Jason A. Forge

Fresh off his $25 million settlement with President Donald J. Trump’s Trump University LLC over civil fraud claims regarding its real estate seminar program, Forge and colleagues are now litigating the first securities fraud case against Wal-Mart Stores Inc.

“Another worthy target,” Forge said of the new defendant. City of Pontiac General Employees’ Retirement System v. Wal-Mart Stores Inc., 5:12-cv-5162 (W.D. Ark., filed May 7, 2012).

The plaintiffs filed the case following a Dec. 8, 2011 Securities and Exchange Commission disclosure in which Wal-Mart portrayed itself to investors as a model corporate citizen that had, months earlier, proactively uncovered potential corruption and promptly reported it to law enforcement. In truth, Forge said, Wal-Mart had learned that The New York Times was investigating an alleged multimillion-dollar bribery scheme in Mexico that the big retailer had covered up years earlier.

“To head off the Times, Wal-Mart provided a very misleading description of themselves as a model corporate citizen,” Forge said. “They made themselves look like heroes. Four months later [in April 2012] the Times painted an entirely different picture.”

The cover-up that the newspaper exposed meant that Wal-Mart was facing hundreds of millions of dollars in previously concealed expenses and losses, and that investors had been purchasing its shares at artificially inflated prices for months, Forge and colleagues alleged. After the Times’ revelations, Wal-Mart disclosed that its audit committee was investigating whether the company had appropriately handled the same bribery allegations it had represented to have promptly reported to law enforcement.

“We had email evidence that upper management knew conclusively of these allegations,” Forge said. But a roadblock soon developed when the SEC declined to release Wal-Mart documents related to the case, citing an ongoing federal investigation. The plaintiffs filed a Freedom of Information Act request to see the documents; that part of the case is unresolved and Forge’s claims against Wal-Mart are in limbo.

“It is frustrating that it is taking the government so long,” Forge said. He’s confronting an 8th U.S. Circuit Court of Appeals rule that may allow Wal-Mart to produce documents to the government but still assert a privilege in court in private litigation. “It’s laughable, to say the least, how they are trying to leverage the government’s ongoing investigation. Our litigation has ground to a halt. We are fully prepared to prove our case, which we think is worth nine or 10 figures. We just need the government to get out of the way.”

— John Roemer