HOUSTON (CN) - The court-appointed receiver who says a businessman and a talk-radio host defrauded investors of $15 million through a Ponzi scheme cannot pursue "abandoned" claims, a federal judge ruled.
Texas businessman Albert Kaleta agreed to pay $3.2 million to settle claims of securities fraud. Neither he nor his investment firm, Kaleta Capital Management, admitted to the charges of the complaint, which claimed that Kaleta had cheated 50 investors out of $10 million through a scam involving promissory-note securities.
U.S. District Judge Nancy Atlas appointed Thomas Taylor to the role of receiver for Kaleta Capital Management and the companies of which Kaleta was part-owner, BusinessRadio Network dba BizRadio and Daniel Frishberg Financial Services dba DFFS Capital Management.
Daniel Frishberg, who broadcast as "The Money Man," co-owned the companies.
Claiming that the companies fraudulently transferred Kaleta funds, the receiver filed a federal complaint against Kaleta; Frishberg; Frishberg's wife and BizRadio officer, Elisea; Barrington Financial Advisors; and Barrington CEO William Heath.
After collecting $10 million for the loan business, Kaleta allegedly diverted the funds to BizRadio and DFFS.
Kaleta and Frishberg brought in another $5.5 million by issuing promissory notes from BizRadio, and they each received compensation from both sets of notes, according to the complaint.
Frishberg also allegedly transferred DFFS assets to Barrington Financial Advisors after the Securities and Exchange Commission named DFFS as an equitable relief defendant to its 2009 lawsuit against Kaleta.
After the SEC sued Frishberg in March 2011, Frishberg had to pay $65,000 in civil penalties for violating the Investment Advisors Act.
Judge Atlas refused to dismiss the receiver's claims against Barrington and Heath on Tuesday, but she did dismiss some claims against Frishberg and his wife.
Atlas "deemed abandoned" the receiver's claims of negligence, aiding or abetting negligence, breach of fiduciary duties, and inducing or aiding breach of fiduciary duties, so far as each claim involved Kaleta Capital Management.
The receiver never responded to the Frishbergs' arguments against the claims, and "the legal viability of the claims is not clear," the 19-page decision states.
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