1999 NCC News ArchivesNCC Recovers Another $405,000 of $8 Million "Troubled Investment"
December 21, 1999, NEW YORK CITY With nearly 70 percent of the funds now recovered, the National Council of Churches has agreed to forego any further legal action in pursuit of the $8 million it had invested in what proved to be fraudulent securities issued in the name of the Prague-based Banka Bohemia.
Total recovery stands at $5,405,000 with the receipt this month of an additional $405,000 from various parties who have now reached a settlement with the NCC."
The NCC's legal counsel in the matter, Whitman Breed Abbott & Morgan, advised the NCC of the final settlement in a letter dated Dec. 10, 1999. This final settlement marks the conclusion of a nearly six-year, aggressive effort that included legal proceedings in England and the United States, an NCC delegation's visit to the Czech Republic and appeals to the Czech National Bank and the U.S. Securities and Exchange Commission.
"We've been fortunate to recover as much as we did," commented the Rev. Dr. Joan B. Campbell, NCC General Secretary, who noted that other investors have lost everything in similar schemes. "I'm grateful this has been resolved. I feel we've been extremely well represented and have turned every stone we could to have returned to us the maximum amount of funds."
The NCC monies involved in the "prime bank guarantees" fraud were a substantial portion of the pooled resources set aside by the Council's various departments to cover future health insurance premiums for retirees and their dependents. "We've been pleased this has never disrupted the service to our retirees," Dr. Campbell said. "We have honored without interruption our commitment to them to cover their health care."
Some $4 million of the NCC funds were traced to Banka Bohemia and $1 million to an account in a bank on the island of Jersey off the coast of Great Britain. The NCC recovered those monies in March 1995.
Banka Bohemia, once the seventh largest in the Czech Republic, collapsed in 1994 after trying to sell $1.2 billion in fake securities abroad and was put into receivership by the Czech National Bank, according to a Bloomberg News Service dispatch (9/4/96). The SEC filed a complaint in the U.S. District Court for the District of Columbia against two U.S. firms and two individuals for allegedly participating in the fraud that caused the NCC's loss (Bloomberg, 8/2/95).
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