Filing # 11953435 Electronically Filed 03/31/2014 05:07:04 PM

IN THE CIRCUIT COURT OF THE 17TH JUDICIAL CIRCUIT, IN AND FOR BROWARD COUNTY, FLORIDA CASE NO. ________________

DON BEVERLY; ADELE MUSSRY; JACK MUSSRY; CONCORDE CAPITAL, INC.; RAZORBACK FUNDING, LLC; D3 CAPITAL CLUB, LLC; BFMC INVESTMENT, LLC; COOPER MANAGEMENT; CARMEN PAVANO, as Trustee of the EXTRA INNING DYNASTY TRUST; NASSIM MUSSRY; MELINA EL-ANI; DANIELLE IZAAC; H&N ASSOCIATES; ARETZ & ASSOCIATES; PARK NATIONAL CAPITAL FUNDING, LLC; PARK NATIONAL MORTGAGE SERVICING; SCOTT MORGAN; VICEROY GLOBAL INVESTMENTS, INC.; IRA SOCHET as Trustee of the IRA SOCHET REVOCABLE INTER VIVOS TRUST; INVESTORS RISK ADVANTAGE, LP; SUSSCO, INC.; FLORENCE PALEY, as Personal Representative of the EDWARD PALEY ESTATE; 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; SHALOM STRICTLY KOSHER MEATS, INC.; MARMARSER INVESTMENT LLC; CARO GROUP LLC; PIRULIN GROUP LLC; EXITO INVESTMENT GROUP LLC; FDS INVESTMENTS USA, L.L.C.; NEW MIAMI GROUP LLC; BWS INVESTMENTS USA, L.L.C.; NETWORK RESOURCES GROUP, LLC; GGTW INVESTMENTS USA, LLC; BBMSW INVESTMENTS USA, L.L.C.; GOW, L.L.C.; INTERAMERICA HOLDING LLC; MTG HOLDINGS LLC; SHIMON LEVY; RACHEL LEVY; DANIEL MINKOWITZ; MORDECHAI BAR ADON; BEN ZION VARON; STEVEN SCHRAGA; TODD SNYDER; THIRTEEN AQUA HOLDINGS, LTD; VALERIE CARTER; PAUL CARTER; OFM, INC.; CLARICE

PALMER; ROBERT PALMER; CLARICE PALMER AS TRUSTEE OF THE CLARICE PALMER INTER-VIVOS TRUST; CLARICE PALMER AS TRUSTEE OF THE PALMER FAMILY TRUST; PATRICIA WHITE; WILLIAM WHITE; PAULA PALLADINO; ANTHONY PALLADINO; JUDITH SCHAEFFER; RICHARD SCHAEFFER; KAREN KOZLOWSKI; HRB CAPITAL, LLC; CBM Capital, LLC; EDWARD C. and MARY LORIE SALTZMAN; STEVEN ADELSBERG; MAX DEKELBAUM; EDWARD GODIN; SEYMOUR SHLOMCHIK AS PERSONAL REPRESENTATIVE OF THE ROBERT LEVIN ESTATE; SEYMOUR SHLOMCHIK AS TRUSTEE OF THE ROBERT B. LEVIN REVOCABLE TRUST DATED JUNE 18, 2008; BRENDA LEVIN; HARRIET WEINSTEIN; SEYMOR PINEWSKI; LARRY and FERN POGUST; Plaintiffs, v. BANK OF AMERICA, N.A.; FREDERICK PERRY; MARK R. MALLER; BRIAN MORMILE; and DOUGLAS DIVIRGILIO; Defendants. ________________________________/ COMPLAINT DON BEVERLY; ADELE MUSSRY; JACK MUSSRY; CONCORDE CAPITAL, INC.; RAZORBACK FUNDING, LLC; D3 CAPITAL CLUB, LLC; BFMC INVESTMENT, LLC; COOPER MANAGEMENT; CARMEN PAVANO, as Trustee of the EXTRA INNING DYNASTY TRUST; NASSIM MUSSRY; MELINA EL-ANI; DANIELLE IZAAC; H&N ASSOCIATES; ARETZ ASSOCIATES; PARK NATIONAL CAPITAL FUNDING, LLC; PARK NATIONAL MORTGAGE SERVICING; SCOTT MORGAN; VICEROY GLOBAL

INVESTMENTS, INC.; IRA SOCHET REVOCABLE INTER VIVOS TRUST; INVESTORS RISK ADVANTAGE, LP; SUSSCO, INC.; FLORENCE PALEY, as Personal Representative of the EDWARD PALEY ESTATE; 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; SHALOM STRICTLY KOSHER MEATS, INC.; MARMARSER

INVESTMENT LLC; CARO GROUP LLC; PIRULIN GROUP LLC; EXITO INVESTMENT GROUP LLC; FDS INVESTMENTS USA, L.L.C.; NEW MIAMI GROUP LLC; BWS INVESTMENTS USA, L.L.C.; NETWORK RESOURCES GROUP, LLC; GGTW

INVESTMENTS USA, LLC; BBMSW INVESTMENTS USA, L.L.C.; GOW, L.L.C.; INTERAMERICA HOLDING LLC; MTG HOLDINGS LLC; SHIMON LEVY; RACHEL LEVY; DANIEL MINKOWITZ; MORDECHAI BAR ADON; BEN ZION VARON; STEVEN SCHRAGA; TODD SNYDER; THIRTEEN AQUA HOLDINGS, LTD; VALERIE CARTER; PAUL CARTER; OFM, INC.; CLARICE PALMER; ROBERT PALMER; CLARICE

PALMER A TRUSTEE OF THE CLARICE PALMER INTER-VIVOS TRUST; CLARICE PALMER AS TRUSTEE OF THE PALMER FAMILY TRUST; PATRICIA WHITE; WILLIAM WHITE; PAULA PALLADINO; ANTHONY PALLADINO; JUDITH

SCHAEFFER; RICHARD SCHAEFFER; KAREN KOZLOWSKI; HRB CAPITAL, LLC; CBM CAPITAL LLC; EDWARD C. and MARY LORIE SALTZMAN; STEVEN ADELSBERG; MAX DEKELBAUM; EDWARD GODIN; SEYMOUR SHLOMCHIK AS PERSONAL REPRESENTATIVE OF THE ROBERT LEVIN ESTATE; SEYMOUR SHLOMCHIK AS TRUSTEE OF THE ROBERT B. LEVIN REVOCABLE TRUST DATED JUNE 18, 2008; BRENDA LEVIN; HARRIET WEINSTEIN; SEYMOR PINEWSKI; LARRY and FERN 3

POGUST sue defendants BANK OF AMERICA, N.A., FREDERICK PERRY, MARK R. MALLER; BRIAN MORMILE; and DOUGLAS DIVIRGILIO; and state as follows:

I.

OVERVIEW 1. Bank of America helped notorious Ponzi schemer Scott Rothstein defraud the

Plaintiffs out of more than $300,000,000.00. Bank of America actively concealed its knowledge of the Rothstein fraud scheme and substantially assisted Rothstein in inducing investors to put millions in the scheme. Bank of Americas goal was induce Rothstein to deposit his ill-gotten billions at Bank of America and to become the Rothstein schemes principal banker. After the Rothstein scheme crashed, Bank of America had its Senior Vice-President lie repeatedly under oath in deposition to try to cover up the Banks role in assisting Rothstein. 2. On January 27, 2010, Scott Rothstein pled guilty to five counts of fraud for

operating a billion-plus-dollar Ponzi scheme, the largest investment fraud in Florida history. On June 9, 2010 Rothstein was sentenced to 50 years in federal prison. 3. 4. Plaintiffs are some of the many Rothstein Ponzi scheme victims. The substantial assistance provided to Rothstein by Bank of America started with

the Banks maneuvering Douglas Von Allmen and family into investing $85,700,000 in the Rothstein scheme in 2009. 5. By 2009 the Von Allmen family, had been personal banking and investment

management and advisor clients of Bank of America in Fort Lauderdale (the Bank) for over 14 years. Defendant Fred Perry (Perry), Bank of Americas U.S. Trust division Senior VicePresident, was the Von Allmens personal banker and financial and investment advisor.

6.

In 2009 Bank of America became aware that the Von Allmens were interested in

investing in Rothsteins investment scheme. 7. The Bank through Perry and other senior Bank officers knew in 2009 that the

Rothstein scheme was fraudulent. Before the Von Allmens invested in the Rothstein investment program, the Bank performed due diligence reviews of the program in 2007, 2008, and 2009. The reviews confirmed that it was a scheme to defraud. 8. When the Von Allmens expressed to Bank of America through Perry in April

2009 their interest in investing in the Rothstein investment program, the Bank including Perry knew that Rothstein was dirty, a crook, a bad guy, of dubious provenance, that it was never believed to be if but rather when [Rothstein] would be caught doing something illegal, that Rothsteins law firm, RRA, was a known bad entity, that Rothsteins investment scheme offered returns that were too good to be true and couldnt get past the sniff test , that the Bank didnt believe the returns, and that the Bank should stay away from Rothstein. 9. The Bank knew it had a fiduciary duty to warn the Von Allmens and its other

Bank of America U.S. Trust division banking clients that the Rothstein investment scheme was a fraud. Perry wrote that On numerous occasions we have made our suspicions known to clients interested in doing business with him or his firm. 10. Yet the Bank decided in 2009 not to make their suspicions (conclusions, actually)

known to the Von Allmens. Bank of America including Perry singled out the Von Allmens and actively concealed what they knew about the Rothstein fraud. They did so over the objections of a fellow Bank of America Senior Vice-President, who reminded them in clear terms that they had a fiduciary duty to disclose to the Von Allmens what they knew about Rothstein. Shortly

after that, the Senior Vice-President who had objected was branded a squeaky wheel and pressured to quit. 11. The Bank through Perry substantially assisted Rothstein by helping maneuver the

Von Allmens into investing $85.7 million of their money in the Rothstein scheme, at a time when the scheme was desperate for money. In return, the Bank asked Rothstein to deposit his billions of Ponzi scheme dollars into Bank of America accounts. 12. In other words, Bank of America (slogan: Higher Standards) willingly

sacrificed $85.7 million of a fourteen-year private-banking client and his familys money so that the Bank could help keep the scheme going, do business with Scott Rothstein, and, ultimately, become the Rothstein Ponzi schemes principal banker. I told [Rothstein] I thought he should be aligned with a national U.S. brand [Bank of America] versus some of the smaller foreign owned brands [TD Bank and Gibraltar Bank]. (Perry deposition) 13. When Rothsteins Ponzi scheme collapsed on Halloween 2009, the Plaintiffs in more than

this case lost virtually most of the money that they had invested, i.e., $300,000,000.00.

Thanks to the Banks deliberate concealment of Rothsteins fraud and

substantial assistance provided to Rothstein in the perpetration of his fraud, the Plaintiffs in this case and other Rothstein victims unwittingly invested an additional 565 million more dollars into the scheme from May to October 2009, or were delayed for months in discovering that they had been defrauded before May 2009 into investing. Bank of America helped turn the Rothstein

saga from a disaster into a full-fledged catastrophe for South Florida. 14. After the Ponzi scheme collapsed, Bank of America tried hard to cover up its

wrongdoing. The Bank had Perry lie repeatedly under oath in deposition about whether the Bank was aware of Rothsteins fraud and about whether the Bank ever warned its victim-clients about 6

it. After the deposition, Perry and other Bank of America senior executives got together and refined the lies in so-called deposition correction pages (Errata Sheets) in order to try to make the lies more saleable.

II.

PARTIES; JURISDICTION; VENUE 15. Plaintiff DON BEVERLY (Beverly) resides in Palm Beach County, Florida.

He was fraudulently induced to invest approximately $1,100,000 into the Ponzi Scheme, without knowledge that it was such a scheme. Beverly first discovered the facts giving rise to his causes of action against Defendants no earlier than March 2014. 16. 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. The Mussrys first discovered the facts giving rise to their causes of action against Defendants no earlier than March 2014. 17. Plaintiff, CONCORDE CAPITAL, INC. (hereinafter, Concorde), is a Florida

corporation with its principal place of business in Broward County, Florida. Between August and September 2009, Concorde invested $2,062,500.00 into the Ponzi scheme through Richard Pearson and R.L. Pearson & Associates. Concorde first discovered the facts giving rise to its causes of action against Defendants no earlier than March 2014. 18. 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 $31,998,988.50 into the Ponzi scheme through Banyon USVI, LLC. Von Allmen Dynasty Trust, D&L Partners, 7

David Von Allmen Living Trust, Ann Von Allmen Living Trust, and Kretschmar were also major investors in Razorback. Razorback first discovered the facts giving rise to his causes of action against Defendants no earlier than March 2014. 19. Plaintiff, D3 CAPITAL CLUB, LLC (hereinafter, D3), is a Delaware limited From

liability company with its principal place of business in Broward County, Florida.

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. D3 first discovered the facts giving rise to its causes of action against

Defendants no earlier than March 2014. 20. 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. BFMC first discovered the facts giving rise to its causes of action against Defendants no earlier than March 2014. 21. 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. Cooper first discovered the facts giving rise to its causes of action against Defendants no earlier than March 2014. 22. Plaintiff, CARMINE PAVANO, 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

$7,001,000.00 into the Ponzi scheme through Banyon 1030-32. Pavano first discovered the facts giving rise to his causes of action against Defendants no earlier than March 2014. 23. 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. Mussry first discovered the facts giving rise to his causes of action against Defendants no earlier than March 2014. 24. 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. El-Ani first discovered the facts giving rise to her causes of action against Defendants no earlier than March 2014. 25. Plaintiff, DANIELLE IZAAC1, is an individual residing in California. On

October 6, 2009, Danielle Izaac invested $35,000.00 into the Ponzi scheme through Michael Szafranski and ABS Capital Funding, LLC. Izaac first discovered the facts giving rise to her causes of action against Defendants no earlier than March 2014. 26. Plaintiff, H&N ASSOCIATES (hereinafter, H&N), is a New York partnership.

On September 4, 2009, H&N invested $200,000.00 into the Ponzi scheme through Michael Szafranski and ABS Capital Funding, LLC. H&N first discovered the facts giving rise to its causes of action against Defendants no earlier than March 2014. 27. Plaintiff, ARETZ ASSOCIATES (hereinafter ARETZ), is a New York

partnership. On October 20, 2009, ARETZ invested $200,000.00 into the Ponzi scheme through

Prior to her marriage and at all times during the events set forth herein, Danielle Izzacs legal name was Danielle El-Ani.
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Michael Szafranski and ABS Capital Funding, LLC. Aretz first discovered the facts giving rise to its causes of action against Defendants no earlier than March 2014. 28. 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 $125,000.00 into the Ponzi scheme through Michael Szafranski and ABS Capital Funding, LLC. Park Captial first discovered the facts giving rise to its causes of action against Defendants no earlier than March 2014. 29. 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. Park National first discovered the facts giving rise to its causes of action against Defendants no earlier than March 2014. 30. 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, LLC. Morgan first discovered the facts giving rise to his causes of action against Defendants no earlier than March 2014. 31. 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 $3,465,000.00 into the Ponzi scheme through Richard Pearson and R.L. Pearson & Associates. Viceroy first discovered the facts giving rise to its causes of action against Defendants no earlier than March 2014.

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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 $148,013,464.29 into the Ponzi scheme through Szafranski, Onyx Options Consultants Corporation, and Alexa Funding, LLC. Sochet first discovered the facts giving rise to his causes of action against Defendants no earlier than March 2014. 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 $8,545,000.00 into the Ponzi scheme through Szafranski and Alexa Funding, LLC. Investors Risk first discovered the facts giving rise to its causes of action against Defendants no earlier than March 2014. 34. Plaintiff, 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 $2,809,166.66 into the Ponzi scheme through Szafranski and ABS Capital Funding, LLC. Sussco first discovered the facts giving rise to its causes of action against Defendants no earlier than March 2014. 35. Plaintiff, FLORENCE PALEY, as Personal Representative of the EDWARD

PALEY ESTATE, is an individual residing in Palm Beach County, Florida. On September 1, 2009, Edward Paley, since deceased, invested $500,000.00 into the Ponzi scheme through Banyon Income Fund. Paley first discovered the facts giving rise to her causes of action against Defendants no earlier than March 2014. 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

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through Banyon Income Fund. Paley first discovered the facts giving rise to her causes of action against Defendants no earlier than March 2014. 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. The Paleys first discovered the facts giving rise to their causes of action against

Defendants no earlier than March 2014. 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. Zaretsky first discovered the facts giving rise to his causes of action against Defendants no earlier than March 2014. 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. Zaretsky first discovered the facts giving rise to her causes of action against Defendants no earlier than March 2014. 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. The Paley Foundation first discovered the facts giving rise to its causes of action against Defendants no earlier than March 2014.

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41.

Plaintiff, LAWRENCE E. DEKELBAUM (hereinafter, Dekelbaum), is an

individual residing in Maryland. Between June 30, 2009 and October 8, 2009, Dekelbaum invested $501,520.01 into the Ponzi scheme through Michael Szafranski and ABS Capital Funding, LLC. Dekelbaum first discovered the facts giving rise to his causes of action against Defendants no earlier than March 2014. 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 $22,000.00 into the Ponzi scheme through Michael Szafranski and ABS Capital Funding, LLC. Shalom Kosher first discovered the facts giving rise to its causes of action against Defendants no earlier than March 2014. 43. Plaintiff MARMARSER INVESTMENT LLC (Marmarser) is a Florida limited

liability company. Marmarser was fraudulently induced to invest $1,210,000 into the Ponzi Scheme, without knowledge that it was such a scheme. Marmarser first discovered the facts giving rise to its causes of action against Defendants no earlier than March 2014. 44. Plaintiff CARO GROUP LLC (Caro) is a Florida limited liability company.

Caro was fraudulently induced to invest $5,330,000 into the Ponzi Scheme, without knowledge that it was such a scheme. Caro first discovered the facts giving rise to its causes of action against Defendants no earlier than March 2014. 45. Plaintiff PIRULIN GROUP LLC (Pirulin) is a Florida limited liability

company. Pirulin was fraudulently induced to invest $2,650,000 into the Ponzi Scheme, without knowledge that it was such a scheme. Pirulin first discovered the facts giving rise to its causes of action against Defendants no earlier than March 2014.

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46.

Plaintiff EXITO INVESTMENT GROUP LLC (Exito) is a Florida limited

liability company. Exito was fraudulently induced to invest $2,310,000 into the Ponzi Scheme, without knowledge that it was such a scheme. Exito first discovered the facts giving rise to its causes of action against Defendants no earlier than March 2014. 47. Plaintiff FDS INVESTMENTS USA, L.L.C. (FDS) is a Florida limited liability

company. FDS was fraudulently induced to invest $2,640,000 into the Ponzi Scheme, without knowledge that it was such a scheme. 48. Plaintiff NEW MIAMI GROUP LLC (New Miami) is a Florida limited liability

company. New Miami was fraudulently induced to invest $1,320,000 into the Ponzi Scheme, without knowledge that it was such a scheme. New Miami first discovered the facts giving rise to its causes of action against Defendants no earlier than March 2014. 49. Plaintiff BWS INVESTMENTS USA, L.L.C. (BWS) is a Florida limited

liability company. BWS was fraudulently induced to invest $1,320,000 into the Ponzi Scheme, without knowledge that it was such a scheme. BWS first discovered the facts giving rise to its causes of action against Defendants no earlier than March 2014. 50. Plaintiff NETWORK RESOURCES GROUP, LLC (Network Resources) is a Network Resources was fraudulently induced to invest

Florida limited liability company.

$1,320,000 into the Ponzi Scheme, without knowledge that it was such a scheme. Network Resources first discovered the facts giving rise to its causes of action against Defendants no earlier than March 2014. 51. Plaintiff GGTW INVESTMENTS USA, LLC (GGTW) is a Florida limited

liability company. GGTW was fraudulently induced to invest $660,000 into the Ponzi Scheme,

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without knowledge that it was such a scheme. GGTW first discovered the facts giving rise to its causes of action against Defendants no earlier than March 2014. 52. Plaintiff BBMSW INVESTMENTS USA, L.L.C. (BBMSW) is a Florida

limited liability company. BBMSW was fraudulently induced to invest $660,000 into the Ponzi Scheme, without knowledge that it was such a scheme. BBMSW first discovered the facts giving rise to its causes of action against Defendants no earlier than March 2014. 53. Plaintiff GOW, L.L.C. (GOW) is a Florida limited liability company. GOW

was fraudulently induced to invest $660,000 into the Ponzi Scheme, without knowledge that it was such a scheme. GOW first discovered the facts giving rise to its causes of action against Defendants no earlier than March 2014. 54. Plaintiff INTERAMERICA HOLDING LLC (Interamerica) is a Florida limited

liability company. Interamerica was fraudulently induced to invest $660,000 into the Ponzi Scheme, without knowledge that it was such a scheme. Interamerica first discovered the facts giving rise to its causes of action against Defendants no earlier than March 2014. 55. Plaintiff MTG HOLDINGS LLC (MTG), a Nevada limited liability company,

was fraudulently induced to invest $1,090,000 into the Ponzi Scheme, without knowledge that it was such a scheme. MTG first discovered the facts giving rise to his causes of action against Defendants no earlier than March 2014. 56. Plaintiffs SHIMON LEVY AND RACHEL LEVY are a married couple residing

in Florida. They were fraudulently induced to invest over $31,848,333.34 into the Ponzi Scheme without knowledge that it was such a scheme. The Levys first discovered the facts giving rise to their causes of action against Defendants no earlier than March 2014.

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57.

Plaintiff DANIEL MINKOWITZ resides in New York. He was fraudulently

induced to invest over $8,501,666.67 into the Ponzi Scheme without knowledge that it was such a scheme. Minkowitz first discovered the facts giving rise to his causes of action against Defendants no earlier than March 2014. 58. Plaintiff MORDECHAI BAR ADON resides in Israel. He was fraudulently

induced to invest over $1,377,833.33 into the Ponzi Scheme without knowledge that it was such a scheme. Bar Adon first discovered the facts giving rise to his causes of action against Defendants no earlier than March 2014. 59. Plaintiff BEN ZION VARON resides in Puerto Rico. He was fraudulently

induced to invest over $729,166.68 into the Ponzi Scheme without knowledge that it was such a scheme. Zion Varon first discovered the facts giving rise to his causes of action against

Defendants no earlier than March 2014. 60. Plaintiff STEVEN SCHRAGA resides in Florida. He was fraudulently induced

to invest over $953,645.84 into the Ponzi Scheme without knowledge that it was such a scheme. Schraga first discovered the facts giving rise to his causes of action against Defendants no earlier than March 2014. 61. Plaintiff TODD SNYDER resides in Florida. He was fraudulently induced to

transfer $2,160,000 into an RRA IOTA trust account and into the Ponzi Scheme without knowledge that it was such a scheme. Snyder first discovered the facts giving rise to his causes of action against Defendants no earlier than March 2014. 62. Plaintiff THIRTEEN AQUA HOLDINGS, LTD (Thirteen Aqua) is a Cayman

Islands limited company. Thirteen Aqua was fraudulently induced to transfer $125,000 into an RRA IOTA trust account and into the Ponzi Scheme without knowledge that it was such a 16

scheme. Thirteen Aqua first discovered the facts giving rise to its causes of action against Defendants no earlier than March 2014. 63. Plaintiffs VALERIE CARTER and PAUL CARTER are married and reside in

Florida. They were fraudulently induced to invest $300,000 into the Ponzi Scheme, without knowledge that it was such a scheme. The Carters first discovered the facts giving rise to their causes of action against Defendants no earlier than March 2014. 64. Plaintiff OFM, INC. (OFM) is a North Carolina corporation. OFM was

fraudulently induced to invest nearly $2,951,160 into the Ponzi Scheme, without knowledge that it was such a scheme. OFM first discovered the facts giving rise to its causes of action against Defendants no earlier than March 2014. 65. Plaintiffs CLARICE PALMER and ROBERT PALMER are married and reside in

Palm Beach County, Florida. They were fraudulently induced to invest over $2,768,600 into the Ponzi Scheme, without knowledge that it was such a scheme. The Palmers first discovered the facts giving rise to their causes of action against Defendants no earlier than March 2014. 66. Plaintiff CLARICE PALMER, trustee of THE CLARICE PALMER

INTERVIVOS TRUST, with its principal place of administration in New Jersey, resides in Palm Beach County, Florida. She was fraudulently induced to invest $500,000 into the Ponzi Scheme, without knowledge that it was such a scheme. Palmer first discovered the facts giving rise to her causes of action against Defendants no earlier than March 2014. 67. Plaintiff CLARICE PALMER, trustee of THE PALMER FAMILY TRUST, with

its principal place of administration in New Jersey, resides in Palm Beach County, Florida. She was fraudulently induced to invest $200,000 into the Ponzi Scheme, without knowledge that it

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was such a scheme. Palmer first discovered the facts giving rise to her causes of action against Defendants no earlier than March 2014. 68. Plaintiffs PATRICIA WHITE and WILLIAM WHITE are married and reside in

New Jersey. They were fraudulently induced to invest $200,000 into the Ponzi Scheme, without knowledge that it was such a scheme. The Whites first discovered the facts giving rise to their causes of action against Defendants no earlier than March 2014. 69. Plaintiffs PAULA PALLADINO and ANTHONY PALLADINO are married and

reside in New Jersey. They were fraudulently induced to invest $400,000 into the Ponzi Scheme, without knowledge that it was such a scheme. The Palladinos first discovered the facts giving rise to their causes of action against Defendants no earlier than March 2014. 70. Plaintiffs JUDITH SCHAEFFER and RICHARD SCHAEFFER are a married

couple residing in Florida. They were fraudulently induced to invest over $1,194,535.60 into the Ponzi Scheme, without knowledge that it was such a scheme. The Schaeffers first discovered the facts giving rise to their causes of action against Defendants no earlier than March 2014. 71. Plaintiff KAREN KOZLOWSKI resides in Palm Beach County, Florida. She was

fraudulently induced to invest $320,000 into the Ponzi Scheme, without knowledge that it was such a scheme. Kozlowski first discovered the facts giving rise to her causes of action against Defendants no earlier than March 2014. 72. Plaintiff HRB CAPITAL, LLC (HRB) is a Florida limited liability company.

HRB was fraudulently induced to invest approximately $1,050,000 into the Ponzi Scheme without knowledge that it was such a scheme. HRB first discovered the facts giving rise to its causes of action against Defendants no earlier than March 2014.

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73.

CBM Capital, LLC (CBM) is a Florida limited liability company. CBM was

fraudulent induced to invest $2,500,000 into the Ponzi Scheme without knowledge that it was such a scheme. CBM first discovered the facts giving rise to its causes of action against Defendants no earlier than March 2014. 74. Plaintiffs EDWARD C. SALTZMAN and MARY LORIE SALTZMAN

(Saltzmans) were fraudulently induced to invest $200,000 into the Ponzi Scheme, without knowledge that it was such a scheme. The Saltzmans first discovered the facts giving rise to their causes of action against Defendants no earlier than March 2014. 75. Plaintiff STEVEN ADELSBERG invested $341,000 into the Ponzi Scheme,

without knowledge that it was such a scheme. Adelsberg first discovered the facts giving rise to his causes of action against Defendants no earlier than March 2014. 76. Plaintiff MAX DEKELBAUM invested $125,000 into the Ponzi Scheme, without

knowledge that it was such a scheme. Dekelbaum first discovered the facts giving rise to his causes of action against Defendants no earlier than March 2014. 77. Plaintiff EDWARD GODIN invested $115,000 into the Ponzi Scheme, without

knowledge that it was such a scheme. Godin first discovered the facts giving rise to his causes of action against Defendants no earlier than March 2014. 78. Plaintiff SEYMOUR SHLOMCHIK is the personal representative of the

ROBERT LEVIN ESTATE; prior to his death, Robert Levin was fraudulently induced to invest $993,000 into the Ponzi Scheme, without knowledge that it was such a scheme. Shlomchik first discovered the facts giving rise to his causes of action against Defendants no earlier than March 2014.

