The Work

August 4, 2011 7:30 PM

Wachovia Gets Dreier-Related Suit Tossed, While Rothstein Suits Settle

Posted by Hannah D'Apice

The trustee in charge of liquidating the estate of the law firm of convicted Ponzi-schemer Marc Dreier has lost a bid to recover money from Wachovia Bank, which loaned millions of dollars to Dreier prior to his conviction and his firm's collapse.

Am Law Daily sibling the New York Law Journal reports that Manhattan federal bankruptcy judge Stuart Bernstein dismissed the lawsuit Wednesday. Trustee Sheila Gowan had alleged that Wachovia loaned millions of dollars to Dreier after the bank should have become suspicious that the lawyer was acting illegally, the NYLJ reports.

Jordan Siev, Wachovia's lawyer and the New York managing partner for Reed Smith, declined to comment to the NYLJ. Gowan and Howard Ressler, who represented the trustee, also declined to comment. Both are partners at Houston-based Diamond McCarthy.

Dreier was arrested in December 2008 for orchestrating a $700 million Ponzi scheme and selling fraudulent promissory notes. According to Wednesday's decision, Gowan alleged that Wachovia had “inklings” that something was wrong in October 2007 when Dreier bought a $17 million yacht using funds from Dreier LLP accounts at Wachovia and soon afterward asked for an $8 million personal loan secured by a mortgage on the yacht.

Judge Bernstein ruled that Wachovia's suspicions did not amount to knowledge of the scheme and dismissed the case. Dreier is currently serving a 20-year prison sentence.

In another high-profile Ponzi case, Am Law Daily sibling publication the Daily Business Review reports that two clawback cases have been settled connected to the bankruptcy case of Scott Rothstein's defunct law firm, Rothstein Rosenfeldt Adler.

Fort Lauderdale federal bankruptcy judge Raymond Ray approved a settlement under which Chris Salamone, whom the DBR describes as a "former Rothstein friend and investor," will repay the bankrupt estate $500,000. The judge also approved a separate settlement under which Rothstein's former law partner Carl Linder will repay $75,000.

Rothstein pleaded guilty in January 2010 to running a $1.2 billion Ponzi scheme through his now-defunct firm. In June of that year, he received a 50-year prison sentence. Rothstein’s attorney is Marc Nurik, who operates his own practice in Fort Lauderdale.

According to the complaint filed by Rothstein Rosenfeldt Adler bankruptcy trustee Herbert Stettin, Salamone invested $1.8 million with Rothstein during an 11-month period beginning in 2007 and received $2.4 million in return, the DBR reports.

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