EFTA00726708.pdf

IN THE CIRCUIT COURT OF THE 17th JUDICIAL CIRCUIT IN AND FOR BROWARD COUNTY, FLORIDA RAZORBACK FUNDING, LLC, D3 CAPITAL CASE NO.: 09-062943 (19) CLUB, LLC, BFMC INVESTMENT, LLC, Complex Litigation Unit LINDA VON ALLMEN, as Trustee of the VON ALLMEN DYNASTY TRUST, D&L PARTNERS, LP, DAVID VON ALLMEN, as Trustee of the DAVID VON ALLMEN LIVING TRUST, ANN VON ALLMEN, as Trustee of the ANN VON ALLMEN LIVING TRUST, DEAN KRETSCHMAR, COOPER MANAGEMENT, ANTHONY DEGENNARO, as Trustee of the EXTRA INNING DYNASTY TRUST, ADELE MUSSRY, JACK MUSSRY, NASSIM MUSSRY, MELINA EL-ANI, DANIELLE EL-ANI, H&N ASSOCIATES, ARETZ & ASSOCIATES, PARK NATIONAL CAPITAL FUNDING, LLC, PARK NATIONAL MORTGAGE SERVICING, SCOTT MORGAN, VICEROY GLOBAL INVESTMENTS, INC., CONCORDE CAPITAL, INC., IRA SOCHET as Trustee of the IRA SOCHET REVOCABLE INTER VIVOS TRUST, INVESTORS RISK ADVANTAGE, LP, SUSSCO, INC., EDWARD PALEY, FLORENCE PALEY, THE EDWARD AND FLORENCE PALEY FOUNDATION, STEVEN PALEY, LAURA PALEY, JANE ZARETSKY, STEVEN ZARETSKY as Trustee of the JANE ZARETSKY DYNASTY TRUST, LAWRENCE E. DEKELBAUM, AND SHALOM STRICTLY KOSHER MEATS, INC., Plaintiffs, v. SCOTT W. ROTHSTEIN, DAVID BODEN, -NOWAROC CLERK OF T COURT COUINTY, U FL DEBRA VILLEGAS, ANDREW BARNETT, B CIRCO IRENE STAY, TD BANK, N.A., FRANK A. SPINOSA, JENNIFER KERS 1 El 1ER, ROSANNE CARETSKY, BANYON INCOME FUND, L.P., BANYON USVI, LLC, BANYON 1030-32, LLC, GEORGE G. LEVIN, FRANK PREVE, MICHAEL SZAFRANSKI, ONYX OPTIONS CONSULTANTS CORPORATION, Page 1 of 2210 CONRAD & SCHERER, LLP, 633 SOUTH FEDERAL HIGHWAY, FORT LAUDERDALE, FL 33301 EFTA00726708  Razorback Funding. LLC, et aL, v. Scott W. Rothstein, et aL Complex Litigation Division - Case No.: 09-062943 (19) Third Amended Complaint ABS CAPITAL FUNDING, LLC, ALEXA FUNDING, LLC, BERENFELD SPRITZER SHECHTER SHEER, LLP, TRACY WEINTRAUB, GARY BERKOWITZ, BRIAN LEITSTEIN, BALLAMOR CAPITAL MANAGEMENT, LLC, BARRY R. BEKKEDAM, R.L. PEARSON & ASSOCIATES, INC., RICHARD PEARSON, GIBRALTAR PRIVATE BANK & TRUST, CO., PLATINUM PARTNERS VALUE ARBITRAGE FUND (USA), L.P., and A TRUE COPY CENTURION STRUCTURED GROWTH, LLC, JUL 26 2010 Defendants. PAM CLERK OF CIRCUIT COURT f BROWARO COUN Y. FL THIRD AMENDED COMPLAINT Plaintiffs, RAZORBACK FUNDING, LLC, D3 CAPITAL CLUB, LLC, BFMC INVESTMENT, LLC, LINDA VON ALLMEN as Trustee of the VON ALLMEN DYNASTY TRUST, D&L PARTNERS, 12, DAVID VON ALLMEN, as Trustee of the DAVID VON ALLMEN LIVING TRUST, ANN VON ALLMEN, as Trustee of the ANN VON ALLMEN LIVING TRUST, DEAN ICRETSCHMAR, COOPER MANAGEMENT, ANTHONY DEGENNARO as Trustee of the EXTRA INNING DYNASTY TRUST, ADELE MUSSRY, JACK MUSSRY, NASSIM MUSSRY, MELINA EL-ANI, DANIELLE EL-ANI, H&N ASSOCIATES, ARETZ ASSOCIATES, PARK NATIONAL CAPITAL FUNDING, LLC, PARK NATIONAL MORTGAGE SERVICING, SCOTT MORGAN, VICEROY GLOBAL INVESTMENTS, INC., CONCORDE CAPITAL, INC., IRA SOCHET REVOCABLE INTER VIVOS TRUST, INVESTORS RISK ADVANTAGE, LP, SUSSCO, INC., EDWARD PALEY, FLORENCE PALEY, THE EDWARD AND FLORENCE PALEY FOUNDATION, STEVEN PALEY, LAURA PALEY, JANE ZARETSKY, STEVEN ZARETSKY, as Trustee of the JANE ZARETSKY DYNASTY TRUST, LAWRENCE E. DEKELBAUM, AND SHALOM Page 2 of 2210 CONRAD & SCHERER, LLP, 633 SOUTH FEDERAL HIGHWAY, FORT LAUDERDALE, FL 33301 EFTA00726709  Razorback Funding, LLC, et aL, v. Scott W. Rothstein, et at Complex Litigation Division - Case No.: 09-062943 (19) Third Amended Complaint STRICTLY KOSHER MEATS, INC., (collectively referred to herein as "Plaintiffs") hereby sue Defendants, SCOTT W. ROTHSTEIN, DAVID BODEN, DEBRA VILLEGAS, ANDREW BARNETT, IRENE STAY, TD BANK, N.A., FRANK A. SPINOSA, JENNIFER KERSTETTER, ROSANNE CARETSKY, BANYON INCOME FUND, L.P., BANYON USVI, LLC, BANYON 1030-32, LLC, GEORGE G. LEVIN, FRANK PREVE, MICHAEL SZAFRANSKI, ONYX OPTIONS CONSULTANTS CORPORATION, ABS CAPITAL FUNDING, LLC, ALEXA FUNDING, LLC, BERENFELD SPRITZER SHECHTER SHEER, LLP, TRACY WEINTRAUB, GARY BERKOWITZ, BRIAN LEITSTEIN, BALLAMOR CAPITAL MANAGEMENT, LLC, BARRY It BEICICEDAM, R.L. PEARSON & ASSOCIATES, INC., RICHARD PEARSON, GIBRALTAR PRIVATE BANK & TRUST, CO., PLATINUM PARTNERS VALUE ARBITRAGE FUND, L.P., and CENTURION STRUCTURED GROWTH, LLC (collectively referred to as "Defendants"), and allege as follows: I. Plaintiffs' Claims I. The Plaintiffs sue the Defendants and seek the following: a. Compensatory damages in excess of $281,525,358.34, pre-judgment interest, and other amounts to be particularized at trial as a direct and proximate result of Defendants' commission of the following: i. fraudulent misrepresentation; ii. negligent misrepresentation; iii. violation of the Florida Securities and Investor Protection Act; iv. breach of fiduciary duty; v. aiding and abetting fraud; Page 3 of 2210 CONRAD & SCHERER, LLP, 633 SOUTH FEDERAL HIGHWAY, FORT LAUDERDALE, FL 33301 EFTA00726710  Razorback Funding, LLC, et at, v. Scott W. Rothstein, et at Complex Litigation Division - Case No.: 09-062943 (19) Third Amended Complaint vi. aiding and abetting breach of fiduciary duty; vii. aiding and abetting conversion; viii. conversion; ix. negligence; x. negligent supervision; and xi. civil conspiracy to