Magazine article American Banker

Copple Suit Reaches $70 Million: Class Action Now Alleges Breach of Fiduciary Duty

Magazine article American Banker

Copple Suit Reaches $70 Million: Class Action Now Alleges Breach of Fiduciary Duty

Article excerpt

LINCOLN, Neb. -- A class-action suit on behalf of depositors of the defunct Commonwealth Savings Company of Lincoln has been amended to raise the amount of damages sought to $70 million.

Originally, the suit asked for damages "in excess of $18 million."

In addition, the number of the defendants was increased from four to five.

The changes were made by a private lawyer hired by the state, as receiver, to represent the Commonwealth depositors. The original suit was filed by a special assistant attorney general appointed late last year after the industrial savings company was declared insolvent, and a deposit guaranty corporation was unable to cover the losses.

M.J. Bruckner, who took over the case from special prosecutor David Domina, also revised the thrust of the suit. Instead of alleging fraud, as the original suit had, the amendments allege the defendants breached their fiduciary duty or were negligent in their capacity as Commonwealth directors.

Mr. Bruckner and his associates said fraud must be proved by "clear and convincing evidence," while a claim of negligence or breach of duty can be supported just by "a preponderance of evidence."

The amendment claims the defendants breached their fiduciary duty by, among other things:

* Forcing or permitting directors, officers, or employees of Commonwealth to borrow funds directly or indirectly without board approval.

* Borrowing or permitting the borrowing of funds by insiders in excess of state limits.

* Failing to require inside borrowers to file written reports required by state law. …

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