Moments ago I posted a story about the dismal recovery success rate from court appointed receivers. We stand by that comment. In doing our research, however, we came across an interesting article from our friends at ponzitracker.com. Whereas receivers typically only recover pennies or nickels on the dollar, sometimes they are quite successful.
Case in point – David Dadante.
Dadante was arrested in 2007. Prosecutors claimed he operated a $50 million Ponzi scheme that rested in a $28 million loss to investors. Dadante told prospective investors that he had inside information to new public offerings coming from Goldman Sachs. That was a lie, of course, but he was credible enough that hundreds of victims gave him tens of millions to invest.
Like all Ponzi schemes, Dadante’s run finally ended. After being arrested and prosecuted, he was sentenced to 13 years in prison making restitution unlikely.
The court appointed a receiver while victims prepared for the worst. Although Dadante was headed to prison, their money was no where to be found. Usually, fraudsters either lose the money in bad investments or blow the money by living outrageous lifestyles.
The receiver couldn’t find the money either but learned that Dadante had close connections with brokerage firm where he once worked. Prosecutors uncovered that a broker at the firm had helped him manipulate the price of a particular stock and had extended him $19 million dollars. The receiver, Mark Dottore, decided to sue the brokerage firm that helped facilitate Dadante’s crime.
Some folks openly questioned the wisdom of the receiver’s move and one prominent newspaper ran a story that the receiver was simply trying to inflate his fees. Undeterred, the receiver moved forward and ultimately secured a multimillion dollar settlement against brokerage firm.
This year, after 7 years of anguish, victims learned that the receiver recovered 110% of their losses. A federal judge in Cleveland called the recovery amazing but the extra 10% certainly isn’t a windfall for victims who suffered for almost a decade and had to struggle financially. One lawyer said, “It’s not the case that Mr. Dottore just got lucky, the receiver did incredible work.”
We love stories like this. So rare can we say that fraud victims were made something even close to whole. Again we caution, however, that in most cases victims should sit down with a good fraud recover lawyer and map out a strategy to get back their money. Receivers often are an important piece of that strategy but rarely are they the only piece.
Time is not the victims friend in a fraud or asset recovery matter. The best course is usually a combination of using court resources (receivers) and third party actions against those facilitating or selling the bad investment.
Hat tip to Jordan Maglich for first reporting this information.
Lose money in an investment fraud, Ponzi scheme or real estate fraud? Give us a call. The fraud recovery lawyers at Mahany & Ertl have helped people across the United States. For more information, contact attorney Brian Mahany at or by telephone at (414) 704-6731 (direct)
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