defraud; b. punitive damages upon obtaining leave of court; c. taxable costs and attorney's fees; and d. any such further relief this court deems just under the circumstances. Page 4 of 2210 CONRAD & SCHERER, LLP, 633 SOUTH FEDERAL HIGHWAY, FORT LAUDERDALE, FL 33301 EFTA00726711  Razorback Funding, LLC, et at, v. Scott W. Rothstein, et at Complex Litigation Division - Case No.: 09-062943 (19) Third Amended Complaint II. Overview 2. This action arises out of a fraudulent scheme orchestrated by Scott W. Rothstein (hereinafter, "Rothstein"), who admittedly bilked investors out of hundreds of millions of dollars in what has come to be known as the largest financial fraud in Florida history. Rothstein, through his law firm Rothstein Rosenfeldt Adler, P.A. (hereinafter, "RRA" and collectively referred to as the "Principal Conspirators"), devised an elaborate plot to lure investors into purchasing putative clients' structured settlement proceeds rights at lump sum discounted rates. Rothstein's role as the reputed escrow agent placed him at the center of the plot, providing him, in collaboration with his hand-picked bank insiders, unfettered access to manipulate and transfer the fraudulently obtained funds. In reality, while certain details used to induce investor funding were real, all of the confidential settlements were pure fabrication. Indeed, returns to earlier investors were not made via structured payments, but instead were made with the principal obtained from later investors--a classic Ponzi scheme.2 3. The Principal Conspirators, however, did not act alone. Defendant TD Bank, N.A. (hereinafter, "TD Bank"), a subsidiary of Toronto Dominion Bank, was complicit in this scheme, serving as a critical lynchpin "legitimizing" the Principal Conspirators' plot and providing crucial inducements to investor action. Specifically, investors were duped by TD Bank employees who conspired with the Principal Conspirators to manipulate TD Bank's trust account statements and 1 On January 27, 2010, Rothstein pled guilty to five counts of criminal offenses. On June 9, 2010, Rothstein was sentenced to fifty (50) years in federal prison. 2 A Ponzi scheme is generally recognized as a fraudulent investment operation that pays returns to earlier investors from their own money or from monies paid by subsequent investors, rather than from any actual profit earned. The scheme is named after Charles Ponzi who became notorious for using the technique in the early 1920's. Page 5 of 2210 CONRAD & SCHERER, LLP, 633 SOUTH FEDERAL HIGHWAY, FORT LAUDERDALE, FL 33301 EFTA00726712  Razorback Funding, LLC, et at, v. Scott W. Rothstein, et at Complex Litigation Division - Case No.: 09-062943 (19) Third Amended Complaint lulled investors into a false senses of security by providing written assurances that settlement funds existed and could only be disbursed directly to the investor. These affirmative deceitful declarations, which in the investors' eyes was tantamount to a guaranty, gravely impacted the investor risk-evaluation analysis and influenced investors into making their investments. 4. Moreover, demonstrative of TD Bank's participation, or alternatively evidence of their gross negligence and wanton misconduct, is the bank's reckless disregard of numerous "red flags." TD Bank ignored their own policies and procedures and acted in derivation of national bank secrecy / anti-money laundering protections as applied to wire, interbank, and interstate transfers. Undeniably, TD Bank had actual knowledge of RRA's pervasive practice of rapidly moving hundreds of millions of dollars through its TD Bank trust accounts over short periods of time. In fact, in October 2009 alone, almost half of a billion dollars was moved in and out of RRA's trust accounts at one TD Bank location--more money than most bank branches would likely see in a decade. Yet, despite the massive amount of funds being moved by one client, TD Bank failed to enforce even basic safeguards, enabling the Principal Conspirators to conceal the fraud, to launder proceeds, and to enrich Rothstein and his band of co-conspirators at the expense of innocent investors. The Ponzi scheme simply could not have gained traction without TD Bank's involvement in sanctioning or willfully failing to exercise reasonable care as an ordinary and prudent bank questioning, inter alia, the vast amounts of money being circulated through its doors. 5. Based on the allegations set forth herein, Plaintiffs aver that, at all materials times, TD Bank was complicit in the Principal Conspirators' Ponzi scheme, had actual knowledge of Rothstein's wrongful conduct, and/or was recklessly or willfully blind to its role in materially supporting the scheme. Page 6 of 2210 CONRAD & SCHERER, LLP, 633 SOUTH FEDERAL HIGHWAY, FORT LAUDERDALE, FL 33301 EFTA00726713  Razorback Funding, LLC, et at, v. Scott W. Rothstein, et at Complex Litigation Division - Case No.: 09-062943 (19) Third Amended Complaint 6. Additionally, Gibraltar Private Bank & Trust (hereinafter, "Gibraltar Bank") and Berenfeld Spritzer Shechter Sheer, LLP (hereinafter, "Berenfeld"), both played instrumental roles in perpetuating the conspiracy to defraud and their conduct and omissions materially contributed to Plaintiffs' losses. Had either Gibraltar Bank or Berenfeld acted in accordance with industry standards and/or their own internal governance policies and procedures, Rothstein's scheme would have been revealed and Plaintiffs' devastating losses averted. 