BigLaw
Firm Can't Shake Suit
That It Enabled $168 Million Ponzi Scheme
Julie Kay
Daily Business Review
March 16-2010
A Sarasota judge dismissed some counts but let stand malpractice
and breach of fiduciary duty charges in a lawsuit filed against
Holland & Knight by the receiver in a $168 million Ponzi scheme.
The rulings by Circuit Judge Rick DeFuria keep alive a suit
filed last year by Burton Wiand against the law firm and one of
its partners, Scott MacLeod. Wiand of Wiand Guerra King of Tampa
was appointed receiver in January 2009 to try to recover funds
from indicted Sarasota hedge fund manager Arthur Nadel.
Nadel, 77, pleaded guilty last month to 15 counts of operating a
Ponzi scheme in Sarasota from 1999 to 2009. In a case that has
been compared to Bernard Madoff’s, Nadel’s investors thought
they were investing in a variety of hedge funds under Nadel’s
control or association. He is awaiting sentencing in a New York
prison and faces up to 300 years.
Wiand hired the law firm Johnson Pope Bokor Ruppel & Burns of
Tampa to sue Holland & Knight for allegedly preparing disclosure
documents for investors that failed to mention Nadel was a
disbarred New York attorney who had drained a client’s escrow
account. The suit also accuses Holland of conflicts of interest
for representing Nadel and his investment funds simultaneously.
Wiand is seeking up to $168 million from Holland, equal to the
amount of the Ponzi loss.
A separate class action suit brought by investors is pending in
Tampa federal court with motions to dismiss filed by Holland &
Knight.
Last week, Holland & Knight’s team of lawyers from the Miami law
firm of Kenny Nachwalter argued to dismiss the state suit.
DeFuria agreed to dismiss counts alleging Holland aided and
abetted the fraud but let stand counts alleging malpractice and
breach of fiduciary duty. The dismissals were without prejudice,
and Wiand said he is considering whether to file amended
pleadings on those counts.
“The major portion of the case is still in place,” he said. “The
case will proceed ...
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