FAIRFAX, Va. (AP) — A Fairfax County judge has dismissed a nearly $1 billion lawsuit the state filed against a banking company accused of defrauding Virginia's worker-retirement fund as well as that of Fairfax and Arlington counties.
Circuit Judge R. Terrence Ney ruled that the state wasn't allowed to use the Virginia Fraud Against Taxpayers Act to seek damages against Bank of New York Mellon. Ney ruled that the state could pursue other legal claims such as breach of contract or fraud against the funds, but not VFATA.
Attorney General Kenneth Cuccinelli filed the lawsuit in August, arguing that BNY Mellon profited by falsifying prices for nearly 74,000 foreign-exchange trades. The lawsuit alleged that the bank hid the true costs of buying and selling international currencies, causing Virginia and localities to overpay, then pocketing the difference.
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The lawsuit sought $120 million in damages and about $811.6 million in civil penalties — $11,000 for each of the 73,784 trades that allegedly shortchanged the public employee retirement funds.
Ney ruled this week that an alleged violation of the state anti-fraud act must also be accompanied by a claim for payment.
"The Court cannot rewrite the VFATA in order to have it comport with what the Court believed the Act may be trying to address," he wrote.
Brian Gottstein, a spokesman for the attorney general's office, told The Washington Times (http://bit.ly/IoHTtF) that his office was still reviewing the court's order and the state's next options.
"It is important to remember that the court's ruling does not absolve the bank of wrongdoing," Gottstein said. "In fact, for the purposes of its analysis, the court assumes fraudulent behavior by the bank, but finds that the Virginia statutes are written in such a way as to prevent that fraud from being punished under the Fraud Against Taxpayers Act."
BNY Mellon spokesman Kevin Heine saw it differently.
"We're pleased that the Virginia court dismissed the entire case against us, vindicating our position that the claims were without merit," he said.
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