May 28, 2022

Law firm can’t shake claims it aided $6M Facebook IPO scam

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37From Law360

Law360, Los Angeles — A California judge refused Thursday to toss claims that Miller Barondess LLP helped a con man launder $5.8 million stolen from investors through a bogus deal to purchase pre-initial public offering shares of Facebook Inc.

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Con man had friends in legal places, firm says

By Lorraine Bailey From Court House News

(CN) – A Los Angeles law firm helped a con artist fleece an investor for $11.25 million in a fictitious Facebook deal, the allegedly defrauded company claims in court.

ESG Capital Partners sued law firm Miller Barondess, partner Erik Syverson and Does 1-50 in Los Angeles County Superior Court.

Miller Barondess Erik Syversonaided and abetted its client, “the notorious con-artist Troy Stratos in the misappropriation of $11.25 million from ESG, a crime for which Stratos is currently being held without bail under federal indictment,” the complaint states. “Defendants had both knowledge of Stratos’ misappropriate and substantially assisted him in defrauding ESG through a scheme involving the purported sale of pre-IPO Facebook shares. Rather than utilizing plaintiffs’ $11.25 million to purchase Facebook shares, Stratos – with the defendants’ assistance – simply stole plaintiffs’ money.”

A federal grand jury indicted Stratos, 47, in May on 20 counts of wire fraud, money laundering and obstruction of justice.

According to the FBI press release, Stratos claimed that he represented Mexican billionaire Carlos Slim, who planned to buy a large block of Facebook stock, and would sell the excess to ESG.

To perpetrate this fraud, Stratos allegedly posed as an international businessman named “Ken Dennis.”

ESG says it placed $7.2 million as a deposit in a Bank of America account pending transfer of the shares, but fraud concerns led the bank to freeze and ultimately close Stratos’ account shortly after receiving the money.

“Without an account in which to place ESG’s money, Stratos’ scheme faced imminent exposure,” the complaint states. “Defendants, however, helped Stratos hide $5.8 million of ESG’s funds in its client trust account. Defendants accepted these funds knowing that they rightfully belonged to ESG and were part of a larger deposit to purchase shares of Facebook stock.”

Then, although the Facebook transaction had not closed, Miller Barondess “allowed Stratos to use its client trust account as his personal piggybank, funding Stratos’ extravagant lifestyle and paying off his debts from earlier fraudulent schemes.”

Federal prosecutors say Stratos spent months telling EGS that the deal would close soon, but was being delayed for various reasons, citing a fictitious deal with Steve Jobs, the founders of Google, and other Silicon Valley entrepreneurs. Even after he was arrested, Stratos continued to tell EGS that the deal was real, although he had spent nearly all of the $11.25 million, the FBI said.

EGS claims that “neither Syverson nor anyone else at Miller Barondess ever informed plaintiffs that their ‘refundable’ deposit had been moved from BOA to Miller Barondess, or that a person named Troy Stratos (of whom ESG had never even heard was freely spending the money ESG had earmarked to purchase Facebook shares. Instead, Miller Barondess paid itself hundreds of thousands of dollars directly from plaintiffs’ funds.” (Parentheses in original.)

The website for Miller Barondess says Syverson specializes in Internet and digital media issues, and was named a “Rising Star” by Super Lawyers magazine in 2012 and 2013.

Stratos was also indicted for a $7 million theft from Eddie Murphy’s ex-wife, Nicole Murphy, according to the complaint.

The FBI press release does not identify the victim, but states that Stratos defrauded a woman of $7 million by convincing her he could manage the proceeds of her divorce by investing them overseas. He also claimed he could sell her home to a Middle Eastern royal family, but she needed to lease luxury cars to make the home more enticing.

In fact, Stratos lived in the house, and drove the cars himself.

ESG seeks punitive damages for aiding and abetting fraud, aiding and abetting conversion, conspiracy, conversion and unjust enrichment.

It is represented by Eugene Ashley with Hopkins & Carley.

For more on this story go to:

http://www.courthousenews.com/2013/10/08/61840.htm

Related story:

FBI: Money stolen from Eddie Murphy’s ex-wife bought $50K piano

By George Warren, From ABC, KXTV September 9, 2013

SACRAMENTO, CA – A federal judge has ordered the FBI to seize a $50,000 antique French grand piano allegedlybought with money stolen from Eddie Murphy’s ex-wife, Nicole.

According to an affidavit filed with the U.S. District Court in Sacramento, the FBI believes the Gaveau concert grand piano was purchased from a Canadian dealer in June, 2010, by money skimmed from an $8 milliontrust fund established for Nicole Murphy with proceeds from her divorce from the actor and comedian.

Troy Stratos, 47, has been indicted on charges he embezzled at least $7 million from Nicole Murphy andconned a financial manager in Pennsylvania out of more than $11 million.

Stratos is being held without bail in the Sacramento County Jail awaiting trial.

The piano has been sitting in a rented space at a Public Storage facility in El Segundo since at least February, 2012, according to the FBI.

The serial number, 44830,indicates the instrument was manufactured in the early 20th century.

The FBI says that prior to shipping the piano to the storage facility, Stratos had it sent to a well-known Northern California film actor and director who was considering buying it.

The actor isidentified onlyby the initials C. E. and the FBI says he never followed through on the purchase.

According to an online biography, Carmel’s most famous resident, Clint Eastwood, is an accomplished pianist and plays a grand piano at his restaurant.

For more on this story go to:

http://www.news10.net/story/entertainment/2014/01/22/4761071/

 

 

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