7. Based on the allegations below, Plaintiffs aver that at all materials times Gibraltar Bank was complicit in the Principal Conspirators' Ponzi scheme, had actual knowledge of Rothstein's wrongful conduct, and substantially assisted in furthering the fraudulent scheme by, inter cilia: (1) actively monitoring Principal Conspirators' trust and operating accounts to avoid compliance issues; (2) affirmatively assisting and advising Rothstein when to transfer funds from RRA trust accounts to cover the tens of millions of dollars in RRA operating account overdrafts; (3) blindly authorizing same-day transfers from client trust accounts to RRA operating accounts and then out to Rothstein's own personal accounts; (4) utilizing key Gibraltar Bank insiders to aggressively quash internal compliance officers concerns over Rothstein's blatantly suspicious activities; and (5) willfully providing Rothstein with "special accommodations; as a client with significant stature, and later as an investor with a 5% ownership interest in Gibraltar Bank. Gibraltar Bank's active support played a vital role in facilitating and/or otherwise substantially assisting the Ponzi and, as a direct consequence, renders Gibraltar Bank liable to Plaintiffs for the damages they suffered. 3 These "special accommodations" are detailed in Section X.A. below, and include abnormal banking procedures and major departures from Gibraltar Bank's own internal policies. Page 7 of 2210 CONRAD & SCHERER, LLP, 633 SOUTH FEDERAL HIGHWAY, FORT LAUDERDALE, FL 33301 EFTA00726714  Razorback Funding, LLC, et at, v. Scott W. Rothstein, et at Complex Litigation Division - Case No.: 09-062943 (19) Third Amended Complaint 8. Based on the allegations below, Plaintiffs aver, inter a/ia, that at all materials times, Berenfeld was: (1) the personal tax accountants for Rothstein and Stuart Rosenfeldt; (2) the tax accountants for RRA; and (3) the independent auditors for the Banyon Income Fund, L.P. and, as such, uniquely positioned to discover the pervasive fraud. Notwithstanding, Berenfeld either intentionally, recklessly, or with gross disregard failed to act choosing instead to affirmatively assist the Ponzi scheme for their own benefit. Berenfeld has already admitted numerous major mistakes in preparing the Principal Conspirators' tax returns and confessed to ignoring a series of red flags discovered during the Banyon audit process. Similarly, Berenfeld cannot avoid the patent conflict in auditing the RRA financial statements it prepared. Berenfeld knew when issuing Banyon its clear audit opinion letter that it was to be incorporated and disseminated in a confidential offering memorandum intended to secure investors. For these reasons and more, Berenfeld's knowing, deliberate, and/or reckless indifference makes it liable to Plaintiffs for their damages. 9. Furthermore, as alleged in detail infra, the Principal Conspirators' inner-circle of facilitators (TD Bank, Spinosa, Kerstetter, Caretsky, Gibraltar Bank, Berenfeld, Weintraub, Berkowitz, Leitstein, Levin, Preve, Banyon entities, Szafranski, Onyx, Villegas, Boden, Barnett, Stay, Platinum, and Centurion) and promoters (TD Bank, Spinosa, Kerstetter, Caretsky, Gibraltar Bank, Levin, Preve, Banyon entities, Szafranski, Onyx, ABS, Bekkedam, Ballamor, Pearson, R.L. Pearson & Associates, Platinum, and Centurion) each played a vital role in the successful perpetration of this systemic fraud. Each of these Defendants either knowingly made material omissions, made false material statements intending to induce Plaintiffs, or knowingly aided and abetted or conspired in the scheme to defraud described herein. Indeed Rothstein, in a Page 8 of 2210 CONRAD & SCHERER, LLP, 633 SOUTH FEDERAL HIGHWAY, FORT LAUDERDALE, FL 33301 EFTA00726715  Razorback Funding, LLC, et at, v. Scott W. Rothstein, et at Complex Litigation Division - Case No.: 09-062943 (19) Third Amended Complaint November 23, 2009, interview with the Sun-Sentinel, stated that "karma has caught up with him, but it will catch up with others too . . . You're in a town full of thieves, and at the end of the day, everyone will see. I'll leave it at that." III. The Plaintiffs 10. The allegations made herein are made upon personal knowledge as to the Plaintiffs' own acts, and upon information and belief as to all other matters. Plaintiffs information and belief is based upon the following including, but not limited to: a review and analysis of public documents; a review and analysis of specific transaction/deal documents; a review and analysis of discovery obtain to date; a review and analysis of pleadings and papers filed in other actions where a Defendant is a named party or witness; a review and analysis of the related RRA bankruptcy chapter 11 pleadings, documents, and 2004 examination testimony; and interviews with Defendants' former employees, associates, and/or acquaintances. II. Plaintiff, RAZORBACK FUNDING, LLC, (hereinafter, "Razorback"), is a Delaware limited liability company with its principal place of business in Broward County, Florida. From October 1, 2009 through October 26, 2009, Razorback invested $32,000,000.00 into the Ponzi scheme through Banyon USVI, LLC. Von Allmen Dynasty Trust, D&L Partners, David Von Allmen Living Trust, Ann Von Allmen Living Trust, and Kretschmar were also major investors in Razorback. 