A Spokane federal judge has approved a New Jersey electrical workers union as lead plaintiff in a securities fraud suit filed against Spokane education travel business Ambassadors Group.
The selection of New Jersey Local 351 of the International Brotherhood of Electrical Workers means the case moves to the next stage: asking the court to declare the suit a class action for all affected investors, said Karl Barth, an attorney for the union. Barth is a partner in Seattle law firm Lovell, Mitchell & Barth.
Two unions, each of which owned a large number of shares of Ambassadors Group stock, sued the company. Both claim significant financial losses because Ambassadors officials intentionally misled investors about the firm’s weak finances during earnings reports through most of 2007.
In the same period, Ambassadors officials sold stock worth more than $7 million in insider trades, the suit alleges.
Under federal law, when two or more investors file class-action suits, the party with the largest alleged financial loss gets lead-plaintiff status.
The losses to IBEW Local 351 from alleged securities fraud came to an initial estimate of about $375,000, according to Barth. That was well above the amount alleged lost by Boston-based Plumbers Local 12, the original plaintiff.
Ambassadors Group arranges travel education trips primarily for students.
The company and its CEO, defendant Jeffrey Thomas, have not filed a reply to the complaint.
The union next will try to persuade U.S. District Court Judge Justin Quackenbush to establish the suit as a class action. Barth said that decision is likely a year away.