By Noreen Marcus, from Daily Business Review

A Miami federal jury found George Levin, the former head of a top feeder fund for disbarred attorney Scott Rothstein, liable for more than $157 million in funds that fueled the ex-law firm chairman’s $1.2 billion Ponzi scheme.

After a weeklong trial and only a few hours of deliberations, the jury on Wednesday decided Levin, 71, committed securities fraud on a massive scale. Already in personal bankruptcy, he faces fines and disgorgement of $157 million in ill-gotten gains.

The Securities and Exchange Commission’s 2012 complaint accused Levin and Banyon Investments CEO Frank Preve of misleading investors as they amassed funds to buy fictional discount legal settlements from Rothstein. They raised the money from more than 150 investors in under two years, the complaint stated. They issued promissory notes that Preve drafted and Levin executed, most with fixed interest rates of 18 percent to 20 percent.

At first they marketed the notes to friends and acquaintances.

“As word spread, they contacted more and more potential investors and lured them into purchasing the promissory notes,” the complaint said. “They explained to investors how the notes represented a business opportunity allowing investors to take advantage of legal settlements.”

Asked if Levin would appeal, his lawyer Daniel Rashbaum said, “We are seeking all avenues of redress.”

“Mr. Levin was Scott Rothstein’s biggest victim,” said Rashbaum of Marcus Neiman & Rashbaum in Miami. “No one had more to lose than George Levin did, and he always thought that his money and investors’ money was protected.”

Banyon allegedly lost $775 million due to Rothstein, former head of the 70-attorney labor and employment firm Rothstein Rosenfeldt Adler.

The business collapsed along with the scam in October 2009. After pleading guilty to orchestrating Florida’s largest Ponzi operation, Rothstein is serving a 50-year sentence.

More than two dozen lawyers, co-workers, relatives and others have been convicted of crimes associated with Rothstein, who ran the fraud through his defunct Fort Lauderdale law firm.

The government called Levin to testify, according to Eric Bustillo, regional head of the SEC office in Miami, which pursued and won the case. The SEC’s lead trial attorney was Amie Riggle Berlin.

Other plaintiffs witnesses were Preve, four investors, onetime Rothstein employee Debra Villegas and an SEC staff accountant.

Described as Rothstein’s closest associate, Villegas is serving a 10-year sentence for money laundering. Because of her role as an active government witness against Rothstein-related targets, federal prosecutors are trying to get her sentence cut to four years.

Facing charges in the same case, Preve settled with the SEC and agreed to testify against his former colleague. The 68-year-old also pleaded guilty to related criminal charges and was sentenced to almost four years in prison.

“The very first witness in this case … was Scott Rothstein’s biggest accomplice, a convicted felon sentenced to 10 years’ imprisonment, Debra Villegas,” Rashbaum said in his closing argument, according to a transcript. He said she never spoke to Levin about the Ponzi scheme.

Rashbaum dismissed Preve as “another convicted felon” and noted Levin has never been charged with a crime.

U.S. District Judge Ursula Ungaro, who presided over the Levin case, urged the parties to settle. They briefly appeared to be heading in that direction.

On the eve of a trial scheduled last October, the SEC announced a preliminary deal had been hammered out, pending approval by SEC officials, requiring Levin pay back $157 million plus a civil fine.

Bustillo said the deal fell through because Levin failed to comply with the agreed terms.

“We negotiated the settlement in good faith,” Bustillo said. “He had a week or so to basically deposit certain monies for the penalty component, and he didn’t.”

With that, Ungaro lifted a stay, and the case proceeded to trial.

IMAGES:

Scott Rothstein – Melanie Bell

Debra Villegas

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