12. Plaintiff, D3 CAPITAL CLUB, LLC (hereinafter, "D3"), is a Delaware limited liability company with its principal place of business in Broward County, Florida. From September 16, 2009 through October 23, 2009, D3 invested $13,500,000.00 into the Ponzi scheme. Von Allmen Dynasty Trust, D&L Partners, and David Von Allmen Living Trust were investors in D3. Page 9 of 2210 CONRAD & SCHERER, LLP, 633 SOUTH FEDERAL HIGHWAY, FORT LAUDERDALE, FL 33301 EFTA00726716  Razorback Funding, LLC, et aL, v. Scott W. Rothstein, et at Complex Litigation Division - Case No.: 09-062943 (19) Third Amended Complaint 13. Plaintiff, BFMC INVESTMENT, LLC (hereinafter, "BFMC"), is a Florida limited liability company with its principal place of business in Broward County, Florida. On October 15, 2009, BFMC invested $2,400,000.00 into the Ponzi scheme. 14. Plaintiff, LINDA VON ALLMEN, is trustee of the VON ALLMEN DYNASTY TRUST (hereinafter, "Dynasty Trust"), an irrevocable trust with its principal place of administration in Broward County, Florida. On May 5, 2009, the Dynasty Trust invested $2,000,000.00 into the Ponzi scheme through Banyon Income Fund. 15. Plaintiff, D&L PARTNERS, LP (hereinafter, "D&L Partners"), is a Missouri limited partnership with its principal place of business in Broward County, Florida. From May 5, 2009 through June 8, 2009, D&L Partners invested approximately $45,000,000.00 into the Ponzi scheme through Banyon Income Fund. Doug Von Allmen is the general partner of D&L Partners. 16. Plaintiff, DAVID VON ALLMEN, is trustee of the DAVID VON ALLMEN LIVING TRUST (hereinafter, "DVA Trust"), a revocable trust with its principal place of administration in Saint Louis County, Missouri. On August 26, 2009, the DVA Trust invested $275,000.00 into the Ponzi scheme through Banyon Income Fund. 17. Plaintiff, ANN VON ALLMEN, is trustee of the ANN VON ALLMEN LIVING TRUST (hereinafter, "AVA Trust"), a revocable trust with its principal place of administration in Saint Louis County, Missouri. On August 28, 2009, the AVA Trust invested $275,000.00 into the Ponzi scheme through Banyon Income Fund. 18. Plaintiff, DEAN KRETSCHMAR (hereinafter, "Kretschmar"), is an individual residing in Broward County, Florida. On June 3, 2009, Kretschmar invested $8,000,000.00 into the Ponzi scheme through Banyon Income Fund. Page 10 of 2210 CONRAD & SCHERER, LLP, 633 SOUTH FEDERAL HIGHWAY, FORT LAUDERDALE, FL 33301 EFTA00726717  Razorback Funding, LLC, et aL, v. Scott W. Rothstein, et at Complex Litigation Division - Case No.: 09-062943 (19) Third Amended Complaint 19. Plaintiff, COOPER MANAGEMENT (hereinafter, "Cooper"), is a Delaware corporation with its principal place of business in Palm Beach County, Florida. On August 4, 2009, Cooper invested $900,000.00 into the Ponzi scheme through Banyon Income Fund. 20. Plaintiff, ANTHONY DEGENNARO, is trustee of EXTRA INNING DYNASTY TRUST (hereinafter "Extra Inning Trust"), an irrevocable trust with its principal place of administration in Southington, Connecticut and the successor in interest to the Pavano Dynasty Trust. From August 18, 2008 through April 2, 2009, the Extra Inning Trust invested $7,000,000.00 into the Ponzi scheme through Banyon 1030-32. 21. Plaintiffs, ADELE MUSSRY and JACK MUSSRY, are a married couple residing in California. From February 23, 2009 through October 15, 2009, Adele Mussry and Jack Mussry invested $1,150,000.00 into the Ponzi scheme through Michael Szafranski and ABS Capital Funding, LLC. 22. Plaintiff, NASSIM MUSSRY, is an individual residing in California. On September 8, 2009, Nassim Mussry invested $100,000.00 into the Ponzi scheme through Michael Szafranski and ABS Capital Funding, LLC. 23. Plaintiff, MELINA EL-ANI, is an individual residing in California. Between August 10, 2009 and October 13, 2009, Melina El-Ani invested $145,900.00 into the Ponzi scheme through Michael Szafranski and ABS Capital Funding, LLC. 24. Plaintiff, DANIELLE EL-ANI, is an individual residing in California. On October 6, 2009, Danielle El-Ani invested $35,000.00 into the Ponzi scheme through Michael Szafranski and ABS Capital Funding, LLC. Page 11 of 2210 CONRAD & SCHERER, LLP, 633 SOUTH FEDERAL HIGHWAY, FORT LAUDERDALE, FL 33301 EFTA00726718  Razorback Funding, LLC, et aL, v. Scott W. Rothstein, et at Complex Litigation Division - Case No.: 09-062943 (19) Third Amended Complaint 25. Plaintiff, H&N ASSOCIATES (hereinafter, "H&N"), is a New York partnership. On September 4, 2009, H&N invested $100,000.00 into the Ponzi scheme through Michael Szafranski and ABS Capital