Author Archive

6 Tips to Avoid a Ponzi Scheme

February 3rd, 2011. By Kristine B

They are two words that no investor wants to hear: Ponzi scheme. As in, your money was invested in a Ponzi scheme. People whose money winds up in a Ponzi scheme often have a lot of difficulty getting their money back, especially if they were among the last to invest. There are ways to watch for Ponzi schemes and avoid them. These tips won’t guarantee that you’ll never invest in a Ponzi scheme, but they’ll at least help to reduce the likelihood of it happening.

What is a Ponzi Scheme?

A Ponzi scheme is an investment scheme in which money from new investors is used to pay out previous (or existing) investors. So, when I invest in the scheme (unknowingly, of course), my money is used to pay the would be “ROI” (return on investment) to the people already invested in the scheme. So, in other words, very little real investing occurs. The Ponzi scheme collapses when one of three things happens: there are not enough new investors to pay out previous investors; when large numbers of previous investors demand to be paid out; or when someone becomes suspicious about where the money is coming from. In recent times, the Bernie Madoff Ponzi scheme made headlines—and Carr Miller is now facing allegations of a Ponzi scheme as well.

The Downside of Ponzi Schemes

Because the money isn’t really invested as it’s purported to be, the scheme requires new investors to keep it going. But those new investors, if no one else invests after them, won’t get their money back. Their money has either gone to previous investors or has gone to fund a lavish lifestyle on the part of the person in charge of the scheme. Nice, huh? All your hard-earned money just bought some guy a fancy car and a trip to a luxury resort, while you thought it was sitting in honest investments.

Even previous investors who were paid out might not be safe. Why? Because the money they were given was illegally gained. So they might have to give some or all of it back to a trustee who then determines how to split up whatever money remains—if any does.

How to Avoid Ponzi Schemes

1) Don’t invest with someone just because your friends/colleagues/associates do.

There’s no guarantee that they’ve done their homework about an investment. Furthermore, if Read the rest of this entry »

Tags: Ponzi scheme, Securities Fraud
Posted in Emerging Issues, Pleading Ignorance, Securities | No Comments »

Can I still File a Lawsuit if there’s already a Settlement?

January 18th, 2011. By Kristine B

Good question—and this week, Pleading Ignorance answers it. It’s a question a lot of people have: Can I still file a lawsuit if there’s already a settlement? I spoke with attorney J. Benton Stewart of Stewart Law, P.L.L.C. to better understand the in’s and out’s of class action settlements and when it’s best to file your lawsuit. 

Before we can answer that question, we have to first understand how class action lawsuits and settlements work.

Class action lawsuits can be opt-in or opt-out lawsuits.

Opt-in Class Action Lawsuit

If they are opt-in, then you have to ask to be part of the lawsuit. Typically, with an opt-in class action, you have to submit a claim form indicating that you wish to be a part of the class action—you have to officially “opt in”. If on opt-in class action lawsuit settles and you weren’t part of the class, you’re still free to bring about your own lawsuit. If you were part of the class, then you can’t bring one of your own.

Opt-out Class Action Lawsuit

In an opt-out lawsuit, you’re automatically part of the class regardless of whether or not you meant to be—you have to tell the claims administrator that you don’t want to be part of the class before you’ll be taken out. In this situation, if you haven’t told them that you do not want to be part of the class and the lawsuit settles, you can’t bring your own lawsuit. Basically, if you’re included in a class that settles, either because you chose to be or because you didn’t opt-out, you can’t bring your own lawsuit.

Bottom line, if you think you may want to file your own lawsuit against the defendant in the class action lawsuit, you cannot have been a member of the class (ie, the plaintiffs) of the class action. Still with me? 

Of course, there’s more to it than that because of how settlements normally work. 

Class Action Lawsuit Settlements

Once a settlement is announced, usually a pool of money is set aside to pay all the claims. Instead Read the rest of this entry »

Tags: Attorney J Benton Stewart, Ben Stewart, Class Action, File Lawsuit, Pleading Ignorance, Settlement
Posted in Emerging Issues, Pleading Ignorance | 21 Comments »

5 of the Highest Settlement Awards for 2010

December 29th, 2010. By Kristine B

Once again we find ourselves at the end of a year—and it’s been a pretty big year for lawsuits. So, in celebration of the year that was, we’ve compiled some of the biggest settlements—in terms of amount of the award or settlement—of 2010. My deepest thanks to the incredibly talented, wonderful, smart, beautiful, fantastic duo of Lucy C. and Abi K. for helping me compile this list…

Personal Injury Lawsuits 

When it came to personal injury, wrongful death and negligence lawsuits, there were some pretty large awards and settlements given out in 2010. 

One settlement of $176 million was approved in a lawsuit filed after a 2003 nightclub fire in Rhode Island killed 100 people. The settlement money will go to survivors of the fire who suffered serious injury and to the children who lost parents in the fire. 

Meanwhile, in one of the largest jury awards ever in the US, a jury in El Paso awarded $132 million to victims of a bus crash in which two people were killed and several others were injured. The vehicle reportedly crashed when the driver began speeding and eating at the same time. The bus rolled down an embankment. 

Defective Products 

Speaking of automobiles, a settlement was reached earlier this year between Volkswagen of America, Inc. and vehicle owners who said their cars leaked during rainstorms. The defective product lawsuit alleged certain Volkswagen and Audi models contained design defects that allowed water to enter the passenger component and, in some cases, damaged electronic components of the vehicle. As part of the settlement, Audi was required to pay $10,000 to each of the class representatives, $9.2 million in fees and $675,000 in costs for the class-counsel firms. 

