Levitt team who worked on this case includes F. Franklin Amanat, Greg G. Gutzler, and Chuck Dender.