Jan. 28 has been set as the date for a Milwaukee County Circuit Court judge to rule on motions to dismiss filed by firms being sued for fraud by five school districts, including Kenosha Unified.

The districts have tallied millions of dollars in losses due to bad investments in collateralized debt obligation bonds sold by those firms.

On Dec. 22, after hearing arguments from the parties in November, Judge William Brash III set the Jan. 28 date to determine whether to dismiss the case or find it has merit to move forward.

“We’re confident that it will proceed,” Bill Johnston, Kenosha Unified executive director of business, said Thursday.

The districts invested a combined $200 million in the high risk CDO bonds through Stifel Nicolaus & Co. in December 2006. As of Oct. 31, 2009, the combined loss totaled at least $190 million, with the Kenosha Unified portion, $37.5 million, valued at an estimated $98,000.

Documents from Whitefish Bay and Kimberly school districts show their CDO investments are worth nothing. West Allis School District was forced to add $10 million to its investment because the bank called the loan and threatened to sell it. The Waukesha and West Allis school districts have refused to release the values of their investments.

The investments were meant to bolster post-retirement teacher benefits through a Stifel product. However, the school districts maintain Stifel Nicolaus misled them into buying what they thought were AA- and AAA-rated bonds that would pay off by December 2013. Instead, the districts bought risky credit default swaps, which are insurance plans taken out between two parties, with one party paying money as insurance in case a bond defaults, while another party agrees to pay money if it does.

A nine-page Power Point presentation shown to all five districts and obtained by the Kenosha News showed the credit default swaps had an average rating of BBB+. Board members maintained that information was glossed over while they repeatedly were assured the investment was conservative and safe. Stifel Nicolaus argues the school districts signed papers acknowledging they had legal representatives and advisers who went over the investment.

An open records request filed by the Kenosha News showed the five school districts had paid lawyer fees totalling $1,383,510.67 as of late October. Kenosha has paid $260,100 of the total.

Attorneys filed the dismissal motion on behalf of Stifel Nicolaus & Co. Stifel Financial Corp., Royal Bank of Canada Capital Markets Corp. and Royal Bank of Canada Capital Markets Holdings after the five school districts sued the firms in 2008.