19

79.

Plaintiff SEYMOUR SHLOMCHIK, as trustee of the ROBERT B. LEVIN

REVOCABLE TRUST DATED JUNE 18, 2008, was fraudulently induced to invest $1,035,841.33 into the Ponzi Scheme, without knowledge that it was such a scheme. Sholmchik first discovered the facts giving rise to his causes of action against Defendants no earlier than March 2014. 80. Plaintiff BRENDA LEVIN was fraudulently induced to invest $31,200 into the

Ponzi Scheme, without knowledge that it was such a scheme. Levin first discovered the facts giving rise to her causes of action against Defendants no earlier than March 2014. 81. Plaintiff HARRIET WEINSTEIN was fraudulently induced to invest $60,000 into

the Ponzi Scheme, without knowledge that it was such a scheme. Weinstein first discovered the facts giving rise to her causes of action against Defendants no earlier than March 2014. 82. Plaintiff SEYMOR PINEWSKI invested $200,000 into the Ponzi Scheme,

without knowledge that it was such a scheme. Pinewski first discovered the facts giving rise to his causes of action against Defendants no earlier than March 2014. 83. Plaintiffs LARRY POGUST and FERN POGUST invested $400,000 into the

Ponzi Scheme, without knowledge that it was such a scheme. The Pogusts first discovered the facts giving rise to their causes of action against Defendants no earlier than March 2014. 84. Defendant BANK OF AMERICA, N.A. (Bank of America or the Bank) is a

national association with its principal place of business in Charlotte, North Carolina. Bank of America has locations in Broward County, Florida and conducts business there. U.S. Trust is a private wealth management platform and a division of Bank of America.

20

85.

Defendant Bank of America Senior Vice President Frederick Perry resides in

Broward County, Florida, and at all relevant times was acting within the scope of his employment with Bank of America. 86. Defendant Mark R. Maller during the relevant period was Bank of America

President of Broward County. Mark R. Maller resides in Broward County, Florida, and at all relevant times was acting within the scope of his employment with Bank of America. 87. Defendant Bank of America Private Wealth Manager Brian Mormile resides in

Dade County, Florida, and at all relevant times was acting within the scope of his employment with Bank of America. 88. Defendant Bank of America Southeast Regional President of Private Banking

Douglas DiVirgilio resides in Sarasota County, Florida, and at all relevant times was acting within the scope of his employment with Bank of America. 89. $15,000. 90. Venue is proper in Broward County as Bank of America conducts business here This Court has jurisdiction over the claims as the amount in controversy exceeds

and the underlying events alleged in the Complaint occurred here.

III.

OTHER RELEVANT PERSONS AND ENTITIES 91. DEAN KRETSCHMAR (Linda Von Allmens son and Doug Von Allmens

stepson) (Dean) is an individual who resides in Broward County, Florida. On or about June 3, 2009, Dean invested $8 million in the Rothstein scheme through Banyon Income Fund. Deans net loss was $7,604,939.67. In addition, on October 8, 2009, Dean invested $400,000 in the

21

Rothstein investment program through Razorback, and participated in D3 as a Guarantor of a $5 million loan to Mercata Justa Partners, LLC to invest in the Rothstein scheme. 92. Plaintiff DAVID VON ALLMEN, as trustee of the DAVID VON ALLMEN

LIVING TRUST (David as Trustee), a revocable trust with its principal place of administration in Saint Louis County, Missouri, invested $275,000.00 into the Ponzi scheme on or about August 26, 2009, through Banyon Income Fund (BIF), and lost $271,037.55. On or about October 2, 2009, David as Trustee also invested in Rothstein through Razorback and lost $250,000.00. 93. ANN VON ALLMEN, as trustee of the ANN VON ALLMEN LIVING TRUST

(Ann), a revocable trust with its principal place of administration in Saint Louis County, Missouri, invested $275,000.00, on or about August 28, 2009 into the Ponzi scheme through Banyon Income Fund, and lost $271,266.37. 94. LAURA STRASSER (Dougs step-daughter and Lindas daughter) and CARL

STRASSER (the Strassers), are individuals who reside in St. Louis, Missouri. On October 1, 2009 and on October 6, 2009, the Strassers invested $1 million in the Rothstein scheme through Razorback each time, for a total of $2 million. The Strassers lost their entire investment. The Strassers first discovered the facts giving rise to their causes of action against Defendants no earlier than 2012. 95. DAVID VON ALLMEN (David) resides in Saint Louis County, Missouri. In

October 2009 David invested and lost $1 million in the Rothstein investment scheme through D3 Capital Club, a single-purpose entity formed for the purpose of purchasing a Rothstein confidential settlement. 96. LINDA VON ALLMEN, as trustee of the VON ALLMEN DYNASTY TRUST

(Linda), an irrevocable trust with its principal place of administration in Broward County, Florida, 22

at all times relevant was a client of Bank of America. Relying on Bank of America including Fred Perry to have honored their fiduciary duties to the Von Allmens, Linda as trustee invested and lost the following sums: Date May 5, 2009 October 1, 2009 October 16, 2009 Investment $2,000,000.00 $5,000,000.00 $890,000.00 Net Loss $1,877,135.84 $5,000,000.00 $890,000.00 Entity through which Linda invested Banyon Income Fund Razorback2 D3 Capital Club3

97.

DOUGLAS J. VON ALLMEN (Doug) is an individual who resides in Broward Relying on Bank of America including Perry to have honored their fiduciary

County, Florida.

duties to him and the Von Allmens, Doug invested through D&L Partners, LP. 98. D&L PARTNERS, LP, is a Missouri limited partnership with its principal place of

business in Broward County, Florida. The general partner is D&L Management Corp., a Missouri corporation, of which Doug is the president. D&L Partners, acting through Doug, who in turn relied upon Bank of America including Perry to honor their fiduciary duty to him, invested and lost the following in the Rothstein scheme: Date May 5, 2009 June 8, 2009 October 1, 2009 October 16, 2009
2

Investment $45,000,000.00 $13,000,000.00 $2,610,000.00

Net Loss $42,387,702.98 $13,000,000.00 $2,610,000.00

Entity through which Doug invested Banyon Income Fund Razorback D3 Capital Club

Razorback Funding, LLC (Razorback) was formed to raise $32 million, which, in turn, would be loaned to Banyon USVI to purchase Rothstein settlements. Banyon USVI was a Banyon entity formed for the purpose of purchasing two Rothstein purported class action settlements, one with a face value of $26.1 million, the other of $40.6 million.
3

D3 Capital Club, LLC was formed to purchase a Rothstein settlement.

23

III.

BANK OF AMERICAS SUBSTANTIAL ASSISTANCE PROVIDED TO ROTHSTEIN. A. The Bank breached fiduciary duties to the Von Allmens. 1. 99. Bank of America owed fiduciary duties to the Von Allmens.

Bank of America, including Perry and the other Defendants, owed fiduciary

duties to the Von Allmens for eighteen years. 100. Bank of America and its Senior Vice President Fred Perry are and during the

relevant period were personal bankers and investment advisers to the Von Allmens. 101. Perry is Dougs personal banker at Bank of Americas U.S. Trust private banking

and wealth-management division. By 2009, Dougs relationship with Perry and the Bank had spanned 14 years. 102. Perry was Dougs financial confidant. They talked regularly about Dougs

investments. Doug and I would talk fairly routinely about the different things he was investing in. Deposition of Frederick Perry (Dec. 22, 2011) (Perry Dep) at 14:25-15:10, Razorback v. Rothstein and TD Bank, et al., Case No. CACE09062943 (Fla. 17th Cir. Ct.). 103. investments. 104. Pursuant to Dougs advisor-client relationship with the Bank through Perry, Doug Perry was Dougs advisor with respect to his and the other Von Allmens

made major investments with Bank of America. 105. In March 2008, for example, Doug emailed Perry about municipal bond funds.

Do[] your investment people know of any good open end mutual funds of muni bonds? Doug

24

asked. Are there muni ETFs? With the yields they are paying now it looks interesting, but I would want t [sic] diversified basket. I could be interest in around $20 million. 106. Upon receiving Dougs email, Perry emailed his Bank of America investment

team, We finally have an opportunity with Doug Von Allmen on the investment side. They discussed a custom portfolio for Doug, including various Bank of America / Columbia funds. 107. Doug, through D&L Partners, LP (D&L), invested substantial amount in Bank

of America in 2008, in Bank of Americas Columbia Funds Series Trust Cash Reserves Capital Class mutual fund. 108. In 2008 and 2009, Doug through D&L invested further substantial amounts in

Bank of America, in the Banks Columbia Municipal Reserves mutual fund. 109. In August 2009, Perry exchanged emails with Bank of America Senior Vice-

President Hugh Shannon, copying Bank of America Credit Risk Approval Executive Doug Bose; Bank Credit Risk Manager Amanda Burton; Bank Vice President, Marine Divison, Lisa Verbit; and Bank of America East Central Florida Market President Samuel Willett. In the emails the Bank recognized its role as Dougs advisor and its fiduciary responsibility to protect Dougs interests: I think as financial advisors we need to be strongly advising him [Doug Von Allmen] to keep a minimal level of liquidity to help protect him (not even taking into account our credit risk). (August 12, 2009 email exchange) (emphasis added). 110. Dougs substantial mutual fund investments with Bank of America in 2008 and

2009, as well as the above-quoted email exchange, illustrate the significant fiduciary role as investment advisor that the Bank through Perry and others played for Doug. The Bank through

25

Perry consulted with Doug regularly and routinely regarding his investments and investment plans and ideas. 111. As the Von Allmens personal banker and investment advisor, Perry knew that the

Von Allmens (particularly Doug and Dean) were always interested in new investment opportunities, and that they made investments through various family entities, including Plaintiff D&L Partners. 112. Perrys role in Doug and his familys financial and investment life was pervasive

enough that, as Perry gave Rothstein to understand, Perry was Dougs investment spokesperson and financial confidant. If Perry said yes on an investment, Doug would invest; if Perry said no, Doug would not invest. 113. Between 2006 and 2009, Perry and his Bank of America investment team held at

least twenty-six meetings concerning Dougs investments and his relationship with Bank of America. 114. Bank of America through Perry and other Bank senior officers provided

investment management and advisory services to the other members of the Von Allmen family as well as to Doug. The Bank regularly pitched them investment opportunities and provided them with investment advice and strategies. 115. The Bank through Perry acknowledged that their fiduciary duties and obligations

as an investment advisor extended to Dougs children: Perry: We have provided investment management services to certain family members. Q: A: Who is that? David Von Allmen, Julia and other Von Allmen children. 26

Perry dep at 13:17-21. 116. Dougs stepson Dean first met Perry in 1998 through Doug. Dean opened his first

accounts with Bank of America in 1999, and made his first investments in 2007 through Perry. 117. As a result of the foregoing, the Bank including Perry assumed and owed to the

Von Allmens fiduciary duties of honesty, candor, and good faith, which included the obligation to disclose material information regarding investment opportunities about which the Bank and the Von Allmens communicated. 118. The fiduciary duties that Bank of America including Perry owed to the Von

Allmens also arose from and were confirmed in various Bank documents. 119. The website of Bank of Americas U.S. Trust division confirms that it has a

fiduciary relationship with its investor clients: WELCOME TO U.S. TRUST. At U.S. Trust, we apply our intellectual resources and financial acumen toward helping manage, preserve and enhance you and your familys wealth. From wealth structuring to investment management, we believe youll find that our global perspective, unique team approach, fiduciary platform and more than 200 years of experience not only distinguish us from other private banks, they provide for the kind of insights, solutions and expertise that have a worth all their own. U.S. Trust Home Page, www.ustrust.com/ust/pages/index.aspx (last visited Jan. 4, 2013) (emphasis added). 120. 121. The Von Allmens were clients of the Bank through its U.S. Trust division. Bank of Americas U.S. Trust division website also states: Your trust and investment management relationship is supported by the strongest standard of integrity, trust and accountability: the fiduciary standard. Our commitment is to serve your best interests and place them ahead of our own. Of course, in doing so, we often seek to leverage the vast capabilities of Bank of America, including calling upon our partners and affiliates to assist us in providing you with the level of service you 27

have come to expect from us. And, we do this with transparency and disclosure of conflicts. U.S. Trust, About Us, www.ustrust.com/ust/pages/about-us.aspx (last visited Jan. 4, 2013) (emphasis added). 122. The Bank of America / U.S. Trust division website further states: You can expect a thoughtful, thorough approach delivered by your advisor and a team of specialists assembled specifically for you who make your concerns their own. These professionals help ensure that your trust and investment management relationship is supported by the strongest standard of integrity and accountability: the fiduciary standard. U.S. Trust, Our Capabilities, www.ustrust.com/ust/pages/capabilities.aspx (last visited Jan. 4, 2013) (emphasis added). 123. Finally, the Banks fiduciary duties to the Von Allmens also were rooted in the

trust and confidence that the Von Allmens reposed in the Bank and which the Bank accepted regarding their investments discussed with the Bank. 124. Bank of America senior officers such as Perry received extensive internal training

and education to ensure that they understood the fiduciary duties that the Bank through Perry and his fellow officers owed to clients such as the Von Allmens. 125. Senior Vice President John Abbuhl (Abbuhl), Perrys colleague in the Banks

U.S. Trust Fort Lauderdale office in the relevant period and a relationship manager at Bank of America from 2007 to 2009, explained in a sworn statement that adhering to fiduciary responsibilities was bank policy and part of his training and education at Bank of Americas U.S. Trust division: [I]n a fiduciary capacity . . . [if] you know more than someone else does . . . and . . . the customer . . . does not have that knowledge . . . you have a higher degree of responsibility to act ethically to disclose things. Sworn Statement of John Abbuhl (Mar. 1, 2013) (Abbuhl Sworn Statement) at 23:18-23:24. 28

126.

Based on the foregoing, when Doug told the Bank through Perry of his interest in

investing in the Rothstein settlement investment program in April 2009, the Bank, including Perry and his colleagues, owed Doug and the Von Allmens fiduciary duties to disclose the knowledge that they had and assessments they made regarding Rothstein and his investment scheme.

2.

When Doug discussed the Rothstein investment program with Bank of America in 2009, the Bank knew that it was scheme to defraud and should be avoided. i. The Rothstein Ponzi scheme.

127.

When Scott Rothstein pled guilty in federal court in 2010, he admitted that he ran

a fraud scheme in which he falsely represented that his firm had multiple client-plaintiffs who had reached confidential settlements of sexual harassment and whistleblower claims for large sums of money that would be paid out over varying periods of time. 128. Rothstein misled investor-victims into believing that the settlement proceeds were

placed in pre-funded Rothstein trust accounts to be paid out over time to the settling RRA client. 129. Rothstein claimed that the RRA client would agree to assign to an investor(s) the

clients rights to the full settlement amount in exchange for an immediate, discounted lump sum payment. 130. In reality, there were no settlements. Rothstein fabricated them. There were few

real RRA clients and no settlement agreements. Returns to Rothstein-scheme investors were not paid from the settlements as Rothstein had represented, but rather were paid with money obtained from later investors. It was a classic Ponzi scheme.

29

ii. 131.

Bank of America knew that Rothsteins investment scheme was fraudulent in 2007.

When Doug told the Bank through Perry in April 2009 that he and his family

wanted to invest in the Rothstein settlement investment program, the Bank including Perry knew and had known since 2007 that the program constituted a scheme to defraud and should be avoided. 132. In 2007, John Abbuhl, a Bank of America/U.S. Trust Senior Vice-President and

Perrys colleague, had a client named George Levin. 133. Levin had been Abbuhls client since 2004 when Abbuhl worked for Wachovia

Bank. Abbuhl knew Levin as an early investor in PetMeds, an online pet pharmacy offering medications and other health products for animals. At the time, Levin reported that he had a net worth in excess of $100 million. Levin had an existing multi-million-dollar banking-client relationship with Bank of America through his company, Auto Resolutions, LLC. 134. Around the time of Abbuhls transition from Wachovia to Bank of America in

2007, Levin told Abbuhl about an attorney friend who was involved in a sexual-harassmentlawsuit-settlement investment business. Levin did not mention Rothstein by name. 135. In August 2007, another Levin company, Banyon 1030-32, LLC (Banyon),

approached Abbuhl about Bank of America providing credit financing that would enable Banyon to invest in Rothsteins investment scheme. Banyon was a single-purpose investment fund established to invest solely in Rothsteins settlement investment scheme. 136. At that time in 2007, Bank of America and Rothstein were officed in the same

building in downtown Fort Lauderdale. Fred Perry and his colleagues at Bank of America knew Rothstein. 30

137.

Frank Preve (Preve) was the person handling day-to-day transactions for Levin

and his Banyon company in 2007. 138. On August 29, 2007, Preve emailed Abbuhl and asked if the Bank would consider

providing Banyon $6.5 million in credit financing collateralized by a $27 million Interest on Trust Account (IOTA) that Rothsteins law firm had: Hi John, We have an opportunity to do some financing for a Broward law firm . . . it involves a IOTA trust account for $27,000,000. Does your department handle such accounts? I am going to need a $6.5M loan with an assignment of proceeds from the trust account. . . . Any interest??? Frank Preve. 139. The IOTA account was purportedly used to hold sexual-harassment settlement

proceeds for the benefit of investors in Rothsteins investment scheme. The IOTA account was promoted by Rothstein as an essential element in the scheme. 140. In response to Preves August 29, 2007 e-mail about a line of credit to invest in

the Rothstein opportunity, Abbuhl responded on August 30, 2007 advising that Bank of America was absolutely interested. Abbuhl wrote to Preve, Let me know what your schedule looks like and we can discuss. Preve responded, [W]hy dont you stop by our offices . . . it shouldnt take more than a few minutes to give you the gist of things. Preve concluded the e-mail, How does BofA feel about signing NDAs??? 141. By NDA Preve meant a non-disclosure agreement. Because Rothsteins lawsuit

settlement business was a Ponzi scheme, he did not want it scrutinized too closely. Thus Rothstein made a show of being paranoid about the confidentiality issues surrounding the settlement-related investment transactions, in order to avoid having to disclose much information or disclose it too widely.

31

142.

On August 31, 2007, Bank of Americas Abbuhl accepted Preves invitation and

met with him met with him regarding the proposal. 143. Preve explained Rothsteins business to Abbuhl and showed him a spreadsheet

that reported very large account balances and very high rates of return on investments. 144. However, Abbuhl doubted that Bank of America would provide credit to Banyon

based on the IOTA account, given the unrestricted nature of the account as Preve had described it. In addition, using law-firm IOTA accounts as Rothstein intended was obviously illegal. Though the amounts at issue and rates of return were impressive, Abbuhl did not believe Bank of America would agree to lend money to Levin using Rothsteins trust accounts as collateral. 145. The accounts, as described by Preve, were not true trust accounts, but depository

bank accounts. Lending money against a bank account required a hold restricting the removal of money from the account. This was to ensure that the account retained the money serving as security for the credit being extended to Banyon. Without that hold, an account could be emptied at any time, wiping out the Banks security. 146. In addition, as stated, using an IOTA account as the Rothstein scheme was using

it was illegal. Illegal use of the Rothstein IOTA account that was later opened at TD Bank formed a principal basis for the court in the aforementioned Razorback v. Rothstein and TD Bank, et al., case to deny Gibraltar Banks motion to dismiss the plaintiffs claim for aiding and abetting fraud in that case: THE COURT: All right. You cannot, if you're a responsible lending institution with even the most fundamental knowledge of banking laws, permit a law firm to take trust account money and put it in your own operating account, and then in your own personal accounts, much less suggest that that be done. And that's what you've alleged. And that's aiding and abetting with knowledge of wrongful conduct but not the specific wrongful conduct. 32

Hearing Tr., Razorback v. Rothstein and TD Bank, et al., p. 30 (November 18, 2010). 147. In spite of his initial concern, Abbuhl took Banyons lending request back to the

Bank. He had no discretion to deny it himself. Under Bank of America policy, all financing opportunities no matter how unlikely to be approved had to be presented to the Bank so that it could conduct due diligence and make an informed decision. 148. In September 2007, Preve tried to get Abbuhl comfortable with the credit request

by highlighting Levins personal commitment to the Rothstein settlement investments. Preve emailed Abbuhl a rough cut cash flow chart for Levin for 2007 and 2008. 149. The Bank performed detailed due diligence on the Banyon credit requests in

September 2007. The Bank explored the legal aspects of Rothsteins settlement investment business, and the Banks in-house lawyer reviewed Banyons credit application. 150. On September 6, 2007, Abbuhl advised Preve that Bank of America had concerns

and needed to conduct further due diligence into Rothsteins business model: I had a lengthy call with the head of the lending for the southeast and the head of risk management for Private Banking for BofA. They are trying to get their arms around this concept. Before they commit (yes or no) they want to explore the legal aspects of this. 151. As stated, Bank of Americas due diligence included having Banyons credit I overnighted copies of the

application reviewed by an in-house lawyer for the Bank:

documentation you sent to me to Charlotte for them to review in the morning. Because this is an unusual type of lending request, they also are going to discuss this with our internal legal advisor. 152. Abbuhl also reviewed an exemplar Rothstein settlement (names redacted), the

cornerstone of the Rothstein investment scheme. 33

153.

Bank of Americas due diligence ultimately revealed that Rothsteins investment

scheme raised was likely a fraud and certainly illegal. 154. Abbuhl told Preve that the very high returns shown on the spreadsheets regarding

the Rothstein investments seem too good to be true. (Abbuhl Sworn Stmt at 58) 155. The Rothstein investments couldn't get past the sniff test, Abbuhl stated.

(Abbuhl Sworn Stmt at 67) 156. assessment. 157. From 2007 on, the Bank believed that Rothstein was running a fraud. As Perry Bank of America denied the Banyon credit application following its due diligence

later confirmed, it was never believed to be if but rather when he would be caught doing something illegal. (Perry email to Bank colleagues, Nov. 15, 2009) (emphasis added). Rothstein was dirty (Perry dep at 33:7), a crook (Abbuhl Sworn Stmt at 80:10 [quoting Perry]), a bad guy (Abbuhl Sworn Stmt at 91) and of dubious provenance (Perry Nov. 15, 2009 email). Rothsteins law firm, RRA, was a known bad entity (Abbuhl Sworn Stmt at 102:1-8 [quoting Bank Sr. Vice President Charles Pulselli]), Rothsteins scheme offered returns that were too good to be true (Abbuhl Sworn Stmt at 58:15-16) and couldnt get past the sniff test (Abbuhl Sworn Stmt at 67:15), the Bank didnt believe the returns (Perry dep at 36:8-9), and Perry told his colleagues, Stay away from these guys (Rothstein and his associates) (Perry Dec. 10, 2008 email to Abbuhl, and others). The Banks denial of the 2007 Banyon credit request because of Rothstein was logged in the Banks internal pipeline report and became Bank institutional knowledge.

iii.

34

158.

When a lending request is made to Bank of America, it is as a matter of bank

procedure logged into a weekly internal pipeline report. 159. The Banyon request for credit to invest with Rothstein was logged into the

pipeline report, as was the Banks denial of the request. 160. The pipeline report thereafter was available to all relevant Bank personnel,

including Perry. 161. Consequently, Bank of Americas decision to decline the Banyon opportunity in

2007, based on the Rothstein investment schemes failure of the sniff test, the too good to be true verdict, as well as other indicia of fraud, became institutional knowledge at the Bank / U.S. Trust. In 2008, Bank of America confirmed that Rothsteins scheme was fraudulent.

iv.

162.

In December 2008, the Bank did further due diligence on the Rothstein settlement

investment scheme and confirmed that the scheme was fraudulent. 163. In October 2008, George Levin approached the Banks Abbuhl again, this time

for a personal loan to buy a Gulfstream G550 business jet. Levin planned to buy the jet and flip it for a $5 million profit. He had a buyer and felt the transaction was all but certain. 164. Levin intended to rely on the financial health of his Banyon investments, which

were fully invested in the Rothstein scheme, for collateral to support the loan application. Thus in 2008 as in 2007, the Rothstein settlement investment scheme was scrutinized by the Bank. 165. By then, there were a number of Banyon funds purchasing Rothstein

settlements. Because Levin was relying on his interests in Banyon to support the loan, Bank of America conducted due diligence on both Levins and Banyons financials. 35

166.

Bank of America obtained a variety of financial statements and tax forms from

Levin and the Banyon funds relating to their investments in Rothsteins scheme. 167. On November 18, 2008, Banyons Preve provided financial documents to Tim

Wakeland (Wakeland), Senior Vice President and Aircraft Sales Executive with Bank of America Leasing and Corporate Aircraft Financing, including: Levins Personal Financial Statement dated October 31, 2008, which included Levins historic cash flow numbers and biography; CPA statements dated June 30, 2008 for the Banyon entities; October 31, 2008 interim statements for the Banyon entities; Copies of trust account balances as of October 29, 2008, which accounts secured the Banyon receivables; Levins tax planning schedule and K-1s; Levins tax filings for all IRS Schedule C and E entities (the Banyon entities were Schedule C entities); and Know Your Customer data. Know Your Customer (KYC) is a program to prevent banks from being used, intentionally or unintentionally, for moneylaundering activities. 168. In an e-mail to Abbuhl, Wakeland expressed concern over an unexplained delay

by Banyons Preve in providing the last three years of Levins personal tax returns: The delays [sic] on the tax returns are causing some heartburn. By the end of November, 2008, Preve provided (or agreed to provide) Matthew Geremia (Geremia), Credit Products Officer with Bank of America Leasing, additional information the Bank needed to process Levins application, including: Levins prior three years personal tax returns; A copy of Banyons corporate structure and ownership; 36

 Organization documents for Banyon 1030-32; Banyons audited financial statements; Bank/brokerage statements demonstrating Levins liquidity; An explanation of Banyons contingent liabilities; A description of Levins major holdings and future business plans; An explanation of Levins non-Banyon related cash flow; An explanation of Levins annual commitments and contributions; An explanation of the nature of the settlement escrows; Whether Banyon expected any industry or legal challenges in the near future; and Levins growth projections for Banyon. 169. On December 10, 2008, Banyons Preve also sent an e-mail to Bank of Americas

Geremia enclosing a typical [Rothstein/RRA sexual harassment claim] settlement package, October bank deposit verifications from Banyons third-party verifier, maturity schedules, and a master summary of each schedule. 170. Also on December 10, Bank of Americas Wakeland sent an e-mail to a number

of Bank executives, including Perry and his superior, Mark R. Maller (Maller), Bank of America Southeast Florida Managing Director and U.S. Trust Division President for Broward County, in connection with Levins application, asking, Is anyone familiar with the law firm Rothstein[] Rosenfeldt? 171. Perry responded unequivocally:

37

172. 173.

Maller added in an e-mail later the same day, I am very familiar. Maller sent another e-mail to Perry and Abbuhl instructing them not to create an

e-mail paper trail regarding any discussion of Rothstein: Please discuss face to face rather than via email on this. Bank of America officials did not want to put their views about Rothstein in writing. 174. Shortly thereafter, Perry told his superior, Maller, in words or substance, I dont

think you can do that loan [to Levin] because this guy [Levin] is doing business with Scott Rothstein. (Abbuhl Sworn Stmt at 90) (emphasis added) 175. Perry had always distrusted Rothstein. He told Abbuhl that Rothstein was a bad

guy. (Abbuhl Sworn Stmt at 91) 176. Charles Pulselli, Senior Vice President and Senior Credit Products Manager with

Bank of America Leasing and Corporate Aircraft Finance, scheduled a conference call for December 15, 2008 to discuss Levins aircraft loan application. Two items were on the agenda: 1) reputation risk; and 2) need to discuss BOAs global view in developing and expanding relationship:

38

177.

