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Entries in Attorney (8)

Wednesday
Aug312011

Two Florida Lawyers Disciplined for Involvement in Ponzi Schemes

The Florida Bar announced that it had handed down disciplinary sanctions against two Florida lawyers implicated in recent Ponzi schemes.  Howard Kusnick, implicated for his role in Howard Rothstein's $1.2 billion Ponzi scheme, and Michael McNerney, who was the lead attorney for Mutual Benefits Corp., each received the Florida Bar's official decision on their future ability to practice law.  Kusnick was disbarred for his role, while McNerney received an indefinite suspension from the practice of law.

Kusnick is currently awaiting sentencing after entering a guilty plea to conspiracy to commit wire fraud in connection with Rothstein's Ponzi scheme.  McNerney, earlier sentenced to five years in prison for his role as counsel for the failed Mutual Benefits Corp., received an indefinite suspension from the Florida Bar.  

A copy of Kusnick's Disbarment Consent is here.

A copy of McNerney's Guilty Plea is here.

Sunday
Aug282011

Former FBI Agent Sentenced to Prison for Ponzi Scheme

An attorney and former FBI agent was sentenced to prison for orchestrating a $4 million Ponzi scheme.  Cary Alan Burdette, from Trussville, Alabama, received a sentence of twenty years in prison, with at least five of those years to be spent in a state penitentiary.  Burdette had pled guilty in July to three counts of fraud in connection with the sale of securities.  

Burdette was indicted in 2009 on thirteen counts of securities fraud and one count each of Sale of an Unregistered Security and Sale of Securities by an Unregistered Agent and four counts of theft of property in the first degree.  According to authorities, Burdette sold promissory notes to several investors with the promise of eight to twelve percent annual returns.  Burdette represented to investors that their funds would be invested in real estate and medical technology ventures.  In total, over $4 million was entrusted to Burdette.  However, an investigation by the Alabama Securities Commission ("ASC") revealed that the majority of these funds were not invested, and instead were used by Burdette to make payments to existing investors and to pay personal expenses.  Additionally, neither Burdette nor the securities sold by Burdette were registered with the ASC.

Burdette is scheduled to report to prison on October 3rd.

 

Sunday
Aug282011

Attorney Sentenced to Five Years for Role in Ponzi Scheme

A Fort Lauderdale attorney was sentenced to five years in federal prison for his role in a giant Ponzi scheme that defrauded thousands of investors out of nearly $1 billion.  United States District Judge Adalberto Jordan sentenced Michael J. McNerney, 63, to the maximum sentence possible for wire fraud.  McNerney was the former lead attorney for Mutual Benefits Corp., a viatical settlement broker shut down by the SEC in 2004 and accused of operating a giant Ponzi scheme.

Mutual Benefits solicited investors to purchase viatical settlements and life insurance policies, pitching guaranteed returns on policies purchased by elderly and terminally ill individuals.  From 1994 to 2004, more than $1.25 billion was raised from 30,000 investors.  Prosecutors indicted McNerney in December 2008 on twenty-five counts in association with his role as outside counsel for Mutual Benefits.  The indictment was later dropped when McNerney pled guilty to a single count of conspiracy to commit mail and wire fraud and agreed to aid authorities in their investigation against other Mutual Benefits executives.  In his role as outside counsel, McNerney acknowledged concealing from regulators the involvement of one executive's criminal past that included a fraud conviction.  McNerney also failed to stop the company from making false representations concerning the company's prowess at estimating life expectancies.  

McNerney is the tenth individual to be convicted for a role in the scheme.  Along with the sentence, he was also ordered to pay $826 million in restitution to victims at a rate of 10% of future income.  Three top executives have pled not guilty and are currently scheduled to stand trial in 2013.

Tuesday
Aug092011

Kansas Lawyer Sentenced to Four Years in Prison for Texas Ponzi Scheme

A federal judge sentenced a Kansas lawyer to nearly four years in prison for operating a Ponzi scheme that bilked investors out of more than $2 million. Clifford R. Roth, 62, was sentenced by United States District Judge Marcia Crone to forty-six months in prison and ordered to pay over $2 million in restitution to defrauded investors.  Roth pled guilty earlier this year to an information charging him with interstate transportation of money taken by fraud.  

Roth, a licensed attorney in Kansas, traveled to Beaumont, Texas, in November 2007 and began soliciting investors to finance the purchase of bank holding company stock, which in turn would purchase an Oklahoma bank that would open a branch in Beaumont.  Investors were promised that their stock purchases would be held in escrow until the bank purchase was completed, and in the event the bank purchase did not occur, investors would receive their initial investment along with accrued interest.  As a result of these misrepresentations, dozens of investors contributed a total of $2.5 million to Roth.  Yet, according to the FBI, Roth never acquired a bank.  Instead, Roth misappropriated investor funds to a company he controlled to pay personal expenses and make payments to previous unrelated creditors of Roth.  

Roth, once a name partner at Kansas City law firm Gaar Buxbaum & Roth, has been ordered to begin serving his sentence by August 23, 2011.

Friday
Aug052011

Attorney Disbarred After Admitting to Ponzi Scheme

A former attorney who masterminded a Ponzi scheme that bilked investors out of $30 million was stripped of his license to practice law in New York.  In the case, Matter of Starr, M-1636, the five-member panel of the Appellate Division, First Department stated that:

"Since respondent admitted to conduct which satisfies the elements of scheme to defraud in the first degree, a New York class E felony, and grand larceny in the second degree, a New York class C felony…he is subject to automatic disbarment…which he does not contest,"

The disbarment will be retroactive to Starr's guilty plea in September 2010.

Kenneth Starr had pled guilty to charges of wire fraud, money laundering, and investment advisor fraud in September 2010, under which prosecutors had agreed to request a sentence based on federal sentencing guidelines calling for a sentence of ten to twelve years in prison.  However, United States District Court Judge Shira Scheindlin departed from the guidelines and sentenced Starr to ninety months in federal prison based on Starr's longstanding charity and civic work. 

The scheme made headlines when it was revealed that several of Starr's victims were celebrities, including Uma Thurman.