Companies Clamor for a Share of Ill-Gotten Gains

     MANHATTAN (CN) – Bank of America and nine other companies can try to take a cut from the $19.28 million forfeiture meant for victims of a securities fraud scheme, a federal judge ruled.



     In late 2011, the CEO and chief operating officer of Mount Vernon Money Center pleaded guilty to securities fraud for raiding money deposited by clients.
     “Robert Egan and Bernard McGarry used the Mount Vernon Money Center vaults, containing tens of millions of dollars of other people’s money they had pledged to safeguard, as their own personal ATM machines,” Manhattan U.S. Attorney Preet Bharara said after their June sentencing.
     Egan will spend 11 years in prison, and McGarry has a five-year term.
     The government seized more than $19.2 million in ill-gotten gains for victims.
     Thirteen corporate entities filed petitions for their portion of the money over several months, and three of them already have been settled.
     The remaining claimants include Bank of America, Clothing Emporium, DVA Federal Credit Union, MGI, Money Spot, Trans Fast Remittance, U.S. Bancorp Assignees, Wilmington Assignees, Mahopac and Inserra.
     These companies demanded a hearing arguing for their portion of the forfeiture, over the government’s objections that it wanted to decide how to distribute the money fairly to the victims.
     On Tuesday, U.S. District Judge John F. Keenan ruled that fairness had to bend to the letter of the law.
     “The government’s argument in favor of the ‘equitable’ distribution of the property fails because it is without support in the criminal forfeiture statute, which gives third-parties the right to recover property in which they have a legal interest,” Keenan wrote.
     “The statute contains no distinction between those who are victims of fraud and those who are not victims of fraud; under the plain language of the statute, any third party with a legal interest in property superior to the defendant’s may recover that property.”
     Keenan scheduled a hearing for the claimants to argue for their portion of the funds on Aug. 29 at 11 a.m.

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