Reputation risk meant the risk of damage to the Banks reputation if the Bank

went through with the transaction. (Abbuhl Sworn Stmt. At 98) 178. The December 15, 2008 call included bank executives Maller, Abbuhl, Matt

Jeremiah, Tim Wakeland, Brian Joyner, and probably Mike Bonner. At the end of the call, the decision was made to deny the loan. The decision was based on a concern that Bank of Americas reputation could be damaged by being associated even indirectly with Rothstein and his investment scheme. 179. The next day, December 16, 2008, Wakeland e-mailed Levin advising him that

the Bank denied his jet loan. 180. The Bank denied Levins $30 million loan application even though Levins loan

would have brought new, much-needed business to Bank of America during the global economic crisis. Banyons financials on their face justified the loan. The only explanation for the denial was Bank reputation risk and the Banks obvious conclusion that the financials were not as represented, i.e., fraudulent. 181. During this period, Maller was pressuring Perry, Abbuhl, and their colleagues to

get more business, and had been since at least since August 2008. In August 2008, before Levin had applied for the loan, Perry and Abbuhls superior, Maller, had sent an e-mail to his team, including Abbuhl and Perry, pushing them to get more business: 39

182.

As he had become involved in the discussion over Rothstein in connection with

the Levin loan application, Perry knew that the loan was turned down due to Bank reputation risk and Banks assessment that Rothstein and his scheme were fraudulent. 183. Like the 2007 Banyon financing opportunity, the 2008 Levin jet loan application

was logged into Bank of Americas internal pipeline report and became part of Bank of America / U.S. Trust institutional knowledge.

3.

In 2009 the Bank actively concealed its knowledge of Rothsteins fraud and maneuvered victims into investing with Rothstein in order to win Rothsteins favor, get a billion dollars in depository business from Rothstein, and ultimately replace TD Bank as the Rothstein schemes principal banker. i. What Bank of America knew in 2009.

184.

By 2009, Bank of America / U.S. Trust had had a long-standing commitment to

the Von Allmens to adhere to the strongest standard of integrity, trust and accountability: the fiduciary standard, and to serve your best interests and place them ahead of our own. 185. As Bank of Americas then Senior Vice-President John Abbuhl said in his sworn

statement, there was a higher standard of duty and responsibility towards the customers of the U.S. Trust Division [of Bank of America], and a duty of making sure the customers were not taking unnecessary financial risks. (Abbuhl Sworn Stmt. at 27) 40

186.

The Banks U.S. Trust division had a higher degree of responsibility to act

ethically to disclose things to its clients such as the Von Allmens. (Abbuhl Sworn Stmt at 2324) 187. Perry confirmed in 2009 that the Bank, including Perry himself, had a fiduciary

duty from and after 2007 to warn its clients to stay away from Rothstein. In accordance with that duty, Perry stated that he warned clients often between 2007 and 2009 to stay away from Rothstein and his investment scheme. Shortly after the Ponzi scheme imploded, Perry wrote: On numerous occasions we have made our suspicions known to clients interested in doing business with him [Rothstein] or his firm [RRA]. (emphasis added). 188. But Perry never made his suspicions (conclusions, actually) known to the Von

Allmens. The Bank including Perry never warned the Von Allmens of what they knew about Rothstein or his firm. 189. In April 2009 or earlier, when Doug told Perry, his long-time Bank of America /

U.S. Trust personal banker and investment advisor, of his interest in investing in Rothsteins settlement investment scheme, Perry and the Bank, instead of warning Doug, told him nothing. 190. At no point did Perry or any other officer of Bank of America warn Doug or any

of the Plaintiffs that the Bank, including Perry, had a concern about Rothstein or that the investment that Plaintiffs contemplated making with Rothstein was fraudulent or suspicious. 191. The Bank was free to warn the Von Allmens of what it knew about Rothstein

scheme. Neither Rothstein nor his firm were clients of the Bank.

41

192.

Because the Bank owed fiduciary duties to the Von Allmens, the Bank including

Perry had a duty to warn the Von Allmens of what it knew regarding investing in the Rothstein scheme (through Banyon). 193. But when Doug told Perry about his desire to invest millions in the Rothstein

investment program (through Banyon), Perry and the Bank actively concealed their damning assessment of Rothstein, and instead helped Banyon and Rothstein discreetly maneuver Doug and his family into investing in the Rothstein scheme. 194. The Banks purpose in helping to maneuver the Von Allmens to invest with

Rothstein was to infuse the Rothstein Ponzi scheme with millions of Von Allmen dollars to keep the scheme going, so that Bank of America could attract large Rothstein bank deposits and, ultimately, replace TD Bank as the Rothstein Ponzi schemes principal banker. Bank of Americas active, deliberate concealment in 2009 of its knowledge of Rothsteins fraud.

ii.

195.

Doug first learned about the Banyon Income Fund from Barry Bekkedam

(Bekkedam) in March of 2009. 196. Bekkedam, a Banyon promoter, came to South Florida from Pennsylvania to meet

with Doug to discuss a possible investment in the Rothstein sexual-harassment and whistleblower settlement investment program through Banyon. As stated, Banyon was solely invested in Rothsteins program. 197. Bekkedam was the principal of Ballamor Capital Investment (Ballamor), a

Pennsylvania-based registered investment advisory firm. Bekkedam had contact with Perry

42

because they both were involved, along with Doug, with the Broward County Boys and Girls Club. Perry and Doug were on the Clubs board of directors. 198. On April 21, 2009, Bekkedam sent Doug an e-mail answering questions about

Banyon Income Fund: Doug: Good morning. Attached are some answers to your questions. The PPM should be completed shortly. My people in NYC [are] with Banyons people working on it today. If you need me to brief the bank [Bank of America] in anticipation of the PPM I am very used to that process. Thanks Barry. 199. Doug forwarded Bekkedams e-mail to Perry, who in turn forwarded it to several Attached to the forwarded Bekkedam e-mail was a

of his Bank of America colleagues.

spreadsheet entitled Von Allmen Questions Spreadsheet. 200. The Bank including Perry concluded that Bekkedam and his firm, Ballamor, were

frauds. He told colleagues after the Rothstein Ponzis collapse that Bekkedam was a POS (piece of shit), and that Balamor capital will go down. 201. However, the Bank including Perry never disclosed any of this to the Von

Allmens in April or May 2009 before they invested in the Rothstein scheme. 202. Instead, the Bank saw an opportunity. Perry had knowledge that Banyon had

placed billions of dollars with Rothstein. Banyons financials showed $1.9 billion flowing through the Banyon accounts and into the Rothstein scheme. Bank of America, including Perry, wanted that money to be deposited at Bank of America. 203. The Bank, including Perry, devised a plan: Help maneuver the Von Allmens into

investing in the Rothstein scheme by carefully concealing the Banks knowledge of Rothsteins fraud, tell Rothstein about Dougs investment in the scheme, take credit for it, and use it as a springboard to get Rothstein to deposit Rothstein scheme proceeds at Bank of America. 43

204.

Perry started by telling Rothstein before April 21 that the Bank was going to get

Von Allmen to invest in the Rothstein scheme. 205. Perry then confirmed with Rothstein and Bekkedam that he (Perry) was Dougs

financial spokesman and advisor. Perry played up his spokesman role in part by obtaining and reviewing Ballamors materials regarding Banyon and the Rothstein investment program, purportedly for Doug. 206. Perry assured Ballamors managing director and general counsel, Larry Rovin

(Rovin), that Perry would treat the information that he received from Bekkedam and Ballamor as strictly confidential. That is, Perry would treat as confidential the information that helped confirm his and the Banks negative impression of Bekkedam, Ballamor, and Rothstein. 207. In other words, the Bank through Perry made a deal with Ballamor to conceal

from the Von Allmens and others the Banks negative conclusions about the Rothstein scheme. (Perry Deposition Errata Sheets at 51:12; addressed in more detail below). 208. Perry knew about Banyons relationship with Rothstein from Bank of Americas

denial of a line of credit to Banyon in 2007 and from the Banks 2008 refusal to make an aircraft loan to Levin. 209. After a conversation with Ballamors Rovin, Perry received a letter to sign

confirming that he was Dougs investment advisor:

44

210.

Perry also received an advance draft of the Banyon Income Fund Confidential

Offering Memorandum dated April 30, 2009 (Banyon COM or PPM), which was provided to potential investors and discussed the Rothstein investment opportunity. 211. Perry e-mailed Ballamors Rovin on May 4, 2009, I received the PPM today and Rovin passed Perrys email on to

am in the process of reviewing it with legal counsel.

Rothstein a half-hour later, and Rothstein okayed the review by the Bank and Bank counsel within a half-hour after that. 212. The Bank through Perry made sure Rothstein was informed of his receipt of the

PPM and NDA, reinforcing Rothsteins understanding that the Bank through Perry was Von Allmens spokesman/advisor.

45

213.

As portrayed to Rothstein, the Banks advisory role through Perry with respect to

Dougs investing in Rothsteins investment scheme was pivotal. As stated, with respect to the Rothstein scheme, Perry indicated to Rothstein that if Perry said yes, Doug would invest, and that if Perry said no, Doug would not invest. 214. Doug disclosed the details of the Rothstein investment opportunity with members

of his family, including his wife Linda, his son and daughter-in-law, David and Ann Von Allmen, his stepson, Dean Kretschmar, and his stepdaughter and her husband, Laura and Carl Strasser. 215. Doug informed the Bank through Perry of his desire to invest tens of millions in

the Rothstein settlements (through Banyon). 216. Rothstein emailed Banyons Preve and Levin on May 2, 2009 that he needed to

get[] Dougs money in right away .... Banyons Preve responded, I dont think we can get this by [Von] Allm[e]n without Perrys approval. 217. Perry e-mailed Doug on May 4, 2009, and told him that the Banyon documents he

had received would be subject to a three-tier review: I would like to have banks outside counsel review the documents simultaneously to my review and my credit teams. (emphasis added) 218. The Bank including Perry purposely concealed from Doug as well as the

investing public that the Bank had already concluded in 2007 that Rothstein and his scheme were fraudulent and had confirmed that assessment in 2008. 219. The Banks three-tier due diligence review in May 2009 reaffirmed the Banks

damning assessment of Rothsteins scheme that the Bank had previously made. 220. Perry informed Bank of America colleague John Abbuhl of the Von Allmens

intention to invest in the Rothstein investments in May 2009. 46

221.

Abbuhl was surprised that Perry would go along with Dougs desire to invest in

the Rothstein scheme and conceal what the Bank knew about the scheme, particularly when, a few months earlier, Perry had torpedoed the aircraft loan to Levin because Levin was invested with Rothstein. 222. The long-standing fiduciary duties owed to the Von Allmens by the Bank through

Perry did not slip Perrys mind when Doug approached Perry about investing in the Rothstein settlement investments. Abbuhl made sure of that. 223. When Abbuhl learned of Dougs intentions to invest with Rothstein, Abbuhl

reminded Perry of Bank of Americas fiduciary duties to Doug, which compelled Perry and the Bank to disclose what he knew before Doug invested. Abbuhl reminded Perry of his and the

Banks responsibility to disclose to the Von Allmens information material to their investment, and that the Bank had recently rejected a credit-business opportunity because of its assessment of Rothstein and his investment scheme. 224. On March 1, 2013, Abbuhl provided a sworn statement in which he confirmed the

details of his conversation with Perry: Q. Did you say anything to Fred Perry about what he should say, if anything to Von Allmen about what happened? A. I did. I said, Fred does Mr. Von Allmen know that we declined a loan four months ago because we couldnt get comfortable with RRA and Scott Rothstein? Q. What did Fred say in response to that?

A. No. And I said, you have a fiduciary responsibility to disclose that to your client. He needs to know that because thats a decision point and he needs to know about that. Q. A. What did Fred say in response? He shrugged it off. He didnt say anything that I remember. 47

Q. Youre absolutely sure that you told Fred that he had a fiduciary duty to disclose that to Doug Von Allmen? A. ... Q. How many times did you talk to Mark Maller [Perry and Abbuhls superior] in person about it? A. Q. A. Multiple times. I dont know a specific number, but multiple times. What did Mark Maller say in response? He said he would talk to Fred. I dont know that he ever did. I absolutely told him that.

(Abbuhl Sworn Stmt at 111-114) (emphasis added). 225. Perry did not forget his and the Banks fiduciary obligations to the Von Allmens.

The Bank, including Perry, his superior, Mark Maller, and other Bank officers, just decided to ignore them. Perry decided to conceal the truth from the Von Allmens, lie to Abbuhl, and discreetly maneuver the Von Allmens into investing over $85 million in the Rothstein scheme. Perry said to Abbuhl, I was wrong about Scott. I was wrong about RRA...Weve [Perry and the Bank] done a full background on Scott and hes super clean, squeaky clean. (Abbuhl Sworn Stmt at 111) 226. There was no background check done on Rothstein showing he was clean. Perry

lied. Perry conceded in writing after the Ponzi collapse that he and the Bank always knew that Rothstein was dirty. But Perry did not want to admit that to Abbuhl, his fellow Senior VicePresident, in April/May 2009. Perry did not want to have to try to convince Abbuhl that even if the Bank believed that Rothstein was a fraud the Bank had no obligation to warn Doug of that fact. Perrys solution was simply to lie to Abbuhl and tell him that Rothstein was clean.

48

227.

In his December 22, 2011, deposition in Razorback v. TD Bank, another

Rothstein-related lawsuit, Perry told a different lie than the one he told Abbuhl. In Perrys deposition, instead of lying that Rothstein was squeaky clean, he falsely testified that he thought he warned Doug about Rothsteins scheme: Q. You did convey [to Doug] that you didnt understand [the Rothstein settlement investment scheme]? A. Perry dep at 83:16-17. 228. But later in his deposition, Perry backtracked to cover himself and the Bank, I think so.

testifying that although he thinks he conveyed his misgivings about Rothstein to Doug, the bottom line was that Doug knew more about the Rothstein investment opportunity than Perry did, so it was not Perrys or the Banks place to warn Doug away from Rothstein. (In other words, just in case my false testimony that I warned Doug about Rothstein does not carry the day, let me hedge by adding that the Bank and I never had an obligation to warn him). Perry dep at 83:19-84:3. 229. The Bank knew that Rothsteins scheme was a fraud. The Bank had a fiduciary

duty to apprise Doug of that. Instead the Bank actively concealed it from the Von Allmens. 230. Perry also lied in his deposition when he testified that in April/May 2009 the

Bank hasn't done any of this homework [on the Rothstein/Banyon investment] and isnt interested in doing any of this homework, its not in [the Banks] realm to do so ...." The Bank did detailed due diligence homework on Rothstein in August 2007, December 2008, and AprilMay 2009, judged Rothstein and his investment scheme crooked (fraudulent), and concluded that the Banks clients should stay away from him and his scheme. (On numerous occasions we 49

have made our suspicions known to clients interested in doing business with him or his firm (Perry November 15, 2009 email).) The Bank actively concealed from Doug the homework that it did on the Rothstein investments, however, and took steps to make Doug believe that the Bank had no problem with Rothstein or his settlement investment program. 231. While Perry was advising Doug before Dougs initial investment in Rothsteins

scheme in May 2009, Perry said to Bank Senior Vice-President Abbuhl: [T]hese guys [Rothstein and RRA] arent so bad after all. I'm actually going to be doing something with them, with RRA with one of my clients, Mr. Von Allmen. Abbuhl Sworn Stmt at 110. The not so bad after all assertion was another lie. The Bank learned nothing in April-May 2009 that contradicted its longstanding assessment that Rothstein was a fraud. Rothstein and his firm were as bad as they had ever been in May 2009. 232. Bank of America including Perry wanted Rothstein to deposit his Ponzi billions in

the Bank and wanted to become the schemes banker, and saw an opportunity to do so on the backs of the Von Allmens. So they actively concealed material facts from Doug, and Perry lied to Abbuhl to back him off. Disappearance of the desk file

iii. 233.

Perry and Abbuhls department maintained a desk file that contained the full

financials of Levin and copies of emails regarding the 2008 proposed jet aircraft loan that had been rejected because of Levins association with Rothstein. 234. scheme. The desk file contained a conclusively negative assessment of Rothstein and his

50

235.

From the time that Abbuhl started working at the Bank up to May 2009, no desk

file had ever turned up missing. The Bank normally retained such files for years. However, the aforementioned desk file inexplicably turned up missing in May 2009. 236. Perry asked Abbuhl for the desk file in May 2009. When Abbuhl went to get it,

however, it was gone. It had disappeared. It was never found. 237. It was in Perry, Maller, and the Banks interest to have the desk file disappear,

because it contained a negative assessment of Rothstein, with whom the Bank now wanted to do business. 238. Abbuhl of course did not want the desk file to disappear. It appears that before

asking for the desk file, Perry may have destroyed or hidden it. Then Perry asked Abbuhl for it. This way the blame for the desk files loss would not fall as readily on Perry. 239. The Banks possible goal was to remove a file that could be cited later as

containing information that should have been shared with the Von Allmens before they invested in the Rothstein scheme. 240. Even without the desk file, the Bank still had in digital form the basic information

about Rothstein and Banyon that the Bank had obtained in 2008. Perry emailed that information to a colleague on May 8, 2009. iv. Because of Bank of Americas active concealment of its knowledge of the Rothstein fraud, $22 million was invested in the scheme between May 5 and 8, 2009. 241. Perry reported no problems with the Rothstein investment scheme after the

Banks three-tier review of the scheme, either in Perrys communications with Doug in May 2009 or any time thereafter. 51

242.

On May 5, 2009, based on the Banyon COM and representations by

Ballamor/Bekkedam, based on Dougs understanding that Bank of America would comply with its fiduciary duties, based on the Banks statements and omissions to Doug through Perry, and because of the Banks active concealment of its knowledge that the Rothstein scheme was fraudulent, the Von Allmens decided in early May 2009 to invest in the Rothstein settlements. 243. On May 5, 2009, D&L Partners, LP invested $15,000,000 in Rothstein through

Banyon Income Fund. 244. On May 5, 2009, Linda Von Allmen as trustee of the Von Allmen Dynasty Trust

invested $2,000,000 through Banyon Income Fund. 245. On May 8, 2009, D&L Partners, LP invested $5,000,000 in Rothstein through

Banyon Income Fund. 246. The Von Allmens initial investments in the Rothstein investment scheme in early

May 2009 saved the Ponzi scheme from collapsing and gave it a new lease on life which helped keep it going through October 2009. 247. As a result of the Banks deliberate concealment of Rothsteins fraud and

substantial assistance provided to Rothstein in the perpetration of his fraud, the Plaintiffs in this case and other Rothstein victims unwittingly invested 565 million more dollars into the scheme from May to October 2009, or were delayed for months in discovering that they had been defrauded before May 2009 into investing. The Bank maneuvered the Von Allmen family into investing a total of $85.7 million of the $565 million between May and October.

52

v. Abbuhls insistence that Bank of America disclose its knowledge of the Rothstein scheme destroyed his Bank of America career. 248. After Dougs initial investments in the Rothstein scheme, Abbuhl paid the price

for his insistence that Bank of America honor its fiduciary duties to the Von Allmens. 249. Abbuhl saw the handwriting on the wall when Douglas DiVirgilio, Bank of

America Southeast Regional President of Private Banking, called out Abbuhl in a June 2009 Bank of America leadership meeting. In front of many others, DiVirgilio accused Abbuhl of being a "squeaky wheel" in the Banks U.S. Trust division -- i.e., a disloyal whistleblower. 250. 2009. As a result of Bank of Americas active concealment of its knowledge of Rothsteins fraud, the Von Allmens invested $85.7 million in the Rothstein scheme. The Bank branded Abbuhl an outcast, and finally pressured him to quit in July

vi.

251.

All told, the Von Allmens invested $85.7 million in the Rothstein investment

program in reliance on the Banks due diligence and on the Banks compliance with its longstanding fiduciaries duties to disclose any material information it had about Rothstein and his scheme. 252. At no time did Bank of America, through Perry or anyone else, in their

communications with Doug or any other member of the Von Allmen family, or with any other third party, disclose their knowledge that the Rothstein scheme was a fraud or raise any suspicion about it. Instead, the Bank through Perry and others carefully, deliberately concealed what they knew, even though they knew that investors in the Rothstein Ponzi scheme likely would lose all or most of their money as a result.

53

253.

The Bank willingly sacrificed $85.7 million of a fourteen-year personal banking

and investment client and familys money so that the Bank could bootstrap these Rothstein investments into a chance to get a foot in the door with Rothstein and ultimately replace TD Bank as the principal banker for the Rothstein Ponzi scheme. 254. Bank of Americas maneuvering the Von Allmens into investing $85.7 million

invaluably assisted Rothstein. It saved the scheme when it was in deep trouble in May 2009. 255. Rothstein was able to take the Von Allmen money invested on May 5, 2009 and

May 8, 2009 and make some of the large payouts he owed to certain New York hedge funds that had invested in his Ponzi scheme and were closing in on him. Rothstein emailed Platinum Partners Value Arbitrage Fund CEO Mark Nordlicht on May 6, 2009, the day after the Von Allmens first investments: I am wiring [$]7.5mm in about 20 min to Banyon Investments/Platinum accountI expect to wire the remainder in the next few days. 256. As a result of the Banks actions, the Plaintiffs in this case and other Rothstein

victims unwittingly invested 565 million more dollars into the scheme from May to October 2009, or were delayed for months in discovering that they had been defrauded before May 2009. Most or all of it was lost. 257. Bank of America through its misconduct in 2009 helped turn the Rothstein saga

from a disaster into a full-fledged catastrophe for South Florida. vii. 258. Bank Senior Vice-President Abbuhl's reaction to the Banks concealment of its Rothstein knowledge from investors.

When Bank of America / U.S. Trust Senior Vice-President John Abbuhl learned

that the Bank never warned Doug about Rothstein, Abbuhl wrote to Maller in May 2009: Words cannot express how disappointing this is to me from an ethical perspective . 54

viii.

Bank of America confirmed after the Rothstein scheme imploded that the Bank knew all along it was a fraud.

259.

On November 2, 2009, two days after the Ponzis Halloween 2009 collapse, Perry

confirmed in an email to Bank of America Senior Vice President Tim Wakeland that he knew all along that Rothsteins scheme was a fraud. We have done everything possible to stay away from this guy. 260. On numerous occasions we have made our suspicions known to clients

interested in doing business with him or his firm, Perry wrote on November 15, 2009. 261. In the days and weeks in November 2009 after his schemes Halloween collapse,

Perry and Bank of America / U.S. Trust Broward president Mark Maller frequently joked about Rothstein's demise and patted each other on the back over the Bank's avoiding getting burned by the Rothstein scheme. 262. emailed Perry: We clearly made the right call on him. Perry responded: Notice there is no mention [in the article] of Fred Perry / US Trust? :-) [smiley face] In other words, we got away with helping engineer the investment of 565 million additional dollars in Rothstein scheme, and got away with reeling in Rothstein as a Bank client, without the press ever catching wind of it. 263. Nowhere in Perry and Mallers back-patting emails (note the smiley face) do they After circulating a Miami Herald article about Rothstein's downfall, Maller

mention the consequences of the Banks active, willful concealment of its knowledge that 55

Rothsteins scheme was fraudulent and other substantial assistance provided to Rothstein by the Bank: * The additional $565 million invested and mostly lost between May and October 2009, a significant portion of it lost by the Plaintiffs in this case. The delay for months in many other Plaintiffs and other victims discovering that they had been defrauded before May 2009.

4.

Though Bank of America knew all along that the Rothstein scheme was a fraud, the Bank threw in with Rothstein in 2009 and aggressively pursued business from him. i. The Merrill Lynch effect.

264.

In 2007, the Bank turned down a Banyon credit proposal because of Rothstein. In

2008, the Bank rejected a loan for Levin because of Rothstein. The Bank said Rothstein was a crook, a fraud, somebody to stay away from. Yet in 2009 the Bank eagerly embraced him. The Bank doggedly pursued depository business from Rothstein in 2009 though it knew he was a fraud. 265. On information and belief, Bank of Americas change of attitude in 2009 at least

in part stemmed from the Banks having become a different place in 2009. 266. 267. The Bank acquired Merrill Lynch brokerage on January 1, 2009. Several of the officers in the U.S. Trust division of Bank of America in Fort

Lauderdale were from Merrill Lynch, including the following officers who dealt with Rothsteinrelated matters: Douglas DiVirgilio, Doug Bose, Samuel A. Willet, Patricia Kowalski, Justin Courtenay, and Brian Mormile. 268. John Abbuhl told his fellow officers that the Bank had to disclose to Doug the

Banks knowledge about Rothstein. In addition to Perry, Abbuhl made his appeal to Defendant 56

Mark Maller, then Bank of America President of Broward County, Defendant Brian Mormile, Managing Director, U.S. Trust / Bank of America Private Wealth Management, Defendant Doug DiVirgilio, Bank of America Southeast Regional President of Private Banking, and Samuel Willet, Bank of America East Central Florida Market President. They all ignored him, and, on the Banks behalf, concealed what they knew from investors. The Bank through them and through Perry helped maneuver the Von Allmens into investing $85.7 million into the Rothstein Ponzi scheme and helped keep the scheme going through October 2009. 269. The Banks U.S. Trust division absorbed many of the Merrill Lynch stock-broker

salespeople. To a large degree, the Bank in the private banking / wealth management area ceased operating like a traditional bank trust department and became more interested in selling to clients and making money from them in whatever way possible, like a Merrill Lynch brokerage operation. 270. Moreso than in the past, in 2009 the objective became bring in business rather

than serve clients needs. 271. The Bank through Perry and the new U.S. Trust stockbrokers from Merrill Lynch

took this way too far. In their mind the client became the target, an object to be used for their own ends regardless of the consequences to the client. 272. This appears to have been the mindset that helped drive Perry, who knew that the

Rothstein scheme was at least a billion-dollar proposition, in April/May 2009 to go after the Rothstein business, when five months earlier he had nixed a loan to Levin because Levin was invested in the Rothstein scheme.

57

273.

