Where'd the Dough Go?
With Ponzi-scheme charges in the news lately, you might wonder about some of the more unusual places fraudulent gains have been found.
Every case is different, says Morrison & Foerster New York City partner Carl Loewenson. “There is no one playbook for receivers. You just have to get in there and follow the money.”
It’s not all that easy. In the late 1990s Loewenson was the court-appointed receiver in a Ponzi scheme undertaken by Credit Bancorp Ltd. bosses. CBL bigwigs reportedly bilked investors of some $200 million—not Bernard Madoff money, exactly, but still too much to hide in a cigar box. Loewenson tracked some of the ill-gotten gains to:
“We did get money back from Neiman Marcus because one of the schemers had bought an $8,000 dress for the CBL Christmas party,” he says. “It was brand new. We made her return it.”
There was the aviary of rare birds in France, he says, though all the birds had died before lawyers discovered it.
Loewenson was looking to recover a yacht in Monaco, but he decided the amount it would cost to pay for docking, insurance, crew and other expenses was more than the effort was worth.
The CBL fraudsters also invested in “bogus securities,” says Loewenson, including what he describes as a “fly-by-night education institution in Monaco.” He says the CBL receivership continues today, though about 90 percent of investor assets have been recovered—a remarkable achievement, according to experts.