Is George Levin a victim in the Rothstein Ponzi?


Convicted Ponzi schemer Scott Rothstein said that when George Levin began investing in his fraud, it "got wings."

Levin, a multimillionaire businessman with a controversial past, not only put much of his fortune (valued at more than $200 million) but also lured hundreds of investors into Rothstein's bogus legal settlements deals through his Banyon hedge fund. Some estimates are that Levin was responsible for an incredible $775 million going into Rothstein's coffers before the scheme imploded.

The Securities and Exchange Commission has filed a complaint charging Levin and his one-time right-hand man Frank Preve with misleading those investors. The Rothstein bankruptcy trustee is going after Levin to compensate victims. Rothstein himself in depositions said he considered Levin a "player" in his scheme and believed Levin knew it was a fraud, though he never had any direct conversations with him on the topic and couldn't prove it. Levin himself had a sketchy background in business, as his former Miami-based company, Classic Motor Carriages, was convicted of fraud back in 1999.

But now Levin and his wife, Gayla Sue, have each filed lawsuits against TD Bank alleging the bank is culpable for their losses. The suits claim the couple's net worth has been decimated and seeks total damages, according to one of their attorneys, of a billion dollars.

"TD Bank processed $6 billion worth of transactions during the time with Rothstein through his law firm, six billion dollars, every bit of that was stolen money," said William Scherer, who is representing Gayla Sue Levin in her suit. "... TD Bank was involved in the fraud but in addition covered up evidence of the fraud." 

Scherer has already recovered more than $220 million from TD Bank in previous actions and has another suit representing Rothstein investors seeking another $100 million.

George Levin's attorney, William L. Richey, said his client believed the scheme was on the up-and-up, so much so that he had his four daughters and 100-year-old mother sink their money into it as well. Richey said Levin met with bank officials about taking out a line of credit based on hundreds of millions of dollars he believed was in the Rothstein accounts that wasn't there.

"Never once did {bank officials] say there isn't any money in these accounts, never once did they call regulators," said Richey. "He believes he's got hundreds of millions of dollars in the bank that he doesn't have in there, that didn't exist."

Attorney Scherer, however, wasn't always on Levin's side. His earlier lawsuits aimed suspicion at Levin, calling him a "co-conspirator" in the scheme. In one suit Scherer pointed out that Levin offered to shore up any shortfalls in the accounts when the scheme appeared to be imploding. Scherer wrote that the shortfall itself was "obvious evidence that the monies are either being misused or are a part of a Ponzi scheme" and the Levin should have recognized that. At the time a spokesman for Levin called Scherer's allegation a "despicable attempt to turn a victim into a villain."

Richey said Levin has subsequently provided more evidence that he really is a victim, winning over Scherer. Richey said Levin's offer to fill the Ponzi gap was an attempt to help make investors whole, rather than a bid to keep the scheme going. "He was told again and again  the money was in the bank," said Richey. "And he thought if the money was in the bank, it couldn't be bad, it couldn't be wrong."