Ohio Attorney General Jim Petro has added new charges to a lawsuit to recover more than $216 million lost because of alleged mishandling of the state?s Bureau of Workers? Compensation (BWC) investments by a Bermuda fund.

MDL Active Duration Fund, Ltd., which was incorporated under Bermuda law in 2002, as well as the founder and chairman of Bermuda?s Olympia Capital, Oskar P. Lewnowski and president and chief accountant of Olympia Capital C. Raymond Morrison and Bermuda exempted companies and current fund board members Warwick Fiduciary Services Ltd. and Hamilton Fiduciary Services, remain as defendants in the amended suit. Other defendants include Pittsburgh-based investment adviser MDL Capital Management, Inc. and three of its shareholders and members of the fund?s board Mark D. Lay and Steven L. Sanders and Edward Adapte.

In his amended complaint filed last Wednesday with the US District Court in Columbus, Mr. Petro added the charges of fraudulent inducement, negligent nondisclosure, and constructive fraud to his suit. These come on top of misdeeds alleged in his original lawsuit last June ? common law fraud, violations of three sections of the Ohio Securities Act, negligent misrepresentation, breach of fiduciary duty, breach of contract, common law conspiracy, common law unjust enrichment, and common law aiding and abetting.

?We continue to vigorously pursue this case on behalf of the BWC and the injured workers of Ohio,? Mr. Petro said in a press statement. ?It?s our position and our client?s position that the defendants did not live up to their contractual obligations to a state agency and their duty to comply with our state?s securities laws.?

BWC engaged MDL Capital as a fixed income manager in 1998 and saw its original investments handled through a long bond account. In September 2003, BWC transferred $100 million from its existing long bond account to buy shares in the MDL Active Duration Fund, which MDL Capital and the individual director defendants formed a year prior.

In May 2004, BWC allocated an additional $100 million from its existing long bond account to purchase additional shares of the fund. In September that same year it invested a further $25 million in an unsuccessful attempt to mitigate its losses. All told, the complaint said BWC recovered $9 million of its $225 million investment.

The AG?s suit accuses the fund of frequently exceeding the leverage limits it had agreed upon with BWC, without disclosure to or consent of the Bureau, its sole shareholder. At one point the assets of the fund were leveraged by approximately 100,000 percent.

?The investment decisions and actions of Lay and MDL Capital and the inaction, lack of diligence and oversight, and failure to intervene by the Individual Director Defendants, the Corporate Director Defendants, and the Fund caused the overleveraging of the Fund?s assets,? Mr. Petro said in his complaint.

Mr. Petro has demanded a trial jury for all claims and is seeking compensatory damages in the amount of $216,303,410.00 as well as rescissory damages; disgorgement of all amounts by which defendants have been unjustly enriched; punitive damages; plaintiff?s attorney fees and costs; pre- and post-judgement interest; and such other relief as the Court deems just and proper under the circumstances.

Last week Mr. Petro also filed papers with the court outlining the BWC?s response to motions by out-of-state defendants to dismiss the suit on grounds the federal court in Columbus lacked personal jurisdiction over them. That filing is under court seal and is not open for inspection.