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FDIC to pay MAXXAM.

FDIC TO PAY MAXXAM. MAXXAM Inc., Houston, Texas, USA announced that Judge Lynn N. Hughes, United States District Court for the Southern District of Texas, has ordered that the Federal Deposit Insurance Corporation (FDIC) pay MAXXAM over US$ 72 million dollars in sanctions as measured by legal and other expenses incurred during its 10-year legal battle against the regulatory agency. MAXXAM's timber subsidiary, Pacific Lumber, owns about 205,000 acres of California timberlands.

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The judgment represents the largest sanction against the Federal government and incorporates MAXXAM's requests that MAXXAM be reimbursed its reasonable costs and attorney's fees. MAXXAM filed a motion to sanction the FDIC for filing a law-suit that the FDIC's own legal division's internal analysis concluded had "at least a 70%" chance of failing on pretrial motions and, if it survived, the chances of prevailing on the merits were "marginal at best." The FDIC's standards call for at least a 50% chance of success before initiating legal action.

Prior to the FDIC lawsuit, the FDIC had paid off millions of dollars to the Office of Thrift Supervision (OTS) to initiate administrative action against MAXXAM, Texas-based businessman Charles Hurwitz (who controls 77% of MAXXAM), and others. The litigation that began 1995 sought US$ 821 million in restitution and civil money penalties. It ended when the OTS settled with MAXXAM and Hurwitz in October 2002 for $206,000; the respondents made no admission of wrongdoing.

ABOUT THE AUTHOR

The WorldWatch section in Solutions! magazine is written by Sara M. Scharpf, a writer based in Oshkosh, Wisconsin, USA. Contact her by email at sara@sgrpi.com.
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Title Annotation:INDUSTRY NEWS
Author:Scharpf, Sara M.
Publication:Solutions - for People, Processes and Paper
Date:Oct 1, 2005
Words:267
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