Lebanon County joins class action suit
County hopes to regain $100,000 retirement fund investment
Lebanon County will file to be a lead plaintiff in a class action suit against a Brazilian steel manufacturer accused of attempting to defraud its government of more than $400 million in taxes.
The issue came to light last year when federal authorities in Brazil began investigating Gerdau SA, resulting in corruption charges being filed against the company's CEO on allegations that Gerdau evaded $429 million in taxes.
Controller Bob Mettley, who serves as secretary of the retirement fund, told the county commissioners on Thursday that Kessler, Topaz, Meltzer & Check, a Chester County law firm which monitors the retirement portfolio, detected that the county's pension fund had lost $100,000 because one of its stable of investment managers had invested in Gerdau SA.
The county has already joined the class action suit filed against Gerdau SA, but because of the size of its loss it may be able to gain preferential treatment, Mettley told the commissioners.
"Since we lost over $100,000 as a result of their wrong-doing, Kessler-Topaz has identified that we have a possibility to file as a lead plaintiff," he said.
The commissioners agreed to go forward with the filing as lead plaintiff after Mettley told them he had consulted county solicitor David Warner, who determined there would be no cost or risk to the county or the retirement fund.
There are a couple of benefits from being a lead plaintiff, including being one of the first to receive payment should Gerdau SA be found guilty, Mettley said.
“One of the other highlights is, we would actually be part of the approval process for any proposed resolution to the litigation and final settlement agreement,” he added.
Other counties have been successful when taking this approach in other cases of fraud but there are no assurances Lebanon County will be deemed a lead plaintiff, Mettley told the commissioners.
“If the court would decide we are not lead plaintiff, we just then fall back in with the regular class people and wait two, three, four years down the line for them to send a notice and get recovery,” he said.
Any money returned to the county would go back into the retirement fund, which currently stands at more than $100 million, Mettley said