Recovering Funds 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. The case received significant media coverage and Top Verdict named Jared’s victory a “Top 20 Verdict in Texas” and a "Top 50 Commercial Litigation Verdict in the U.S." for 2019. In June 2021, the Fifth Circuit upheld the jury’s verdict as to liability. Jared served as co-counsel for the appeal. In June 2021, the Fifth Circuit upheld the jury’s verdict as to liability. Jared served as co-counsel for the appeal.
