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Uncovering the Rothstein Ponzi Involvement of George Levin, Frank Preve, and Banyon Investments

Yesterday, we brought you the accusations against Rothstein Ponzi investors George Levin and Frank Preve, who the Securities and Exchange Commission says knew about Rothstein's scam and fed hundreds of millions of dollars into it anyway.

That post took you through what (allegedly) happened from the start of the scheme in 2005 until it disintegrated in fall 2009. Here's what happened after that, and how the details of Levin and Preve's involvement gradually came to light.

The shady side of Banyon Investments was first mentioned on The Pulp on Nov. 10, 2009, after Scott Rothstein's Ponzi scheme fell apart but before Rothstein had stopped promising to just pay everybody back. Bob Norman said George Levin and his associates "almost surely" knew of the fraud, that they were not victims but active feeders of the scheme.

By Nov. 21, the story was "If you feel at all sorry for Fort Lauderdale businessman George Levin for apparently losing a great deal of his money -- or other people's money -- in Scott Rothstein's Ponzi scheme, you can stop now."

It was revealed that Levin had been ripping people off for years selling bogus car kits. When a consumer advocate fought back, Levin's lawyers harassed him in the courts until he died of cancer. Then they tried to get his family to pay $80,000 of their fees.

Nov. 25, we published details of an offering memo from Banyon pumping Rothstein's totally fake "employment settlement financing," in which Levin said "labor and employment settlement financing has largely been ignored because it is a niche market and lacks visibility due to confidentiality issues. ... It is the [Banyon] Partnership's belief that this is a largely un-tapped market."

Yeah, man -- it was secretly awesome money. It was also secretly not true even a smidgen.

In December 2009, Banyon sent a letter to investors saying "First and foremost, George Levin did not know that Scott Rothstein was operating a ponzi scheme... George Levin trusted Scott Rothstein. However, he trusted TD Bank even more." The letter went on to blame the bank for direct collusion in the scheme and say Rothstein perpetrated the crime "with the cooperation of certain senior TD Bank officials."

(Two years later, Rothstein would back this claim up himself, and explain in depositions exactly how both TD Bank and Coral Gables-based Gibraltar Bank were sooo in on the scheme.)

In April 2010, a civil complaint was filed that compared Levin's alleged fraud with Rothstein to his dealings in the car company -- "Similar to his operation of Classic Motor Carriages, Levin relied on others in Banyon to do his 'dirty work' in an attempt to insulate him from both criminal and civil liability," it said.

It also included volumes of emails between Banyon and Rothstein, including one from Preve once things started getting shaky that said "I am petrified ... if word gets out that we are $125 million past due we will never see another cent in 3rd party funding."

Two other New York hedge funds were implicated in the suit, in which the plaintiffs claimed both knew something fishy was going on but continued to pour money in via loans -- to Banyon.

By July 2010, Levin had agreed to turn over the bulk of his $100-200 million fortune to the RRA bankruptcy settlement.

Tune in tomorrow for highlights from December 2011, when Rothstein was deposed in the Razorback lawsuit and tossed Levin and Preve under the bus.


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