The Jefferson County Commission Tuesday agreed to hire a New York law firm to defend the county against a lawsuit filed by Syncora Guarantee Inc. on April 29.
Commissioners voted to hire Boies, Schiller & Flexner LLP, according to the Birmingham News.
Syncora filed a civil suit in New York State alleging that Jefferson County and JPMorgan “fraudulently induced” Syncora to provide more than $1 billion in insurance coverage for the county’s nearly $3.2 billion of failed variable- and auction-rate sewer warrants.
The 45-page suit said that Syncora would not have insured the warrants if it had known about bribes that JPMorgan paid to Jefferson County commissioners to become lead underwriter for the sale of the warrants and counterparty to “lucrative swap agreements.”
Syncora also said it would not have insured the warrants had it known about “the inability of the county to repay the warrants.”
The allegation relies on an engineering report that casts doubt on the ability of the sewer system to repay debt unless the county raised rates significantly or found new sources of revenue.
