Washington, DC, February 5— Patton Boggs, along with co-counsel Blum & Silver, announced today that it has filed a lawsuit on behalf of almost 100 individuals from Michigan who lost upwards of $20 million in an elaborate Ponzi scheme.
The suit alleges that a Michigan accounting and consulting firm, Doeren Mayhew, PC, participated actively in the “fraudulent, if not criminal” scheme by its alleged role, along with Ed May, in the preparation and dissemination to investors of false and misleading offering materials and tax returns. Those documents allegedly depicted the 200 or so corporate entities through which the scheme was perpetrated as actual operating businesses when, in fact, they were all shells which merely recycled investors’ proceeds. The suit also alleges that Doeren Mayhew aided and abetted the fraud by its conduct, which included its alleged day-to-day management of the scheme. The suit further alleges that Doeren Mayhew profited handsomely from the scheme, pocketing “millions” in undisclosed “management fees” and other fees.
Also named in the suit are two Doeren Mayhew directors, James O’Rilley and Todd Fox and their wives, who allegedly were directed by Messrs. Fox and O’Rilley to “write the checks” that kept the scheme afloat until mid-2007. The suit also names a corporation, SamJack Investments, Inc., allegedly formed by Messrs. O’Rilley and Fox to receive proceeds of the scheme for the undisclosed benefit of the Doeren Mayhew directors.
This is not the first time a suit has been filed contesting the scheme. In November 2007, the Securities and Exchange Commission (SEC) filed a suit against the alleged founder of the scheme, Ed May, characterizing the scheme as “fraudulently selling securities in the form of interests in limited liability companies.” That suit remains pending.
Attorneys handling the case are senior litigation partner John W. Schryber and associate David C. Silver of Patton Boggs in Washington D.C., and Scott L. Silver of Blum & Silver in Florida. The law firm of Jaffe, Raitt, Heuer & Weiss is local counsel for plaintiffs in the litigation.