Ambassadors to pay $7.5 million to settle fraud suit
Spokane-based Ambassadors Group will pay a group of investors roughly $7.5 million to settle a class-action lawsuit claiming the company engaged in securities fraud.
The suit was originally filed in 2009 in Spokane’s federal district court, with a New Jersey electrical workers pension fund as the lead plaintiff. A year later the suit was amended, with the national Plumbers Union Local No. 12 pension fund becoming the lead plaintiff in a class-action suit.
After going through federal mediation, the parties signed the settlement last week, said Ambassadors Group CEO and President Jeff Thomas.
The union alleged in court documents that Ambassadors and some executives intentionally misled investors about the company’s weak finances during 2007, when the stock price fell by 40 percent. Company executives also sold stock worth more than $7 million during that period, the suit alleged.
In announcing the settlement Ambassadors made no admission of wrongdoing.
The money for the settlement will be paid by Ambassador Group’s insurance companies, said Tony Dombrowik, the company’s CFO.
Ambassadors arranges and sponsors travel-education trips for students and other professional groups. It has Spokane offices near the Spokane airport.
The next step will be finding out how many investors will share in the settlement. That number has yet to be calculated, said Karl Barth, a Seattle attorney representing the plumbers’ union fund.
Barth also noted attorneys representing the class of shareholders will also seek a portion of the $7.5 million, plus legal fees. The amount attorneys will request has not been set and eventually will have to be approved by a judge as “fair and reasonable,” Barth said.