Beginning in 2009, the Bank became less worried about its getting its hands dirty

in a particular transaction and more worried about bringing business in the door, from whatever source, and now. 274. In April 2009, when Perry first heard from Doug that he and his family wanted to

invest millions in the Rothstein investment program through Banyon, and then reviewed materials that confirmed for him that it Banyon had a half-billion or more dollars invested in the Rothstein scheme already, Perry and the Bank saw an opportunity. 275. The Bank, including through Perry, conceived a plan to maneuver the Von

Allmens into investing millions with Rothstein to help fuel the scheme going forward, and then to persuade Rothstein to take the Von Allmen money and hundreds of millions invested by the Plaintiffs in this case and other victims deposit the money in accounts at Bank of America. 276. In 2009 Bank of America / U.S. Trust had no compunction about casting its lot

with a major fraud schemer. The Banks Fort Lauderdale office had already shown a willingness in the past to do Rothsteins bidding. 277. In 2006, Rothstein was involved in a criminal scheme with a Steve Caputi,

manager of Caf Iguana on the beach. Caf Iguanas corporate entity was Kendall Sports Bar, which had an account at Bank of America. There was an internal investigation at the Bank regarding a check-kiting scheme that Rothstein and Caputi were involved in through Kendall Sports Bar. With the help of his friend Ted Morse, Rothstein got Bank of America to quash its investigation regarding the Rothstein-Caputi check-kiting scheme. 278. The prospect of Bank of America becoming the Rothstein schemes banker was On September 18, 2007, Banyons Preve raised the

initially floated in September 2007.

possibility and discussed it with Rothstein. Preve told Bank of Americas Abbuhl on that date: 58

I had a long discussion with Scott on your meeting with him and the possibility of utilizing BofA for this trust account funding. As I think I intimated, Scott is absolutely paranoid about the confidentiality issues surrounding these kind of transactions so he has asked tha t we give him a couple of days to digest the possibility of working with BofA. Quite frankly I think his reluctance in part is based on taking the candy away from his current bank so he has to come to terms with that decision. (emphasis added). 279. In spring 2009 Perry, as he testified in his deposition, was very motivated to find

ways to do the depository and trust business [with Rothstein/RRA] . In the spring Perry started working in earnest to ingratiate himself with Rothstein, by telling Rothstein that he (Perry) was going to get a lot of money to be invested in Rothsteins scheme. 280. After the Von Allmens invested the first twenty-two of the many millions that

they would invest with Rothstein starting in May 2009, an elated Perry reported back to Rothstein, with Perry Bank colleague John Abbuhl present, that Bank of America was responsible for the investment, and that it was now time for Bank of America and Scott Rothstein to do business together. As Abbuhl reported in his sworn statement: It was Fred was bragging to Scott about, Hey, we're going to get something done for you [i.e., for Scott Rothstein], blah, blah, blah. Meaning he was going to get the money for Mr. Von Allmen and that they should start doing business together. Abbuhl Sworn Stmt at 121-122. (emphasis added) 281. Perrys colleagues perceived that I was very motivated to find ways to do the

depository and trust business with Rothstein. Perry dep Errata Sheets at 33 (emphasis added). 282. In May 2009 Rothstein desperately needed cash to keep his fraud scheme going.

He was late on massive payments owed to the above-mentioned New York hedge funds that had invested in the scheme. The Ponzi was in crisis.

59

283.

After the $22 million initial wave of investments in the Rothstein scheme

(through Banyon) on May 5 and 8, 2009, which saved the Ponzi scheme, Perry invited Rothstein to lunch:

284.

Abbuhl rode down the elevator one day in May 2009 with Perry after the initial

wave investments in the Rothstein scheme that the Bank helped engineer. On the elevator Perry told Abbuhl he was going to meet with Rothstein. Abbuhl said in words or substance, What are you doing going to meet with him? Hes the guy who youve said is a crook. Perry gave Abbuhl a big grin and said, Just going to spend some time with Scott. 285. Perry continued to work on Rothstein and his inner-circle through 2009. On

multiple occasions Perry visited with Rothstein and close Rothstein confidant Ted Morse while they were smoking cigars on the outdoor patio at Bova Prime, the restaurant that Rothstein owned in the downtown office building that RRA and Bank of America shared. 286. Perry also took advantage of the private elevator that he and Rothstein used to get

to their respective offices in the building, on the 16th floor (Rothstein) and 21st floor (Perry) of the building. On multiple occasions Perry made pitches to Rothstein on the elevator to open

accounts at Bank of America, saying also that he could refer business to Rothstein.

60

287.

The Bank through Perry went so far as to enlist Doug Von Allmen -- whom the

Bank had just maneuvered into dropping millions in the Rothstein Ponzi scheme -- to assist the Bank in its efforts to land the Rothstein depository and trust business. 288. In 2009 the Bank through Perry asked Doug on several occasions to try to

convince Rothstein to move his depository and trust business to Bank of America. An example:

61

289.

Perry confirmed with Rothstein at a party on Dougs yacht on October 23, 2009

that Rothstein/RRAs depository business amounted to around a billion dollars. Perry dep at 27. 290. On October 26, 2009, Perry set up a meeting with Rothstein at Rothsteins office

for October 28, 2009, after emailing Doug on October 26 about the potential for there being some business Scott and I [Perry and Bank of America] could do together." Perry dep at 91. 291. On the yacht Perry told [Rothstein] I thought he should be aligned with a

national U.S. brand [Bank of America] versus some of the smaller foreign owned brands [TD Bank and Gibraltar Bank] that he has engaged with thus far a national [U.S.] brand could bring more to bear . Perry dep at 92, 95. 292. The Bank through Perry wanted to open doors to do business with him

[Rothstein] because of the sizable business opportunity that Rothstein represented. Perry dep Errata Sheets at 92, 93. 293. Perry was tireless in his efforts to get the Rothstein business for Bank of America.

Or, as the colorful Rothstein later put it, Perry tried to shake me down right to the end. 294. Rothsteins recollections and his testimony on matters relating to his Ponzi

scheme have proved amply credible. His testimony recently in the trial of a former lawyer in his firm led to the lawyers conviction for assisting Rothstein. A juror interviewed afterward

confirmed that Rothstein proved a credible witness; we believed him, she said.

ii. Bank of America succeeded in landing Rothstein Ponzi scheme depository business in October 2009. 295. Perrys October 28, 2009 meeting with Rothstein apparently was a success. The

monumental assistance that the Bank had been providing Rothstein since May 2009 was going to 62

start paying off for the Bank. Rothstein agreed to open accounts at Bank of America / U.S. Trust:

296.

This was the same Scott Rothstein who Perry and the Bank said was dirty, a

crook, a bad guy, whose investment scheme they had concluded was a fraud, and who had inspired Perrys Stay away from these guys warning to his Bank colleagues in December 2008. But in 2009 the new Bank of America was ready and willing to throw in with the arch Ponzi schemer. Money was money. 63

297.

Unfortunately for Bank of America, on Halloween 2009, as the Bank was reeling

in its new very-big-fish depositor, the line snapped. The Rothstein Ponzi scheme collapsed. B. 298. Lies I and Lies II: The deposition of Frederick Perry and Perrys amazing Errata Sheets. Fred Perry was deposed on December 22, 2011 in Razorback v. Rothstein and TD

Bank, et al., Case No. CACE09062943 (Fla. 17th Cir. Ct.), another Rothstein-related case. 299. In the weeks following his deposition, Perry and his fellow Bank co-conspirators

must have fretted considerably over his testimony. On February 8, 2012, six weeks after Perry was deposed, he and his Bank colleagues on behalf of the Bank collaborated on, and then Perry submitted, one of the more amazing sets of deposition correction pages (Errata Sheets) in memory. 300. testimony. 301. Perry even tampered with the Errata Sheets standard declaration on penalty of In his Errata Sheets Perry made 34 substantive changes to his deposition

perjury that his testimony as corrected was true and correct. Perry added fudge language to the declaration. The standard declaration stated: Under penalties of perjury, I declare that I have read my deposition and that the facts stated herein are true. Perry changed the declaration to say: Under penalties of perjury, I declare that I have read my deposition and that the facts stated herein are true to the best of my recollection. Perry Errata Sheets at 134 (Perrys change to the declaration emphasized).

64

302.

Perry was trying to protect himself against a charge of perjury, and in turn protect

the Bank. He had good reason to try to do that, given the raft of lies that he swore to in his Errata Sheets as well as in his original December 22, 2011 deposition. 303. In his December 22, 2011 deposition, Perry testified under oath fifteen times that

before Rothsteins fraud scheme collapsed, he (Perry) had concluded that Rothstein was dirty or the like and that his scheme was crooked. In his Errata Sheets submitted six weeks later, Perry retracted all fifteen of these testimonial statements. He reversed his original sworn deposition testimony to say now instead that he did not conclude before the schemes collapse that Rothstein or his scheme were dirty (fraudulent). 304. On Perry Deposition Errata Sheets page 33, line 7, Perry changed Rothstein was

dirty to Rothstein was complicated. Perry went on to declare that he asked his colleagues after his original deposition and that they told Perry that what Perry was really thinking was that Rothstein was not dirty: [I]n revisiting my demeanor with my colleagues, they perceived that I was very motivated to find ways to do the depository and trust business [with Rothstein] and only later became suspicious/more cautious. Perry deposition Errata Sheets at 33:25 (emphasis added). 305. The participation by Perrys colleagues in the preparation of the Perry deposition

Errata Sheets confirms the collaborative nature of the project to prepare the corrections in the Sheets. It was a Bank operation, carried out by Perry and his colleagues including, on

information and belief, Defendants Maller, Mormile, and DiVirgilio. 306. The other fourteen changes to Perrys original sworn testimony retracting the

dirty label and similar sworn testimony are found on Errata Sheet pages and lines 33:5, 33:7, 33:25, 38:5, 44:5, 45:21, 92:10, 92:12, 92:16, 93:18, 93:25, 98:25, 99:2, 118:7, and 53:11. 65

307.

Perry's fifteen changes retracting his original Rothstein was dirty testimony

were false and constituted a fraud on the Court. 308. The Bank including Perry knew all along that Rothstein was dirty, a fraud. Perry,

Maller, Abbuhl, and their colleagues at the Bank had been sure since 2007 that Rothstein and his investment scheme were fraudulent. 309. Because Perry in his Errata Sheets falsified his deposition testimony to say that he

and the Bank had not concluded Rothstein was dirty when the Bank was discussing with Doug the possibility of investing with Rothstein, Perry and his colleagues evidently felt he had to change several other answers to deposition questions to make them fit with the fifteen new lies. 310. If -- as Perry said fifteen times in his Errata Sheets -- Perry had not decided that

Rothstein was dirty by May 2009, Perry of course could not have warned Doug that Rothstein was dirty. Recognizing that, Perry in his Errata Sheets retracted his testimony that he had warned the Von Allmens about Rothstein. Perry changed all eleven such testimonial statements to say now instead that he did not warn the Von Allmens about Rothstein or his scheme until after October 20, 2009 (if ever). See Perry Deposition Errata Sheets pp. 34:3, 34:6, 37:22, 38:5 40:6, 51:12, 83:7, 83:17, 105:11, 118:7; 63:22. 311. Both the original eleven testimonial statements and the eleven corrected versions

of that testimony were false. The eleven original testimonial statements were false because Perry never warned the Von Allmens or that there was a problem with Rothstein. Perrys eleven corrected versions of this testimony were still false, because Perry never disclosed to Doug or his family any suspicions about Rothstein, before or after 10/20/09. The Bank through Perry

66

and otherwise always carefully and deliberately concealed that information, as described above in detail. 312. According to Perrys own testimony elsewhere in his original deposition, the only

time that Perry talked to Doug after 10/20/09 and before the Rothstein scheme imploded was on October 29 or 30, 2009. But on that occasion, it was Doug who called Perry, alerting Perry that he (Doug) heard there may be a problem with Rothstein. (Perry dep at 98.) Perry did not tell Doug there was a problem with Rothstein; Doug told Perry. Perry said nothing one way or another about Rothstein or his scheme on the October 29-or-30 call, much less voice any suspicion about Rothstein. The Ponzis blow-up occurred one or two days after Perry and Doug talked on October 29/30. 313. In sum, Perry lied eleven times plus eleven times about warning the Von Allmens

regarding Rothstein and his scheme. 314. Taken together with the above-described 15 lies that he did not believe Rothstein

was crooked or dirty (i.e., not a fraud), Perry, at the behest of the Bank and with the assistance of his Bank officer colleagues, in order to protect the Bank as well as himself, lied in his deposition and Errata Sheets at least 37 times. 315. In his Errata Sheets Perry essentially opted for the Rothstein wasnt crooked lie

over the I warned Doug about Rothstein being crooked lie. Assumedly Perry concluded that the I warned Doug lie would not hold up. Perry likely decided that fabricating what he thought in his own mind would be less impeachable than fabricating what he said to another person (Doug).

67

316.

The upshot of Perrys alteration of his original deposition testimony is that Bank

of America through Perry admits that it concealed everything and told the Von Allmens nothing of Rothsteins fraud before the scheme imploded on Halloween 2009. 317. Bank of America including Perry and his colleagues actively concealed that the

Rothstein investment scheme was a fraud and that their money invested in the scheme was destined to go down the drain. As a result, Rothstein victims including the Plaintiffs in this case unwittingly invested an additional $565 million into the scheme from May to October 2009, losing most of it, or were delayed for months in discovering that they had been defrauded before May 2009. 318. Two more important Perry deposition lies: * Perrys testimony that the amount of due diligence the Bank did on the Rothstein investments in 2009 was none (Perry dep at 41), and that the Bank hasn't done any of this [due diligence] homework and isnt interested in doing any of this [due diligence] homework, its not in [the Banks] realm to do so ...." (Perry dep at 83-84) In fact, the Bank through Perry and otherwise did detailed due diligence homework on the Rothstein scheme in August 2007, December 2008, and April-May 2009 (a three-tier review by the Bank, including by Perry himself, Perry said in his May 4, 2009 email). The Bank through Perry judged Rothstein and his investment scheme fraudulent, and based on that judgment, told the Banks clients (but not the Von Allmens) on numerous occasions that they should stay away from Rothstein. * Perrys testimony that after Perrys meeting with Rothstein on October 28, 2009 in Rothsteins office, Perry did not pursue business with Rothstein: Q. What was the result of that [October 28, 2009 meeting]? Did you ultimately pursue this business relationship with Mr. Rothstein? A. No. we let it die a natural death. I didn't pursue it, I didn't follow up with Mr. Rothstein. (Perry dep at 32; 45) 68

In fact, the day after the October 28, 2009 meeting Perry emailed Rothsteins office to open new accounts at the Bank, pursuant to Perrys discussion with Rothstein on October 28. 319. More than willing to lie under oath, Perry has no compunction about lying when

not under oath. On November 2, 2009, two days after the Ponzis Halloween 2009 collapse, Perry emailed Bank colleague Tim Wakeland, We have done everything possible to stay away from this guy [Rothstein]. But on October 29, 2009, just four days before this email, Perry and Bank of America signed up Rothstein as a Bank of America / U.S. Trust private banking client. (See above.) 320. Perry is a liar and a perjurer. He and Bank of America tried to cover up and

conceal their wrongdoing. 321. The Banks cover-up and concealment included extensive, bad-faith withholding

of documents responsive to subpoenas served on them by the plaintiffs in Scott Morgan, et al. v. Edward J. Morse, Jr., et al., Circuit Court of the 17 Judicial Circuit in and for Broward County, Case No. 11-30821 (07) and Razorback Funding, LLC, et al. v. Scott W. Rothstein, et al. , Circuit Court of the 17 Judicial Circuit in and for Broward County, Case No. 09-062943 (07). 322. Bank of America concealed and failed to produce a number of relevant,

responsive documents without serving a privilege log and without otherwise identifying the documents that it withheld from production. 323. Bank of America has also hinted that it may have destroyed documents that relate

to the Von Allmens claims. (Perry dep at 44) 324. The Bank including Perry have concealed, covered up, and possibly destroyed

documents for obvious reasons: to avoid massive liability and a public relations nightmare. 69

325.

But the cover-up and concealment just make things worse.

Evidence of

concealment of offensive conduct after it initially occurred is indicative of malice or evil intent sufficient to support punitive damages. Gen. Motors Corp. v. McGee, 837 So. 2d 1010, 1035 (Fla. 4th DCA 2002). 326. As a result of the Defendants actions, including the knowing, substantial

assistance that they provided to Rothstein in rescuing his fraud scheme in May 2009 and helping to fuel it from May to October, 2000, the Plaintiffs in this case and other Rothstein victims unwittingly invested an additional $565 million into the scheme from May to October 2009, losing most of it, or were delayed for months in discovering that they had been defrauded before May 2009. ***** IV. ADDITIONAL CO-CONSPIRATORS INSTRUMENTAL TO INDUCING PLAINTIFFS TO INVEST A. 327. Michael Szafranski Michael Szafranski was the president of Onyx Options Consultants Corporation and

ABS Capital Funding, LLC. Michael Szafranski was hired as an independent third-party on behalf of several entities prior to investing with Rothstein and was tasked with verifying the legitimacy of the purported confidential settlements. Specifically, Szafranski was the only person vested with authority to analyze the unredacted settlement documents, to substantiate the putative plaintiffs and putative defendants existence, to confirm the putative defendants pre-funded wire transfer into the Principal Conspirators TD Bank escrow account, to verify the Principal Conspirators TD Bank trust and escrow account balances, and to provide an opinion as to the authenticity of the settlement deals. Szafranski participated in the scheme by, among other things, 70

making material misrepresentations, false verifications, and conspiring to induce investor funding while accepting over $32 million in payment for his participation in Rothsteins conspiracy despite having actual or constructive knowledge that the investments were a Ponzi scheme. Szafranski also acted as a knowing intermediary of Rothsteins fraudulent misrepresentations.4 B. 328. Richard Pearson Richard Pearson was the sole owner and president of R.L. Pearson. Pearson

participated in the scheme by actively serving as a feeder that materially participated, conspired, substantially assisted, encouraged, and otherwise knowingly aided and abetted Rothstein in the unlawful, misleading, and fraudulent conduct alleged herein. C. 329. Frank Spinosa Frank Spinosa was a senior regional vice-president of operations for TD Bank.

Spinosa contributed to the scheme by, among other things, making material misrepresentations in meetings with investors, providing falsified account statements, preparing fraudulent irrevocable lock letters, and using his position at the bank and the bank itself to induce investor funding for the Ponzi. On or about November 2009, TD Bank terminated Spinosas employment.5

On March 8-9, 2010, Szafranski was deposed as part of the 2004 Examination in the case styled as In Re: Rothstein Rosenfeldt Adler, P.A., Debtor, Case No.: 09-34791-BKC-RBR currently pending before the United States Bankruptcy Court Southern District of Florida. Mr. Szafranskis sworn 2004 Examination deposition testimony was relied upon by the Plaintiffs in making the allegations contained herein.
5

On June 10, 2010, Spinosa was deposed as part of the 2004 Examination in the case styled as In Re: Rothstein Rosenfeldt Adler, P.A., Debtor, Case No.: 09-34791-BKC-RBR currently pending before the United States Bankruptcy Court Southern District of Florida. Mr. Spinosas sworn 2004 Examination deposition testimony was relied upon by the Plaintiffs in making the allegations contained herein.

71

D. 330.

David Boden David Boden 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 insider to the fraudulent transactions alleged herein. Boden was Rothsteins 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.6 E. 331. Curtis Lyman Curtis L. Lyman, is an investment advisor employed and licensed by High Tower Lyman, who controlled Alpha Fiduciary Wealth

Holding LLC (High Tower Holding).

Management (Alpha), became an investment advisor with High Tower following Alphas merger into High Tower in or about December 2008.

V.

THE UNDERLYING FRAUD A. 332. Don Beverly Don Beverly invested approximately $1,100,000 into the Ponzi Scheme, without

knowledge that it was such a scheme.

On April 29, 2010, Boden was deposed as part of the 2004 Examination in the case styled as In Re: Rothstein Rosenfeldt Adler, P.A., Debtor, Case No.: 09-34791-BKC-RBR currently pending before the United States Bankruptcy Court Southern District of Florida. Mr. Bodens sworn 2004 Examination deposition testimony was relied upon by the Plaintiffs in making the allegations contained herein.

72

333.

No later than April 2008, Banyon, through Preve, and Curtis Lyman (Lyman)

of Alpha Fiduciary Wealth Management (Alpha), made an arrangement under which Lyman would receive compensation for investors he brought in to invest in the RRA confidential settlements through Banyon. 334. 335. By April 2009, Hightower Securities, LLC (Hightower) had taken over Alpha. Beverly met with Lyman at Hightowers offices on or about April 8, 2009.

Lyman presented Beverly with a confidential packet of materials from Banyon offering potential investors the opportunity to invest in a confidential settlement through Banyon. 336. Lyman told Beverly (and the packet of materials stated) that before disbursement

of any funds, an independent third party would verify that the funds being purchased by the investor had been received in a trust account at TD Bank, and that these funds could not be disbursed without prior signature authorization from both RRA and TD Bank. Lyman told

Beverly that he had met with TD Bank officials about TD Banks role in the investment program. 337. The packet of materials included a false, fraudulent March 20, 2009 letter from

TD Bank enclosing purported balance statements for five different TD Bank RRA trust accounts (accounts ending in numbers 1258, 0923, 3489, 9146, and 5104, respectively). These TD Bank balance statements falsely stated that there was a balance of over $650,000,000 in the RRA trust accounts. 338. In May 2009, in reliance on these materials and the assurances made by Lyman,

including the assurance that funds would be held in a trust account at TD Bank, and that no funds could be transferred from the account without prior signature authorization from both RRA and

73

TD Bank, and based on the fraudulent March 20, 2009 TD Bank letter, Beverly invested $500,000 in an RRA confidential settlement offered through Banyon 1030-32. 339. In July 2009, in reliance on the same materials and assurances, Beverly invested

an additional $600,000 in RRA confidential settlements offered through Banyon 1030-32. 340. The purported RRA confidential settlement investments offered through Banyon

1030-32 and purchased by Beverly never existed. 341. RRAs trust accounts at TD Bank never contained the money that Beverly was

told the accounts would contain. 342. In November 2009, payments due Beverly stopped being made. The notes

became due and were not paid, and the principal was not returned. B. 343. The Mussry Plaintiffs (Induced by Michael Szafranski) Adele Mussry and Szafranski became close friends while working together in On or about February 2009, Adele Mussry learned of the

New York several years ago.

confidential settlement deals from Szafranski. Szafranski explained that the settlements being purchased involved pre-suit, sexual harassment claims brought by female employees who wanted to quickly leave town and could not wait for months of scheduled payments. Szafranski assured Adele Mussry that many of the cases he verified first-hand and that the opportunity was too good to pass up. This, according to Szafranski, was where the investors came in. Investors would front the money and, in return, receive their principal and interest in monthly installments. 344. Szafranski told Adele and Jack Mussry that all the cases were legitimate and that He represented that he personally

he had been involved with Rothstein for a long time.

accompanied Rothstein to TD Bank to verify that the putative defendants money was in RRAs escrow account and that he was able to confirm same either through logging on to TD Banks 74

website or through TD Bank tellers. Szafranski explained that they would not be asked to wire any money unless and until the putative defendants money from the settlements was wired into the RRA escrow account. 345. In response to Adele Mussrys concerns over certain risks, Szafranski repeatedly

told her that the investments were 100% safe and that if something was not right he would know about it. The primary reason the Mussrys decided to invest the majority of their life savings was because of Adele Mussrys trust in Szafranski. 346. Based upon Szafranskis representations, Jack and Adele Mussry invested in

several settlements through ABS on the following dates: a) b) c) d) e) f) g) h) i) j) 347. February 23, 2009: April 6, 2009: May 7, 2009: June 12, 2009: July 9, 2009: August 11, 2009: September 8, 2009: $100,000.00 $50,000.00 $75,000.00 $150,000.00 $125,000.00 $165,000.00 $200,000.00

September 10, 2009: $50,000.00 October 7, 2009: October 14, 2009: $110,000.00 $125,000.00

Jack and Adele Mussry invested a total of $1,150,000.00 into the Ponzi through

Szafranski and ABS. 348. Predictably, after the misguided appearance of early returns on investment, the

Mussrys told close family members about their success with Szafranski. These individuals 75

include Nassim Mussry (Jacks father), Melina El-Ani (Adeles mother), and Danielle Izaac (Adeles sister). 349. After learning all of the details from Jack and Adele Mussry, Nassim Mussry

invested $100,000.00 with Szafranski and ABS on September 8, 2009. 350. After learning all of the details from Jack and Adele Mussry, Melina El-Ani

invested $60,000.00 with Szafranski and ABS on August 10, 2009, $40,000.00 on September 9, 2009, and $45,900.00 on October 13, 2009. 351. After learning all of the details from Jack and Adele Mussry, Danielle Izaac

invested $35,000.00 with Szafranski and ABS on October 6, 2010. 352. For ease of reference, Jack Mussry, Adele Mussry, Nasim Mussry, Melina El-Ani,

and Danielle Izaac are hereinafter collectively referred to as the Mussry Family Investors. 353. All told, the Mussry Family Investors invested $1,430,900.00 as a result of Adele

Mussrys close friend, Michael Szafranskis material misrepresentations and omissions. C. 354. Concorde Capital, Inc. (Induced by Richard Pearson) On or about August 22, 2009, Thomas DAzevedo (hereinafter, DAzevedo), on

behalf and as the principal of Concorde, briefly discussed the confidential settlement investment opportunity with Bradley Singer while the two attended a Bar Mitzvah. Singer suggested that DAzevedo contact him the next day to continue their discussion of the particulars of the deal structure. 355. On August 23, 2009, DAzevedo telephoned Singer, who talked in great detail

how he was first approached by Pearson about the purchase and assignment of RRA settlements. Singer stated that Pearson wanted him to be a commissioned representative and to solicit potential investors to purchase settlement deals. Pearson spent a lot of time explaining the nature 76

and operation of the purchase and assignment of legal settlements knowing that Singer would rely on the very same information when pitching investors, like Concorde. Pearson stressed to Singer, who in turn passed this information on to DAzevedo, the low risk high return potential of these investments. 356. Singer went on to explain that RRA was handling a large amount of settlements

from around the country in which confidentiality was of utmost importance to the putative defendants. Singer elaborated that as a result the defendants payments were not immediately released in their entirety to the putative plaintiffs, but were instead held in RRA escrow accounts to be paid over time, and were subject to clawback if any of the putative plaintiffs breached the confidentiality of the agreements. Singer further described that many of the putative plaintiffs, for fear of never receiving the money at all, were willing to take less in exchange for receiving a lump sum payment upfront. 357. On August 24, 2009, Singer sent DAzevedo an e-mail further clarifying the

structure of the investment. The e-mail included a copy of a flowchart prepared by Pearson illustrating the mechanics of the settlements and payment to RRA and the investor. Also included was an explanation that the deal was being brokered by Pearson, as well as a detailed description of Pearson and Singer equally sharing a 5% commission from any investment made by Concorde. 358. On or about August 28, 2009, DAzevedo attended a meeting at the RRA offices

in order to close on a deal and purchase an interest in purported settlement case number RRAP17. Nabil Rhazi, an employee of Pearson, met DAzevedo outside of the RRA offices and accompanied him during the entire closing. Prior to walking into the RRA conference room, Rhazi confirmed Pearsons multimillion dollar personal investment into these deals, and that RL 77

Pearson & Associates had an ownership stake and was helping to build a local Ritz Carlton. Once in the conference, both Rhazi and Boden again extolled the virtues of the deal. Rhazi assured DAzevedo of the veracity of the underlying cases and asserted that Pearson had been having success with these investments for years. After Boden and Rhazais final pitch, but prior to funding the purported settlement, Boden provided DAzevedo with the following documents: a) A letter dated August 26, 2009, from Rothstein certifying that RRA was in

receipt of, and was holding in trust, $900,000.00, representing the full liquidated settlement proceeds in case number P17; b) A letter dated August 26, 2009, from Rothstein guaranteeing to Concorde

three monthly payments of $300,000.00 in connection with Concordes purchase of rights under the P17 Settlement Agreement; c) A redacted document that was purportedly a contract of employment

between RRA and the plaintiff in the P17 case; d) A redacted document that was purportedly the Confidential Settlement

Agreement between the plaintiff and defendant in the P17 case; e) An Acknowledgement of Assignment/Purchase of Settlement Proceeds in

case number RRA-P17 naming Concorde as the exclusive Transferee of the proceeds of the purported settlement and directing Commerce Bank that said proceeds are only to be released to Concorde; and f) A Sale and Transfer Agreement for case number RRA-P17 dated August

26, 2009. 359. Boden handled the entire closing transaction. Prior to execution of the

assignment and completion of the wire transfer, Boden said he witnessed, and his assistant said 78

she notarized, the putative plaintiffs and Rothsteins signatures on the Sale and Transfer Agreement that morning. This same assistant acted as the notary public for Concordes signature on the same Sale and Transfer Agreement. 360. In reliance upon the foregoing, Concorde, acting through DAzevedo, invested

$660,000.00 into the P17 deal. 361. On or about August 29, 2009, DAzevedo attended a meeting at the offices of

RRA in order to close on a deal to fund the purported settlement to which RRA assigned the internal confidential case number RRA-P19. At that meeting and prior to funding the purported settlement, Boden provided DAzevedo with the following documents: a) A letter dated August 28, 2009, from Rothstein certifying that RRA was in

receipt of, and was holding in trust, $900,000.00, representing the full liquidated settlement proceeds in case number P19; b) A letter dated August 28, 2009, from Rothstein guaranteeing to Concorde

three monthly payments of $300,000.00 in connection with Concordes purchase of rights under the P19 Settlement Agreement; c) A redacted document that was purportedly a contract of employment

between RRA and the plaintiff in the P19 case; d) A redacted document that was purportedly the Confidential Settlement

Agreement between the plaintiff and defendant in the P19 case; e) An Acknowledgement of Assignment/Purchase of Settlement Proceeds in

case number RRA-P19 naming Concorde as the exclusive Transferee of the proceeds of the purported settlement and directing Commerce Bank that said proceeds are only to be released to Concorde; and 79

f)

A Sale and Transfer Agreement for case number RRA-P19 dated August

26, 2009. 362. In reliance upon the foregoing, Concorde, acting through DAzevedo, invested

$660,000.00 into the P19 deal. 363. On or about September 30, 2009, DAzevedo attended a meeting at the offices of

RRA in order to close on a deal to fund the purported settlement to which RRA assigned the internal confidential case number RRA-P27. At that meeting and prior to funding the purported settlement, Boden provided DAzevedo with the following documents: a) A letter dated September 29, 2009, from Rothstein certifying that RRA

was in receipt of, and was holding in trust, $900,000.00, representing the full liquidated settlement proceeds in case number P27; b) A letter dated September 29, 2009, from Rothstein guaranteeing to

Concorde three monthly payments of $300,000.00 in connection with Concordes purchase of rights under the P27 Settlement Agreement; c) A redacted document that was purportedly a contract of employment

between RRA and the plaintiff in the P27 case; d) A redacted document that was purportedly the Confidential Settlement

Agreement between the plaintiff and defendant in the P27 case; e) An Acknowledgement of Assignment/Purchase of Settlement Proceeds in

case number RRA-P27 naming Concorde as the exclusive Transferee of the proceeds of the purported settlement and directing Commerce Bank that said proceeds are only to be released to Concorde; and

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f)

Sale and Transfer Agreement for case number RRA-P27 dated September

29, 2009. 364. In reliance upon the foregoing, Concorde, acting through DAzevedo, invested

$660,000.00 into the P27 deal. 365. Additionally, Concorde, acting through DAzevedo, paid a total of $33,000.00 in

commissions to Pearson. 366. All told, Concordes investments in the Ponzi and commission payments to

Pearson totaled $2,013,000.00. D. 367. Razorback Funding, LLC, and D3 Capital Club, LLC In order to glean a full understanding of the circumstances under which

Razorback and D3 were lured into Rothsteins scheme, a brief summary of the formation of an entity called Clockwork Capital Advisors, LLC (hereinafter Clockwork), is warranted. 368. The Von Allmen family investments breathed new life into BIF. Barry Bekkedam

was instrumental in soliciting the Von Allmens. On the heels of his success in securing these funds, Bekkedam continued pursuit of additional investment funds. 369. In early summer of 2009, Ballamors Managing Director Al Rapetti put Bekkedam

in touch with Abraxas Discala (hereinafter, Discala), who was portrayed as a potential investor source with access to high-net worth individuals and Hollywood celebrities. 370. After a few initial conversations and an informal meeting in Florida, Bekkedam

invited Discala to Ballamors headquarters in Pennsylvania. 371. Over the course of many discussions, Discala learned from Bekkedam about the

inner workings of BIF and about the confidential settlements being purchased.

