In August this year, a California-based company called AMJ Global brought a class action in New York against a US organisation called Migom Global Corp., Migom Bank Ltd. (its subsidiary) and 22 individuals supposedly connected to the bank.
At face value, a sweeping range of allegations and high-profile defendants tell a sensational tale of corporate malpractice. A burst of accompanying news coverage cements these allegations in the public eye. Casual readers cry scandal… “How was this possibly allowed to happen?”
But what if all is not as it seems? Scratch the surface and a different picture emerges.
AMJ Global is a company which has been suspended by its state Tax Board since April 2021 for not paying certain taxes, has subsequently lost its corporate rights in that state and therefore cannot sue in its own jurisdiction. To avoid these sanctions, it brings a case to New York instead.
AMJ claims to be acting both as an investor and on behalf of investors who suffered alleged loss. But there is evidence that no shares were purchased in the entity in question (nor indeed could it likely have afforded to do so).
While a compelling read, the pleadings – which appear calculated to boost publicity – produce no evidence to support a series of highly damaging claims against the defendants.
Perhaps unsurprisingly, AMJ has not actually served any claim (therefore not necessitating any defence from the defendants). But it appears to have paid for a PR campaign to promulgate this series of false allegations at a distressed company and group of individuals who have no avenue of response.
This gives it a veneer of legitimacy, when in fact the case is nothing but a “shakedown,” a novel way to harness the court system to destroy reputations. Consider also, what kind of actors would use the court system in this way?
Of course, this misappropriation of the US class action regime is nothing new. This is simply the latest example of this legal system, intended to increase access to justice, being hijacked for vexatious claims to destroy corporate reputations.
If apparently vexatious actions such as these are allowed to proceed, it could open the floodgates to a whole trend of illegitimate activity. The legal sector should consider whether it wishes to show nefarious actors how easy it is to weaponise the class action system, purely to inflict reputational or political damage.
Share this article:
EU Reporter publishes articles from a variety of outside sources which express a wide range of viewpoints. The positions taken in these articles are not necessarily those of EU Reporter.
