October 7, 2014
George Levin in court pleadings said it’s an “undisputed” fact he was the primary target and the
“biggest victim” of Scott Rothstein’s $1.2 billion Ponzi scheme.
The Securities and Exchange Commission doesn’t see it the same way.
Levin, who owned a group of feeder funds dubbed Banyon Investments LLC, scored a victory
Monday when a Miami federal judge denied the SEC’s motion for summary judgment in the
agency’s federal civil securities fraud suit against him.
U.S. District Judge Ursula Ungaro’s ruling paves the way for a trial scheduled Oct. 20 trial in the
SEC’s case against Levin. It would be only the third trial in the 5yearold Rothstein saga.
A status hearing is scheduled for Friday. The SEC is seeking disgorgement and a civil penalty.
Shortly before motions for summary judgment were due in August, Levin fired his attorneys and
hired Daniel L. Rashbaum of Marcus Neiman & Rashbaum in Miami.
“Levin, a selfmade millionaire previously worth more than $200 million, invested a substantial
portion of his assets (and his family’s assets) in Rothstein’s fake discounted settlement
business,” Rashbaum wrote in a motion opposing the SEC’s request.
Rashbaum declined comment to the Daily Business Review, citing the ongoing litigation.
The SEC filed suit against Levin and his top executive at Banyon, Frank Preve, in May 2012.
The agency alleged the pair raised more than $157 million from 173 investors in about two
years by issuing promissory notes from Levin’s company and interest in a private investment
fund they operated.
Preve has already admitted liability but plans to seek mitigation of the $157 million penalty
sought by the regulatory agency.
If Levin is found liable at trial, he could claim in the penalty phase that Rothstein investors have
already been made whole, partly through the help of the defendants’ bankruptcy settlements.
Levin has not been charged criminally. The statute of limitations to charge Rothstein co-
conspirators expires Oct. 31.
Preve has negotiated a guilty plea to a conspiracy charge, taking responsibility for $20 million in
Levin insists he didn’t know Rothstein, chairman of the Rothstein Rosenfeldt Adler law firm in
Fort Lauderdale, was running a Ponzi scheme funded with Banyon money. He told investors in
a letter shortly after the fraud imploded in 2009 that he was duped by both Rothstein and TD
Bank, which handled most of Rothstein’s money.
Levin declared bankruptcy and he and wife, Gayla Sue Levin, filed separate lawsuits in 2012 in
Broward Circuit Court against TD Bank. The cases have settled.
Rothstein is serving a 50year prison sentence, and more than 20 people associated with the
disbarred lawyer have been sentenced to prison. Prosecutors have said all victims have been
reimbursed through various means, including bankruptcy settlements.
The SEC’s amended fraud complaint filed in March alleges, among other things, that Levin
failed to register securities issued by Banyon, which was wholly owned by Levin and exclusively
invested in Rothstein settlements.
The SEC alleged Levin and Preve “marketed the Banyon investment to investors, met with
potential investors to tell them about Rothstein’s investment in purchasing court settlements at
The SEC claims the defendants told investors the fictional settlements concocted by Rothstein
were fully funded.
Levin has said he was so hands off at Banyon that he met with two or three investors at most.
In her 43page order, Ungaro said there is a genuine dispute whether Levin and Preve acted
knowingly, recklessly or negligently on several purported misrepresentations in materials
provided to Banyon investors. She said the matter is best left for a jury to decide.
The judge also noted Preve, in the last four months of the scheme, demanded documentation
from Rothstein several times for the settlements he was purchasing with investors’ money.
“I really need the backup documentation,” one email from Preve to Rothstein reads. “I don’t
mind going ONE week without it but going a MONTH is asking for an enlightened attitude which
I was just not blessed with.”