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Ohio's lawsuit to recover $215 million lost in a Bermuda hedge fund has been shifted to federal court from Franklin County Common Pleas Court. … The lawsuit filed June 10 by state Attorney General Jim Petro on behalf of the Bureau of Workers' Compensation argues that the hedge fund contract was fraudulent and violated Ohio securities laws. It claims MDL violated guidelines for leveraging the hedge fund, borrowing as much as $26 for every dollar the fund actually contained. The excess leveraging ate through almost all of the bureau's $225 million investment. In addition to MDL and its lead executives, defendants include Bermuda companies and residents who sat on the hedge fund's board of directors. Curtis Gantz, a Columbus attorney, officially filed MDL's notice of removal with the district court's Chief Judge James Graham. … A federal hearing gives MDL some strategic advantages, said Christopher Fairman, an Ohio State University law professor.
"There's a belief that federal judges are insulated from political pressure because of their lifetime appointments," he said. "Federal judges aren't looking to trade-up." … Mr. Fairman said that federal judges are more likely to use summary judgment than their lower-court brethren. "They are not reluctant to use a summary device to get rid of cases that have no chance of winning at trial." Even though the laws of Bermuda formally govern the hedge fund, Mr. Fairman said that the case does not need to travel to the British territory and tax haven. "The question of what law applies is separate from what forum hears the case," he said.
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