MoneyGram 2011 Annual Report Download - page 131

Table of Contents
other things, (i) breach of fiduciary duty and disclosure claims against the Company’s directors, THL and Goldman Sachs, (ii) breach of the
Company’s certificate of incorporation claims against the Company, THL and Goldman Sachs, and (iii) claims for aiding and abetting breach of
fiduciary duties against Goldman Sachs. Ms. Pittman purports to sue on her own behalf and on behalf of the Company and its stockholders. Pittman
sought to, among other things, enjoin or rescind the 2011 Recapitalization. On April 29, 2011 the plaintiff filed an amended complaint to add two
additional plaintiffs, Susan Seales and Stephen Selzer. On May 16, 2011 a hearing to enjoin or rescind the 2011 Recapitalization was held in the Court
of Chancery of the State of Delaware, and at the hearing, the plaintiffs’ request for a preliminary injunction was denied. The 2011 Recapitalization
was completed on May 18, 2011. Since that time, Ms. Pittman has withdrawn as a putative class representative; Ms. Seales and Mr. Selzer remain as
plaintiffs. The plaintiffs seek to recover damages of some or all of the cash and stock payments made to THL and Goldman Sachs by the Company in
connection with the recapitalization transaction. This litigation is ongoing and is scheduled for trial in the second quarter of 2012.
On May 12, 2011 a complaint was filed in the County Court at Law No. 3 in Dallas County, Texas by Hilary Kramer purporting to be a class action
complaint on behalf of all shareholders and a shareholder derivative complaint against the Company, THL, Goldman Sachs and each of the
Company’s directors. Ms. Kramer alleges in her complaint that she is a stockholder of the Company and asserts, among other things, (i) breach of
fiduciary duty claims against the Company’s directors, THL and Goldman Sachs and (ii) claims for aiding and abetting breach of fiduciary duties
against Goldman Sachs. Ms. Kramer purports to sue on her own behalf and on behalf of the Company and its stockholders. Ms. Kramer sought to,
among other things, enjoin the 2011 Recapitalization. The defendants have moved for the Texas court to stay this litigation in favor of the Pittman
litigation in Delaware, which has an overlapping class definition.
Other Matters — The Company is involved in various claims and litigation that arise from time to time in the ordinary course of the Company’s
business. Management does not believe that after final disposition any of these matters is likely to have a material adverse impact on the Company’s
financial condition, results of operations and cash flows.
Government Investigations:
MoneyGram has been served with subpoenas to produce documents and testify before a grand jury in the U.S. District Court for the Middle District of
Pennsylvania. The subpoenas sought information related to, inter alia, MoneyGram’s U.S. and Canadian agents, as well as certain transactions
involving such agents, fraud complaint data, and MoneyGram’s consumer anti−fraud program during the period from 2004 to 2009. MoneyGram has
provided information requested pursuant to the subpoenas and continues to provide additional information relating to the investigation. In addition,
the Company has been provided with subpoenas for the testimony of certain current and former employees in connection with the investigation. The
Company has also been notified of a request for interviews of one current executive officer and one former chief executive officer of the Company.
The U.S. Department of the Treasury Financial Crimes Enforcement Network (“FinCEN”) also requested information, which information was
subsequently provided by MoneyGram, concerning MoneyGram’s reporting of fraudulent transactions during this period. In November 2010,
MoneyGram met with representatives from the U.S. Attorney’s Office for the Middle District of Pennsylvania (the “MDPA USAO”) and
representatives of FinCEN to discuss the investigation. In July 2011, MoneyGram had further discussions with the MDPA USAO and representatives
of the Asset Forfeiture and Money Laundering Section of the U.S. Department of Justice (“US DOJ”). MoneyGram has been informed that it is being
investigated by the federal grand jury in connection with these matters for the period 2004 to early 2009 as well as MoneyGram’s anti−money
laundering program during that period. In January 2012, meetings were held between representatives of the Company, the MDPA USAO and the
Criminal Division of the US DOJ to discuss the investigation. MoneyGram continues to engage in discussions and cooperate with such government
representatives regarding the ongoing investigation. During the course of these discussions, the Company was advised that consideration is being
given to a range of possible outcomes, including the seeking of criminal penalties against the Company. However, no conclusions can be drawn at this
time as to the outcome of the investigation, and we are unable to predict the probable loss, or range of loss, if any, associated with this matter.
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