Southern Holdings Settlement Money Ruling

By Paul Gable

A ruling has finally come from the court on the litigation and settlement funds associated with the Southern Holdings case that we have been following for years.

The ruling came in an interpleader action asking the court to rule on who has claim to the remaining Southern Holdings litigation and settlement funds and how much should go to each claimant.

The interpleader case was brought by attorney and Lexington Magistrate John Rakowsky who represented seven individual plaintiffs in the original Southern Holdings case. Rakowsky stated he didn’t know who had claims to the remaining litigation and settlement money he held.

Litigation funds were raised by the Southern Holdings plaintiffs represented by Rakowsky from three funding sources. A majority of the settlement funds ($55,000) came from the S.C. Insurance Reserve Fund administered by the S.C. Budget and Control Board.

Documents submitted to the court showed at least $115,000 in litigation funds were provided to Rakowsky. Rakowsky’s submitted accounting began with the amount of $67,500. Rakowsky sent a check in the amount of $7,691.78 to James Spencer (one of the plaintiffs represented by Rakowsky) as a refund of the remaining litigation funds.

Rakowsky was not required by the court to account for the over $40,000 discrepancy between originally deposited funds and his final accounting. He was not required by the court to produce a settlement agreement for the original Southern Holdings case signed individually by each plaintiff as required by both South Carolina and federal rules of procedure.

Instead, a recent ruling issued by S.C. Circuit Judge Doyet Early, Rakowsky and his attorneys walked away with all the settlement money, even though the settlement has been challenged by the original plaintiffs since 2007 and challenges currently reside in the U.S. Fourth Circuit Court of Appeals.

Even for a South Carolina court, this is an astounding ruling.

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