New York COUNTY CLERK 03/01/2021 03:32 P~ NYSCEF DOC. NO. 414 INDEX NO. 654118/2015 RECEIVED NYSCEF: 03/01/2021 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: COMMERCIAL DIVISION PART IAS MOTION 3EFM — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — -x JOSEPH RUTIGLIANO, Plaintiff, — v — WILLIAM LOCANTRO, ROBERT ROMANOFF, EDM ELECTRICAL CONTRACTORS, INC., BRAVO SALES GROUP, INC., JOHN DOES 1THROUGH10, ABC CORPORATIONS 1THROUGH10, Defendants. — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — -x ABSOLUTE ELECTRICAL CONTRACTING OF NY INC., WILLIAM LOCANTRO, ROBERT ROMANOFF Plaintiffs, -againstJOSEPH RUTIGLIANO, Defendant. — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — x HON. JOEL M. COHEN: INDEX NO. 654118/2015 MOTION DATE N/A, N/A MOTION SEQ. NO. 010 011 DECISION+ ORDER ON MOTION DECISION/ORDER Index №654425/2017 (Action #1) The following e-filed documents, listed by NYSCEF document number (Motion 010) 373, 374, 375, 376, 377, 378, 379, 380, 381, 385, 386, 387, 388, 389, 390, 391, 392, 393, 394, 395, 396, 397,400,401, 402,408,410 were read on this motion for ATTORNEY WITHDRAWAL The following e-filed documents, listed by NYSCEF document number (Motion 011) 403, 404, 405, 406, 407,409,411 were read on this motion to SEAL In Motion Sequence Number 10, Levitt LLP (“Levitt”) seeks to withdraw as counsel for William Locantro, Robert Romanoff, and EDM Electrical Contractors, Inc. (“EDM”) (collectively, the “Defendants”). Levitt, through one of its attorneys, Irene Tenedios, Esq., seeks to terminate its representation due to the death of EDM’s President (see NYSCEF Doc. №374 654118/2015 RUTIGLIANO, JOSEPH vs. LOCANTRO, WILLIAM Motion №01 O 011 1 of 4 Page 1 of4 [FILED: NEW YORK COUNTY CLERK 03/01/2021 03:32 P~ NYSCEF DOC. NO. 414 INDEX NO. 654118/2015 RECEIVED NYSCEF: 03/01/2021 [“Tenedios December Affidavit”] at iii! 6–8), and Defendants’ failure to pay Levitt’s invoices (see NYSCEF Doc. №400 [“Tenedios January Affidavit”] at iii! 13 -18). An attorney may withdraw as counsel upon a showing of good and sufficient cause and reasonable notice (NY CPLR § 321 :2). Further, an attorney may withdraw from representation where the client “deliberately disregards an agreement or obligation to the lawyer as to expenses or fees” (NYCRR 1.16 [c]; see also Weiss v Spitzer, 26 AD3d 675 [1st Dept 2007] [permitting attorney to withdraw where client was almost $4,000 in arears]; Winters v Winters, 25 AD3d 601, 601 [2d Dept 2006] [holding that an attorney may withdraw where the client “refuses to pay reasonable legal fees”]). The Court concludes that Levitt has made a sufficient showing of entitlement to withdraw as counsel for Defendants and its motion is Granted. In Motion Sequence Number 11, Levitt seeks to seal certain documents submitted in support of its Motion to Withdraw as Counsel to Defendants. Levitt bases its motion on N.Y. Rule 1.16( e ), seeking to avoid any prejudice to its now-former clients by redacting certain reasoning for its Motion to Withdraw (non-payment of fees). The Appellate Division has emphasized that “there is a broad presumption that the public is entitled to access to judicial proceedings and court records” (Mosallem v Berenson, 76 AD3d 345, 348 [1st Dept 2010]). “Since the right [of public access to court proceedings] is of constitutional dimension, any order denying access must be narrowly tailored to serve compelling objectives, such as a need for secrecy that outweighs the public’s right to access” (Danco Labs., Ltd. v Chemical Works of Gedeon Richter, Ltd., 274 AD2d 1, 6 [1st Dept 2000] [emphasis added]; see also, e.g. Gryphon Dom. VL LLC v APP Intern. Fin. Co., B. V, 28 AD3d 322, 324 [1st Dept 2006]). 