Attorney malpractice cases come in many shapes and sizes. The cases we usually see involve lawyers who miss deadlines or practice in a subject matter area they shouldn’t. Sometimes, however, we see cases where the attorney simply steals money or engages in other criminal behavior. Today’s post falls into the latter category, an attorney who lost his license for turning a blind eye to his brother’s massive $309 million Ponzi scheme.
Matthew Marino was a New Jersey lawyer licensed in several states. He was originally licensed in 1998 and 20 years later, was convicted of misprision of a felony and sent to prison. This month, he lost his license to practice law.
Misprision of a felony is a federal crime. It occurs when a person has knowledge of a crime and helps “conceal” that crime.
To better understand this post, a brief history is necessary. In 1996, prosecutors say that Matthew Marino’s brother, Daniel, began providing accounting services for a new hedge fund called Bayou. Just two years later and the fund had sustained heavy losses. Rather than tell investors, the fund owners asked Daniel Marino for help in concealing the losses. Daniel complied and established a fictitious company to perform a sham audit of Bayou. Their strategy worked.
Not only did brother Daniel lie about the fund’s losses, he also made up statements showing profits – phony profits, of course. Money continued to pour into the fund even though Bayou was still losing money. By 2001, Daniel became a principal in Bayou.
By 2002, Daniel’s brother Matthew was now on the payroll earning $5000 per month. At first he was picking up his brother’s dry cleaning and performing other menial errands. A year later his salary was increased to $10,000 per month but it remains unclear if Matthew knew that his brother was running a Ponzi scheme.
In 2005, prosecutors claim there was no doubt that Matthew knew his brother was up to no good. Rather than quit or report his brother, prosecutors say that Matthew began helping Daniel stonewall those asking questions.
Matthew was convicted and sentenced to prison for his role in concealing his brother’s crime. Because he was not the principal architect of the scam, his sentence was a relatively short 21 months. His problems didn’t end at his sentencing, however.
The federal court also ordered Matthew to pay $60 million in restitution. He was temporarily suspended from practicing law too. Last week the New Jersey Supreme Court formally suspended Marino’s ability to practice law.
Lawyers who are not allowed to practice law and are convicted felons don’t usually have rosy employment prospects. That means the $60 million in restitution will certainly remain unpaid. Technically, Marino’s victims were not his clients making this case fall outside the realm of attorney malpractice. It also means there is likely no malpractice coverage for the victim’s claims, either.
Victims of the brothers Marino are likely out of luck. The government has collected $100 million of the $309 million lost. Unless a victim purchased the Bayou FUnd LLC investment through a stockbroker or other third party, there is also no insurance coverage likely.
In every post, we always try to offer hope for victims. Sometimes, however, there simply isn’t much good news to report. Sadly, this is one of those cases.
Lose money in a Ponzi scheme, investment fraud or other scam? Our fraud recovery lawyers help victims get back their hard earned money. From attorney malpractice to TIC fraud to stockbroker fraud cases, we can help. For more information, contact attorney Brian Mahany at or by telephone at (414) 704-6731. No charge for initial consultations.