Funding, LLC. 26. Plaintiff, ARETZ ASSOCIATES (hereinafter "ARETZ"), is a New York partnership. On October 20, 2009, ARETZ invested $200,000.00 into the Ponzi scheme through Michael Szafranski and ABS Capital Funding, LLC. 27. Plaintiff, PARK NATIONAL CAPITAL FUNDING (hereinafter "PARK CAPITAL") is a New York limited liability company. Between June 30, 2009 and July 30, 2009, PARK CAPITAL invested $200,000.00 into the Ponzi scheme through Michael Szafranski and ABS Capital Funding, LLC. 28. Plaintiff, PARK NATIONAL MORTGAGE SERVICING hereinafter "PARK MORTGAGE") is a New York partnership. On October 1, 2009, PARK MORTGAGE invested $250,000.00 into the Ponzi scheme through Michael Szafranski and ABS Capital Funding, LLC. 29. Plaintiff, SCOTT MORGAN (hereinafter, "Morgan"), is an individual residing in Illinois. Between July 24, 2009 and September 21, 2009, Morgan invested $358,791.67. into the Ponzi scheme into the Ponzi scheme through Michael Szafranski and ABS Capital Funding, LW. 30. Plaintiff, VICEROY GLOBAL INVESTMENTS, INC. (hereinafter, "Viceroy"), is a Georgia corporation with its principal place of business in Atlanta, Georgia. Between August 31, 2009 and October 7, 2009, Viceroy invested $3,300,000.00 into the Ponzi scheme through Richard Pearson and R.L. Pearson & Associates. 31. Plaintiff, CONCORDE CAPITAL, INC. (hereinafter, "Concorde"), is a Florida corporation with its principal place of business in Broward County, Florida. Between August and Page 12 of 2210 CONRAD & SCHERER, LLP, 633 SOUTH FEDERAL HIGHWAY, FORT LAUDERDALE, FL 33301 EFTA00726719  Razorback Funding, LLC, et aL, v. Scott W. Rothstein, et at Complex Litigation Division - Case No.: 09-062943 (19) Third Amended Complaint September 2009, Concorde invested $2,013,000.00 into the Ponzi scheme through Richard Pearson and R.L. Pearson & Associates. 32. Plaintiff, IRA SOCHET, is the trustee of the IRA SOCHET REVOCABLE INTER VIVOS TRUST (hereinafter, "Sochet Trust"), an irrevocable trust that between February and October 2009, invested $147,300,000 into the Ponzi scheme through Szafranski, Onyx Options Consultants Corporation, and Alexa Funding, LLC. 33. Plaintiff, INVESTORS RISK ADVANTAGE, LP (hereinafter, "Investors Risk"), is a Delaware corporation with its principal place of business in Miami-Dade County, Florida. Between February and October 2009, Investors Risk invested $8,450,000.00 into the Ponzi scheme through Szafranski and Alexa Funding, LLC. 34. Plainitff, SUSSCO, INC. (hereinafter, "Sussco"), is a Florida corporation with its principal place of business in Miami-Dade County, Florida. Between March and October 2009, Sussco invested $2,799,166.66 into the Ponzi scheme through Szafranski and ABS Capital Funding, LLC. 35. Plaintiff, EDWARD PALEY, is an individual residing in Palm Beach County, Florida. On September 1, 2009, Edward Paley invested $500,000.00 into the Ponzi scheme through Banyon Income Fund. 36. Plaintiff, FLORENCE PALEY, is an individual residing in Palm Beach County, Florida. On September 1, 2009, Florence Paley invested $500,000.00 into the Ponzi scheme through Banyon Income Fund. Page 13 of 2210 CONRAD & SCHERER, LLP, 633 SOUTH FEDERAL HIGHWAY, FORT LAUDERDALE, FL 33301 EFTA00726720  Razorback Funding, LLC, et aL, v. Scott W. Rothstein, et at Complex Litigation Division - Case No.: 09-062943 (19) Third Amended Complaint 37. Plaintiffs, STEVEN PALEY and LAURA PALEY, are a married couple residing in Bergen County, New Jersey. On August 27, 2009 and October 29, 2009 Steven and Laura Paley made investments totaling $2,000,000.00 into the Ponzi scheme through Banyon Income Fund. 38. Plaintiff, STEVEN ZARETSKY, as trustee of the JANE ZARETSKY DYNASTY TRUST (hereinafter, "Zaretsky Dynasty Trust"), an irrevocable trust that on June 8, 2009, invested $100,000.00 into the Ponzi scheme through Banyon Income Fund. 39. Plaintiff, JANE ZARETSKY, is an individual residing in Bergen County, New Jersey. On September 10, 2009, Jane Zaretsky invested $50,000.00 into the Ponzi scheme through Banyon Income Fund. 40. Plaintiff, THE EDWARD AND FLORENCE PALEY FOUNDATION (hereinafter, "The Paley Foundation"), is a New Jersey not-for-profit corporation with its principal place of business in Bergen County, New Jersey. On August 26, 2009, The Paley Foundation invested $100,000.00 into the Ponzi scheme through Banyon Income Fund. 41. Plaintiff, LAWRENCE E. DEKELBAUM (hereinafter, "Dekelbaum"), is an individual residing in Maryland. Between June 30, 2009 and October 8, 2009, Dekelbaum invested $381,500.01 into the Ponzi scheme through Michael Szafranski and ABS Capital Funding, LLC. 42. Plaintiff, SHALOM STRICTLY KOSHER MEATS, INC. (hereinafter "Shalom Kosher") is incorporated under the laws of the State of Maryland. On October 6-8, 2009, Shalom Kosher invested $142,000.00 into the Ponzi scheme through Michael Szafranski and ABS Capital Funding, LLC. Page 14 of 2210 CONRAD & SCHERER, LLP, 633 SOUTH FEDERAL HIGHWAY, FORT LAUDERDALE, FL 33301 EFTA00726721  Razorback Funding, LLC, et at, v. Scott W. Rothstein, et at Complex Litigation Division - Case No.: 09-062943 (19) Third Amended