Millions Lost Because Mutual Funds Invested Illegally in Offshore Gambling Companies that Violated U.S. Law
New York, NY – (August 28, 2008) – Investors recently sued several mutual fund defendants, claiming that the funds’ managers unlawfully invested and lost tens of millions of dollars in illegal offshore gambling entities.
The investors’ attorneys, along with other law firms with whom they have been cooperating, intend to file several additional cases in the near future on behalf of investors in other mutual funds. The legal team is led by Hanly Conroy Bierstein Sheridan Fisher & Hayes LLP of New York and SimmonsCooper LLC of Illinois.
Until 2006, a number of foreign companies took bets over the Internet from gamblers in the United States, which the suits claim is a violation of federal and state law. The suits allege that the mutual fund managers caused the funds to invest in the gambling companies and that they knew or should have known of the illegality. For example, the prospectus of one of the gambling companies acknowledged that its “activities are considered to be illegal by relevant authorities” in the US. The value of the shares of the gambling businesses tumbled when authorities in the US began a crackdown in 2006.
The Anti-Gambling Act, 18 U.S.C. § 1955, makes it a felony to own an interest in, or to finance, an illegal gambling business. According to the suits, when the mutual funds invested in the illegal gambling companies, they violated the Anti-Gambling Act. By causing the mutual funds to violate the Anti-Gambling Act, the managers of the mutual funds violated the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-68 (“RICO”), because a violation of the Anti-Gambling Act is a “racketeering activity” under RICO. The managers were also negligent, breached their fiduciary duties to the funds and their investors, and wasted fund assets, the suits claim.
The plaintiffs are pursuing derivative claims on behalf of the mutual funds in which they invested as well as class action claims on behalf of themselves and all investors who lost money as a result of the alleged wrongdoing. The suits seek recovery of the capital losses suffered by the funds and their investors and the return of all fees and other compensation paid to the defendants by the mutual funds or the plaintiffs during the time when the defendants were breaching their duties to the funds and the plaintiffs. The suits also seek treble damages and attorneys fees under RICO.
If you currently own shares in mutual funds purchased before January 1, 2007, we may be able to help you recoup your losses. For a free case evaluation, please call our case specialists at 1 212-784-6404 .
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HANLY CONROY BIERSTEIN
SHERIDAN FISHER & HAYES LLP
