On July 11, 2016, the United States Court of Appeals for the Ninth Circuit issued a published decision substantially reinstating claims of a private investment limited partnership (ESG Capital) and its partners, who were victimized in an $11.25 million fake stock purchase scheme. The suit against the Venable law firm and its former partner David Meyer alleged that the firm committed securities fraud and aided and abetted a client in promoting the fictitious sale of pre-IPO Facebook shares. In the decision, the Appeals Court ruled that plaintiffs satisfied the heightened pleading standards under the Private Securities Litigation Reform Act (“PSLRA”), and that “[c]ertainly, ESG Capital has pled facts sufficient to show a cogent and compelling inference of scienter.” Venable’s former client, Troy Stratos, has already been convicted of wire fraud and money laundering charges, for his role in the fraudulent scheme. The case now returns to the United States District Court in Los Angeles for discovery and trial.
Nystrom, Beckman & Paris LLP serves as lead trial counsel for plaintiffs. On Appeal, NBP was assisted by Margaret Grignon, former California Court of Appeal justice, who currently practices at the Grignon Law Firm, in Long Beach, California.
A copy of the Decision, and selected press reports, may be found here: