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Firm Says Fund Cheats Its 9/11 Survivors

Assistance: Federal rules on financial aid deny 'full compensation' to families, Cantor Fitzgerald charges. The claim is disputed by special master.

September 18, 2002|From Associated Press

NEW YORK — Cantor Fitzgerald, the bond brokerage that lost 658 employees in the attack on the World Trade Center, charged Tuesday that the federal victims compensation fund cheats survivors of its employees out of hundreds of millions of dollars.

Under the rules of the fund, "the vast majority of Cantor Fitzgerald families would not receive full or appropriate compensation for their economic losses," the firm said in a report submitted to Kenneth Feinberg, the fund's special master.

Lawyers for victims' families said the report could discourage some from accepting federal aid as an alternative to seeking compensation through lawsuits.

The report charges that the fund underestimates the lost earning potential of the victims, is biased against single and younger employees and illegally bases awards on after-tax income.

It also challenges what it says are limits on compensation to families.

In an interview Tuesday, Feinberg insisted the fund does not place a cap on awards.

He offered to meet with Cantor Fitzgerald families to demonstrate that the program is fair.

"I think that their effort is well-intentioned, but I think it is incorrect to say that the rules of this program will arbitrarily prevent the individual claimants from getting a fair award," he said.

Cantor Fitzgerald lost two-thirds of the 1,050 people employed at its headquarters near the top of the north tower of the trade center. The toll was nearly a quarter of all those killed in the attack.

The report, which was posted on Cantor's Web site, lists numerous objections to the way Feinberg has calculated the payments.

Basing payments on after-tax income instead of gross earnings is "a very clear-cut mistake" that violates New York state law, said Karen Valihura, a lawyer with the firm of Skadden, Arps, Slate, Meagher & Flom, which assisted Cantor Fitzgerald in preparing the report.

The report also said the government's earnings growth estimates are too low, in part because it averaged three years of earnings to compute compensation.

The salary, bonuses and fringe benefits for Cantor employees rose dramatically in three years, from $134 million in 1999 to $284 million in 2001, the firm said.

New York lawyer Lee Kreindler, whose firm represents 40 Cantor families, said the report could delay proceedings because "the families will be reluctant to accept something that may change."

The fund's awards are based on a formula that includes earning potential plus a $250,000 award for pain and suffering.

An additional $100,000 is added for a spouse or each dependent child. Life insurance and workers' compensation payments are deducted.

Feinberg said in March that the average payment to victims' families would be about $1.85 million before deductions.

Families that choose to participate in the fund must relinquish the right to sue the airlines and other entities.

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