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372.

As a backdrop, Bekkedam described a close personal relationship shared between

Rothstein and Levin which explained how BIF was able to secure the purported exclusive right to purchase RRAs entire pipeline of confidential settlements. 373. Additionally, Bekkedam detailed how RRAs successful marketing efforts, via

strategically placed 800 numbers and network of nationwide referrals, swelled the firms pipeline of settlements to a critical mass. Bekkedam even pointed to Berenfelds audited accounting financial statements as proof substantiating BIFs monthly purchases of between $50,000,000.00 $75,000,000.00 of settlements a month. 374. BIFs problem was that the current pace of funding was unsustainable as RRAs

seemingly insatiable capital demands exhausted Banyons financial wherewithal. As a result, BIF was in danger of creating rolling monthly shortfalls which would inevitably crater BIFs exclusivity deal. 375. Bekkedam believed that with Discalas help in promoting BIF the monthly deficit

could be bridged and, to bolster his confidence, brought Levin and Preve into the discussion to augment this point. 376. In essence, Discala was being positioned as a white knight capable of riding in to

save BIF and make a lot of money for himself and his investors along the way. 377. When, in approximately August or September, 2009, the conversations turned to

solidifying his involvement, Discala balked at the opportunity to work directly for Ballamor, deeming the proposed remuneration inadequate. 378. The conversation quickly transitioned to the idea of Discala taking over fund

raising responsibilities from BIF by creating his own investment fund which would absorb BIF and provide Discala the opportunity to raise capital under more financially lucrative terms. In principal, 82

this idea would not only benefit Discala, but would also permit Levin to significantly reduce (if not eliminate) his personal investment, allow him to eliminate his personal guaranty, and ensure that he could step away from the day-to-day stresses and responsibilities of raising capital. 379. These discussions led Discala to incorporate Clockwork with an eye towards

planning for the creation of a Clockwork fund. 380. On September 8, 2009, Discala and Levin memorialized their understandings by

executing a Letter of Intent (hereinafter, LOI) prepared by Ballamors General Counsel Lawrence Rovin, Esq., outlining the proposed terms and conditions for a new facility to provide funding for the business currently being conducted by BIF and its affiliates. 381. Specifically, the LOI details the mechanics for rolling BIF into the to-be-formed

Clockwork fund,7 describes the transition of primary money raising responsibility to Clockwork, and offers insight into Levins expedited financial exit.8 382. On September 16, 2009, pursuant to the terms of the LOI, Levin wired Discala

$125,000.00 to help get Clockwork off its feet and to hire the Clifford Chance, LLP law firm needed to prepare Clockworks private placement memorandum. 383. Notwithstanding, settlement purchase opportunities came along during the time that

Clockwork was still in formation and not yet fully operational. Discala needed to begin raising capital for both the Razorback and D3 deals. In so doing, Discala shared the information he
7

At closing, Clockwork will take responsibility of the administration of the purchase, funding and collection of Settlements on behalf of Newco . . . [and] will also assume administration of the collection of pre-existing BIF Settlements.
8

Following the closing, Clockwork agrees to fund by way of loans . . . at least 50%, but at Levins option up to 90% of the Settlement Price of Approved Settlements, with Newco funding the balance on the first $500,000,000.00 raised by Clockwork and, thereafter, to fund 90% of the Settlement Price for Approved Settlements by way of loans . . . subject to the right of Newco to fund more than 10% of the Settlement Price using funds provided solely by Levin. 83

obtained in being recruited to help form Clockwork with the investors who eventually funded both Razorback and D3 deals. For Douglas Von Allmen, a major investor in both Razorback and D3, this information further buttressed the representations previously made to him by Bekkedam, Bank of America, and others. 384. Razorback was formed September 24, 2009, for purposes of investing in two

RRA settlements: (1) a $40,600,000.00 structured settlement, payable in four equal monthly installments, offered in exchange for a lump sum payment of $23,200,000.00; and (2) a $26,100,000.00 structured settlement, payable in three equal monthly installments, offered in exchange for a lump sum payment of $17,400,000.00. 385. In particular, the deal was structured so Razorback would fund $32,000,000.00

towards the purchase of these settlements by means of a loan to Banyon USVI, LLC. Banyon USVI in turn would contribute $8,600,000.00 to purchase the settlement proceeds from Rothstein. 386. On October 1, 2009, Szafranski, who, in addition to acting as the independent

verifier for Banyon, was utilized as the independent reviewer for Razorback, met with Rothstein to review and verify all of the documents supporting the Razorback deal. In that meeting, Szafranski purportedly witnessed Rothstein sign on to the TD Bank on-line banking website and verified that all of the wire transfers for the underlying Razorback settlement deals had been received by RRA and were held in RRAs escrow account ending in x-1356. 387. Szafranski also verified that a lock letter signed by Frank Spinosa, in his capacity

as Regional Vice President of TD Bank and dated October 1, 2009, had been received. That letter stated:

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Pursuant to your written instructions to us of September 30, 2009, please be advised that all funds contained in the above referenced account shall only be distributed upon your or Stuart Rosenfeldts instruction and shall only be distributed to Banyon USVI (Del), LLV, c/o Razorback Funding, LLC, Debt & Equity Re-Payment Account: TD Bank, NA, 319 Glen Head Road, Old Brookville, NY, ABA: 026013673, Account # 4244986191. Your letter is understood not to convey ownership of the account or access to the account to any other party, but rather is meant to irrevocably restrict conveyances as follows: conveyances shall only be made from the account referenced above to the Banyon USVI account. See October 1, 2009 letter. 388. The above referenced account mentioned in Razorbacks lock letter had the

account number: 4245221356. 389. Spinosa e-mailed the lock letter to Rothstein earlier that day with a message

stating that at Rothsteins request and instructions, this account [RRAs trust account] has been irrevocably locked as to destination of all disbursements [which was Razorbacks account, also at TD Bank]. The letter confirming same is attached. Please do not deposit any funds into this account that are not soley (sic) to be directed to the entity set forth in the irrevocable instruction. 390. On October 1, 2009, Razorback received copies of two TD Bank wire transfer

statements from Preve, a Banyon USVI representative, demonstrating that a total of $66,700,000.00 (the full settlement funding being purchased) had been received by RRA in its escrow account at TD Bank, account number 4245221356 which is the same account reference in the aforementioned TD Bank irrevocable lock letter. 391. On the same day, Preve forwarded Razorback an email from Rothstein providing:

(1) confirmation of Preves purported $8,000,000.00 wire into RRAs trust account; and (2) that no disbursement on the deal would be made until he received the $32,000,000.00 from Razorback.

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392.

On October 3, 2009, Razorback received confirmation from Spinosas assistant that

she prepared the lock letter and witnessed Spinosa signing it. 393. On October 7, 2009, Razorback received an e-mail from Preve which contained an

on-line screen shot of an RRA trust account at TD Bank indicating a balance of $66,700,000.00 in the account ending in number x-1356. 394. On October 22, 2009, Szafranski met again with Rothstein and verified that all of

the putative plaintiffs in the Razorback deals received their disbursements by reviewing TD Banks on-line banking website. 395. In late September 2009, Clifford Chance LLP a large national law firm retained by

Clockwork, meet with Rothstein for two days to perform due diligence on the Razorback deal. During the course of the in-depth interview and discussion, lawyers for Clifford Chance achieved a greater understanding of settlement deal flow and verification process and eventually recommended and endorsed investor funding into Razorback. 396. In reliance on the foregoing, Razorback transferred the sum of $32,000,000.00 to

RRAs trust account. 397. As it turns out, account number 4245221356 never contained the funds represented

in the wire transfer statements or on the online screenshot of that account at TD Bank. 398. Rothsteins frenzied demand for the required capital necessary to keep the Ponzi

going coupled with the identification of an exuberant new funding source provided Rothstein and his conspirators a perfect opportunity to secure funding. conspirators concocted a new settlement opportunity. Accordingly, Rothstein and his

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399.

D3 was formed October 4, 2009, for purposes of investing in a $30,000,000.00

RRA structured settlement, payable in six equal monthly installments of $5,000,000.00, offered in exchange for $18,000,000.00. 400. A D3 representative, who was also a representative of Razorbacks management

team, along with Douglas and David Von Allmen as investors, had knowledge of and relied upon the contacts and representations made by TD Bank in connection with the Razorback transaction. 401. On or about October 15, 2009, as part of its due diligence, D3 obtained a copy of a

TD Bank lock letter signed by Spinosa stating the following: Pursuant to your written instructions to us of October 14, 2009, please be advised that all funds contained in the above referenced account shall only be distributed upon your or Stuart Rosenfeldts instruction and shall only be distributed to D3 Capital Club, LLC, 2833 NE 35th Court, Fort Lauderdale, FL, 33308, TD Bank NA, Account # 4245728568. Your letter is understood not to convey ownership of the account or access to the account to any other party, but rather is meant to irrevocably restrict conveyances as follows: conveyances shall only be made from the account referenced above to the TD bank account # 4245728568 belonging to D3 Capital Club, LLC. 402. The above referenced account mentioned in the lock letter had the account

number: 4246051629. 403. On October 15, 2009, Spinosa signed another letter enclosing a copy of RRAs trust

account bank statement for account number 4246051629. The account statement that Spinosa enclosed showed a balance in excess of $30,000,000.00 as of October 14, 2009. 404. Furthermore, on October 15, 2009, TD assistant branch manager Jennifer Kerstetter

drafted a letter to RRA enclosing a copy of RRAs trust account bank statement for the D3 settlement showing a balance in excess of $30,000,000.00 in account number 4246051629 as of October 14, 2009. This letter was personally delivered by Kerstetter to Rothstein and immediately 87

handed to the D3 representative in everyones presence while inside the TD Bank Fort Lauderdale branch. Later that day, Kerstetter met again with that same D3 representative in order to sign the paperwork to open a D3 account at TD Bank. 405. On October 16, 2009, and again on October 19, 2009, a D3 representative sent e-

mails to Spinosa and Kerstetter advising that D3 had opened its account for purposes of doing business with RRA and asked about the mechanics of the irrevocable lock letter that D3 had obtained regarding account number 4246051629. 406. Spinosa responded to the October 19, 2009 e-mail with a phone call to the D3

representative and while Spinosa acknowledged signing the lock letter he refused to provide any other details about the general procedures for how the irrevocable lock letter works. 407. On October 19, 2009, Szafranski, as the hired agent independent verifier for D3, met

with Rothstein and confirmed that the sum of $30,000,000.00 was wired from the putative defendant into the locked RRA escrow account ending 4246051629. 408. Additionally, in early October 2009, Morgan, Lewis & Bockius LLP a large national

law firm retained by Clockwork, met with Rothstein at RRA to perform due diligence on the D3 deal. During the course of the in-depth interview and discussion, Morgan, Lewis & Bockius LLP achieved a greater understanding of settlement deal flow and verification process which allowed them to approve investor funding for the D3 deal. 409. trust account. 410. As it turns out, RRAs escrow account number 4246051629 never contained the In reliance on the foregoing, D3 transferred the sum of $13,500,000.00 to RRAs

funds represented in the account statements provided by Spinosa and Kerstetter.

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E. 411. 412.

BFMC Investment, LLC BFMC was formed in November 1998 to fund investment opportunities. On September 28, 2009, BFMC principal, Barry Florescue (Florescue) met

socially with Andrew Barnett (Barnett), Director of Corporate Development for RRA. 413. During this meeting, Barnett described his role at RRA and invited Florescue to

meet Rothstein later that week to discuss a lucrative investment opportunity. Florescue, who was aware of Rothsteins prominence in the Fort Lauderdale business and social community, agreed to a meeting at RRA on September 30, 2009. 414. On September 30, 2009, Florescue and his employee, Mark Seigel (Seigel),

arrived in RRAs offices and were initially greeted by Barnett. Barnett then took Florescue and Seigel into Bodens office to meet David Boden. 415. Boden was introduced as RRAs business manager and general counsel.

Coincidentally, Boden had, many years earlier, worked as a junior staff member with Florescues corporate counsel and had actively worked on one of Florescues previous financing transactions. 416. After several minutes, Boden and Barnett led Florescue and Seigel into

Rothsteins private office where the five of them participated in the meeting. 417. After brief introductions, Rothstein, Boden, and Barnett described to Florescue

and Seigel an opportunity involving the lump-sum purchase of various pre-funded confidential settlements with structured payments explaining the investment as follows: a) RRA is a nationally recognized firm representing plaintiffs in

whistleblower lawsuits against employers. RRA also has expertise in qui tam litigation, whistleblower lawsuits brought by a private person against a company 89

or person who is believed to have violated the law in the performance of a contract with the government or is acting in violation of a government regulation.9 In a qui tam action the plaintiff (the person bringing the suit) will be entitled to a percentage of the recovery of the penalty (which may include large amounts for breach of contract) as a reward for exposing the wrong-doing and assisting recovering funds for the government. RRA purportedly became a magnet for qui tam actions following its success as co-counsel in a 2008 Eli Lilly Qui Tam case, which resulted in a $1 billion plus settlement. b) RRA was currently representing whistleblower plaintiffs employed by a

Fortune 500 company which allegedly defrauded the United States government. Citing confidentiality, Rothstein could not share the name of the company, but he described it as a large food conglomerate that had substituted cheaper ingredients into food supplies which were sold to the government under national contracts. Rothstein claimed to be rounding up dozens of whistleblowers inside the company who had been threatened by senior management to remain silent regarding the companys fraud. c) RRA had negotiated numerous settlement tranches for $1,400,000.00

for various whistleblower clients, but the defendant insisted on paying the settlements out over four months. Rothstein, Boden, and Barnett then stated that the putative plaintiffs wanted their cash up front. d) Rothstein explained that the putative plaintiffs were willing to take a large

discount up front because: (i) they had a high degree of concern over whether the
9

Qui tam suits are brought for the government as well as the plaintiff.

90

defendant would attempt to prevent them from receiving payments after settling and, (ii) plaintiff was in privity with the defendant, which subjected their settlement to reversal by the federal government. Rothstein represented that a third party buyer of the settlement rights would not be subject to such reversal as the third party was not in privity with the defendant. e) The settlement documents were drafted and ready to be settled but Rothstein

Rothstein needed to find an investor to fund these settlements.

explained that such a transaction was legal because the settlement agreement had no anti-assignment rights; however, any third party investor could not be given any details about the parties involved in the settlement because it was highly confidential and contained strict confidentiality provisions. f) Due to the fact that a funder could not be given any information about

the case, the defendant, or the plaintiff, and given the fact that Rothstein needed a high degree of confidentiality about even the existence of the funding arrangement (in order to prevent defendants from explicitly prohibiting this type of arrangement going forward), Rothstein could only engage in such transaction with local friends with whom he trusted. g) RRAs clients were willing to accept $800,000.00 up front in exchange for

their rights to the $1,400,000.00 settlement, payable over 4 months. h) Rothstein could not personally fund the structured settlements because it

was illegal for him or his firm to profit from a settlement in which he represented the plaintiff. However, it was in RRAs interest to find a funder so that the firm

91

could settle the case and get paid its contingency fee. Accordingly, to help facilitate the transaction, Rothstein agreed to stay on as the acting escrow agent. i) Rothstein remarked that the entire transaction would be independently

verified, that he would provide evidence of the settlement in his office, and that he would get on the phone with Spinosa of TD Bank to confirm that the putative defendants funds had been wired into a Florida Bar trust account with strict instructions to only release the funds in that account to the specified investment funder. 418. At some point during the meeting between Rothstein, Boden, Barnett, and

Florescue, Rothstein went online to show Florescue the balances in the TD Bank accounts. 419. Upon concluding the meeting, Barnett walked Florescue and Seigel out to the

elevator. During that time, Barnett revealed that the confidential defendant they had been discussing was Dole Foods, which had allegedly supplied the U.S. Government with impure orange juice in breach of their contract which required 100% pure orange juice. Barnett

informed Florescue and Seigel that Rothstein offered to sign a corporate and personal guaranty as a further inducement to make the investment. 420. Between October 1, 2009, and October 15, 2009, BFMC worked with Boden to

revise and finalize the transaction and security documents necessary to close the deal. 421. The first version of the settlement assignment documents was prepared by Boden.

Once BFMC made its redline changes, Boden remarked that he needed to sit down with the client to review the revisions. Boden explained to Florescue and Siegel that he was negotiating seventy (70) different settlements and meeting with each client was often difficult and time consuming. 92

422.

On or about the middle of October, 2009, Boden finalized the deal documents for

BFMCs investment in three identical RRA settlements each involving a $1,400,000.00 structured settlement, payable in four equal monthly installments, offered in exchange for a lump sum payment of $800,000.00. 423. BFMCs explicit understanding from Barnett, Boden and Rothstein was that the

putative defendants settlement proceeds were pre-funded and being held in RRAs escrow trust account and could only be released directly to BFMCs account pursuant to the terms of the irrevocable lock letter. 424. During the first week of October, 2009, Florescue telephoned Spinosa to discuss

the investment specifics and to inquire about Rothstein. Florescue had an existing professional relationship with Spinosa and had previously employed Spinosa and TD Bank for various banking activities. Notwithstanding, Spinosa stonewalled Florescue, declining to discuss

anything related to Rothstein without his consent, and flatly refusing to answer even the most basic questions. 425. The closing was scheduled for October 15, 2009. That same day, as part of its due

diligence, BFMC obtained a copy of a TD Bank lock letter signed by Spinosa stating that: Re: Account 4245220324 RRA-BFMC

. . . Pursuant to your written instructions to us of October 14, 2009, please be advised that all funds contained in the above referenced account shall only be distributed upon your or Stuart Rosenfeldts instruction and shall only be distributed to BB&T (FKA: Colonial Bank), Pompano Beach Branch # 32083, (954) 943-6550, ABA# 062001319, for further credit to: BFMC Investment, LLC Account # 8050674491.

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Your letter is understood not to convey ownership of the account or access to the account to any other party, but rather is meant to irrevocably restrict conveyances as follows: conveyances shall only be made from the account referenced above to the BB&T (FKA: Colonial Bank) account # 8050674491 belonging to BFMC Investment, LLC.

See October 15, 2009 lock letter attached hereto and incorporated herein as Exhibit I. 426. Additionally, on that same day and prior to closing, Boden provided Florescue

and Siegel with the TD Bank wire transfer verification confirming that the putative defendant funded $4,200,000.00 into RRA escrow/trust account number 4245220324 (irrevocably locked account). 427. Although the closing was supposed to take place in the late morning, Boden

informed Florescue and Siegel that the process was being held up as they were working with the putative plaintiffs to hammer out the deal. By mid-afternoon, Rothstein and Boden walked into the room where Florescue and Siegel were waiting with original signed documents. Rothstein and Boden allowed Florescue and Siegel see the original documents and then proceeded to execute their closing documents. 428. Later that day, and in reliance on the foregoing, BFMC wired $2,400,000.00 to

RRAs TD Bank trust account number 6860420923. F. 429. Cooper Management Cooper Management, by and through its owner and operator Hilary Musser

(hereinafter, Musser), was introduced to BIF by Mussers financial advisor, Bekkedam. 430. Bekkedam, in an effort to persuade Cooper Managements investment, repeatedly

assured Musser that the BIF opportunity represented the highest return with lowest possible risk 94

of any venture that he had ever handled. As Bekkedam explained, the money being purchased at a lump sum discount was already pre-funded by the putative defendant prior to investing and held in a protected escrow account by the putative plaintiffs attorney and, thus, was almost essentially free of risk. Further, Musser was told that the escrow account had a dual signature requirement for any withdrawals, one of which was always a Banyon representative. 431. Bekkedam further represented to Musser that all pre-funded monies were held in

trust/escrow accounts at TD Bank. Bekkedam assured Musser that he had access to these trust/escrow accounts allowing him to monitor transactions on a daily basis and verify that the the amounts claimed were actually held in trust in those accounts. In making such

representations, and to further induce Musser, Bekkedam promised that he would pay Musser back if the investment with Banyon failed. 432. On or about July 29, 2009, in an effort to bolster his oral representations,

Bekkedam provided Musser with BIFs Confidential Offering Memorandum and incorporated audited financials. 433. The representations in the Confidential Offering Memorandum, consistent with

the representations made to the other BIF investors referenced supra, offered her a limited partnership opportunity with a guaranteed rate of return of 15%. 434. As a final inducement into the Ponzi, Bekkedam promised Musser that her entire

investment would be personally guaranteed by George Levin whom Bekkedam represented as an extremely wealthy individual who had invested substantial amounts of his own money into the purchase of these confidential settlements. 435. Based on the representations of Bekkedam, Cooper Management wired

$900,000.00 into BIF on August 4, 2009. After Cooper Managements initial wire transfer, 95

Bekkedam attempted to convince Musser to invest additional funds into BIF and persuaded her to convince her wealthy friends to do the same. G. 436. Extra Inning Dynasty Trust Carmen Pavao is the current trustee of the Extra Inning Dynasty Trust. Joseph W.

Sparveri, Jr. (hereinafter, Sparveri), was a co-trustee of the predecessor in interest of the Extra Inning Trust and, at all material times relevant hereto, was acting as one of the trusts investment advisors. 437. Sparveri first heard about the Principal Conspirators settlement investment

opportunity through Banyon in mid-2008 from another client, Roland Labonte. Sparveri served as Mr. Labontes investment advisor and is a co-trustee on at least one of Mr. Labontes family of trusts. Labonte informed Sparveri that Joseph DiSilva, a commissioned Banyon agent,

explained the entire deal structure for the purchase and assignment of confidential settlements. After what appeared to be some initial success with Labontes investment, Sparveri began looking into the possibility of getting the Extra Inning Trust to invest as well. 438. On or about May 23, 2008, Sparveri received Levins initialed copy of Banyon

1030-32s balance sheet and profit and loss statement showing total assets in excess of $135,000,000.00. 439. On or about July 18, 2008, Sparveri received Banyon 1030-32s seventeen page

Confidential Settlement Funding power point presentation entitled A High Yield Low Risk Activist Investment Strategy. Within the presentation, Banyon 1030-32 made material

representations including: (1) all investments are guaranteed personally by Levin; (2) Banyon 1030-32 securitizes each investment with a Promissory Note valued at not less than 130% of the settlement face value; (3) that the putative defendant fully fund the settlement amount in advance 96

of investor funding which is then held in a special purpose escrow/trust account by the putative plaintiffs attorney as the trustee of funds; (4) the special purpose trust account has a dual signature requirement for any and all withdrawals, one of which is always a Banyon representative; and (5) as of June 1, 2008, Banyon has funded settlements with a face value in excess of $200,000,000.00. 440. following: a) Banyon 1030-32s private funding background summary asserting Additionally, Banyon, through Preve and DiSilva, provided Sparveri with the

significant representations regarding the settlement purchase structure and growth forecast; b) Banyon 1030-32s audited financial statement and opinion letter prepared

by Berenfeld as of June 30, 2008; c) d) e) Banyon 1030-32s preliminary financials as of December 31, 2008; Banyon 1030-32 incorporation documents and corporate resolutions; Authorization to contact Berenfelds Managing Partner, Tracy Weintraub

to discuss Banyon 1030-32s audited financials, tax returns, and other related financial transaction information; f) The promise that the Extra Inning Trust would receive a Promissory Note,

Security Agreement, and Levins personal guaranty as security/collateral for each investment made into Banyon 1030-32; and g) Information regarding the overall deal structure including specifics into

the mechanics of RRAs escrow account used to secure an investors Promissory Note. 97

441.