Complaint IV. The Defendants A. Principal Conspirators 43. Defendant, ROTHSTEIN, is an individual residing in Broward County, Florida and, at all times relevant hereto, was one of Rothstein, Rosenfeldt Adler, P.A.'s founders, its managing partner and CEO. Rothstein is the admitted architect of the Ponzi scheme. On January 27, 2010, Rothstein pled guilty to one count of conspiracy to violate the racketeering influenced corrupt organization (RICO) statute (Count 1); one count of conspiracy to commit money laundering (Count 2); one count of conspiracy to commit mail fraud and wire fraud (Count 3); and two counts of wire fraud (Counts 4 and 5). On June 9, 2010, Rothstein was sentenced to fifty (50) years in federal prison. Rothstein also agreed to forfeit all known assets, including twenty-four pieces of real property, numerous luxury cars, boats, and other vessels, jewelry, sports memorabilia, business interests, and bank accounts. Rothstein materially participated, conspired, substantially assisted, encouraged, and otherwise knowingly aided and abetted one or more of the other defendants in the unlawful, misleading, and fraudulent conduct alleged herein. 44. RRA, a non-party, is a Florida professional association with its principal place of business in Broward County, Florida. At all times pertinent to this complaint, RRA, through its agents, employees, alter egos, subsidiaries, or divisions, served as the legitimate front for this elaborate Ponzi scheme, acting as both the law firm representing the putative plaintiffs in connection with their pre-suit, confidential settlements and as the escrow agents for each of the Plaintiffs' Ponzi scheme investments. RRA's trust, escrow, and operating accounts at TD Bank and Gibraltar Bank were used to divert and misappropriate investor funds at the heart of this scheme. RRA materially participated, conspired, substantially assisted, encouraged, and otherwise Page 15 of 2210 CONRAD & SCHERER, LLP, 633 SOUTH FEDERAL HIGHWAY, FORT LAUDERDALE, FL 33301 EFTA00726722  Razorback Funding, LLC, et at, v. Scott W. Rothstein, et at Complex Litigation Division - Case No.: 09-062943 (19) Third Amended Complaint knowingly aided and abetted one or more of the other defendants in the unlawful, misleading, and fraudulent conduct alleged herein. B. TD Bank Defendants 45. Defendant, TD BANK, is a foreign national banking association registered to do business in Florida. TD Bank maintains substantial contact with the state of Florida through its multiple branches located throughout the state. TD Bank was the financial epicenter of the Ponzi scheme as hundreds of millions, if not billions, of Ponzi dollars flowed through RRA's it Bank escrow, trust, and operating accounts. Despite the grossly inordinate amount of funds being rapidly wired in and out of RRA's accounts held at two local South Florida branches, these suspicious account activities inexplicably circumvented several fraud-risk tripwires and avoided detection by TD Bank's internal bank compliance officers and systems. As asserted herein, TD Bank's active involvement in the Ponzi lent substantial credibility to the scheme which Plaintiffs relied upon in making their investments. Accordingly, TD Bank is liable for Plaintiffs' losses as they materially participated, conspired, substantially assisted, encouraged, and otherwise knowingly aided and abetted one or more of the other defendants in the unlawful, misleading, and fraudulent conduct alleged herein while willfully ignoring and/or failing to exercise reasonable care. 46. Defendant, FRANK A. SPINOSA (hereinafter, "Spinosa"), is an individual residing in Broward County, Florida and, at all times relevant hereto, was acting within the scope of his employment as a senior regional vice-president of operations for TD Bank. Spinosa contributed to the scheme by, among other things, making material misrepresentations in meeting with investors, providing falsified account statements, preparing fraudulent irrevocable "lock letters", Page 16 of 2210 CONRAD & SCHERER, LLP, 633 SOUTH FEDERAL HIGHWAY, FORT LAUDERDALE, FL 33301 EFTA00726723  Razorback Funding, LLC, et at, v. Scott W. Rothstein, et at Complex Litigation Division - Case No.: 09-062943 (19) Third Amended Complaint and using his position at the bank and the bank itself to induce investor funding for the Ponzi. Additionally, Spinosa materially participated, conspired, substantially assisted, encouraged, and otherwise knowingly aided and abetted one or more of the other defendants in the unlawful, misleading, and fraudulent conduct alleged herein while willfully ignoring and/or failing to exercise reasonable care. On or about November 2009, TD Bank terminated Spinosa's employment.4 47. Defendant, JENNIFER KERSTETTER (hereinafter, "Kerstetter"), is an individual residing in Broward County, Florida and, at all times relevant hereto, was acting within the scope of her employment as an assistant manager for TD Bank. Kerstetter contributed to the scheme by, among other things, making material misrepresentations in meeting with investors, providing falsified account