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The state Division of Law obtained $148 million in recoveries and judgments on behalf of the state in 2009 through debt recovery, consumer fraud, environmental and other litigation, Director Taysen VanItallie announced Tuesday.
The $148 million obtained by the division compares to $154 million recovered in 2008, but represents an increase of $24 million – or approximately 19 percent – over the amount obtained two years ago, and a $48 million increase over 2006. The $154 million obtained in 2008 included $63 million received from a single settlement – the settlement of a pension securities fraud lawsuit against Tyco International Ltd.
Total dollars obtained by the division in 2009 through favorable judgments or cost recoveries included approximately $54 million from litigation related to securities fraud, consumer fraud and insurance fraud, approximately $42 million from environmental litigation and $12 million from debt recovery efforts.
In addition, division attorneys defended the state in such areas as employment and tort litigation. Combined, the amount paid out by the state as a result of legal action against it in 2009 and 2008 totaled $62 million – $31.3 million in 2009 and $26.7 million in 2008. That figure represents a 47 percent reduction compared with the state's combined pay-out for years 2007 and 2006 of $117.9 million – $72.3 million in 2006 and $45.6 million in 2007.State Attorney General Anne Milgram credited the division for continuing to obtain substantial dollars on behalf of the state while sharply reducing its litigation-related financial liability.
Overall, the division handled more than 39,000 pending legal matters in 2009, resolving or closing more than 19,000 matters and representing the state in approximately 1,200 trials and 1,100 administrative hearings.
Notable examples included a landmark state Supreme Court case in which the court held that the School Funding Reform Act is constitutional with regard to the state's poorest school districts, so-called Abbott districts. The decision ended years of litigation concerning school funding practices, and reflected extensive work done in collaboration with the state Department of Education.
In another appellate victory in 2009, the U.S. Court of Appeals for the District of Columbia ruled in favor of New Jersey and other states in a challenge to inadequate federal standards for microscopic pollutants known as fine particulate matter or "soot." The court directed the federal Environmental Protection Agency to revisit its standards to ensure they protect public health with a margin of safety, and to provide scientific support for its eventual determination.
Among the significant lawsuit settlements handled by the division in 2009 was a $5.6 million settlement with Frank E. Walsh Jr., a remaining defendant in the state's investment fraud suit against Tyco International Ltd. Walsh, an independent director, was accused of taking an improper payment that was not disclosed to investors in connection with Tyco's acquisition of CIT in 2001. He admitted no wrongdoing. In addition, the financial services firm Pricewaterhouse Coopers paid $5.85 million to settle allegations of accounting improprieties at Tyco. Under terms of the settlement agreement, there was no admission of wrongdoing.
Attorneys for the division also finalized an agreement in 2009 under which the state will be paid $43 million to settle cost recovery and natural resource damage claims associated with the Combe Fill South Landfill, a federal Superfund site in Morris County that operated for decades as a landfill that accepted industrial wastes, sewage sludge, chemicals and waste oils.
In a consumer protection settlement also finalized in 2009, Verizon agreed to pay the state $795,000 and provide pre-paid gift cards to more than 1,100 New Jersey consumers who complained about company marketing, promotion, sales and customer service practices related to its FiOS fiber-optic television, telephone and internet service.
Attorneys for the division also continued the state's fight against mortgage fraud in 2009, filing lawsuits aimed at putting fraudulent lenders and mortgage "rescue" operators out of business while making consumers whole.
Among other cases, the division filed suit against a disbarred lawyer, Martin Gendel of Montville, and his son, Seth Gendel of New York City, as well as their companies Casey Properties and Lee Alan LLP, for violating New Jersey's Civil Racketeer Influenced and Corrupt Organizations (RICO) statute. The suit charged the Gendels and other defendants with using deception – and the credit information of their unwitting victims – to obtain fraudulent mortgage loans and turn a profit via the sale of urban properties at grossly inflated prices.
