Posted by & filed under Fraud.

By Ann C. Logue

Class action litigation operates in a strange space. On the one hand, these lawsuits can force real reform. On other hand, they can cause enormous disruption over silly things and succeed only in making lawyers rich. In August, I received $2.15 in the Google Plus Profile class action suit. Did Google really anything wrong? Probably not, and they did not acknowledge wrongdoing in the settlement. I happily accepted the $2.15, but it did not make me rich. Google paid $7.5 million to those who opted into the suit and to the lawyers, which probably meant less to them than the $2.15 meant to me.

Corporations have long complained about abuses of the class action process. And it is a process, with a lot of players. Many fraud suits involve a potential payout far larger than $2.15, so claimants often hire a claims aggregation firm to submit and manage their claims. 

This week, the SEC charged Alpha Plus Recovery and related companies with fraud. Alpha Plus is a claims aggregator that has filed claims on behalf of money management firms for numerous large legal settlement funds, including those ordered by the SEC. (Its web site has been taken down, but you can find it on the Wayback Machine). According to the charge, Alpha Plus took $40 million dollars beginning in 2014, including $3 million from SEC settlements, by submitting fraudulent claims. This included inventing a money management firm, creating false account statements. and counterfeiting brokerage-firm letterhead. The profits funded personal expenditures, including fine jewelry and an island in the Bahamas. If found guilty, the folks involved could face up to 20 years in prison. Another claims aggregator may have a go at clawing back their ill-gotten gains.

Meanwhile, I am waiting for my $345 payout in the class action lawsuit filed against Facebook, alleging violations of privacy laws in Illinois. The company is fighting it, because it will cost a lot more than $7.5 million and set a precedent. That $345 will buy me plenty of costume jewelry. 

Leave a Reply

Your email address will not be published. Required fields are marked *