Christopher J. Gray, P.C. and its co-counsel have filed a petition for certiorari with the U.S. Supreme Court seeking review of the dismissal of the complaint in an action alleging that the major underwriters of title insurance conspired to fix the premiums for title insurance at an artificially high level.  The U.S. District Court for the Western District of Texas dismissed the complaint based on a technical legal principle known as the filed rate doctrine, which essentially holds that rates approved by a government regulator cannot be challenged under the antitrust laws even if it is alleged that those same rates were achieved via anticompetitive conduct. The U.S Court of Appeals for the Fifth Circuit in New Orleans affirmed the dismissal. 

The certiorari petition (which contains the orders appealed from as appendices) is accessible below.  

10.6.28 certiorari petition winn v alamo.pdf (332.61 kb)

The U.S. District Court for the Southern District of New York recently granted the motion filed by plaintiffs (including plaintiff Roberto E. Calle Gracey represented by Christopher J. Gray and Louis F. Burke) seeking a prejudgment attachment of $72.4 million against a master fund entity (Amaranth LLC) associated with the now-defunct hedge fund known as Amaranth. The Amaranth master fund had sought to distribute the $72.4 million to its feeder fund investors (including offshore entities) and also to its former employees as deferred compensation.

The Court granted the order of attachment in In re Amaranth Natural Gas Commodities Litig., No. 07-CV-6377 (SAS), a class action (the "class action") that alleges that various Amaranth entities and certain Amaranth personnel manipulated the prices of New York Mercantile Exchange (NYMEX) natural gas futures contracts during the period February through September, 2006.

Plaintiffs argued that if the money were distributed, plaintiffs would likely be unable to collect any final judgment won in the case since the potential judgment would far exceed the approximately $110 million that the Amaranth master fund would have had left after the proposed $72.4 million distribution. Plaintiffs further argued that they were likely to prevail at trial on their claims given, among other things, the fact that Amaranth’s head trader Brian Hunter has been found liable for market manipulation by the Federal Energy Regulatory Commission in a proceeding that was premised on some of the same trading that underlies the Amaranth class action.

The Amaranth master fund argued that plaintiffs should not be granted attachment because they were unlikely to prevail on their Commodities Exchange Act Section 2(a)(1) agency claims against the Amaranth master fund because (defendant argued) Amaranth’s trading advisor entity was not its agent.

Under the Court’s ruling, Amaranth LLC will be prohibited from distributing the $72.4 million in question during the pendency of the class action.

The full text of the Court’s opinion as reported in the New York Law Journal is accessible below.

10.5.10 order of attachment from nylj.pdf (727.18 kb)

Chistopher J. Gray. P.C. and its co-counsel filed an Amended Complaint in the consolidated class action lawsuit against, among others, Bank of America and certain commodities Futures Commission Merchants alleging aiding and abetting commodities fraud in connection with a fraudulent "Ponzi" scheme known as Agape operated by a man named Nicholas Cosmo (who has also been charged with several crimes by the United States government arising out of the same scheme).

The Amended Complaint, filed July 17, 2009, alleges that Bank of America aided and abetted Cosmo and Agape's scheme by: 

  a.   allowing Cosmo, a convicted felon, to open, direct, control and haveextraordinary access to at least two dozen accounts under different names (among which accounts Cosmo regularly made multi-million dollartransfers of funds);

  b.   enabling Cosmo and Agape to transfer investor funds between different named accounts, in effect, "sweeping" all monies into one account controlled by Cosmo;

  c.   providing Agape with confidential customer account information for Agape to utilize in soliciting new investors;

  d.   assigning one or more representatives to work directly out of Cosmo's office, which was approximately 28 miles from the branch where Agape and Cosmo had their bank accounts;

  e.   providing its on-site representatives at Agape with bank equipment and/or computer systems to enable them to directly access Bank of America'saccounts and computer systems, monitor and check account balances, accept deposits and issue checks, directly from Agape's office; and

  f.   approving and effecting, on a regular basis, transfers of up to $100 milliondollars in wires from Agape's accounts to commodities and futures trading firms.

