FOR IMMEDIATE RELEASE:
Cindi Perantoni, [email protected]
Karla Cobreiro, [email protected]
VICTIMS OF GEORGE THEODULE’S MULTI-MILLION PONZI SCHEME TO RECEIVE DISTRIBUTION
Court-Appointed Receiver Jonathan E. Perlman Obtains Approval for Interim Distribution
MIAMI, FL (Dec. 6, 2016) – After eight years of chasing assets, pursuing lawsuits, locating victims, and reviewing over 100,000 pages of financial documents, Jonathan E. Perlman, the court-appointed Receiver for Creative Capital Consortium and other companies George Theodule used to swindle investors in a massive Ponzi scheme, has received court approval to pay out more than $4.5 million to victims.
U.S. District Judge Daniel T.K. Hurley approved Perlman’s interim distribution plan to pay eligible claimants in SEC v. Creative Capital Consortium, LLC, Case No. 08-CIV-81565 (S.D. Fla.). The distribution, proposed with the agreement of the Securities and Exchange Commission, equates to 34 percent of victims’ approved claims, a substantial return considering that the Theodule-related companies had less than $28,000 in their bank accounts when Perlman was appointed in late 2008. At a hearing on Monday, Judge Hurley, who oversaw the case, commended the Receiver’s team for being “creative and insistent and diligent” in pursuing claims on behalf of Theodule’s victims.
“We are proud to be able to provide some restitution to nearly 1,500 deserving victims devastated by George Theodule’s scheme,” said Perlman, a partner at the Miami law firm Genovese Joblove & Battista. “It’s been a hard-won battle. At several points, it felt like we were dead in the water, but we kept fighting. Ultimately, we made new law in the Eleventh Circuit, a huge accomplishment that not only helped the victims of Theodule’s scheme, but will also benefit victims of future Ponzi schemes.”
During the seven-month claims process, more than 1,720 claims were submitted. Following a thorough review of every claim by the Receiver’s team, over 86 percent of claimants, approximately 1,481 were determined to have allowed claims in some amount, and the court has approved claims for more than $13.6 million. The Receiver’s diligence during the review process also weeded out almost $10 million in ineligible or illegitimate claims, which increased the payout to actual victims by almost 50 percent.
“The Receiver’s team worked tirelessly to ensure that legitimate claims, and only legitimate claims, were allowed. Rather than rubber-stamping claims, our team implemented a fair and robust procedure that was lenient to actual victims but also mindful that illegitimate or fraudulent claims would take further advantage of the real victims,” said W. Barry Blum, counsel for Perlman and also a partner at Genovese Joblove & Battista. “That process ultimately led to a much greater payout for deserving claimants.”
“This is an outstanding result, especially considering the estate was essentially penniless when the Receiver was appointed,” added Blum. “It’s extremely challenging and often impossible to marshal a meaningful amount of assets once a Ponzi scheme has run its course and the crooks have dispersed all of the money. As challenging as it was, we feel privileged as lawyers to have had this opportunity to deliver a significant recovery for these hard-working and innocent victims.”
In open court on Monday, Judge Hurley expressed his appreciation for the Receiver’s efforts, stating: “We owe an enormous debt to Mr. Perlman and his law firm.” Judge Hurley then added, “Mr. Blum, you and your law firm deserve an enormous amount of credit – all the staff, people who have worked with you – this has really been an effort, and I can’t tell you the admiration I have for the effort that has been exerted here. You folks really are admirable. You set standards for the entire Bar.”
From the fall of 2007 through 2008, Theodule collected over $68 million in a Ponzi scheme that defrauded thousands of investors, including many working-class Haitian-Americans in Florida, Georgia and elsewhere, with promises of guaranteed high returns in 90 days. Holding himself out as a Christian pastor, Theodule used his Haitian roots to gain investors’ trust and confidence. The scheme was fueled by more than 100 investment clubs formed by Theodule’s relatives and cronies, as well as by unwitting investors who recruited their friends and family to invest with Theodule’s Creative Capital Consortium. Theodule pleaded guilty to federal charges and was sentenced to 12-1/2 years in federal prison in February 2014.
Perlman and his team pursued legal actions to recover fraudulently-transferred funds in more than 30 cases, including four claims against national banks and broker-dealer firms where Theodule used accounts to operate his scheme. After the district court dismissed the Receiver’s cases against Bank of America and Wells Fargo Bank (formerly Wachovia Bank) in 2012, the Receiver’s legal team convinced the Eleventh Circuit Court of Appeals to reverse the dismissals and reinstate both cases in 2014. Perlman ultimately resolved both cases. The Receiver’s tenacity also resulted in settlements with the broker-dealers, TD Ameritrade and optionsXpress by Charles Schwab. The last settlement in December 2015 cleared the way for the Receiver to make distributions to Theodule’s victims.
The Receiver anticipates a smaller final distribution after about 120 days. Additional information can be downloaded from the Receiver’s website, http://creativecapitalreceivership.com/.
About Genovese Joblove & Battista, P.A.
Genovese Joblove & Battista, P.A. (GJB) was established in 1999 by founding partners John H. Genovese, Michael D. Joblove, and Paul J. Battista. Today, GJB has grown steadily to become a major regional firm with offices in Miami and Fort Lauderdale and an affiliate office in Caracas, serving clients throughout the U.S. GJB attorneys are recognized for their experience representing clients in large and complex litigation in a number of areas, including bankruptcy, insolvency, receiverships, franchises, and general commercial matters, as well as white collar, real estate, employment law, class actions, and securities litigation. The firm and its affiliate, GJB Consulting, also counsel clients in local, state and federal government matters. For more information, visit www.gjb-law.com.