statements, preparing fraudulent irrevocable "lock letters", and using her position at the bank and the bank itself to induce investor funding. Additionally, Kerstetter materially participated, conspired, substantially assisted, encouraged, and otherwise knowingly aided and abetted one or more of the other defendants in the unlawful, misleading, and fraudulent conduct alleged herein while willfully ignoring and/or failing to exercise reasonable care.5 48. Defendant, ROSANNE CARETSKY (hereinafter, "Caretsky"), is an individual residing in Broward County, Florida, and, at all times relevant hereto, was acting within the scope of her employment as an assistant vice president and branch manager for TD Bank. Caretsky 4 On June 10, 2010, Spinosa was deposed as part of the 2004 Examination in the case styled as In Re: Rothstein Rosenfeld: Adler, P.A., Debtor, Case No.: 09-34791-BKC-RBR currently pending before the United States Bankruptcy Court Southern District of Florida. Mr. Spinosa's sworn 2004 Examination deposition testimony was relied upon by the Plaintiffs in making the allegations contained herein. On May 18, 2010, Kerstetter was deposed as part of the 2004 Examination in the case styled as In Re: Rothstein Rosenfeld: Adler, P.A., Debtor, Case No.: 09-34791-BKC-RBR currently pending before the United States Bankruptcy Court Southern District of Florida. Ms. Kerstetter's sworn 2004 Examination deposition testimony was relied upon by the Plaintiffs in making the allegations contained herein. Page 17 of 2210 CONRAD & SCHERER, LLP, 633 SOUTH FEDERAL HIGHWAY, FORT LAUDERDALE, FL 33301 EFTA00726724  Razorback Funding, LLC, et at, v. Scott W. Rothstein, et at Complex Litigation Division - Case No.: 09-062943 (19) Third Amended Complaint materially participated, conspired, substantially assisted, encouraged, and otherwise knowingly aided and abetted one or more of the other defendants in the unlawful, misleading, and fraudulent conduct alleged herein while willfully ignoring and/or failing to exercise reasonable care.6 C. RRA Defendants 49. Defendant, DAVID BODEN (hereinafter, "Boden"), is an individual residing in Fort Lauderdale, Florida and, at all times relevant hereto, was a shareholder and general counsel for RRA. Boden also worked as an agent for defendant-broker Richard Pearson and was compensated for performing services as an "inside?' to the fraudulent transactions alleged herein. Boden was Rothstein's "right-hand man" and an essential participant in the scheme by, among other things, participating in investor inducement meetings, negotiating and drafting the putative settlement and assignment documents, acting as the "closing agent" to secure investor funding, and advising and soliciting investors into funding settlements despite actual and/or constructive knowledge that the investments were part of a Ponzi scheme. Boden materially participated, conspired, substantially assisted, encouraged, and otherwise knowingly aided and abetted one or more of the other defendants in the unlawful, misleading, and fraudulent conduct alleged herein while willfully ignoring and/or failing to exercise reasonable care? 6 On May 19, 2010, Caretsky was deposed as part of the 2004 Examination in the case styled as In Re: Rothstein Rosenfeld: Adler, P.A., Debtor, Case No.: 09-34791-BKC-RBR currently pending before the United States Bankruptcy Court Southern District of Florida. Ms. Caretsky's sworn 2004 Examination deposition testimony was relied upon by the Plaintiffs in making the allegations contained herein. 7 On April 29, 2010, Boden was deposed as part of the 2004 Examination in the case styled as In Re: Rothstein Rosenfeld: Adler, P.A., Debtor, Case No.: 09-34791-BKC-RBR currently pending before the United States Bankruptcy Court Southern District of Florida. Mr. Boden's sworn 2004 Examination deposition testimony was relied upon by the Plaintiffs in making the allegations contained herein. Page 18 of 2210 CONRAD & SCHERER, LLP, 633 SOUTH FEDERAL HIGHWAY, FORT LAUDERDALE, FL 33301 EFTA00726725  Razorback Funding, LLC, et at, v. Scott W. Rothstein, et at Complex Litigation Division - Case No.: 09-062943 (19) Third Amended Complaint 50. Defendant, ANDREW BARNETT (hereinafter, "Barnett"), is an individual residing in Broward County, Florida and, at all times relevant hereto, was the Director of Corporate Development for RRA. Barnett participated in the scheme by, among other things, recruiting and soliciting investors into the Ponzi scheme, participating in investor inducement meetings, providing material misrepresentations which induced investor funding, and reaping financial benefits from the investor fraud despite having actual or constructive knowledge that the investments were being made into a Ponzi scheme. Bamett materially participated, conspired, substantially assisted, encouraged, and otherwise knowingly aided and abetted one or more of the other defendants in the unlawful, misleading, and fraudulent conduct alleged herein while willfully ignoring and/or failing to exercise reasonable care. 51. Defendant, IRENE STAY (hereinafter, "Stay"), is an individual