MANHATTAN (CN) - A nonprofit devoted to children's education claims the Pryor Cashman law firm and its partner Donald Zakarin helped a convicted Ponzi-schemer roll it for $9.75 million.
The Alexander Dawson Foundation "is a Nevada charitable trust whose primary function is to support the Alexander Dawson schools in Nevada (pre-K to 8th grade) and Colorado (K to 12th grade). ADF serves the educational needs of over 1,000 children," according to the complaint in New York County Court. Also suing are Alexander Dawson Inc. (ADI), the foundation's investment arm, and the chairman of the Dawson board, Mario Borini, and his trusts.
The Dawson Foundation is a limited partner in North Hills LP, a "so-called hedge fund" whose chief admitted to the massive fraud in 2009, according to the complaint.
"This case is about how a law firm and a lawyer assisted a felon in his scheme to defraud a charitable foundation, two of its trustees, and the other plaintiffs out of millions of dollars," the complaint states.
"On July 30, 2009, Mark Bloom ('Bloom'), the former head of a so-called hedge fund named North Hills, L.P. ('North Hills'), pled guilty to five federal felonies relating to a Ponzi scheme that he had conducted over the course of eight years. The Ponzi scheme was not the product of Bloom's efforts alone. He had help. Specifically, as set forth more fully in this complaint, Bloom received substantial assistance in his scheme from Donald S. Zakarin and his law firm, Pryor Cashman LLP. Bloom revealed to Zakarin and Pryor Cashman in 2005 that he had been stealing money from North Hills - at that time, they could have shut Bloom's fraud down or withdrawn as his counsel. They did not. They chose instead to further the fraud by helping Bloom conceal his past and ongoing theft from the Plaintiffs and other victims of the Ponzi scheme until it finally came to light in late 2008.
"As a result of the fraud at North Hills, plaintiffs lost over $9,750,000. Eight and one- half million dollars of the lost funds were from ADF, a nonprofit foundation, and ADI, its investment arm, and were supposed to be used to educate children."
In December 2008, the Dawson plaintiffs sued Mark Bloom and his wife, and North Hills Management, in New York State Supreme Court. That case is pending.
In January 2011 they filed a separate lawsuit against the accountants for Bloom and North Hills, Brian Zucker and his firm Zucker & Associates, and others. That case is pending in the same court.
"North Hills ultimately proved to be a fraud," the complaint states. "Bloom unlawfully diverted at least $20 million from North Hills' bank accounts over a course of years. Bloom transferred the stolen funds to NHM, the company that acted as the General Partner of North Hills. Bloom then used NHM as his personal piggy bank. Bloom often transferred hundreds of thousands of dollars weekly, if not daily, from North Hills to NHM, and then to himself. ....
"Bloom also stole money from plaintiffs and the other investors in North Hills by accepting lucrative kick-backs in return for 'selling' the Philadelphia Alternative Asset Fund ('PAAF'), a purported commodities trading pool, to North Hills and other investors. In 2004 and 2005, Bloom received over $1.5 million in 'commissions' from the Philadelphia Alternative Asset Management Company ('PAAMCO') - PAAF's management company - for steering investors' money into PAAF."