Based upon the foregoing, between August 18 and August 20, 2008, Extra Inning

Trust wired to Banyon 1030-32s Gibraltar Bank trust account ending x-6377, two investments of $1,000,000.00 each ($2,000,000.00 total). In exchange, the Extra Inning Trust received a Promissory Note, a Security Agreement, and a Levin personal guaranty for each of the respective investments into Banyon 1030-32. 442. Thereafter, in October, 2008, December, 2008, January, 2009, and April, 2009,

Extra Inning Trust made four additional investments through Banyon 1030-32 by wiring $1,000,000.00 (10/31/08), $1,000,000.00 (12/02/08), $1,000,000.00 (1/09/09), and

$2,000,000.00 (4/02/09), respectively, into Banyon 1030-32s Gibraltar Bank trust account ending x-6377. Each investment was accompanied by a Promissory Note, a Security Agreement, and a Levin personal guaranty. Because of the relatively consistent payments of the promised interest, the principal of all of the notes were either rolled over or re-invested. 443. In total, Extra Inning Trust invested $7,000,000.00 through Banyon 1030-32 into

the Ponzi scheme. H. 444. H&N Associates, Artez Associates, Park Capital, Park Mortgage (Induced by Szafranski) Harvey Wolinetz (hereinafter, Wolinetz), owner and officer of H&N

Associates, Aretz Associates, Park Capital, and Park Mortgage (collectively the Wolintez entities) first learned of the opportunity to purchase confidential settlements through Szafranski and ABS. Wolinetz was acquainted with Szafranski by virtue of being neighbors as well as members of the same religious congregation and, on or about early 2009 informally discussed what Szafranski was doing with Rothstein at RRA.

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445.

On or about April or May 2009, Wolinetz was contacted by Natalie Turetsky, an

agent of ABS, who informed Wolinetz about the specific investment opportunity regarding the purchase and assignment of confidential settlement proceeds. Turetsky explained in great detail how Szafranski was working closely with Rothstein and, as the verifier, was the only other person with direct access to look behind the confidentiality veil to verify that: (1) each of the putative plaintiffs and defendants were real; (2) TD Bank held the putative defendants prefunded settlement money in an RRA escrow account; and (3) to confirm the veracity of all settlement and assignment documentation. 446. On or about May of 2009, Wolinetz spoke with Szafranski who described the Ultimately, Szafranski gave Wolinetz multiple

investment opportunity in similar detail.

assurances that the confidential settlements being purchased were all real, that the investments had negligible risk, and that the opportunity was just too good to pass up. 447. Both Szafranski and Turetsky provided the Wolinetz entities with various

documents and spreadsheets to entice Wolinetzs investment into the Ponzi scheme. Szafranski agreed to prepare a Preferred Equity Agreement for each deal Wolinetz decided to invest in, spelling out the specific terms and providing explicit assurances that Szafranski would act as the verifier for each of the confidential settlements being purchased, as had been represented. 448. Based upon Szafranski, Turetsky, and ABSs representations, Wolinetz made the

following wire transfers to ABS through the Wolinetz entities: a) b) c) d) June 30, 2009 July 30, 2009 September 4, 2009 October 1, 2009 $50,000.00 through Park Capital $150,000.00 through Park Capital $100,000.00 through H&N $250,000.00 through Park Mortgage 99

e) 449.

October 20, 2009

$200,000.00 through Aretz

Wolinetz invested, through the various Wolinetz entities, a total of $750,000.00

into Rothsteins Ponzi scheme based upon the misrepresentations of Szafranski, Turetsky, and ABS. I. 450. Scott Morgan (Induced by Szafranski) On or about June 2009, Morgan first learned of the RRA settlements from an

investor and mutual acquaintance of Szafranski. 451. Shortly thereafter, Szafranskis business partner and ABS agent, Matthew

Turetsky, contacted Morgan. Matthew Turetsky informed Morgan that Szafranski was involved with the purchase and assignment of settlement proceeds acting as an independent verifier. In that role, Morgan was told that Szafranski went to the RRA offices to ensure that the putative plaintiff and putative defendant signed the settlement agreement, that the putative defendants money was transferred to a trust/escrow account at TD Bank, and that once an assignment of settlement proceeds was executed, the money in RRAs trust/escrow account representing the full settlement proceed could only be distributed to the purchaser pursuant to the terms of the confidential settlement agreement schedule. Finally, over the course of a few discussions, Matthew Turetsky gave Morgan multiple assurances that the investment was extremely safe, had low risk and high reward, and that Szafranski verified that the parties, the settlements, and the pre-funded monies were all real. 452. Based upon these ABS representations, in June 2009, Morgan invested

$100,000.00 in to the Ponzi scheme. 453. On or about August 2009, Morgan began speaking directly with Szafranski by

telephone. Morgan requested that Szafranski show him prior deals that Szafranski had done. 100

Citing confidentiality, Szafranski told Morgan that he could only show him the documents if Morgan came to see them in Florida. Szafranski did, however, tell Morgan that the settlements were related to government whistleblower cases, and that the returns were only so good because of the strict confidentiality requirement. 454. In these telephone conversations, Szafranski continuously repeated that he was an

independent verifier of these deals, which involved going to the law offices of RRA to make certain that the appropriate documents were properly signed, and confirming that the funds were transferred to RRAs TD Bank escrow account which could only be distributed to the purchasing investor(s). 455. Based upon Szafranskis representations, Morgan invested, through ABS, in

several settlements: a) b) c) 456. July 24, 2009 August 21, 2009 $100,000.00 $250,000.00

September 21, 2009 $8,791.67

Morgan invested a total of $358,791.67 into Rothsteins Ponzi scheme based

upon the misrepresentations of Szafranski, Turetsky, and ABS. J. 457. Viceroy Global Investments, Inc. (Induced by Pearson) Viceroy, by and through its principal Howard Solomon (hereinafter, Solomon),

was introduced to the concept of purchasing confidential settlements via a conference call during the first week of August 2009. Solomon participated in the teleconference along with Rothstein, Boden, Pearson, Ali Raza, Nabil Rhazi (an employee of Pearsons), and others to preview the deal structure and discuss investment opportunities in purchasing these settlements.

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458.

At some point during the conference call, Ali Raza confirmed to Solomon that she

had worked with some of the purported defendants and plaintiffs. Based on certain affirmations and material representations made by Rothstein, Boden, and Pearson, Solomon decided to fly to Ft. Lauderdale to personally meet with Rothstein at the end of August 2009. 459. However, prior to that meeting, Solomon first got together with Pearson who

carefully went over the entire deal flow and document exchange. Pearson repeatedly mentioned that he had invested approximately $11,000,000.00 of his own money with Rothstein and that he had the right of first refusal to purchase any of the cases within the RRA settlement pipeline. Pearson provided specific assurances about the veracity of prior investment returns and legitimacy of the opportunity, even claiming that Big Four accounting firm

PricewaterhouseCoopers spent up to three months auditing the entire settlement structure. 460. As the discussion was concluding and prior to meeting with Rothstein, Pearson

informed Solomon that because previous potential investors turned out to be just window shopping and wasted valuable resources, the Principal Conspirators now required any potential investor to wire earnest money into escrow before Rothstein would agree to meet in person. Solomon questioned this unusual requirement and asked for a written guaranty stating that he could get all of his money back if he decided against investing. Pearson responded that he would check with someone at RRA to address those concerns. A short time later, Pearson returned with Boden who handed Solomon a letter from RRA spelling out the relevant terms of the guaranty. Boden reiterated that if Solomon chose not to proceed with the transaction he would get 100% of his money back. Furthermore, Boden told Solomon that his money would be held in an RRA escrow account which, even if he decided to invest, could not be disturbed unless and until the full settlement proceeds were first received from the putative defendant. Solomon requested a 102

few changes which Boden immediately incorporated and, based upon same Viceroy wired a total of $1,980,000.00 to Pearson. 461. Solomon, accompanied by Ali Raza, Pearson, Boden, and others, then proceeded

to Rothsteins office. Rothstein, Boden, and Pearson discussed deal specifics and outlined the settlement purchase and assignment process, tracking almost verbatim the representations made in the Confidential Offering Memorandum previously provided to Solomon by Pearson and Boden. 462. On September 2, 2009, Boden sent an e-mail to Pearson, which was subsequently

passed on to Solomon by either Pearson or one of his employees. Attached to the e-mail were multiple documents related to a purported settlement to which RRA assigned the internal confidential case number RRA-P20. The attachments included: a) A letter dated September 2, 2009, from Rothstein certifying that RRA was

in receipt of, and was holding in trust, $900,000.00, representing the full liquidated settlement proceeds in case number P20; b) A letter dated September 2, 2009, from Rothstein guaranteeing to Viceroy

three monthly payments of $300,000.00 in connection with Viceroys purchase of rights under the P20 Settlement Agreement; c) A redacted document that was purportedly a contract of employment

between RRA and the plaintiff in the P20 case; d) A redacted document that was purportedly the Confidential Settlement

Agreement between the plaintiff and defendant in the P20 case; e) An Acknowledgement of Assignment/Purchase of Settlement Proceeds in

case number RRA-P20 naming Viceroy as the exclusive Transferee of the 103

proceeds of the purported settlement and directing TD Bank that said proceeds are only to be released to Viceroy; and f) A Sale and Transfer Agreement for case number RRA-P20 dated

September 2, 2009. 463. On September 2, 2009, Boden sent another e-mail to Pearson, which was

subsequently passed on to Solomon by either Pearson or one of his employees. Attached to the e-mail were multiple documents related to a purported settlement to which RRA assigned the internal confidential case number RRA-P21. The attachments included: a) A letter dated September 2, 2009, from Rothstein certifying that RRA was

in receipt of, and was holding in trust, $900,000.00, representing the full liquidated settlement proceeds in case number P21; b) A letter dated September 2, 2009, from Rothstein guaranteeing to Viceroy

three monthly payments of $300,000.00 in connection with Viceroys purchase of rights under the P21 Settlement Agreement; c) A redacted document that was purportedly a contract of employment

between RRA and the plaintiff in the P21 case; d) A redacted document that was purportedly the Confidential Settlement

Agreement between the plaintiff and defendant in the P21 case; e) An Acknowledgement of Assignment/Purchase of Settlement Proceeds in

case number RRA-P21 naming Viceroy as the exclusive Transferee of the proceeds of the purported settlement and directing TD Bank that said proceeds are only to be released to Viceroy; and

104

f)

A Sale and Transfer Agreement for case number RRA-P21 dated

September 2, 2009. 464. On September 2, 2009, Boden sent yet another e-mail to Pearson, which was

subsequently passed on to Solomon by either Pearson or one of his employees. Attached to the e-mail were multiple documents related to a purported settlement to which RRA assigned the internal confidential case number RRA-P22. The attachments included: a) A letter dated September 2, 2009, from Rothstein certifying that RRA was

in receipt of, and was holding in trust, $900,000.00, representing the full liquidated settlement proceeds in case number P22; b) A letter dated September 2, 2009, from Rothstein guaranteeing to Viceroy

three monthly payments of $300,000.00 in connection with Viceroys purchase of rights under the P22 Settlement Agreement; c) A redacted document that was purportedly the Confidential Settlement

Agreement between the plaintiff and defendant in the P22 case; d) An Acknowledgement of Assignment/Purchase of Settlement Proceeds in

case number RRA-P22 naming Viceroy as the exclusive Transferee of the proceeds of the purported settlement and directing TD Bank that said proceeds are only to be released to Viceroy; and e) A Sale and Transfer Agreement for case number RRA-P22 dated

September 2, 2009. 465. Based upon the foregoing, Viceroy decided to invest in the investments identified

as P20, P21, and P22, rather than seeking the return of the $1,980,000.00 previously wired.

105

466.

On October 6 and 7, 2009, Viceroy wired an additional $1,320,000.00 into RRA

trust accounts in order to invest in deals P30 and P31. 467. On October 14, 2009, Boden sent an e-mail to Solomon attaching multiple

documents related to a purported settlement to which RRA assigned the internal confidential case number RRA-P30. The attachments included: a) A letter dated October 6, 2009, from Rothstein certifying that RRA was in

receipt of, and was holding in trust, $900,000.00, representing the full liquidated settlement proceeds in case number P30; b) A letter dated October 6, 2009, from Rothstein guaranteeing to Viceroy

three monthly payments of $300,000.00 in connection with Viceroys purchase of rights under the P30 Settlement Agreement; c) A redacted document that was purportedly a contract of employment

between RRA and the plaintiff in the P30 case; d) A redacted document that was purportedly the Confidential Settlement

Agreement between the plaintiff and defendant in the P30 case; e) An Acknowledgement of Assignment/Purchase of Settlement Proceeds in

case number RRA-P30 naming Viceroy as the exclusive Transferee of the proceeds of the purported settlement and directing TD Bank that said proceeds are only to be released to Viceroy; and f) A Sale and Transfer Agreement for case number RRA-P30 dated October

6, 2009. 468. deal P31. 106 The Ponzi scheme cratered before Viceroy received any documents relating to

469.

Viceroy invested a total of $3,300,000 into the Ponzi scheme based upon the

misrepresentations stated above. K. 470. Sussco, Inc. (Induced by Szafranski) Sussco first learned of the opportunity to purchase confidential settlements

through Szafranski and ABS in early 2009. The principals of Sussco were acquainted with Szafranski by virtue of being neighbors and through their membership in the same religious congregation. Additionally, the Sussco principals were aware of Szafranskis reputation in the community, as well as the successes of others who had done business with him. 471. On or about February of 2009, Szafranski first approached Sussco with an

opportunity to invest in the purchase and assignment of the proceeds from confidential settlement agreements, providing multiple assurances that the confidential settlements being purchased were all real. Szafranski told Sussco that he first became aware of and involved in this opportunity when he served as the verifier for a hedge fund that was investing in such settlements. He further informed Susco that the settlements he previously verified had proven successful and were continuing to perform. 472. More specifically, Szafranski assured Sussco that the settlements were legitimate

by telling them that he personally met with Rothstein and had verified and confirmed that the funds from the purported defendants had already been wired into Rothsteins escrow account at TD Bank. Szafranski further assured Sussco that he had and would continue to personally verify that the plaintiff and defendant both signed the purchase and sales agreement and that the plaintiff had received the money that was funded by the investor.

107

473. ABS:10

Based upon Szafranski,s representations, Sussco made the following payments to

a) b) c) d) e) f) g) h) 474.

March 30, 2009 May 11, 2009 June 29, 2009 July 29, 2009 July 30, 2009 September 8, 2009

$300,000.00 (wire transfer) $150,000.00 (wire transfer) $223,333.33 (wire transfer) $328,125.00 (wire transfer) $122,708.33 (wire transfer) $100,000.00 (payment by check)

September 21, 2009 $300,000.00 (payment by check) October 20, 2009 $1,275,000.00 (payment by check)

As a result of Szafranskis representations, Sussco invested a total of

$2,799,166.66 into Rothsteins Ponzi scheme. L. 475. Paley Family Investors Florence Paley, as Personal Representative of the Edward Paley Estate, Florence

Paley, the Edward and Florence Paley Foundation, Steven Paley, Laura Paley, Jane Zaretsky, and the Jane Zaretsky Dynasty Trust (collectively referred to herein as the Paley Family Investors), first learned of BIF by and through their financial advisor Bekkedam. 476. For more then eight years, Bekkedam served as the Paley Family Investors

financial advisor. Over the course of that representation, the family routinely emphasized their investment goals of capital preservation and modest growth. The Paley Family Investors

10

The payments made on March 27, 2009 ($300,000.00), and on July 31, 2009 ($122,708.33), were funded directly by the Sussco principals, who were reimbursed shortly thereafter by Sussco.

108

approach to investing never waivered over that period as the family implicitly trusted Bekkedam to only recommend opportunities consistent with this strategy. Bekkedam reiterated that he understood the Paley Family Investors needs and that they should be flying at 35,000 feet as he was the guy that should be worrying in the trenches. 477. On or about May of 2009, Bekkedam approached the Paley Family to discuss

investment into BIF. Bekkedam began by telling the story of how this rich investor (Levin) founded BIF after securing the exclusive opportunity with a law firm (RRA) to purchase the rights to structured settlement proceeds at lump sum discounted rates. 478. Bekkedam continued by emphasizing the safety of the BIF investment explaining

that all settlements were pre-funded prior to investment and held in the law firms trust/escrow account. With these protections in place, Bekkedam proclaimed that almost all risk of

investment loss was eliminated. Bekkedam went as far as to tout BIF as absolutely safe and a no-brainer assuring the family that this once-in-a-lifetime opportunity represents the highest return with lowest risk of any investment he had ever seen. 479. Furthermore, Bekkedam represented to the Paley Family Investors: (1) that BIF

was paying 15% interest though 2010 and 12% interest thereafter; (2) that the trust/escrow account holding the pre-funded settlement proceeds had a dual signature requirement for any withdrawals, one of which was always a BIF representative; (3) that Bekkedam and Ballamor thoroughly vetted the entire investment process; (4) that BIFs profitable financial track record was supported by audited financials and that a Big Four auditing firm would verify financials quarterly; (5) that Ballamor had continuous access to the trust account balances, and would oversee the third-party verifier to authenticate that the settlement proceeds were completely

109

funded and locked in a designated trust/escrow account; and (6) that Levin would personal guaranty each limited partners entire investment.11 480. Bekkedam repeatedly assured the Paley Family Investors that he always had their

best interest at heart and guaranteed that he would never put them in jeopardy because he considered them family. Moreover, Bekkedam in a final effort to induce the Paley Family Investors investment proclaimed that all Banyon investor were insured by a crime-fraud policy for which he unequivocally stated that the family would be crazy not to invest because their money would be one-hundred percent secure. 481. Shortly thereafter, to corroborate Bekkedams oral representations about the

veracity and low risk nature of the investment, Bekkedam provided the Paley Family Investors with BIFs Confidential Offering Memorandum and incorporated Banyon financials audited by Berenfeld discussed infra. Each Paley Family Investor received the aforementioned Confidential Offering Memorandum and related subscription documentation prior to funding. 482. The next time Bekkedam met with the Paley Family Investors in July of 2009, he Bekkedam advised that he had personally completed the

again focused his pitch on BIF.

substantial due diligence highlighted in the Confidential Offering Memorandum and unequivocally stressed that the BIF opportunity perfectly matched the Paley Family Investors investment strategy. During the ensuing discussion, Bekkedam pointed out that all settlement funds were held in a TD Bank trust/escrow account and that he had seen first-hand the firms large trust fund balances. Bekkedam stated that, theres a TD Bank on every corner, if its not safe at TD Bank where would it be safe, they have billions of dollars in assets. Finally,
11

Bekkedam represented that Levin was an extremely wealthy individual and had invested one hundred and twenty five million dollars ($125,000,000.00) of his own money into the purchase of these settlements. 110

Bekkedam closed with an emphatic plea that this was a cant miss investment and that the Paley Family Investors simply could not afford to sit on the sidelines and pass up the opportunity to significantly enhance their investment portfolio. 483. In reliance in part on Bekkedams representations, the Confidential Offering

Memorandum, and the purported due diligence and verification procedures in place, the Paley Family Investors invested the following funds into BIF: a) b) June 8, 2009 - $100,000.00 from The Jane Zaretsky Dynasty Trust; August 26, 2009 - $100,000.00 from The Edward & Florence Paley

Foundation; c) d) e) f) g) 484. scheme. M. 485. Dekelbaum and Shalom Kosher (Induced by Szafranski) Dekelbaum and his familys corporation, Shalom Kosher, first learned of the August 27, 2009 - $1,500,000.00 from Steven & Laura Paley; September 1, 2009 - $500,000.00 from Edward Paley; September 1, 2009 - $500,000.00 from Florence Paley; September 10, 2009 - $50,000.00 from Jane Zaretsky; and October 29, 2009 - $500,000.00 from Steven & Laura Paley

All told, the Paley Family Investor invested $3,250,000.00 into Rothsteins Ponzi

opportunity to purchase confidential settlements through Szafranski and ABS in the Spring of 2009. Dekelbaum and the principals of Shalom Kosher were acquainted with Szafranski through their affiliation in the same religious congregation. Dekelbaum had known of Szafranski for six years and knew that Szafranski presented himself as a successful investment broker. More significantly, Dekelbaum knew of other individuals whose investments in the settlements with 111

Szafranski and ABS had yielded the promised returns. After learning of Szafranskis apparent success, Dekelbaum followed up with him and inquired about the investments. 486. Szafranski had seen Dekelbaum in synogague a number of times when

Dekelbaum was visiting family in Florida who were also members of the congregation. As with his other victims, Szafranski relied on his usual pitch, explaining that the investments were based on funding pre-suit settlement agreements. More specifically, Szafranski explained that

investors would front the money and, in return, would receive their principal and interest in regular monthly installments. Szafranski assured Dekelbaum that he verified the settlements first hand. Szafranski also told Dekelbaum that all the cases were legitimate and that he had been involved with Rothstein for a long time. He represented that he personally accompanied

Rothstein to TD Bank to verify that the putative defendants money was in RRAs escr ow account and that he was able to confirm same. Szafranski explained that Dekelbaum would only be required to make his investment after the putative defendants money from the settlements was wired into the RRA escrow account. 487. Dekelbaum trusted Szafranaski based upon Szafranskis reputation in the

community as well as his own dealings. Dekelbaum thought that Szafranski was simply a nice young man who was trying to support his young family by working hard and providing other members of the community with this opportunity. 488. Based upon Szafranskis representations, Dekelbaum made the following

payments to ABS: a) b) c) June 30, 2009 July 31, 2009 September 4, 2009 $50,000.00 (wire transfer) $88,333.34 (wire transfer) $109,353.34 (wire transfer) 112

d) e) f) g) h) 489.

September 4, 2009 September 4, 2009 September 4, 2009 October 8, 2009 October 8, 2009

$105,000.00 (wire transfer) $20,000.00 (wire transfer) $8,980.00.00 (wire transfer) $7,400.00 (wire transfer) $1,433.33 (payment by check)

Based upon Szafranski,s representations, Dekelbaum, through Shalom Kosher,

made the following payments to ABS: a) b) 490. October 8, 2009 October 8, 2009 $120,000.00 (wire transfer) 12 $22,000.00 (payment by check)

All told, as a result of Szafranskis representations, Dekelbaum and Shalom

Kosher invested $532,500.01 into Rothsteins Ponzi scheme. N. 491. The Marmarser Investors As stated, Plaintiffs Marmarser Investment LLC; Caro Group LLC; Pirulin Group

LLC; Exito Investment Group LLC; FDS Investments USA, L.L.C.; New Miami Group LLC; BWS Investments USA, L.L.C.; Network Resources Group, LLC; GGTW Investments USA, LLC; BBMSW Investments USA, L.L.C; GOW, L.L.C; and Interamerica Holding LLC (collectively, the Marmarser Investors) are Florida limited liability companies. From May 2009 through October 2009, the Marmarser Investors invested over $20,000,000 into the Ponzi Scheme. 492. In April 2009, Richard Pearson approached Martin Arreseigor about an

investment opportunity yielding high returns that was being offered through RRA.
12

The October 8, 2009, investment by Shalom Kosher was actually a policy loan which was borrowed against a Mass Mutual Policy. Mass Mutual wired the funds to ABS on behalf of Shalom Kosher.

113

493.

In late April 2009, Arreseigor, Marcelo Goncalves, and Sergio Waissmann

received an email from Nabil Rhazi, Pearsons associate, containing a document dated April 21, 2009, entitled Confidential Settlement Funding. The document presented potential investors the opportunity to invest in confidential settlements through RRA, and offered a return rate of at least 20 percent. 494. In mid-May 2009, Arreseigor and Goncalves met with Pearson, Rothstein, and

RRA general counsel David Boden at RRAs offices. At the meeting Rothstein explained how the cases purportedly were acquired by RRA, and presented samples of the underlying agreements. 495. Rothstein further explained that funds were placed in TD Bank trust accounts and

verified by an independent verification source. 496. Rothstein showed Arreseigor and Goncalves a supposed balance in a TD Bank

trust account on his computer screen. The screen displayed the TD Bank logo and showed over $1 billion on deposit. Rothstein informed Arreseigor and Goncalves that if they would like to invest, Rothstein should be contacted through Pearson, and that Boden would be the RRA attorney in charge of their investments. 497. In May 2009, in reliance on the assurances given to Arreseigor, Goncalves, and

Waissmann by Rothstein, Pearson, and Boden -- including the assurance that all funds would be held in a trust account at TD Bank -- they invested through Plaintiff Marmarser Investment, LLC in a confidential settlement offered by RRA. 498. Subsequent investments were made by Marmarser and by the other Plaintiff

limited liability companies (LLCs) as described below. One or more of the above -referenced persons were principals in each of these Plaintiff LLCs, except BWS Investments USA, LLC 114

(BWS) and Network Resources Group, LLC (Network Resources). BWS and Network Resources also acted in reliance on the representations made by Rothstein, Pearson, and Boden to the above-referenced persons. 499. In July 2009, Goncalves again met with Rothstein, Boden, and Pearson. During

the meeting, Rothstein logged into TD Bank account number 6860420923. The computer screen displayed the TD Bank logo and showed approximately $6 million on deposit in an RRA TD Bank trust account. Goncalves verified that the displayed balance in the account matched the numbers in the investment documentation originally supplied by RRA. 500. In reliance on the representations and assurances made by Rothstein, Pearson, and

Boden to Marmarser (through owner-principals Arreseigor, Goncalves, and Waissmann), Marmarser made another investment in the confidential settlements offered by RRA. 501. Date May 29, 2009 October 8, 2009 Marmarsers two investments were as follows: Amount of Investment $550,000 $660,000

502.

In reliance on the representations and assurances made by Rothstein, Pearson, and

Boden to CARO GROUP LLC (Caro) (through its principals and as described above), Caro made the following investments in the confidential settlements offered by RRA: Date June 9, 2009 July 10, 2009 August 7, 2009 Amount of Investment $1,450,000 $900,000 $660,000 115

September 9, 2009 September 10, 2009 October 9, 2009

$660,000 $660,000 $1,000,000

503.

In reliance on the representations and assurances made by Rothstein, Pearson, and

Boden to PIRULIN GROUP LLC (Pirulin) (through its principals and as described above), and because of the confidence established through the previous receipt of scheduled investment payments to Marmarser, Pirulin made the following investments in the confidential settlements offered by RRA: Date July 13, 2009 August 26, 2009 September 30, 2009 October 21, 2009 Amount of Investment $550,000 $660,000 $660,000 $780,000

504.

In reliance on the representations and assurances made by Rothstein, Pearson, and

Boden to EXITO INVESTMENT GROUP LLC (Exito) (through its principal and as described above), and because of the confidence established through the previous receipt of scheduled investment payments to Marmarser and Caro, Exito made the following investments in the confidential settlements offered by RRA: Date July 24, 2009 August 27, 2009 Amount of Investment $990,000 $660,000

116

September 16, 2009

$660,000

505.

In reliance on the representations and assurances made by Rothstein, Pearson, and

Boden to FDS INVESTMENTS USA, L.L.C. (FDS) (through its principal and as described above), and because of the confidence established through the previous receipt of scheduled investment payments to Marmarser, FDS made the following investments in the confidential settlements offered by RRA: Date August 5, 2009 September 30, 2009 October 2, 2009 Amount of Investment $1,320,000 $660,000 $660,000

506.

In reliance on the representations and assurances made by Rothstein, Pearson, and

Boden to NEW MIAMI GROUP LLC (New Miami) (through its principals and as described above), and because of the confidence established through the previous receipt of scheduled investment payments to Marmarser and Caro, New Miami made the following investments in the confidential settlements offered by RRA: Date August 10, 2009 September 30, 2009 Amount of Investment $660,000 $660,000

507.

In reliance on the representations and assurances made by Rothstein, Pearson, and

Boden to BWS INVESTMENTS USA, L.L.C. (BWS) (through its principal, Daniel Serber, 117

and as described above), and because of the confidence established through the previous receipt of scheduled investment payments to FDS, BWS made the following investments in the confidential settlements offered by RRA: Date August 28, 2009 September 26, 2009 Amount of Investment $660,000 $660,000

508.