The Amended Complaint further alleges that Bank of America provided Agape and Cosmo with this extraordinary assistance even though Bank of America's onsite representatives had actual knowledge that Cosmo was commingling investor money, diverting investor money to his own accounts, engaging invirtually no legitimate business whatsoever and speculatively trading investor money in the commodities markets as an unregistered commodities pool.

The defendants' response to the Amended Complaint is due to be filed in the U.S. District Court for the Eastern District of New York on August 31, 2009.  The Amended Complaint and the indictment of Cosmo are accessible below.

09.7.17 cac.pdf (147.25 kb)

cosmo indictment.pdf (388.21 kb)

Christopher J. Gray and his co-counsel, Louis F. Burke and Benjamin L. Del Vento, have filed a class action case against Nicholas Cosmo, an alleged Ponzi scheme promoter, as well as Bank of America and several commodities brokerages that carried accounts to which Cosmo allegedly diverted investor funds.  The class action complaint alleges that starting in 2003, Cosmo, a convicted felon who had just completed a 21 month sentence in Federal Prison in Allenwood, Pennsylvania, commenced a fraudulent investment scheme through Agape, which was eventually comprised of two companies he controlled and approximately 12 brokers acting on Agape’s behalf. Agape obtained approximately $400 million from investors using false pretenses. Thousands of blue collar investors, including police officers, post office employees, social security clerks, and widows investing life insurance proceeds, lost their entire life and retirement savings. Cosmo then surreptitiously transferred a large portion of these funds to commodities trading accounts, in which he traded the investors’ funds and operated an unregistered commodities pool.

The class action complaint further alleges that Bank of America substantially assisted this fraud as follows: (a) Bank of America assigned one or more representative to work directly out of Cosmo’s office, which was approximately 28 miles from the branch where Agape and Cosmo had their bank accounts; (b) Bank of America provided its onsite representatives at Agape with on site bank equipment and/or computer systems to enable direct access to Bank of America’s accounts and systems; and (c) Bank of America’s onsite representatives at Agape had the ability to monitor and check account balances, accept deposits and issue checks. The class action complaint alleges that based on this arrangement, Bank of America had knowledge of all of Cosmo’s financial activities, including his transfers of funds to commodities accounts to operate Cosmo’s unregistered commodities pool.

The class action complaint can be accessed below.

09.4.17 complaint and civil cover sheet.pdf (697.18 kb)

The antitrust class action filed by Christopher J. Gray, P.C. and several other firms in the U.S. District Court for the Eastern District of Texas (Winn v. Alamo Title Insurance Co., et al.) alleging price-fixing in the market for title insurance has been transferred to the U.S. District Court for the Western District of Texas in Austin on the judge's own motion.  U.S. District Judge Ron Clark ruled that the case may more appropriately proceed in Austin because, among other reasons, as the capital of the State of Texas, Austin is a more convenient venue for Texas state government officials who may wish to intervene in or otherwise participate in the case.  The class action alleges that the major title insurance companies operating in Texas conspired to artificially inflate the premiums that they charged to customers over a multi-year period.

The transfer order and the complaint in the antitrust class action are accessible below.  The case has been assigned to Judge Sam Sparks.

09.3.4 order transferring case to wd tex.pdf (119.42 kb)

08.4.3 class action complaint.pdf (2.48 mb)

Christopher J. Gray today argued before a panel of the U.S. Court of Appeals for the Second Circuit seeking reversal of an order granting dismissal of class action claims against Morgan Stanley arising out of Morgan Stanley's alleged conceealment of, misrepresentations concerning the existence of, and destruction of, e-mail evidence.  The three-judge panel reserved decision, meaning that it will issue a written decision at a later date. 

Also representing the plaintiffs/appellants was Louis F. Burke, Esq. of Louis F. Burke, P.C.  Arguing for defendant/appellee Morgan Stanley was Richard A. Rosen of the firm of Paul, Weiss, Rifkind, Wharton & Garrison LLP. 

The complaint that was dismissed by the U.S. District Court and the briefs filed by appellants can be accessed immediately below. 

appellants' brief.pdf (582.79 kb)

reply brief.pdf (152.49 kb)

amended class action complaint.pdf (168.75 kb)