Attorney General Kwame Raoul announced the commencement of the distribution process for a $70 million settlement with several major investment banks, including Bank of America, Barclays Capital Inc., BMO Financial Corp., Citigroup Inc., Fifth Third Bancorp, JPMorgan Chase & Co., Morgan Stanley, William Blair & Co, and Edelweiss Fund LLC (Edelweiss). This settlement, one of the largest reached under Illinois' False Claims Act in recent years, resolves allegations that the defendants rigged interest rates on bonds known as variable rate demand obligations.
Raoul emphasized the significance of this settlement, noting its role in restoring funds to state and local governments across Illinois for the benefit of taxpayers. Following court approval of the distribution motion, $33.6 million will be allocated to bond issuers within the state, including various municipal governments. This substantial allocation aims to rectify the financial damages incurred due to the alleged misconduct.
The remaining funds from the settlement will go to Edelweiss Fund LLC, the whistleblower who initiated the original complaint under the Illinois False Claims Act. As compensation for its role and to cover legal costs, Edelweiss will receive a portion of the settlement.
The litigation was handled by Division Chief Chris Wells and Deputy Division Chief David Buysse of Raoul’s Public Interest Division, along with Bureau Chief Harpreet Khera and Complex Litigation Counsel Isaac Freilich Jones from Raoul’s Special Litigation Bureau. This case exemplifies the use of the False Claims Act as a powerful tool for holding entities accountable for defrauding the state and protecting public interests.
