One of Madison County’s oldest class action ended on May 9,
when Wells Fargo Bank settled a 15 year old negligence claim over rotten bond
Wells Fargo and class representative William Tennison of
Arkansas canceled a trial that Circuit Judge Barbara Crowder would have started
on May 16.
Wells Fargo stood as the last of many defendants, and
Tennison stood as the last of many plaintiffs.
Tennison sought $34 million plus interest on behalf of all who
bought bonds for nursing homes that a developer in Chicago sponsored.
Tennison claimed he invested $365,000, and lost all of it.
Three cities in Wisconsin issued bonds in 1996 and 1997, and
three cities in Michigan issued bonds in 1998.
The Wisconsin Health and Educational Facilities Authority
hired Norwest Bank, a predecessor to Wells Fargo, as indenture trustee.
The Michigan cities hired Norwest through economic
The developer, Malachi Corporation, defaulted on all the
bonds in 1998.
Bond buyers filed suit in Madison County in 2001, against
the underwriter, banks, accountants, lawyers, Malachi Corporation directors, and
William Lucco of Edwardsville represented the plaintiffs, in
association with the high profile firm of Motley Rice in Mount Pleasant, S.C.
They alleged a Ponzi scheme in which Malachi Corporation met
payments on each bond with proceeds of bond issues that followed.
No plaintiff alleged any connection to Madison County, but that
held true for many of the class actions flooding the court.
For years, discovery dragged on and some defendants settled.
In 2010, former circuit judge Daniel Stack certified a class
across 38 states alleging negligence and recklessness.
He rejected claims of fraud, conspiracy, and securities
Last year Tennison settled claims of the class for $300,000
from Fifth Third Bank, $150,000 from the Indianapolis accounting firm of Blue
and Company, and $75,000 from the St. Louis law firm of Gilmore and Bell.
That left Wells Fargo as sole defendant.
Wells Fargo asked Crowder to certify questions about Stack’s
class certification to Fifth District appellate judges, but she declined last
“While it is an attractive offer to try to fend this complex
dispute off to the appellate court, an order will not make this dispute less
complex,” Crowder wrote.
She will hold a hearing on plaintiffs' motion for class settlement at 1:30 p.m. on June 26.