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Wednesday, November 18, 2009

Alabama county sues JPMorgan over debt deals


BIRMINGHAM, Ala. — Alabama’s most populous county filed suit Friday blaming Wall Street powerhouse JPMorgan Chase and others for the financial disaster that brought it to the brink of what would be the largest municipal bankruptcy in U.S. history. 

 
Jefferson County in Alabama filed a suit that contends JPMorgan Chase and others were part of a conspiracy.
The suit, filed in state court by Jefferson County, contends JPMorgan Securities Inc., JPMorgan Chase Bank, former Birmingham Mayor Larry Langford and dozens of other defendants were part of a conspiracy to generate huge fees through a series of deals called rate swaps.
The deals were supposed to help the county manage debt from a massive sewer renovation but instead generated huge fees and crippled the county’s finances, according to the complaint.
“These transactions provided no value to the county or its citizens and created an inherently flawed financial structure that imploded within just a few years,” said the complaint, which seeks an unspecified amount in damages. 

The lawsuit also names Montgomery-based investment banker Bill Blount and lobbyist Al LaPierre, both of whom pleaded guilty to bribing Langford in deals that generated $ 7.1 million in fees for Blount’s company, Blount Parrish & Co., which also is a defendant in the case.

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