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SOURCE Grant & Eisenhofer
Court upheld main claims of bankruptcy estate, which accuses Cantor Fitzgerald and its three top executives of taking mobile gambling technology and other assets for use in its Nevada gaming business without compensating Refco for its original ownership stake; Grant & Eisenhofer represents bankruptcy estate administrator Marc Kirschner
NEW YORK, June 17, 2014 /PRNewswire/ -- A federal judge in New York's Southern District has upheld all of the key claims in a lawsuit filed against financial services firm Cantor Fitzgerald and its primary owner and chief executive Howard Lutnick by the bankruptcy estate of former futures broker Refco Inc. The suit, filed in 2013, alleges that Cantor's Nevada gaming businesses acquired proprietary technology and other assets from a subsidiary in which Refco held a 10% stake, without ever compensating the subsidiary and depriving Refco of its interest in the assets.
In an 80-page ruling on Cantor's motion to dismiss delivered June 10, U.S. District Judge Ronnie Abrams allowed the Refco bankruptcy estate's conversion, waste, breach of fiduciary duty, aiding and abetting claims and other claims to survive against Cantor Fitzgerald and several of its subsidiaries and executives. The named individual defendants are Cantor Fitzgerald Chairman and CEO Howard Lutnick, Cantor Gaming President Lee Amaitis and Cantor General Counsel and Cantor Index Holdings director Stephen Merkel.
Leading financial litigation law firm Grant & Eisenhofer is counsel for Refco's bankruptcy estate and its administrator Marc Kirschner. The firm filed suit seeks to recover compensation owed to the Refco estate under Chapter 11 of the bankruptcy code.
The lawsuit contends that in 2002, Refco invested $8 million in Cantor Fitzgerald subsidiary, Cantor Index Holdings ("CIH"), in exchange for a 10% partnership interest. Over the next several years, CIH developed successful gaming technology, such as devices for remote gambling and other betting techniques. The bankruptcy estate alleges that Cantor Gaming ultimately shut down CIH and took the rights of its core assets and intellectual property for its own profit, developing valuable businesses in Nevada and elsewhere – while failing to provide any compensation to the bankruptcy estate to reflect its 10% stake in CIH.
The complaint notes that Cantor defendants have repeatedly represented to regulators, analysts and the press that the technology developed by CIH and its subsidiaries in the U.K. was critical to the successful build-out of Cantor's Nevada operations. The bankruptcy estate's suit seeks tens of millions of dollars in compensatory and punitive damages.
In allowing the case to go forward, Judge Abrams upheld major claims against the defendants, as follows:
Following the ruling, the parties in the litigation will be required to jointly submit to the court a proposed case management plan and scheduling order, and the court has set a conference on June 24, 2014.
Grant & Eisenhofer co-managing director Jay Eisenhofer said: "We're pleased that the Southern District Court has upheld all of the key claims against the main parties in this action. We are prepared to move forward with our litigation, to prove that Cantor still owes Refco's bankruptcy estate for the value of assets which Refco helped finance more than a decade ago. Cantor's success in the mobile gaming sector has depended heavily on the technologies that Refco helped bankroll and we will continue to press for recovery for the fair value of that investment."
Mr. Kirschner added that: "If the case goes to trial, we will demonstrate that the Cantor defendants used CIH's core technology and related assets in which Refco had original ownership stake to build its subsidiary gaming business. This case is about honoring the terms of that original agreement."
In addition to Mr. Eisenhofer, Grant & Eisenhofer director Geoffrey Jarvis is special litigation counsel to plaintiff bankruptcy estate.
The case is captioned as: RefcoGroup LTD., LLC v. Cantor Fitzgerald, L.P., et al.
About Grant & Eisenhofer
Grant & Eisenhofer P.A. represents plaintiffs in a wide range of complex financial litigation. G&E's clients include institutional investors, whistleblowers and other stakeholders in bankruptcy litigation, securities class actions, derivative lawsuits, consumer class actions, antitrust suits, and cases involving the False Claims Act. G&E has recovered more than $13 billion for investors in the last five years and has consistently been cited by RiskMetrics for securing the highest average investor recovery in securities class actions. Grant & Eisenhofer has been named one of the country's top plaintiffs' law firms by The National Law Journal for the past ten years.
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