In reliance on the representations and assurances made by Rothstein, Pearson, and

Boden to NETWORK RESOURCES GROUP, LLC (Network Resources) (through its principal, Goncalves, and as described above), and because of the confidence established through the previous receipt of scheduled investment payments to Exito, Network Resources made the following investments in the confidential settlements offered by RRA: Date August 28, 2009 September 30, 2009 Amount of Investment $660,000 $660,000

509.

In reliance on the representations and assurances made by Rothstein, Pearson, and

Boden to GGTW INVESTMENTS USA, LLC (GGTW) (through its principal and as described above), and because of the confidence established through the previous receipt of scheduled investment payments to Marmarser, Pirulin, FDS, and New Miami, GGTW made the following investments in the confidential settlements offered by RRA: Date September 29, 2009 Amount of Investment $660,000 118

510.

In reliance on the representations and assurances made by Rothstein, Pearson, and

Boden to BBMSW INVESTMENTS USA, L.L.C., (BBMSW) (through its principal and as described above), and because of the confidence established through the previous receipt of scheduled investment payments to Marmarser, Pirulin, FDS, and New Miami, BBMSW made the following investment in the confidential settlements offered by RRA: Date October 2, 2009 Amount of Investment $660,000

511.

In reliance on the representations and assurances made by Rothstein, Pearson, and

Boden to GOW, L.L.C. (GOW) (through its principal and as described above), and because of the confidence established through the previous receipt of scheduled investment payments to Marmarser, Pirulin, FDS, and New Miami, confidential settlements offered by RRA: Date October 2, 2009 Amount of Investment $660,000 GOW made the following investment in the

512.

In reliance on the representations and assurances made by Rothstein, Pearson, and

Boden to INTERAMERICA HOLDINGS LLC (Interamerica) (through its principals and as described above), and because of the confidence established through the previous receipt of scheduled investment payments to Marmarser, Caro, Pirulin, Exito, FDS, and New Miami, Interamerica made the following investment in the confidential settlements offered by RRA: Date Amount of Investment 119

October 9, 2009

$660,000

513.

The purported RRA confidential settlement investments purchased by the

Marmarser Investors never existed. 514. RRAs trust accounts at TD Bank never contained the money that the Marmarser

Investors were told the accounts would contain. 515. On October 28, 2009, two days before the Ponzi Scheme imploded, RRA stopped

paying the scheduled interest payments to the Marmarser Investors, and the principal invested was not returned. O. 516. MTG Holdings LLC MTG Holdings LLC (MTG) was introduced to the RRA/Rothstein settlements

through Pearson and R.L. Pearson and Associates, Inc. (R.L. Pearson). 517. In September 2009 telephone conferences with MTGs owner and managing

member, R.L. Pearson agents Messrs. Garbareno and Lynch related that the investment in RRA/Rothstein settlements was a no-brainer; that TD Bank was involved; that the funds would be kept in an irrevocable trust account; that the investments involved sexual harassment settlements in which the plaintiff wanted a lump sum payment rather than future payments; that each individual settlement would become available periodically; and that a major law firm was involved. 518. MTG also was provided with, among other documents, a confidential settlement

funding memorandum; a set of deal documents for RRA-P25; a memorandum, non-disclosure agreement, and settlement funding agreement.

120

519.

An Acknowledgment of Assignment/Purchase of Settlement Proceeds executed

by Rothstein in connection with MTGs investment and provided to MTG stated that the money invested would be deposited into attorney Florida bar trust (or similar) account number 6860420923 at Commerce Bank [now TD Bank, N.A.] , and that, As the attorney of record and trustee of the account No. 6860420923 at Commerce Bank [now TD Bank, N.A.], Fort Lauderdale, Florida, in which account the proceeds of the settlement . . . are held, we hereby acknowledge that those proceeds will be held exclusively for the beneficiary of the Transferee. 520. On September 23, 2009, in reliance on the above-referenced oral and written

representations and statements, MTG invested $1,000,000 into the Ponzi Scheme. MTG wired the money directly to one of RRAs accounts at TD Bank. 521. MTG received a personal guaranty from Rothstein and RRA, a Certification from

RRA that the settlement proceeds were in a TD Bank trust account, and an RRA Defense Agreement. 522. The purported RRA confidential settlement investment purchased by MTG never

existed, and RRAs trust accounts at TD Bank never contained the money that MTG was told the accounts would contain. 523. In November 2009, payments due MTG stopped being made and the principal

was never returned. P. 524. The Levy Family Investors Plaintiffs Shimon Levy, Rachel Levy, Daniel Minkowitz, Mordechai Bar Adon,

and Ben Zion Varon (collectively the Levy Family Investors), invested approximately thirty seven million dollars ($37,000,000) into the Ponzi Scheme without knowledge that it was such a scheme. 121

525.

In 2007 and 2008, the Levy family had various business dealings with Rothstein,

and Rothstein joined the Levys for family events, Jewish holidays, and synagogue-related events. 526. In Late December 2008, Shimon Levy (Levy) met with Rothstein at RRAs

offices. At the meeting, Rothstein presented Levy with an opportunity to invest in confidential settlements for race and sexual discrimination cases. 527. While describing the investment opportunity, Rothstein presented to Levy

samples of redacted settlement agreements that others had invested in. 528. As part of his presentation to Levy, Rothstein explained that funds were placed in

trust accounts and verified by an independent verification source. Rothstein showed Levy on his computer screen the supposed balance in the trust accounts relating to the investments. The computer screen displayed a TD Bank logo and showed over seven hundred million dollars ($700,000,000) on deposit in TD Bank trust accounts. 529. Rothstein further explained that immediately upon investing in a confidential

settlement, he would issue to Levy each payment that Levy was to receive in the form of postdated checks. 530. Based upon the representations and assurances made by Rothstein, including the

assurance that all funds were held in trust accounts at TD Bank, Levy suggested to his family and close friends that they invest in the confidential settlements. 531. On or about December 30, 2008, Levy and Daniel Minkowitz (Levys son-in-law)

(Minkowitz) invested $2,500,000 in a confidential settlement offered by Rothstein. In addition to the December 2008 investment, Levy and Minkowitz made two additional investments in January 2009.

122

532.

After his initial investments, Levy met Regional Vice President of TD Bank

Frank Spinosa while dining with Rothstein at Bova Prime restaurant in Fort Lauderdale. Introducing Spinosa to Levi, Rothstein called Spinosa The Man at TD Bank. 533. Later in 2009, Levy again met Spinosa, when Levy went to meet Rothstein for a

meeting at RRAs office. After Levy met Spinosa again, and during his meeting with Rothstein, Rothstein again noted that Spinosa was a TD Bank officer. Rothstein then said, See how much I have at his bank, and showed Levy the supposed balance of a trust account at TD Bank on his computer screen. The computer screen displayed a TD Bank logo and showed over one billion dollars ($1,000,000,000) on deposit in the TD Bank trust account. 534. Based on the assurances made by Rothstein, including the assurance that all funds

were held in a trust account at TD Bank, and based on the confidence established through the previous receipt of scheduled investment payments, the Levy Family Investors made further investments in the confidential settlements beginning in April 2009. 535. The purported RRA confidential settlement investments offered by Rothstein and

purchased by the Levy Family Investors never existed. 536. RRAs trust accounts at TD Bank never contained the money that the Levy

Family Investors were told the accounts would contain. 537. In November 2009, TD Bank no longer honored payments of checks issued to the

Levy Family Investors. Promissory notes that were issued when they invested became due and were not paid. Q. 538. Steven Schraga In March 2009, Steven Schraga was introduced to the RRA/Rothstein settlements

through Michael Szafranski. 123

539.

Szafranski explained that the settlements being purchased were pre-suit

settlements, and that the plaintiffs in the disputes could not or did not want to wait for months of scheduled payments. This was where investors came in, Szafranski said. Investors would front the money for the settlements and, in return, receive their principal and interest in monthly installments. 540. Szafranski told Schraga that he had been involved with Rothstein for a while, and

that he personally verified that funds were deposited into RRAs trust accounts. He explained that Schraga would not be asked to wire any money unless and until the putative defendants money from the settlements was wired into the RRA trust account. 541. In April 2009, based on the assurances and representations made by Szafranski,

which originated with RRA, Schraga invested one hundred and fifty thousand dollars ($150,000) in Szafranski-affiliated ABS and into the Ponzi Scheme without knowledge it was such a scheme. Schragas investment was deposited into a TD Bank RRA trust account. 542. Between June 2009 and the crash of the Ponzi Scheme at the end of October

2009, based on the assurances made by Szafranski, and the confidence established through the previous receipt of scheduled investment payments, Schraga made an additional investment of approximately $800,000 in ABS and into the Ponzi Scheme without knowledge that it was such a scheme. This investment also was deposited into a TD Bank RRA trust account. 543. The purported RRA confidential settlement investments offered through ABS and

purchased by Schraga never existed. RRAs trust accounts at TD Bank never contained the money that Schraga was told the trust accounts would contain. 544. In November 2009, interest payments due Schraga stopped being made, and the

principal has not been returned. 124

R. 545.

Todd Snyder Todd Snyder transferred two million one hundred sixty dollars ($2,160,000) into

an RRA IOTA trust account and into the Ponzi Scheme without knowledge that it was such a scheme. 546. In early October 2009, while on a plane flying from Tampa to Miami, Snyder was

approached by Douglas Faulkner, a securities broker, about an investment opportunity Faulkner had heard about that was offered through RRA and yielded high returns. 547. Faulkner related that through RRA, Snyder could invest in confidential settlement

agreements that offered a high monthly return rate. Faulkner said that prior to Snyder funding a confidential settlement, the settlement funds would be wired into an RRA trust account at TD Bank. Once Snyder funded the deal, the trust account at TD Bank would be locked down with explicit instructions that TD Bank may only disburse the funds to Snyder. As additional security to the investment, Faulkner explained that both RRA and Rothstein guaranteed the investment. 548. On or about October 23, 2009, based on the assurances related by Faulkner and

originating with Rothstein, Snyder transferred two million one hundred and sixty thousand dollars ($2,160,000) to an RRA trust account at TD Bank to purchase a confidential settlement agreement from RRA. 549. 550. The Rothstein Ponzi Scheme blew up eight days later. The purported RRA confidential settlement investment purchased by Snyder

never existed. RRAs trust accounts at TD Bank never contained the money that Snyder was told the accounts would contain. 551. In November 2009, RRA failed to make its scheduled payment to Snyder and the

principal was not returned. 125

S. 552.

Thirteen Aqua Holdings, Ltd. On or about October 27, 2009, Thirteen Aqua Holdings, LTD, (Thirteen Aqua)

entered into a settlement agreement in a lawsuit in which it was represented by RRA, but which was unrelated to the Ponzi Scheme. 553. Pursuant to the settlement agreement, Thirteen Aqua was to receive one hundred

and twenty five thousand dollars ($125,000). 554. Thirteen Aqua permitted the settlement funds, in the amount of $125,000, to be

deposited into an RRA IOTA trust account, as it was informed that RRA would hold the money in trust for the benefit of Thirteen Aqua. 555. Money then was improperly and unlawfully transferred out of and stolen from the

Thirteen Aqua RRA IOTA trust account as part of Rothsteins Ponzi Scheme, and put into the Ponzi. 556. After the collapse of the Scheme, the funds that had been held in trust in the

IOTA trust account on behalf of Thirteen Aqua were never delivered to Thirteen Aqua. T. 557. Valerie and Paul Carter As stated above, Plaintiffs Valerie Carter and Paul Carter are married and reside

in Florida. On May 28, 2009, Valerie and Paul Carter invested $300,000 into the Rothstein Ponzi Scheme through Banyon 1030-32, without knowledge that it was such a scheme. 558. Valerie and Paul Carter were introduced to the RRA settlement investment

opportunity through Banyon 1030-32 in May of 2009 through Mrs. Carters cousin Joseph DeSilva.

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559.

DeSilva served as the Carters advisor during the sale of their residence in Cape After the property closed in May of 2009, Mrs. Carter and DeSilva

Cod, Massachusetts.

discussed investing the profits from the sale of the property through Banyon 1030-32. 560. DeSilva related to Mrs. Carter that he understood the investment was reserved

only for friends and family and that he and his wife had invested their entire retirement savings with Banyon. 561. In or about May 2009, DeSilva related to the Carters information from Banyon

1030-32 to the effect that the investment was safe, that Banyon 1030-32 had procured an insurance policy on the investment, that an independent verifier was selected to ensure that the investment was secure and that the funds would be kept at TD Bank, that the investment was in a lock box, that the funds could only be released with two signatures, and that a large South Florida law firm headed by Scott Rothstein was involved in the investments. 562. In reliance on these representations, the Carters invested $300,000 into the Ponzi

Scheme through Banyon 1030-32 on May 28, 2009. The invested funds were wired to Banyon 1030-32s account. The Carters received a Promissory Note from Banyon 1030 -32, a Security Agreement from Banyon 1030-32, a personal guaranty, Banyon 1030-1032s private funding background summary, and a Certificate of Corporate Resolutions, Corporate Status and Incumbency of Banyon 1030-32, LLC. Banyon 1030-32s private funding background summary contained additional representations regarding the settlement purchase structure and growth forecast. 563. The purported RRA confidential settlement investments offered through Banyon

1030-32 and purchased by the Carters never existed, and RRAs trust accounts at TD Bank never contained the money that the Carters were told the accounts would contain. 127

564.

In November 2009, the principal that the Carters had invested and the interest that

had accrued became due. The principal was not returned and the interest was not paid. U. 565. OFM, Inc. From December 21, 2007 through July 28, 2009, Plaintiff OFM INC. (OFM)

invested nearly $3,000,000 into the Ponzi Scheme through Banyon 1030-32, without knowledge that it was such a scheme. 566. By 2007, Abel Zalcberg and Barbara Zalcberg (collectively the Zalcbergs),

OFMs principals, had been close family friends of George Levin and his wife for almost 20 years. 567. In November 2007, Levin on behalf of Banyon 1030-32 told the Zalcbergs about

the opportunity to invest in what they described as a friends and family fund that was used to finance legal settlements. Because this was offered as a friends and family pooled investment, the Zalcbergs were told that there was no minimum investment. 568. Levin related to the Zalcbergs that the settlements were handled by a Fort

Lauderdale attorney with whom Levin had been investing for some time. Levin explained that because the cases being settled involved sexual harassment claims, much of the information relating to them had to remain confidential. 569. It was explained that Banyon had conducted extensive due diligence on the

investment opportunity, and that he was aware that a large hedge fund, which was invested heavily, did their own checks as well, and that the investment opportunity was extremely safe, as the money from the putative defendant would be placed into a trust account and held for the Zalcbergs before the money paid in by the Zalbergs to purchase the settlement agreement would

128

be distributed to the putative plaintiff. Only a Banyon representative had the ability to disburse to the investors the money held in the trust account. 570. It was related to Abel Zalcberg that a representative of Banyon 1030-32 would go

to the bank holding the money in trust to verify that the current account balance statement accurately reflected the amount in the settlement documents, before money was paid to the putative plaintiff, and represented that there was a Banyon employee at the Fort Lauderdale law firm who would review all documents and deposits prior to the investment. 571. Based on foregoing, the Zalcbergs in December 2007 invested in Banyon 1030-32

through and on behalf of OFM. 572. Zalcberg also was informed that Banyon 1030-32 had secured a $70 million dollar

crime/fraud insurance policy to protect the investments. 573. Thus the Zalcbergs continued through OFM to invest in Banyon throughout the

first seven months of 2009. 574. Between December 21, 2007 and July 28, 2009, OFM transferred nearly

$3,000,000 to Banyon 1030-32, which was invested into the Ponzi Scheme, without knowledge on the part of OFM or the Zalcbergs that it was such a scheme. A majority of OFMs investment eventually rolled over and was re-invested when its promissory notes become due. 575. The purported RRA confidential settlement investments offered through Banyon

and purchased by the Zalcbergs through OFM never existed, and RRAs trust accounts at TD Bank never contained the money that OFM was told the accounts would contain. 576. In November 2009, interest payments due OFM stopped being made. The notes

became due and were not paid, and the principal was not returned.

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577.

In 2012, the Zalcbergs sold OFM, but in the sale transaction they acquired and

retained the right to seek recovery for losses in connection with the purported RRA confidential settlement agreements. V. 578. Palmer Family Investors The Palmer Family Investors are Clarice Palmer, Robert Palmer, Patricia White,

William White, Paula Palladino, Anthony Palladino, Clarice Palmer, as trustee of the Clarice Palmer Intervivos Trust, and Clarice Palmer, as trustee of the Palmer Family Trust. They invested over $4,000,000 into the Ponzi Scheme, without knowledge that it was such a scheme. 579. In late 2007, Robert and Clarice Palmer were introduced to Banyon 1030-32,

Levin and Preve through their friend, Joe DeSilva. Robert and Clarice had known DeSilva for approximately 30 years. 580. DeSilva brought to Robert and Clarices attention the opportunity to invest,

through Banyon, in confidential settlements for race and sexual discrimination cases between large corporations and former employees, which were being handled by a Fort Lauderdale attorney, Scott Rothstein. DeSilva reported that Rothstein was a powerful force in Fort

Lauderdale who had extensive political connections, wealth, and success. 581. DeSilva said that the investments were safe as the money contributed by the

putative defendant that was used to pay the investment would be held in an IOTA trust account at TD Bank, which required two signatures from Banyon 1030-32 representatives in order for any money to be released. 582. In December 2007, DeSilva and Palmer met with Levin and Preve. Palmer was

presented with various documents pertaining to the investment, including financial statements reflecting the balances in Banyon accounts. Palmer was told about the prior success of these 130

investments. The significance of the IOTA trust account in which the money would be held at TD Bank was also explained, including the fact that higher duties and stiffer regulations applied to such accounts. 583. Each investment was accompanied by a promissory note, a security agreement,

and a personal guaranty. 584. Palmer also was told that Banyon had an independent verifier, Michael

Szafranski, who was paid on a per-claim basis to verify the settlement documents between the purported defendant corporation and the individual plaintiff, and to review the bank account balance to ensure that the money was in trust. 585. Relying on these representations, Robert Palmer invested $500,000 into the Ponzi

Scheme, through Banyon 1030-32, in January 2008, and made several other investments thereafter, without knowing it was such a scheme. 586. Palmer met with Levin and Preve on other occasions during the course of his

investments in Banyon to discuss the investments. During these meetings it was represented to Palmer that the investments were doing well. 587. In reliance on all of the assurances and on the consistent payment of the promised

interest on the particular prior investments that were not rolled over, Robert Palmer made several additional investments for himself through Banyon 1030-32, and rolled over or re-invested the principal of all of the existing investments throughout 2008-2009. 588. When it appeared to him that he was obtaining good returns on his investments,

Robert Palmer told close family members about his success with Banyon. The individuals included Clarice Palmer (Roberts wife), Patricia and William White (Robert & Clarices

131

daughter and son-in-law), and Paula and Anthony Palladino (also Robert & Clarices daughter and son-in-law). 589. After learning the details from Robert Palmer Clarice Palmer, Patricia and

William White, and Paula and Anthony Palladino all invested with Banyon 1030-32 and into the Ponzi Scheme throughout mid- to late 2008, without knowledge that it was such a scheme. 590. In August 2008, Clarice Palmer, as trustee of the Palmer Family Trust and Clarice

Palmer Inter Vivos Trust, in reliance on the same representations and information, invested money from the trusts with Banyon 1030-32 and into the Ponzi Scheme, without knowledge that it was such a scheme. 591. The purported RRA confidential settlement investments offered through Banyon

1030-32 and purchased by the Palmer Family Investors never existed. RRAs trust accounts at TD Bank never contained the money that the Palmer Family Investors were told the accounts would contain. 592. In November 2009, interest payments due the Palmer Family Investors stopped

being made. The notes became due and were not paid, and the principal was not returned. W. 593. Judith Schaeffer and Richard Schaeffer Plaintiffs Richard Schaeffer and Judith Schaeffer invested over one $1,000,000

into the Ponzi Scheme, without knowledge that it was such a scheme. 594. Plaintiffs RICHARD SCHAEFFER and JUDITH SCHAEFFER are a married

couple residing in Florida. 595. As described above, no later than April 2008, Banyon, through Preve, and Curtis

Lyman (Lyman) of Alpha Fiduciary Wealth Management (Alpha), made an arrangement

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under which Lyman would receive compensation for investors he brought in to invest in the RRA confidential settlements through Banyon. 596. In April and May 2008, Lyman and his team at Alpha approached Richard

Schaeffer (Schaeffer) about the investment opportunities offered by Alpha. 597. In May 2008 Schaeffer met with Lyman at Alphas offices. Lyman gave a

PowerPoint presentation that had been prepared by Banyon and offered potential investors the opportunity to invest in confidential settlements through Banyon. Lyman explained to Schaeffer that prior to disbursement of any funds, an independent third party would verify that the funds being purchased by the investor had been received in a trust account at TD Bank, and that these funds could not be disbursed without prior signature authorization from both RRA and an official from TD Bank, where the money was being held in trust. 598. Lyman told Schaeffer that because TD Bank was involved, Schaeffers

investment would be secure. Lyman told Schaeffer that he had gone to TD Bank, met with a TD Bank representative, and verified that the funds were in fact in the RRA accounts. 599. In June 2008, in reliance on the assurances made by Lyman and made in the

Banyon PowerPoint, including that the funds would be held in a TD Bank trust account, and that no funds could be transferred from the TD Bank account without prior signature authorization from both RRA and TD Bank, the Schaeffers decided to make an initial investment of over $250,000 in an RRA confidential settlement offered through Banyon 1030-32. 600. In early July 2008, Schaeffer met with Levin and Preve at the Banyon offices. At

this meeting, Schaeffer was provided with a Banyon presentation packet and given another PowerPoint presentation, which stressed the safety and high rates of return for the confidential settlements offered through Banyon. As part of this presentation, it was again explained that 133

prior to disbursement of any funds, an independent third party would verify that the funds being purchased by the Schaeffers had been received in a TD Bank trust account, and that these funds could not be disbursed without prior signature authorization from RRA and from TD Bank. 601. In reliance on these and the prior assurances made by Lyman, and on the

Schaeffers previous receipt of scheduled interest payments from his existing investment with Banyon, Schaeffer as principal for the Schaeffers decided to invest further in the RRA confidential settlements through Banyon 1030-32. 602. The Schaeffers investments in RRA confidential settlements offered through

Banyon were made through NFS Trans Global Investments, Inc. IV Defined Benefit Pension Plan and Trust (the Trans Global Trust). Richard Schaeffer and Judith Schaeffer were the beneficiaries of the Trans Global Trust. On July 7, 2009 the Trans Global Trust was terminated, and the Trusts res, which included the investments made through Banyon, was transferred to Richard Schaeffer and Judith Schaeffer. 603. The purported RRA confidential settlement investments offered through Banyon

1030-32 and purchased by the Schaeffers never existed. 604. The trust accounts maintained by RRA at TD Bank never contained the money

that the Schaeffers were told the accounts would contain. 605. In November 2009, interest payments due the Schaeffers stopped being

made. The notes became due and were not paid, and the principal was not returned. X. 606. Karen Kozlowski Karen Kozlowski invested $320,000 into the Ponzi Scheme through BIF, without

knowledge that it was such a scheme.

134

607.

In or around the summer of 2008, Hilary Musser, a longtime friend of Kozlowski

and a client of Barry Bekkedam (Bekkedam) and Ballamor Capital Management, LLC (Ballamor), introduced Kozlowski to Bekkedam at Mussers home. 608. Kozlowski eventually became a client of Ballamor and Bekkedam became her

financial advisor. Kozlowski explained to Bekkedam that she wanted to invest conservatively after taking a large hit in the stock market. After advising Kozlowski to liquidate her assets at Smith Barney and transfer those funds to Bekkedams Fidelity accounts, Bekkedam presented her with several investment opportunities that purportedly were low-risk, one of which was BIF. 609. Bekkedam on behalf of BIF repeatedly assured her that the BIF opportunity

represented the highest return with lowest possible risk of any venture that he had ever handled. In addition, the Managing Director of Ballamor, Ed Spofford, represented to Kozlowski on June 8, 2008 in an email that the investment returned 15 percent annually, and that Kozlowski should let Ballamor put her money to work for her. Spofford reminded Kozlowski that she hired Ballamor to get her into good investments with good returns, and that BIF was such an investment. 610. Shortly thereafter, Spofford provided Kozlowski with Banyon documents and

information and a Banyon Subscription Agreement in an effort to bolster his and Bekkedams representations. 611. In reliance on these Banyon documents and information repeated assurances

regarding the BIF investment, and based on the above-referenced statements made to her, and that the money would be deposited into TD Bank, Kozlowski invested in BIF. Kozlowski made her first investment of $160,000 into the Ponzi Scheme through BIF on June 29, 2009.

135

612.

Near the end of October 2009, Kozlowski received a phone call from Spofford.

Spofford, on behalf of BIF, insisted that Kozlowski should make an additional investment in BIF before the investment period closed so she would not miss out. Accordingly, on October 30, 2009, Kozlowski transferred another $160,000 into the Ponzi Scheme through BIF. The next day, the Ponzi Scheme imploded. 613. The purported RRA confidential settlement investments offered through BIF and

purchased by Kozlowski never existed, and RRAs trust accounts at TD Bank never contained the money that Kozlowski was told the accounts would contain. 614. In November 2009, interest payments due Kozlowski stopped being made, and

the principal has not been returned. Y. 615. HRB Capital, LLC HRB Capital, LLC (HRB), invested approximately $1,050,000 into the Ponzi

Scheme without knowledge that it was such a scheme. 616. HRB principal Henry Bush (Bush) met Levin in 2005 when Bush and Levin

entered into a 50/50 partnership to purchase the Galleria Corporate Centre (GCC). During the purchase process, Bush was provided information about Levins net worth. After the purchase of the Galleria Corporate Centre, Levin opened the Banyon 1030-32 office in the GCC, where Bush also had an office. 617. In the early months of 2008, Levin began to tell Bush about returns he was getting

from investing in confidential structured settlements, and in a meeting talked to him about investing with Banyon 1030-32, through a loan to Banyon 1030-32 which would then purchase confidential structured settlements from Rothstein.

136

618.

The loans would be in the form of a 90-day note that paid a 16 percent return and

could be renewed upon maturity, that the loan would be personally guaranteed, that the loan would go to purchase a number of small claims and no one large sum of money would be exposed and that Banyon 1030-32 had purchased an insurance policy to cover all those involved in the transaction. 619. Thus in May 2008, in reliance on the information provided, to HRB principal

Bush, HRB invested $600,000 with Banyon 1030-32 and into the Ponzi Scheme without knowledge that it was such a scheme. 620. In November 2008, again based on the same information and based on the

confidence established through the previous receipt of scheduled investment payments, HRB invested an additional $450,000 with Banyon 1030-32 and into the Ponzi Scheme without knowledge that is was such a scheme. 621. In addition to the assurances initially made, Preve and Levin met with HRB

principal Bush later in 2008 and it was explained that because the funds in the investment accounts, which were originally held at Gibraltar Bank, were so large, they were being moved to TD Bank. TD Bank officials were already working closely with Banyon 1030-32. 622. Further, it was explained to Bush/HRB that all the funds at TD Bank would be

placed in a trust account and that there were stop orders/letters, meaning that prior approval would be required before any funds could be transferred from the accounts. Banyon 1030-32 employed a full-time accountant to oversee the accounts at TD Bank, and another full-time employee located at Rothsteins office whose sole responsibility was to review the structured settlement.

137

623.

