Bond Insurer: 'Goldman Tricked Us Into Buying $30M In Worthless CDOs!' Firm Seeks To Recover Investment & Impose $90M In Punishment

The Wall Street Journal reports:

• ACA Financial Guaranty Corp. said it is suing Goldman Sachs Group Inc. for "fraud and unjust enrichment" in connection with a soured mortgage-backed investment that led the bank to pay $550 million to settle government charges last year.

• ACA said in a lawsuit filed in New York state court Thursday it is seeking $30 million in compensatory damages plus an additional $90 million in punitive damages, as it was "misled by Goldman's fraudulent activities."

• The monoline bond insurer alleged in its lawsuit that Goldman designed the investment, named Abacus, to fail so that a hedge-fund client, Paulson & Co., could take big profits by shorting the portfolio and so that Goldman could take in fat investment banking fees. ACA bought millions of dollars in Abacus notes and insured the super-senior parts of the underlying portfolio for $909 million, it said in its lawsuit.

• ACA said in a statement Thursday that the Abacus 2007-AC1 collateralized debt obligation "was worthless" at the time Goldman marketed it to ACA.

For more, see ACA Financial Sues Goldman For Alleged Abacus-Related Fraud (requires subscription; if no subscription, TRY HERE, then click appropriate link for the story).

For the lawsuit, see ACA Financial Guaranty Corp. v. Goldman Sachs & Co.

Thanks to Mike Dillon at GetDShirtz.com for the heads-up on the story.