George Levin, an early promoter of bogus Scott Rothstein discounted settlement investments, has followed his wife’s lawsuit against TD Bank with one of his own.
The Fort Lauderdale businessman who ran the Banyon 1030-32 LLC hedge fund through which he funnelled at least $157 million of other people’s money into the Ponzi scheme asserts he was just as fooled by Rothstein as everyone else.
The Levins are essentially claiming the same losses, about $300 million, almost their entire personal wealth.
William L. Richey, George Levin’s Miami counselor, said the husband filed a separate lawsuit because he is going through an involuntary bankruptcy. His wife’s lawsuit was filed last week by William Scherer of Conrad & Scherer in Fort Lauderdale.
While George Levin is portraying himself as a victim, he was charged May 22 in Miami U.S. District Court by the Securities and Exchange Commission. The SEC claims Levin and his hedge fund chief executive officer, Frank Preve violated securities laws.
However, the case against Preve has since been dismissed. On Wednesday, Richey also filed a motion to dismiss the SEC complaint against Levin as well, claiming the SEC failed to serve him with the lawsuit within the 120-day required period, and because the agency’s allegations that were insufficient to support their case.
According to the SEC complaint, Levin either knew or was reckless in not knowing the scheme.
Levin, however, claims his innocence. In his Broward County state court lawsuit he blames TD Bank, Rothstein and former bank executives Frank Spinosa and Rosanne Caretsky.
“Levin had accounts at TD Bank,” Richey said. “Over time, he met with higher and higher-placed bank officials and they failed to ever tell him there was no money in the bank. They just allowed Mr. Levin to be fooled for a long period of time.”
The Levins invested directly in what were described as employment lawsuit settlements generated by Rothstein’s Fort Lauderdale firm, Rothstein Rosenfeldt Adler, where plaintiffs would accept up-front lump sums and investors would profit by waiting out the employer defendant for a larger award. But the lawsuits never existed.
In addition to putting in their own money, the Levins talked family members, friends and others into investing in the Ponzi scheme, sometimes by guaranteeing their own assets.
“Mr. Levin was the primary person who lost the most of any individual to Mr. Rothstein’s scheme,” Richey said.
Levin accuses TD Bank, Spinosa, Caretsky and Rothstein of aiding and abetting fraud, and of civil conspiracy to defraud. Rothstein is serving a 50-year federal prison sentence and his former firm has been in bankruptcy court for three years.
Since the scheme collapsed in October 2009, TD Bank has been targeted by investors because of its ability to pay damages and its role in the scheme.
In depositions, Rothstein said TD Bank was the principal hub through which he laundered the $1.2 billion that were drawn into the scheme. He testified that TD Bank officers were in his pocket and he could never have kept the scheme going on such a scale without their assistance.
Levin’s complaint describes how bank officers would collaborate with Rothstein for show meetings with investors, producing fraudulent accounts to make it look like there was actually large sums in real accounts.
Counsel for TD Bank, Marcos Jimenez of McDermott, Will & Emery in Miami, did not respond for comment by deadline.
Bank officer emails pointed to the collusion, confirming the allegation that Spinosa authored the so-called “lock letters” used to assure investors the accounts were genuine and only the investor could receive distributions. Aware of the harmful content, Levin’s complaint states TD Bank buried them during the discovery phase in lawsuits brought by Razorback Funding LLC and Coquina Investments Inc.
“When the documents were eventually discovered, TD Bank was sanctioned severely by the Coquina court for its untruthful and deceptive conduct,” Levin’s complaint states.
TD Bank settled prior to trial in Broward County state court with Razorback for $170 million, and was socked with a $67 million jury award in the Coquina federal trial in Miami.
Levin also described numerous meetings he had with TD Bank officers in which he and his CEO, Preve, went to great detail to explain their understanding of the structure of the investments and their role. Levin’s company, Banyon 1030-32 LLC funneled $157 million into the scheme.
Citing one 90-minute meeting in 2008, the complaint said, “The details of the RRA investment and the settlements were again presented to TD Bank, along with a statement that showed Banyon believed that it had millions of dollars already in trust accounts at TD Bank.”
Richey noted that even if the bank officers would not warn Levin, they knew Rothstein’s handling of the accounts were improper, yet they never went to the FBI or bank regulators.