MutualFundWire.com: The Bents File Suit Over Alleged Evidence Falsification

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Thursday, January 24, 2013

The Bents File Suit Over Alleged Evidence Falsification

The legal drama involving the death of the Reserve Primary Fund is starting again, this time with a complaint filed by the Bents against the independent trustees of the fund.

In a complaint filed on January 22, Bruce Bent Sr and his son Bruce Bent II level seven accusations against the trustees, including breach of contract, torturous interference with contract and minutes fraud.

The allegations are made against trustees Ronald Artinian, Santa Albicocco, William Viklund, Edwin Ehlert, William Montgoris, and Frank Stalzer, in the US. District Court of Southern New York.

They are outlined in the 64-page file titled Case 1:08-cv-08060-PGG Document 80, subtitled Defendant's Answer to Consolidated Class Action Complaint and Defendant's Third Party Complaint.

Much of this complaint hinges on what was said, and not said, during crucial board meetings, which took place on September 15 and 16, 2008, regarding the solvency of the Primary Fund in the wake of the bankruptcy of Lehman Brothers.

At the trial of an SEC fraud case leveled against the Bents, testimony was presented regarding these board discussions. The Bents later beat this fraud rap, for which the SEC subsequently requested a rematch.

MFWire's full timeline of the Primary Fund's collapse can be found here.

The Bents' complaint alleges that the trustees misrepresented the discussion that took place during this testimony.

In particular, the complaint has this to say on the subject:

Lastly, discovery in the SEC Action also revealed that the Independent Trustees conspired to falsify evidence. The Fund’s activities on September 15 and 16, 2008 are well documented through detailed Board minutes, which were adopted by the Independent Trustees at or around the time they were created in 2008. Two years after the Lehman bankruptcy and in the midst of discovery in the SEC Action, the Independent Trustees suddenly decided to alter the unanimously-approved minutes from the September 15, 2008 Board meeting, by replacing true statements with fabrications designed to create the false impression that the Bents made untrue statements to them concerning redemptions on September 15, 2008. This improper attempt to rewrite history occurred almost immediately after SEC attorneys had finished interrogating the Independent Trustees about the events of September 15, 2008. Their long course of dishonest conduct caused substantial injury to the Third Party Plaintiffs.