residing in Broward County, Florida and, at all times relevant hereto, was the chief financial officer of RRA. Stay participated in the scheme by furnishing investors with falsified bank account statements and wire transfer confirmations used to induce investor funding despite having actual or constructive knowledge that the investments were a Ponzi scheme. Stay materially participated, conspired, substantially assisted, encouraged, and otherwise knowingly aided and abetted one or more of the other defendants in the unlawful, misleading, and fraudulent conduct alleged herein while willfully ignoring and/or failing to exercise reasonable care. 52. Defendant, DEBRA E. VILLEGAS (hereinafter, "Villegas"), is an individual residing in Broward County, Florida and, at all times relevant hereto, was the chief operating officer at RRA. Villegas, Rothstein's proclaimed number two at RRA, participated in the scheme by, among other things, drafting and notarizing fallacious putative settlement and assignment Page 19 of 2210 CONRAD & SCHERER, LLP, 633 SOUTH FEDERAL HIGHWAY, FORT LAUDERDALE, FL 33301 EFTA00726726  Razorback Funding, LLC, et at, v. Scott W. Rothstein, et at Complex Litigation Division - Case No.: 09-062943 (19) Third Amended Complaint agreements, furnishing investors with false bank account statements and fictitious wire transfer notifications for the purpose of inducing investments into the Ponzi scheme despite having actual or constructive knowledge of same. Villegas materially participated, conspired, substantially assisted, encouraged, and knowingly otherwise aided and abetted one or more of the other defendants in the unlawful, misleading, and fraudulent conduct alleged herein while willfully ignoring and/or failing to exercise reasonable care. On June 11, 2010, Villegas pled guilty to federal charge of conspiracy to commit money laundering. D. Banyon Defendants 53. Defendant, BANYON 1030-32, LLC (hereinafter, "Banyon 1030-32"), is the General Partner and investment manager of Banyon Income Fund and Banyon USVI. Banyon 1030-32, by and through its agent Frank Preve and Managing Member George Levin, directed several of the Banyon investment entities including, BIF, Banyon USVI, Banyon Funding, LLC, and Banyon Investments, LLC. In its role as the General Partner and investment manager of BIF, Banyon 1030-32 owed a fiduciary duty to the partnership and to the Limited Partners. Banyon 1030-32 made material misrepresentations to its Limited Partners and breached its fiduciary duties when it haphazardly invested all of the investors into the Ponzi scheme despite awareness of numerous indisputable "red flags." Banyon 1030-32 benefited financially from their illegal, wrongful, and conspiratorial acts against the Limited Partners of BIF and Razorback. Banyon 1030-32 materially participated, conspired, substantially assisted, encouraged, and otherwise knowingly aided and abetted one or more of the other defendants in the unlawful, misleading, and fraudulent conduct alleged herein while willfully ignoring and/or failing to exercise reasonable care. Page 20 of 2210 CONRAD & SCHERER, LLP, 633 SOUTH FEDERAL HIGHWAY, FORT LAUDERDALE, FL 33301 EFTA00726727  Razorback Funding, LLC, et at, v. Scott W. Rothstein, et at Complex Litigation Division - Case No.: 09-062943 (19) Third Amended Complaint 54. Defendant, BANYON INCOME FUND, L.P. (hereinafter, "RIF"), is a Delaware limited partnership with its principal place of business in Fort Lauderdale, Florida. BIF, at all times relevant hereto, was operated by its Managing Members Levin and Preve as a putative investment entity formed exclusively to purchase interests in Ponzi scheme settlements. 55. Defendant, BANYON USVI, LLC (hereinafter, "Banyon USVI"), is a Delaware limited liability company with its principal place of business in Fort Lauderdale, Florida. Banyon USVI, at all times relevant hereto, was operated by its Managing Members Levin and Preve as a putative investment entity formed exclusively to purchase, along with Razorback, an interest in a certain Ponzi scheme settlement. 56. Defendant, GEORGE G. LEVIN (hereinafter, "Levin"), is an individual residing in Broward County, Florida and, at all times relevant hereto, was acting within the scope of his employment as the Chief Executive Officer and Managing Member of Banyon USVI, BIF, and Banyon 1030-32. Levin, who previously owned and operated GGL Industries, Inc. d/b/a Classic Motor Carriages, a company convicted of federal fraud charges, actively participated in the scheme by, among other things, recruiting, inducing, conspiring, assisting, encouraging, and otherwise aiding and abetting one or more of the other defendants in the unlawful, misleading, and fraudulent conduct alleged herein while willfully ignoring and/or failing to exercise reasonable care. Similar to his operation of Classic Motor Carriages, Levin relied on others in Banyon to do his "dirty work" in an attempt to insulate him from both criminal and civil liability. Levin's participation in the Ponzi scheme should be considered "Classic Motors 2.0." 57. Defendant, FRANK J. PREVE (hereinafter,