March 21, 2024
Whistleblower Law Collaborative is proud to be a member of the whistleblower’s legal team in a recent municipal bond fraud settlement. The $70 million qui tam settlement was with eight of the nation’s largest banks. It is the largest reported settlement ever under the Illinois False Claims Act.
Our client, Edelweiss Fund LLC, alleged that eight large banks engaged in widespread fraud and collusion in the fees they charged and the interest rates they set for municipal bonds. Specifically, the allegations related to the banks’ handling of VRDOs. The defendant banks included: Bank of America, Barclays, Citigroup, JPMorgan Chase, Morgan Stanley, Fifth Third Bancorp, BMO, and William Blair.
Specifically, Edelweiss alleged that Illinois hired the defendant banks to market and price the bonds at the lowest possible interest rates. But instead, Edelweiss alleged, the banks schemed to inflate the interest rates in order to collect millions in unearned fees. Edelweiss further alleged that the banks did this, among other reasons, to avoid having the bonds tendered back to them.
Edelweiss has brought similar lawsuits alleging the same municipal bond fraud scheme. Three additional cases are continuing. They are in California, New York, and New Jersey.
Edelweiss’s principal is Johan Rosenberg. He has more than 30 years’ experience advising municipalities on VRDOs and other types of municipal bonds. This result was only possible because of Rosenberg’s dogged commitment to recovering taxpayer dollars.
I am gratified by the settlement and hopeful we will obtain similar results for the other states. My goal continues to be securing for my clients and other state and local governments the lowest-cost municipal bond financing possible to maximize the overall benefit the public receives from the critical government projects these VRDOs fund.
–Johan Rosenberg
Under the Illinois False Claims Act and laws in numerous other states, whistleblowers can bring lawsuits against those defrauding the government. The case, knowns as a “qui tam,” is brought on behalf of the state or federal government. In return, successful whistleblowers can receive up to 30% of what the government recovers from the lawsuit.
Here, 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.
Edelweiss is represented in these matters by a large team of lawyers across the country. In addition to Whistleblower Law Collaborative LLC, the firms include Constantine Cannon, Schneider Wallace Cottrell Konecky LLP, McKool Smith, Behn & Wyetzner, DiCello Levitt LLP, Steyer Lowenthal Boodrookas Alvarez & Smith LLP, Stone & Magnanini LLP, and Howard Law. Erica Blachman Hitchings and David Lieberman are the WLC attorneys working on the Edelweiss matters.
It has been a pleasure to collaborate with such talented lawyers and staff on the monumental effort that these series of cases require. We look forward to continuing to press forward in New Jersey, California, and New York.
–Erica Blachman Hitchings, WLC partner
Whistleblower Law Collaborative LLC, based in Boston, devotes its practice entirely to representing clients nationwide in bringing actions under the federal and state whistleblower laws and programs, False Claims Acts, and other whistleblower programs.
If you are considering becoming a whistleblower or are aware of other types of fraud, contact us for a free, confidential consultation.