Fort Lauderdale businessman George Levin brought more money into Scott Rothstein’s ponzi scheme than anyone else involved with the convicted ex-lawyer. And now, Levin himself has been convicted by a federal jury. On Wednesday, the jury found Levin liable for fraud in his role with Rothstein’s scheme.
In 2012, the Securities and Exchange Commission filed a civil suit against Levin in Miami federal court, saying he duped 173 investors through a made-up investment fund known as Banyon.
Astonishingly, Levin raised more than $157 million from the 173 investors in less than two years by issuing promissory notes from his company and interests in a private investment fund they operated.
Levin then funneled those investments to Rothstein, who is now serving a 50-year prison sentence for masterminding the fourth largest Ponzi scheme in U.S. history. He swindled investors out of more than $1 billion through the sale of fake discounted settlements through his now-defunct law firm Rothstein Rosenfeldt and Adler PA. Rothstein had told investors that he had clients who were secretly settling for big sums, but that they wanted cash payouts up front rather than payments over time. These clients, Rothstein said, would accept less cash up front. If the investors fronted the money, they could pocket the full settlement amount — and make a big profit — over time. In reality, there were no such clients or settlements.
According to the SEC complaint filed against Levin and another Fort Lauderdale businessman, Frank Preve, on May 22, 2012, Levin began raising money to purchase Rothstein settlements in 2007. Then in 2009, they formed Banyon Income Fund LP, which invested exclusively in Rothstein's settlements. Banyon served as the general partner of the fund, and its profit was generated from the amount by which the settlement discounts obtained from Rothstein exceeded the rate of return promised to investors.
The SEC accused Levin and Preve of investing in Rothstein's made-up legal settlements while telling investors that their money was safe and the investments were making a profit. Levin and Preve were able to suck in their victims with fake documents containing misrepresentations and omissions, according to the SEC compliant.
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For his part, Levin has maintained that he’s just another one of Rothstein’s victims and had no idea he was taking money from investors for a massive Ponzi scheme. In 2009, New Times reported that Levin “invested $120 million of his own money into the scheme before raising at least $300 more to put into Rothstein's scheme.” But, according to deposition transcripts, Rothstein said both Levin and Preve knew about the scheme the whole time.
On Wednesday, the federal grand jury found Levin was liable on all five counts of fraud leveled by the SEC, including charges he intentionally committed fraud.
“We are pleased with today’s jury verdict finding that South Florida resident George Levin committed securities fraud in connection with two private investment funds that raised more than $157 million from over 150 investors in less than two years,” said Andrew Ceresney, SEC Director of Division of Enforcement. "The Commission presented evidence that Levin falsely told investors that the funds had several safeguards to protect their investments, while knowing that the funds were not following those safeguards and procedures. We will continue to hold accountable those who raise monies from investors through fraudulent means.”
Preve, meanwhile, who has pled guilty to one count of conspiracy, will head to prison in June to begin serving a three-and-a-half-year sentence.