Between December 2008 and the crash of the Ponzi Scheme at the end of October

2009, based on these assurances, and the confidence established through the previous receipt of scheduled investment payments by HRB, and the security of having the funds placed in trust accounts at TD Bank, HRB continued to re-invest with Banyon 1030-32 and into the Ponzi Scheme without knowledge that it was such a scheme. 624. The purported RRA confidential settlement investments offered through Banyon RRAs trust accounts at TD Bank never

1030-32 and purchased by HRB never existed.

contained the money that HRB was told the accounts would contain. 625. In November 2009, interest payments due HRB stopped being made. The notes

have become due and were not paid, and the principal has not been returned. Z. 626. CBM Capital, LLC Plaintiff CBM Capital, LLC (CBM) invested $2,500,000 into the Ponzi Scheme

without knowledge that it was such a scheme. 627. In late 2007, Levin and CBM principal Clifford MacBroom (MacBroom)

discussed CBMs investing in confidential structured settlements offered by Scott Rothstein. MacBrooms investment would be in the form of a loan to Banyon 1030-32, it was explained, which would then purchase confidential structured settlements from Rothstein. 628. It was further explained that the loans would be in the form of a note that paid an

18 percent return, and could be renewed upon maturity; there would be a personal guarantee of the loan; and the settlement funds would be held in an RRA escrow account on which Banyon 1030-32 was the payee.

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629.

In January 2008, based on these assurances on behalf of Banyon 1030-32 to CBM

principal MacBroom, CBM made an initial investment of $1,500,000 through Banyon 1030-32 and into the Ponzi Scheme without knowledge that it was such a scheme. 630. Between May and August 2008, based on the same assurances, and the previous

receipt of scheduled monthly payments on its original investment, CBM invested an additional $1,000,000 through Banyon 1030-32 and into the Ponzi Scheme without knowledge that it was such a scheme. 631. In 2008 Levin told CBM principal MacBroom that Rothstein was adding

additional RRA-Banyon escrow accounts at TD Bank -- a larger and better known bank as the business had outgrown Gibraltar. 632. Based on the assurances initially made, the fact that the settlement funds were

held in escrow at TD Bank, and the previous receipt of scheduled monthly payments, CBM continued to reinvest with Banyon 1030-32 and into the Ponzi Scheme without knowledge that it was such a scheme. 633. The purported RRA confidential settlement investments offered through Banyon RRAs trust accounts at TD Bank never

1030-32 and purchased by CBM never existed.

contained the money that CBM was told the accounts would contain. AA-CC. 634. Saltzman Family Investors

Edward and Marie Lorie Saltzman invested two hundred thousand dollars

($200,000.00) into the Ponzi Scheme, without knowledge that it was such a scheme. 635. At all relevant times, Lyman was the Saltzmans investment advisor.

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636.

As described above, in 2008, Lyman made an arrangement with representatives of

Banyon under which Banyon would recommend Lymans financial advisory services to investors and Lyman would in turn receive compensation from these investors. 637. Around March/April 2009, the Saltzmans met with Lyman at Alphas offices.

Lyman presented the Saltzmans with a PowerPoint presentation and a confidential presentation packet prepared by Banyon 1030-32 that offered potential investors the opportunity to invest in confidential settlements through Banyon 1030-32. 638. Lyman told the Saltzmans that no funds could be disbursed without prior

signature authorization from both RRA and TD Bank. 639. In April 2009, in reliance on the assurances made by Lyman and Banyon 1030-

32, including the assurance that funds would be held in a trust account at TD Bank, and that no funds could be transferred from the account without prior signature authorization from both RRA and TD Bank, the Saltzmans invested one hundred thousand dollars ($100,000) in an RRA confidential settlement offered through Banyon 1030-32. 640. In June 2009, because of the assurances made and the confidence established

through receipt of scheduled interest payments, the Saltzmans invested an additional one hundred thousand dollars ($100,000) into RRA confidential settlements offered through Banyon 1030-32. 641. The RRA confidential settlement investments offered through Banyon 1030-32

and purchased by the Saltzmans never existed. 642. RRAs trust accounts at TD Bank never contained the money that the Saltzmans

were told the accounts would contain.

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643.

In November 2009, payments due the Saltzmans ceased to be made, and the

principal invested became due but was not returned and has not been returned. DD. 644. Steven Adelsberg Steven Adelsberg invested two hundred and twenty-five thousand dollars

($225,000) into the Ponzi Scheme without knowledge that it was such a scheme. 645. In spring 2009, Adelsberg learned of an investment opportunity from his brother-

in-law Harvey Wolinetz (Wolinetz). Wolinetz told Adelsberg that Michael Szafranski of ABS Capital Funding, LLC, whom Wolinetz knew from synagogue-related events, was offering investments based on funding pre-suit settlement agreements that produced a twenty percent (20%) rate of return, and that he had invested and was receiving the promised returns. 646. It was further explained that Szafranski was working closely with Rothstein and,

as the verifier, was the only other person with direct access to look behind the wall of confidentiality to verify that: (1) each of the putative plaintiffs and defendants were real; (2) a large national bank held the putative defendants pre-funded settlement money in an RRA escrow account; and (3) all settlement and assignment documentation was authentic. 647. In June 2009, in reliance on the assurances and representations made by

Szafranski to Adelsberg (through Harvey Wolinetz), including that the funds were held in a large national bank (which was TD Bank), Adelsberg made an initial investment of fifty thousand dollars ($50,000) in confidential settlements offered through ABS. 648. 649. Adelsberg later learned that the large national bank was TD Bank, N.A. Between July 2009 and October 2009, in reliance on the assurances and

representations made by Szafranski (through Harvey Wolinetz) and the confidence established through the receipt of scheduled investment payments, Adelsberg invested an additional one 141

hundred and seventy-five thousand dollars ($175,000) in confidential settlements offered through ABS. 650. The confidential settlement investments offered through ABS Capital Funding,

LLC, never existed. 651. In November 2009, the periodic payments to Adelsberg stopped, and Adelsbergs

investment was not returned. EE. 652. Max Dekelbaum Max Dekelbaum invested one hundred and sixty five thousand dollars ($165,000)

into the Ponzi Scheme without knowledge that it was such a scheme. 653. Dekelbaum first learned of the opportunity to purchase confidential settlements

through Szafranski and ABS in the spring of 2009. Dekelbaum had known Szafranski for nearly five years through his attendance at the same synagogue. Dekelbaum knew that Szafranski presented himself as a successful investment broker and that other individuals from the synagogue who had invested with Szafranski and ABS had received returns on their investments. 654. After learning of Szafranskis apparent success, Dekelbaum followed up with him

and inquired about the investments offered by Szafranski. Szafranski explained an investment opportunity based on funding pre-suit settlement agreements, and explained that they produced a twenty percent (20%) rate of return. More specifically, Szafranski explained that the plaintiffs in these cases had agreed to settlements in which periodic payments were made by defendants, and that the plaintiffs were willing to accept a discounted lump-sum payment in exchange for rights to the full settlement amounts.

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655.

Dekelbaum also became aware that Szafranski was assuring other investors that

he verified the settlements first-hand, that all the cases were legitimate, and that he had been involved with Rothstein for a long time. 656. In April 2009, based on the assurances made by Szafranski, Dekelbaum made an

initial investment in confidential settlements offered through ABS with instructions to reinvest all returns. 657. Between May 2009 and October 2009, based on the assurances made by

Szafranski, Dekelbaum made additional investments in RRA confidential settlements offered through ABS with instructions to reinvest all returns. 658. The confidential settlement investments offered through ABS never existed, and

Dekelbaums investment was not returned. FF. 659. Edward Godin Edward Godin invested one hundred fifteen thousand dollars ($115,000) into the

Ponzi Scheme without knowledge that it was such a scheme. 660. In July 2009, Godin learned of an investment opportunity through his neighbor

Larry Dekelbaum and Larry Dekelbaums father Max Dekelbaum. 661. Godin learned that Szafranski of ABS Capital Funding, LLC, was offering

investments based on funding pre-suit settlement agreements that produced a twenty percent (20%) rate of return, that the plaintiffs in these cases had agreed to settlements in which defendants made periodic payments, and that the plaintiffs were willing to accept a discounted lump sum payment in exchange for rights to the full settlement amounts. 662. In July 2009, Szafranski further explained the investment concept to Godin and

provided him with wiring instructions. 143

663.

Based on the assurances made by Szafranski, Godin wired forty thousand dollars

($40,000) to ABS Capital Funding, LLC, in July 2009 in exchange for the right to receive three monthly payments of eighteen thousand dollars ($18,000). 664. In October 2009, based on the assurances made by Szafranski and confidence

established through receipt of scheduled payments, Godin invested an additional seventy five thousand dollars ($75,000) in confidential settlements offered through ABS Capital Funding, LLC. 665. The confidential settlement investments offered through ABS Capital Funding,

LLC, never existed. 666. In November 2009, the periodic payments to Godin stopped, and Godins

investment was not returned. 667. Defendants aiding and abetting Rothstein and conspiracy with Rothstein

sustained the Ponzi Scheme and played a major role in causing Godin to be defrauded. GG. 668. Robert Levin Family Investors Seymour Shlomchik, personal representative of the Robert Levin Estate, Seymour

Shlomchik, as trustee of the Robert B. Levin Revocable Trust Dated June 18, 2008, Brenda Levin, and Harriet Weinstein, (collectively the Robert Levin Family Investors), invested over two million two hundred thousand dollars ($2,200,000) into the Ponzi Scheme through Banyon 1030-32, without knowledge that it was such a scheme. 669. Robert Levin was married to Brenda Levin. He invested over two million dollars

($2,000,000) into the Ponzi Scheme through Banyon 1030-32, without knowledge that it was such a scheme. Seymour Shlomchik is the personal representative of the Robert Levin Estate and the trustee of the Robert B. Levin Revocable Trust Dated June 18, 2008. 144

670.

Brenda Levin invested over thirty thousand dollars ($30,000) into the Ponzi

Scheme through Banyon 1030-32 without knowledge that it was such a scheme. 671. Harriet Weinstein invested sixty thousand dollars ($60,000) into the Ponzi

Scheme through Banyon 1030-32 without knowledge that it was such a scheme. 672. In early 2008, George Levin (Levin) and his cousin Robert Levin (Robert)

talked about investing in confidential structured settlements offered by Scott Rothstein. Roberts investment would be in the form of a loan to Banyon 1030-32, which would then purchase confidential structured settlements from Rothstein. financial advising services of Curtis Lyman. 673. In 2008, Lyman made an arrangement with representatives of Banyon under Ultimately, that Robert employed the

which Banyon would recommend Lymans financial advisory services to investors and Lyman would in turn receive compensation from these investors. 674. In April 2008, Lyman explained to Robert that the investments would be loans in

the form of a note that paid an eighteen percent (18%) return, and could be renewed upon maturity; there would be a personal guarantee of the loan; and the settlement funds would be held in an RRA escrow account on which Banyon 1030-32 was the payee. 675. In April 2008, in reliance on the assurance and representations made by Lyman,

Robert, on behalf of himself, Brenda Levin, Harry Levin, and Harriet Weinstein, decided to make an initial set of investments, totaling approximately four hundred and eighty thousand dollars ($480,000), in RRA confidential settlements offered through Banyon 1030-32. 676. Between May 2008 and October 2009, based on the assurances made and the

confidence established through receipt of scheduled interest payments, Robert made additional

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investments totaling more than one million six hundred thousand dollars ($1,600,000) in RRA confidential settlements offered through Banyon 1030-32. 677. In August 2008, in reliance on assurances and representations made by Lyman to

Brenda Levin (through Robert Levin), and because of the confidence established through the previous receipt of scheduled investment payments, Brenda Levin made the following investments: Date August 1, 2008 December 29, 2008 June 16, 2009 678. Amount of Investment $27,400 $1,700 $2,100 In November 2008, preparing to invest her personal savings in RRA confidential

settlements offered through Banyon 1030-32, Harriet Weinstein met Frank Preve at Banyon 1030-32s offices. At this meeting, Preve explained that all settlement funds were in a locked account at TD Bank, and that multiple signatures were required before money could be transferred from the account. 679. In reliance on the assurances and representations made by Lyman to Harriet

Weinstein (through Robert), the confidence established through the previous receipt of scheduled investment payments, and Preves explanation that all settlement funds were held in a locked account at TD Bank, Harriet Weinstein invested sixty thousand dollars ($60,000) in RRA confidential settlements offered through Banyon 1030-32. 680. The RRA confidential settlement investments offered through Banyon 1030-32

and purchased by the Robert Levin Family Investors never existed.

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681.

In November 2009, payments due the Robert Levin Family Investors stopped

being made, and the principal invested became due but was not returned and has not been returned. HH. 682. Seymor Pinewski Seymor Pinewski invested two hundred thousand dollars ($250,000) into the

Ponzi Scheme without knowledge that it was such a scheme. 683. In summer 2009, Pinewski learned of an investment opportunity from Steven

Adelsberg. Pinewski learned that Szafranski of ABS Capital Funding, LLC, whom Adelsberg had been introduced to by his brother-in-law Harvey Wolinetz, had offered Adelsberg investments based on funding pre-suit settlement agreements that produced a twenty percent (20%) rate of return. 684. Upon hearing of the investment opportunity, Pinewski met with Szafranski, who

explained the investment opportunity in greater detail. 685. In approximately September 2009, in reliance on the assurances and

representations made by Szafranski, Pinewski made an initial investment into confidential settlements offered through ABS. 686. In October 2009, in reliance on the same assurances and the confidence

established through the receipt of one or more scheduled investment payments, Pinewski made an additional investment in the confidential settlements offered through ABS. 687. The confidential settlement investments offered through ABS Capital Funding,

LLC, never existed. 688. In November 2009, the periodic payments to Pinewski stopped, and Pinewskis

investment was not returned. 147

II. 689.

Pogust Family Investors Larry and Fern Pogust (collectively the Pogust Family Investors or Pogusts)

invested four hundred thousand dollars ($400,000) into the Ponzi Scheme without knowledge that it was such a scheme. 690. 691. 692. Larry Pogust and Fern Pogust are a married couple residing in New Jersey. Prior to 2008, Fern Pogust became the legal guardian of Irwin Denicoff. Beginning in early 2008, on behalf of Denicoff, the Pogusts began receiving and

depositing interest checks paid on Banyon 1030-32 notes issued to Denicoff. 693. In August or September 2008, the Pogusts inquired about the Banyon 1030-32

investment from which Denicoff was receiving the interest checks. 694. The Pogusts contacted Frank Preve, who explained that investments in Banyon

1030-32 were in the form of a loan to Banyon 1030-32, which would then purchase confidential structured settlements. 695. In September 2008, based on the assurances and representations made by Preve,

and the confidence established through seeing Denicoffs receipt of monthly interest payments, the Pogusts made an initial investment of fifty thousand dollars ($50,000) in confidential settlements offered through Banyon 1030-32. The Pogusts received the first six interest

payments and then gave instructions to reinvest all scheduled receipts. 696. Between October 2008 and October 2009, in reliance on the assurances and

representations made by Preve, through seeing Denicoffs receipt of monthly interest payments, the Pogusts made additional investments of three hundred and fifty thousand dollars ($350,000) in the confidential settlements offered through Banyon 1030-32.

148

697. existed. 698.

The confidential settlement investments offered through Banyon 1030-32 never

In November 2009, the periodic payments to Pogusts stopped, and the Pogusts

investments were not returned. JJ. 699. Ira Sochet Inter Vivos Revocable Trust and Investors Risk Advantage (Induced by Szafranski Ira Sochet first became acquainted with Michael Szafranski in the latter half of

2001. Over the following eight years, Sochet developed a close bond with Szafranski and his family. Sochet attended the bris of two of Szafranskis children and attended a dinner in Szafranskis honor. In 2008, Sochet and his wife travelled to Israel with Szafranski and his wife. Ira Sochet reposed trust and confidence in Szafranski and a fiduciary relationship arose. 700. Over the years, Sochet began seeing Mikey as his protg, mentoring

Szafranski based on his many years of experience in the financial sector. 701. Sochet had total and absolute trust in Szafranski, giving Szafranski access to all of

his clients accounts. Szafranski served as a financial advisor to Sochets wife, children, and grandchildren. In fact, Sochet had so much faith in his relationship with Szafranski that he appointed Szafranski as Trustee of his Estate. 702. In June, 2008, Szafranski informed Sochet that he was working for a then

unnamed hedge fund in New York (Platinum and Centurion) verifying transactions at an undisclosed attorneys office (RRA). Even after the stock market suffered a sharp drop later that year, Szafranski continuously bragged about how well the hedge funds were performing. 703. In February, 2009, Szafranski told Sochet that the hedge fund was cutting back,

which presented a fantastic opportunity for both Sochet and his company, Investors Risk 149

Advantage, LLC, to invest in a very safe investment in which the benefits were much better returns than the stock market, and that Szafranski was personally doing all of the necessary independent verification. 704. Despite his close relationship with Sochet, Szafranski relied on his usual pitch,

explaining that the investments were based on funding pre-suit settlement agreements. As Szafranski explained, investors would front the money and, in return, investors would receive their principal and interest in regular monthly installments. Szafranski assured Sochet that he verified the settlements first hand. 705. Szafranski told Sochet that all the cases were legitimate and that he had been He represented that he personally accompanied

involved with Rothstein for a long time.

Rothstein to TD Bank to verify that the putative defendants money was in RRAs escrow account and that he was able to confirm same either through logging on to TD Banks website or through TD Bank tellers. Szafranski explained that Sochet would only be required to make his investment after the putative defendants money from the settlements was wired into the RRA escrow account. 706. On February 24, 2009, Szafranski submitted to Sochet five of Rothsteins

investments. Based upon Szafranskis and Rothsteins representations, Sochet began wiring funds from the Sochet Trust and from Investors Risk directly into an RRA Trust Account at TD Bank. Additionally, Sochet signed an agreement both for the Sochet Trust and on behalf of Investors Risk with Szafranski and Alexa Funding whereby Szafranski, through Alexa, would be paid a 5% finders fee and a 5% verification fee of all profits.

150

707.

On March 27, 2009, Sochet received account balance statements for several RRA

Trust Accounts at TD Bank. These statements showed a balance of over $500,000,000.00 between five different RRA Trust Accounts as of March 20, 2009. 708. Ira Sochet for the Sochet Trust and on behalf of Investors Risk relied upon the

representations of Szafranski, Alexa Funding, LLC, and Onyx Options Consultants Corporation. Ira Sochet for the Sochet Trust and on behalf of Investors Risk also relied upon the documents received from RRA, TD Bank, and others which were both material and integral to the furtherance of the Ponzi 709. Over the next several months, Szafranski continued presenting deals to Sochet.

Based upon Szafranskis representations, Sochet made the following wire transfers through the Sochet Trust to RRAs TD Bank trust account: a) b) c) d) e) f) g) h) i) j) k) l) February 25, 2009 March 17, 2009 March 24, 2009 April 27, 2009 April 29, 2009 May 8, 2009 May 27, 2009 June 9, 2009 June 24, 2009 June 29, 2009 July 8, 2009 July 16, 2009 151 $5,000,000.00 $2,000,000.00 $1,500,000.00 $2,750,000.00 $200,000.00 $300,000.00 $4,950,000.00 $900,000.00 $950,000.00 $4,700,000.00 $1,250,000.00 $1,800,000.00

m) n) o) p) q) r) s) t) u) v) w) x) y) z) aa) 710.

July 20, 2009 July 24, 2009 July 28, 2009 July 29, 2009 August 7, 2009 August 10, 2009 September 3, 2009 September 5, 2009 September 16, 2009 September 18, 2009 September 24, 2009 September 25, 2009 October 8, 2009 October 16, 2009 October 23, 2009

$3,600,000.00 $3,600,000.00 $6,000,000.00 $9,000,000.00 $2,400,000.00 $8,800,000.00 $7,000,000.00 $19,000,000.00 $10,000,000.00 $2,500,000.00 $5,000,000.00 $4,000,000.00 $8,100,000.00 $16,000,000.00 $16,000,000.00

Sochet also made the following additional investments through Investors Risk

Advantage to RRAs TD Bank trust account: a) b) c) d) e) f) February 25, 2009 March 27, 2009 April 27, 2009 July 8, 2009 July 16, 2009 July 29, 2009 152 $1,000,000.00 $500,000.00 $600,000.00 $750,000.00 $300,000.00 $600,000.00

g) h) i) j) k) 711.

August 10, 2009 August 26, 2009 September 3, 2009 September 25, 2009 October 8, 2009

$800,000.00 $1,000,000.00 $1,000,000.00 $1,000,000.00 $900,000.00

On August 25, 2009, Rothstein sent a letter to Frank Spinosa at TD Bank

instructing him that the funds in a specified trust account should only be distributed to Sochet Trust. 712. On September 17, 2009, Sochet met Scott Rothstein at TD Bank where the two

were joined by Frank Spinosa, TD Banks senior regional vice-president. That same day, Rothstein sent another letter to Spinosa instructing him that the funds in a specified trust account should only be distributed to Sochet Trust. 713. On September 18, 2009, Spinosa authorized and then e-mailed a lock letter to

Rothstein specifically acknowledging the August 25, 2009, instructions alleged above and confirming that the funds referenced were being held in a specified trust account and could only be distributed to the Sochet Trust. 714. In the beginning of October, 2009, Szafranski and Rothstein began missing the

scheduled payments on the deals. Szafranski provided numerous excuses, including that TDs computer systems had crashed and that there had been a confidentiality breach that needed to be addressed before the funds could be released. 715. By the time the Ponzi imploded, Ira Sochet, for the Sochet Trust, had invested

$147,300,000.00 in the Ponzi scheme and Investors Risk had invested $8,450,000.00 in the Ponzi scheme. 153

716.

Additionally, Szafranski received $713,000.00 from Sochet Trust and $95,000.00

from Investors Risk in finders and verification fees.

***** 717. Due to the Defendants conduct, Plaintiffs were forced to engage in costly

litigation to protect their interests. 718. been waived. 719. Plaintiffs have retained the undersigned counsel to represent them in this action Any conditions precedent to this action have occurred, been satisfied, or have

and are required to pay them a reasonable attorneys fee.

VI.

COUNTS COUNT 1. AIDING AND ABETTING FRAUD 720. 721. 722. Plaintiffs reallege paragraphs 1 - 719. This is a claim for aiding and abetting fraud. Rothstein engaged in a fraud through the Ponzi scheme he perpetrated against

hundreds of victims, including Plaintiffs, from 2007 to at least Halloween 2009. 723. Bank of America and the individual Defendants had actual knowledge that

Rothsteins investment scheme was fraudulent. 724. The Bank through Perry and the other individual Defendants provided substantial

assistance to advance the commission of the Rothstein fraud scheme. 725. The Bank through Perry and the other individual Defendants actively assisted and

provided substantial assistance to Rothstein in his financial exploitation of the Plaintiffs through 154

fraud. As described above, Bank of Americas assistance included, but was not limited to, the Banks two-plus-year active cover-up and concealment of the scheme, and intentionally false and misleading statements and omissions made to the Von Allmens and others regarding the scheme, all in an effort by the Bank including Perry and the other individual Defendants to get the Von Allmens to invest and to fuel the Rothstein scheme going forward, so that the Bank could obtain Rothstein and RRA depository business. 726. The Bank played a pivotal, substantial role in keeping the Rothstein Ponzi scheme

going from 2007 to the end. As a result of the Banks deliberate concealment of Rothsteins fraud and substantial assistance provided to Rothstein in the perpetration of his fraud, the Plaintiffs in this case and other Rothstein victims unwittingly invested 565 million more dollars into the scheme from May to October 2009, or were delayed for months in discovering that they had been defrauded before May 2009 into investing. 727. The Bank communicated to Rothstein that it was maneuvering the Von Allmens

into investing in the Rothstein scheme and that in return it wanted Rothstein to deposit millions of Ponzi dollars with Bank of America and, ultimately, take over from TD Bank as the schemes principal banker. 728. The Banks two-plus-year active concealment and cover-up of the Rothstein fraud

prevented Plaintiffs from learning of the fraud. Thus they suffered spectacular losses while Rothstein and the Bank greatly benefitted. 729. The Bank including Perry and the other individual Defendants assistance as

described above revived the Ponzi scheme when it was teetering in May 2009 and helped fuel it for several more months, thus damaging Plaintiffs and hundreds of other Rothstein other Ponzi victims. 155

730.

Plaintiffs have suffered injury and damages as a direct and proximate result of

Defendants actions. WHEREFORE, Plaintiffs demand judgment against Bank of America, Fred Perry, and the other individual Defendants for damages, attorneys fees and costs under the Wrongful Act Doctrine, prejudgment interest, costs, and any other relief that the Court deems just and proper.

COUNT 2. CONSPIRACY TO DEFRAUD 731. 732. 733. Plaintiffs reallege paragraphs 1 - 719. This is a claim for conspiracy to defraud. As described more fully above, Bank of America, Fred Perry, the other individual

Defendants, and Scott Rothstein knowingly acted in concert to perpetrate a scheme to defraud. 734. Bank of America including Perry communicated with Rothstein in May 2009,

through emails, phone conferences, and other means, and worked together to get the Von Allmens to invest in Rothsteins fraudulent investments. Rothstein, Preve, and Perry on behalf of the Bank communicated and strategized about getting the Von Allmens to invest. The Bank through Perry agreed to help make it happen, the Bank through Perry and the other individual Defendants made it happen, and in return the Bank got the opportunity to persuade Rothstein to deposit Ponzi scheme proceeds with Bank of America, which he ultimately agreed to do. The Bank including Perry and the other individual Defendants actively and deliberately concealed their knowledge of the Rothstein fraud. 735. After the Bank through Perry and the other individual Defendants got the Von

Allmens to invest starting in early May 2009, Perry told Rothstein that the Bank and Rothstein

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should now start doing business together. The Bank and Rothstein continued to talk until finally Rothstein agreed to open deposit accounts at Bank of America. 736. The Bank including Perry and the other individual Defendants overt acts as

described above revived the Ponzi scheme when it was teetering in May 2009 and helped fuel it through October 2009, thus damaging the Plaintiffs and other Rothstein victims who invested in the scheme between May and October 2009, and preventing Plaintiffs and other Rothstein victims who invested before that from discovering the fraud. 737. In reaching the meeting of the minds and engaging in the overt acts described

above, Bank of America and Perry and the other individual Defendants along with Rothstein acted with knowledge and awareness that the Rothsteins investment scheme was designed to give the false impression of the existence of legitimate investment opportunities when in fact the investments were blatant fabrications by Rothstein. 738. Bank of America, Perry, and the other individual Defendants acted in their

respective roles, as described above, according to a predetermined and commonly understood and accepted plan of action all for the purpose of obtaining substantial funds for Rothstein from investors, including Plaintiffs and Rothsteins other victims. 739. The overt acts of Bank of America, Perry, Rothstein, and the other individual

Defendant co-conspirators were contrary to law, as stated above. 740. There was a meeting of the minds between and among Bank of America,

Rothstein, Perry, the other individual Defendants, and other individuals and entities, both known and unknown, to commit the unlawful acts alleged herein.

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741.

This conspiracy to commit fraud, including through the unlawful overt acts

described above and elsewhere in this Complaint, has directly and proximately caused Plaintiffs damage and injury. WHEREFORE, Plaintiffs demand judgment against Bank of America, Fred Perry, and the other individual Defendants for damages, attorneys fees and costs under the Wrongful Act Doctrine, prejudgment interest, interest, costs, and any other relief the Court deems just and proper.

DEMAND FOR JURY TRIAL 742. Plaintiffs demand trial by jury of all issues so triable.

DATED: March 31, 2014. CONRAD & SCHERER, LLP 633 South Federal Highway, 8th Floor Fort Lauderdale, Florida 33301 Tel: (954) 462-5500 Fax: (954) 463-9244 BY: ___/s/William R. Scherer WILLIAM R. SCHERER wscherer@conradscherer.com Florida Bar No.: 169454 JAMES F. CARROLL jfc@conradscherer.com Florida Bar. No. 984681

Attorneys for Plaintiffs

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