Tuesday, April 28, 2009

Bernie Madoff Would be Proud- More Fraudsters Afoot

Lawyers Line Up for New Investor Fraud Cases in Fla., Pa.
by Brian Baxter, AmLaw Daily

Bernie Madoff and Allen Stanford aren't the only accused fraudsters giving Am Law 200 lawyers business these days. This week the SEC charged two investment advisers with orchestrating multimillion-dollar frauds. Dechert, Mayer Brown, Carlton Fields, and Pepper Hamilton are among the firms queuing up to represent the defendants and aggrieved investors. The week began with the SEC unveiling a 22-page complaint against Donald Anthony Walker Young, accusing him of running a Ponzi scheme and misappropriating more than $23 million from investors. On Tuesday the SEC froze the assets of Acorn Capital Management, based in Kennett Square, Pennsylvania (Young was principal at the firm). The SEC has stated that most of those who invested with Young are from the Philadelphia area. The charges have shocked the residents of idyllic Chester County, Pa., where the 38-year-old Young lived and enjoyed horseback riding and foxhunting. (Ironically, Young also lived part-time in Palm Beach, Fla., where he was a close neighbor of Madoff's, the Palm Beach Daily News reports.) Dechert partner Paul Huey-Burns in Washington, D.C., a former attorney with the SEC's Division of Enforcement, reportedly was representing Young. But when reached on his cell phone on Friday, Huey-Burns told us that while he's represented Young in the past, he's no longer involved in this case as it pertains to the SEC charges.

Pepper Hamilton partner Cuyler Walker in Berwyn, Pa., is representing several investors claiming to be victims of Young's alleged Ponzi scheme. He declined to disclose the names of those investors but said they were cooperating with investigators. "There is a process the SEC is following, and we are seeing how that could play out," Walker told The Delaware County Daily Times. Prosecutors have yet to file criminal charges against Young. Nearly 1,200 miles to the south, the SEC charged Naples, Fla., investment adviser William Gunlicks and his firm, Founding Partners Capital Management, with defrauding investors by misrepresenting the nature of their $550 million in investments. The agency requested and received an emergency asset freeze from U.S. district court judge John Steele in Fort Myers, Fla., who appointed Gray Robinson partner Leyza Blanco in Miami to be receiver for Founding Capital and several subsidiary funds.
Founding Capital has retained Mayer Brown's Sean Casey, former deputy chief of the business and securities fraud unit at the U.S. attorney's office in Brooklyn, for the SEC case. Casey, who joined the firm in February, also previously served as senior counsel in the SEC's enforcement division. (Casey declined to comment.)

The SEC claims that Gunlicks and Founding Partners maintained that their funds had audited financial statements for 2007 when they did not. Gunlicks, whom the SEC accuses of using investor funds to pay personal expenses, has tapped Carlton Fields partner Michael Pasano in Miami for counsel.

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