On Monday, the victims of Robert Bentley’s $1 billion Ponzi scam suffered a setback when a federal appeals court overturned a $32.7 million jury verdict against Peninsula Bank of Delray Beach, its ex-executive vice president, Joseph Marzouca, Southeastern Securities, Inc., and its president Theodore Benghiat. The defendants are accused of helping to keep Bentley’s Ponzi scheme going.
Per court documents, Entrust Group and Bentley Financial Services Inc. misled investors by making them believe they were buying federally insured CD’s when they were actually buying unregistered IOU’s. David H. Marion, the receiver of Bentley’s companies in Paoli, Pennsylvania, says the Ponzi scam would have fallen apart much sooner without the defendants’ help.
The jury found that the brokerage firm and the bank either helped or conspired with Bentley to defraud investors. They said Southeastern Securities and Benghiat should pay almost $19.7 million and Peninsula and Marzouca should pay approximately $13.1 million.
The attorneys for the defense, however, argued that Marion, as the receiver, cannot pursue claims that should belong to investors. Prior to the jury verdict, Marion said he had recovered over 91% of the money lost by the victims. Attorneys for the plaintiff had called on the jury to hold the defendants liable for the money that Marion hadn’t been able to recover.
The 3rd Circuit sided with the defense and overturned the entire verdict.
“Courts, and especially Federal courts, are becoming more and more friendly to Wall Street,” says securities attorney William Shepherd, whose investment fraud law firm, Shepherd Smith Edwards & Kantas LTD LLP represents investors nationwide. “There has been a great deal of press in the last decade about ‘frivolous’ or ‘abusive’ securities law suits which has been greatly overblown. Investors should know that the price they pay for electing politicians who appoint pro-Wall Street judges is that when they suffer a devastating loss caused by fraud, their own case is subject to being tossed. This affects all cases because each one must be settled for a lower amount. It is a fact victims of securities fraud now recover an average of less than 7% of their losses in class action claims. Note that investors generally do much better when they hire an experienced attorney to file their individual claims.”
Related Web Resources:
3rd Circuit Tosses $33 Million Verdict Against Bank, Broker Charged With Aiding Ponzi Scheme, New Jersey Law Journal, January 6, 2010
Read the Opinion: Marion V. TDI (PDF)