States News Service
August 3, 2009 Monday
LENGTH: 382 words
HEADLINE: LAWYERS SUE COMPANY CHAIRED BY CU MORTGAGE CEO
BYLINE: States News Service
DATELINE: NEW YORK
BODY:
The following information was released by the Credit Union National
Association (CUNA):
At least four law firms have withdrawn or are seeking to withdraw from a
case that involves a financially troubled company formerly chaired by a man
convicted of defrauding credit unions, Fannie Mae and others when he headed up
the now-bankrupt U.S Mortgage Corp. and CU Mortgage.
The defendant company is Dallas-based Home Solutions of America Inc., which
specializes in restoring homes after disasters. Its former chairman, Michael
McGrath, pleaded guilty June 11 to defrauding 19 credit unions, Fannie Mae and
others of $139.6 million related to the bankruptcies of the mortgage companies.
He will be sentenced on Oct. 1 (News NowJune 16).
According to a July 21 summary judgment in the New York Supreme Court,
Justice Emily Goodman awarded New York law firm Morgan, Lewis and Bockius $2.4
million, plus interest, for legal fees owed the firm by Home Solutions of
America Inc., from 12 legal situations in 2007. The New York Supreme Court is a
trial-level, lower court. The court acting as the highest court in the state is
the New York Court of Appeals.
Also, on July 23, Justice Goodman granted another law firm--New Jersey-based
Riker, Danzig, Scherer, Hyland and Perretti LLP-- its motion to withdraw as
attorney of record for Home Solutions because Home Solutions owed the firm
$60,000 for work from November 2008 to April 2009. The firm had defended Home
Solutions in the lawsuit filed by Morgan, Lewis and Bockius (New York Law
Journal July 29).
The other firms trying to withdraw are from Texas--Fulbright and Jaworski and
Hallett and Perrin, said the journal.
In January 2008, Home Solutions of America was delisted from the Nasdaq Stock
Exchange after missing deadlines for filing quarterly reports. It had financial
and legal difficulties for most of 2008 and has been selling or closing all its
divisions except those in New Orleans, it said in a filing with the Securities
and Exchange Commission.
McGrath had offered Morgan Lewis $1 million to settle accounts but the law
firm said it was owed $2.5 million. Riker Danzig had required McGrath to sign a
personal guaranty for payment of fees and costs, but McGrath resigned as
chairman of Home Solutions and federal prosecutors froze his assets. |
