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A federal judge has refused to overturn a jury’s verdict of more than $32.7 million in a suit brought by the victims of a $1 billion Ponzi scheme operated by Chester County businessman Robert L. Bentley. The June verdict in Marion v. TDI Inc. – which came nearly five years after federal authorities unraveled Bentley’s Ponzi scheme – promised to get back nearly all of the money lost by his 200-plus victims. After an 11-day trial, the jury found that Bentley was aided in his schemes by a bank and a broker who helped him secure a series of loans that kept the Ponzi scheme alive and handed up a verdict of $32,774,300. The verdict was a crowning achievement for attorney David H. Marion of Montgomery McCracken Walker & Rhoads – the court-appointed receiver of Bentley’s Paoli companies – who had already recovered more than 91 percent of the victims’ funds. Bentley pleaded guilty to securities fraud charges and is currently serving a 55-month prison sentence. In the suit, Marion claimed that Bentley’s schemes would have unraveled much earlier if not for the assistance he received from Peninsula Bank of Delray Beach, Fla., and its former executive vice president Joseph Marzouca, as well as Southeastern Securities Inc., of Miami, and its president Theodore Benghiat. According to court papers, Bentley and his corporations, Bentley Financial Services Inc. and Entrust Group, conducted an elaborate financial swindle in which investors were led to believe that they were purchasing federally insured certificates of deposit, or CDs, when, in reality, they were purchasing unregistered IOUs. In its verdict, the jury said Peninsula and Marzouca should pay about $13.1 million, and Southeastern Securities and Benghiat should pay nearly $19.7 million. Specifically, the jury found that both the bank and the brokerage firm had “either conspired with or aided and assisted Robert Bentley in his fraudulent activities.” Now Senior U.S. District Judge John P. Fullam has handed down a 12-page opinion rejecting defense motions for judgment as a matter of law of a new trial. The evidence at trial, Fullam said, was sufficient for the jury to find that, between April 1999 and Oct. 23, 2001 – the date when the Securities and Exchange Commission closed down the Bentley operations – the defendants had provided Bentley with about $10 million in financing, “thus enabling Mr. Bentley to prolong the life of the Ponzi scheme.” During that period, Fullam said, the evidence showed that Bentley’s had secured more than $269 million in additional investments from defrauded investors. “While some of these investments resulted in the purchase of actual CDs which were still on hand when the scheme was shut down, the principal amount of CDs on hand as of Oct. 23, 2001, was approximately $23 million less than the principal amount the investors had purchased, and that figure does not include $9,440,000 in unpaid (and unpayable) interest,” Fullam wrote. As a result, Fullam said, Marion properly contended that the defendants’ assistance to Bentley caused “additional losses” of $32.7 million. The crucial issue at trial, Fullam said, was whether the defendants knew that Bentley was engaged in a fraudulent scheme when they provided the funds. Fullam concluded that there was “ample evidence” for the jury to find that the defendants either had actual knowledge of the Ponzi scheme or knowledge of facts that showed Bentley was defrauding investors, or that they were “chargeable with willful blindness.” And since Bentley was a registered representative employed by the Benghiat firm between July 1998 and August 2000, Fullam found that the Benghiat defendants “had an obligation to supervise Mr. Bentley’s activities, and could properly be held liable for failing to do so.” In their post-trial motions, defense lawyers also argued that Marion lacked standing to pursue such a suit because the entities for which he was appointed receiver were the wrongdoers who primarily caused the losses. Under the doctrine of in pari delicto, the defense lawyers argued that recovery would be barred. But Fullam found that while the in pari delicto doctrine would apply to bar such a claim brought by a trustee in bankruptcy, it did not act as a bar to a receiver’s bringing the same claims. “A bankruptcy proceeding differs significantly from an equity receivership imposed at the request of a government agency such as the SEC,” Fullam wrote. “The whole purpose of the SEC proceeding is to remedy violations of the securities laws for the benefit of investors.” The order appointing Marion as receiver, Fullam noted, provided that he “shall have complete jurisdiction over, and control of all the property, real, personal or mixed, including any assets or funds, wherever located, of all defendants.” As a result, Fullam said, Marion “has the right to pursue the cause of action which was the property of Bentley Financial Services – i.e., a claim that its officer, Mr. Bentley, breached his fiduciary duty to the corporation by subjecting it to liability for fraud, and that the Peninsula Bank and Benghiat Defendants assisted him in doing so.” (Copies of the 12-page opinion in Marion v. TDI Inc. , PICS No. 06-1816 , are available from The Legal Intelligencer . Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information. Some cases are not available until 1 p.m.)

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