Negligence, Fraud and Ponzi Scheme – Oh My!
After seven years of litigation, we obtained a dismissal with prejudice in favor of our client, a prominent cardiologist, in a negligence and fraud case involving the operation of a Ponzi scheme. The 16 plaintiffs brought suit in 2010 against our client and 14 other defendants with respect to investments in shares of a start-up television network and production company focused on developing, managing, and operating internally owned and operated LPTV stations. The plaintiffs collectively invested and lost approximately $2.67 million in what was a $6 million Ponzi scheme, as the start-up did not own television stations or licenses as represented in the written offering materials. The former CEO and his top accomplice were convicted of wire fraud and sentenced to lengthy terms of federal imprisonment. The two used investor funds for their own personal expenses. Many of the defendants, like our client, were medical professionals who served on the board of directors and/or provided content for medical programming. The plaintiffs raised claims for violations of state securities laws, negligence, fraud and civil RICO against all of the defendants. With a two-week trial looming the following year, summary judgment motions about to commence and the threat of the client obtaining a significant attorney’s fee award based on previously rejected proposals for settlement, the plaintiffs begrudgingly agreed to voluntarily dismiss our client, with prejudice. They received no settlement monies, and each side paid their own fees and costs. The litigation continues against the other defendants.