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Recovering $15 Million for a Client in the Wake of Massive Fraud

Our Client's Challenge

While with a previous firm, Lightfoot partner Jared Levinthal represented SED Holdings, LLC in a dispute arising out of its June 2014 loan sale agreement with 3 Star Holdings. Under the agreement, SED acquired, free and clear, exclusive ownership of 1,235 non-performing loans from 3 Star for $13.88 million, of which $4 million was paid in cash. 

Only after the agreement took effect was it revealed that the deal was a complete fraud: 3 Star did not own any of the loans it “sold” to SED — and some did not even exist. SED demanded its money back, but 3 Star had already spent it and was forced into bankruptcy soon after. 

SED was left with no clear way to recover its funds from 3 Star or the individuals that had perpetrated — and benefitted from — the fraud. The company turned to Jared for help. 

Our Approach

After analyzing the case — and the underlying fraud — Jared realized that securing as many related documents from 3 Star as possible was the only way SED would ever prove its case. Over the next four years, he engaged in contentious discovery to uncover the full extent of the fraud against his client. Though time-consuming, his work uncovered the intricacies of what had taken place, who had benefited and, most importantly, where SED’s money had gone. 

Armed with that knowledge, Jared and SED sued a number of entities and individuals that benefitted from the fraud and went to trial in the U.S. District Court for the Southern District of Texas, Houston Division. 

The Result

Jared’s painstaking work paid off. His solid case painted a compelling picture of the fraud perpetrated on SED, and the federal jury agreed. Following a lengthy trial and hours of deliberation, jury members found unanimously for SED on every claim. They awarded SED nearly $15 million, including $4 million in punitive damages against four of the defendants. 

Top Verdicts named Jared’s victory a “Top 20 Verdict in Texas” for 2019.

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