Boca Attorney Alleged To Live In Own "Virtual World."

Hi folks, this is one strange story:

Six people have been charged with participating in a scheme to steal more than $40 million in settlement funds from class-action lawsuits.

According to the indictment unsealed in Philadelphia by Acting U.S. Attorney Laurie Magid, the accused submitted numerous false and fraudulent claims in three class-action lawsuits - all of which were eventually settled - between 2001 and 2007.

The class-action defendants were Nasdaq OMX Group Inc. (NDAQ), Bank of America Corp. (BAC) and the former Cendant Corp. They agreed to pay a combined $4.5 billion in their settlements.

In each case, accounting firms were used to administer the massive settlements. But the accused used a number of devices, from setting up fake corporations to creating phony brokerage-account statements and other financial documents in an effort to snatch some of the settlement funds, Magid said.

"Class-action lawsuits play a vital role in vindicating the rights of thousands of people with legitimate legal claims," Magid said. The defendants "exploited the system and created their own virtual world, full of false names, fake accounts, and bogus corporations. The only thing real in their world was the intent to deceive."

One of the accused is Boca attorney Deborah K. Rice, who is alleged to have represented the bogus companies in filing their fraudulent claims.

I have to admit, this is a new one on me. But it certainly indicates why reasonable claims verification procedures in class securities settlements may be necessary.

You can read the entire DOJ indictment here.