James Hall IV, 33, of Bel Air, Md., and Paul Negroni, 41, of Mt. Kisco, N.Y., filed nearly $1 million of fake claims

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. 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 was a senior accountant with one of the accounting firms. That same person, Christian Penta, 38, of Southhampton, N.J., was also indicted for filing false federal tax returns that underreported his income and claimed deductions from income that he stated was generated from a legitimate business, but was instead from the alleged fraud.
Penta faces at least 12 years in jail while the alleged ringleader, Kevin Waltzer, 41, of Washington Crossing, Pa., faces at least 25 years. Both were charged with mail and wire fraud and money laundering.Also involved in the scheme, say federal prosecutors, was Deborah Rice, 47, of Boca Raton, Fla. Waltzer is alleged to have begun working with the attorney in 2004 and "represent" the fake companies and file fraudulent claims on their behalf.Two other men, James Hall IV, 33, of Bel Air, Md., and Paul Negroni, 41, of Mt. Kisco, N.Y., filed nearly $1 million of fake claims and shared the proceeds with Waltzer, while Stephen Porto, 51, of Boca Raton, worked with Waltzer to file other fraudulent claims in the names of fake companies.Robert F. Downey, the Philadelphia FBI Division's acting special agent in charge, called the scheme "particularly serious" in that "the defendants engaged in an organized and long-term effort to steal money from victims within the settlement classes who were dependent on that money to restore the losses that they had suffered."