And in another defective product lawsuit, Medtronic agreed to pay $268 million to settle lawsuits regarding the company’s Sprint Fidelis Leads. The leads were alleged to have been defectively designed, allowing the wires to crack and causing unnecessary shocks to patients’ hearts. 

And, in a defective drugs lawsuit, the maker of Seroquel agreed to pay 17,500 patients a total of $198 million to settle allegations that the medication caused illnesses such as diabetes. 

Tags: 2010 Highest Settlements, Bus Accident, El Paso, Medtronic, Rhode Island, Seroquel, Settlements, Volkswagon
Posted in Emerging Issues, Settlement | 3 Comments »

2010: Annus Horribilis for GlaxoSmithKline?

December 20th, 2010. By Kristine B

Let’s face it, lots of drug companies face a variety of lawsuits and fines from the government. But 2010 might be a year that GlaxoSmithKline would wipe from its memory if it could—a sort of annus horribilis, if you will. Between the reported Paxil settlements, massive fines for illegal activity at its Puerto Rico plant and huge restrictions on its diabetes drug, Avandia, GSK appeared to be facing a TKO as we moved into 4Q’2010. So officials at GlaxoSmithKline could be forgiven if they toast the New Year and hope it’s better than the last 12 months…

Paxil Settlements

Earlier this year, various media outlets reported that GlaxoSmithKline agreed to settle certain lawsuits alleging Paxil caused birth defects. According to Bloomberg, the drug maker agreed to pay more than $1 billion to settle approximately 800 lawsuits.

Meanwhile, a separate lawsuit also alleging Paxil birth defects, saw the family of an infant who died less than two months after birth, settle with GlaxoSmithKline for an undisclosed amount. In yet a different lawsuit, the family of a boy born with heart defects was awarded $2.5 million by a jury, which found that GlaxoSmithKline officials “negligently failed to inform” the mother’s physician about the risk of birth defects.

Fines for the Glaxo Puerto Rico Plant

In October of this year, GlaxoSmithKline agreed to pay $750 million to settle allegations of wrongdoing at the company’s Puerto Rico plant, which is now closed. An investigation into the plant found that improper manufacturing procedures resulted in medications that could split apart or had improper amounts of the active ingredient. Officials alleged that GlaxoSmithKline knowingly manufactured, distributed and sold medications that did not meet FDA standards.

As part of the settlement, a whistleblower in the case received a whopping $96 million. So for her, 2010 might just have been a fantastic year.

Avandia

Also this year, GlaxoSmithKline learned that its diabetes drug, Avandia, would carry severe restrictions on who can take the medication. The decision came after an FDA advisory panel recommended that use of Avandia be restricted in light of serious side effects. Patients who are not currently on Avandia will have to try other diabetes medications before using Avandia and will have to show they have been made aware of Avandia side effects. Although some people consider it a victory that Avandia was not pulled entirely from the market, these restrictions will likely have an impact on Avandia profits.

Based on those three issues alone, 2010 might be a year that GlaxoSmithKline tries—ever so hard—to forget.

Tags: Avandia, avandia-heart-attack, GlaxoSmithKline, GSK, paxil, paxil-heart-defects-newborn
Posted in Drugs/Medical | No Comments »

Understanding the 120-Day Deadline for VA Claim Appeals

December 15th, 2010. By Kristine B

It’s a lawsuit that could have huge implications for US veterans trying to claim veterans’ benefits: A lawsuit being heard by the Supreme Court asks the justices to rule that lower-court judges can be lenient in extending the 120-day deadline for filing appeals regarding denied claims. Although the issue might seem open and shut to some of us—let’s just do the right thing for our veterans, already—lawyers for the VA say Congress didn’t allow for judges to be flexible with the deadline. This week, Pleading Ignorance looks at the deadline issue and asks when our veterans will be treated fairly. 

So, here’s the issue in a nutshell. A veteran files a claim with the VA and that claim is denied. The veteran then has 120 days to file an appeal of the denial. If he misses the 120-day deadline, he’s out of luck. His appeal won’t be heard. Okay, I know what you’re thinking: a deadline is a deadline. Don’t miss the deadline and you’re fine.

But the problem is this: veterans file claims because of health problems. Let’s say the veteran has been badly injured and is in the hospital for nine months, with no one to help him through the claims process. How is he supposed to file the claim from the hospital when there’s a chance he might not even know the claim was denied? How is he supposed to take care of the paperwork from his hospital bed? 

Or, what about veterans who deal with issues such as post-traumatic stress disorder (PTSD) or other psychological problems that impair their ability to understand the deadlines or the paperwork involved? The very condition that requires them to file a claim could be what stops them from being able to submit an appeal after a denied claim. 

Look, I’m not saying we should give them 10 years to file appeals. But for crying out loud, they served our country—probably for a lot longer than 120 days. Is there no way we can be flexible in dealing with veterans who have health problems that prevent them from filing an appeal in 120 days? 

The case before the Supreme Court is a perfect example of the unfairness of the system. David Henderson was a Korean War veteran who was diagnosed with paranoid schizophrenia and Read the rest of this entry »

Tags: VA, Veterans Benefits, Veterans Disability
Posted in Pleading Ignorance | No Comments »