A recent Law 360 story by Carolina Bolado, “Real Estate Investors’ Attys Want $33M of $100M CBRE Deal,” reports that attorneys for a class of real estate investors who recently agreed to a $100 million settlement with property management giant CBRE over a multimillion-dollar embezzlement asked for a one-third cut of the settlement as attorneys’ fees, arguing that the case was complex and risky and produced a great result for the class members.
Stearns Weaver Miller Weissler Alhadeff & Sitterson PA, which represented the 179-member class, asked a Florida federal court to sign off on a $33,333,333 fee award plus reimbursement of $1.7 million in out-of-pocket expenses after putting nearly 18,000 hours into the investigation and prosecution of the case against CBRE. The attorneys said the litigation required in-depth study of a number of complex deal documents and drilling deep into the historical financial records for each property involved in order to understand how the alleged embezzlement was committed and concealed. The resulting settlement of $100 million is 71.6 percent of the plaintiffs’ total damages, which Stearns Weaver called “an exceptional result.”
The firm added that it will continue to devote time and labor to this case during the claims process. “While many law firms prosecute class actions, few continue to assist the class after a settlement or verdict has been achieved and the defendants have paid,” the attorneys said. “Our law firm does so as a matter of course, in order to ensure that class members actually receive the monies due them.”
The plaintiffs accused CBRE, one of the largest firms of its kind in the world, and employee Gloria Hernandez of helping executives from Cabot Investment Properties LLC embezzle at least $7.9 million. The defaults and foreclosures that resulted on the loans financing the acquisition of the Florida properties led the class to lose more than $139 million, according to the settlement documents. The plaintiffs were seeking punitive damages in addition to compensatory damages.
Cabot Investment Properties and its subsidiaries went into default. Cabot CEO Carlton P. Cabot and Chief Operating Officer Timothy J. Kroll, also named as defendants, went to prison for committing the fraud. Co-defendant Actuarial Risk Management Ltd. was dismissed from the case, leaving only CBRE and Hernandez as defendants in the case.
Cabot and Kroll were arrested in June 2015, with Kroll pleading guilty that October and Cabot pleading guilty in May 2016 to securities fraud in Manhattan federal court. Prosecutors said the two executives repeatedly transferred money out of so-called “tenant-in-common accounts,” through which investors take collective ownership of a piece of commercial real estate. They spent the funds on expensive cars, luxury apartments and private school tuition for their children, according to prosecutors.
The suit is Cabot East Broward 2 LLC et al. v. Cabot et al., case number 0:16-cv-61218, in the U.S. District Court for the Southern District of Florida.