654118/2015 RUTIGLIANO, JOSEPH vs. LOCANTRO, WILLIAM Motion №01 O 011 2 of 4 Page 2 of 4 [FILED: NEW YORK COUNTY CLERK 03/01/2021 03:32 P~ NYSCEF DOC. NO. 414 INDEX NO. 654118/2015 RECEIVED NYSCEF: 03/01/2021 The desire to prevent the dissemination of information, that might be embarrassing to a party or might damage a party’s reputation, is not sufficient grounds for sealing (see Matter of Benkert, 288 AD2d 147, 147 [1st Dept 2001]). Here, having reviewed Levitt’s submissions, the Court determines that there are no sufficient reasons to seal the documents filed in support of Levitt’s Motion to Withdraw as Counsel to Defendants, apart from the redacted descriptions of legal work done in Levitt’s invoices (NYSCEF Doc. Nos. 401, 407). Levitt’s Motion to Seal is Granted in Part, allowing the redaction of task descriptions in Levitt’s invoices, and is otherwise Denied. Accordingly, it is therefore: ORDERED that the motion of Levitt to be relieved as counsel for Defendants in this action is Granted, subject to the following conditions; it is further ORDERED that Levitt is to comply with its obligations under Rule 1.16( d) of the Rules of Professional Conduct, as applicable to the facts presented, to “take steps, to the extent reasonably practicable, to avoid foreseeable prejudice to the rights of the clients, including giving reasonable notice to the clients, allowing time for employment of other counsel, delivering to the clients all papers and property to which the clients are entitled, promptly refunding any part of a fee paid in advance that has not been earned and complying with applicable laws and rules”; it is further ORDERED that, Levitt shall promptly serve a copy of this order upon Defendants by email, and, if practicable, by hard copy at their last known home and business addresses by certified mail, return receipt requested; it is further ORDERED that EDM shall appoint substitute counsel by March 31, 2021; it is further 654118/2015 RUTIGLIANO, JOSEPH vs. LOCANTRO, WILLIAM Motion №01 O 011 3 of 4 Page 3 of 4 !FILED: NEW YORK COUNTY CLERK 03/01/2021 03: 32 PMI NYSCEF DOC. NO. 414 INDEX NO. 654118/2015 RECEIVED NYSCEF: 03/01/2021 ORDERED that Defendants William Locantro and Robert Romanoff either appoint substitute counsel or advise the Court of their intention to proceed in this matter pro se, on or before March 31, 2021; it is further ORDERED that no further proceedings may be taken against Defendants without leave of Court in this matter until March 31, 2021; it is further ORDERED that Levitt’s Motion to Seal is Granted in Part and Denied in Part. The descriptions of the legal tasks performed in Levitt’s Invoices, NYSCEF Doc. Nos. 401 and 407 will remain redacted; it is further ORDERED that Levitt shall file on NYSCEF the unredacted and unsealed versions of NYSCEF Doc. Nos. 400 and 401 within one week of this Order; it is further ORDERED that nothing in this Order shall be construed as authorizing the sealing or redactions of any documents or evidence to be offered at trial; and it is ORDERED that all parties are to appear for a Status Conference, via teleconference (dial-in number to be provided by Plaintiff to Defendants and the Court) on April 6, 2021 at 4:30 p.m. This constitutes the decision and order
Sep 20, 2012,11:59am EDT
Seven Years Of Smoke And Mirrors In $1 Million Hedge Fund Scam
I am a critic of the inept and ineffective
This article is more than 8 years old.
U.S. Attorney for the Southern District of New York Preet Bharara (Photo credit: Wikipedia)
From April 2005 through November 2006, Michael Katz, Christopher Fardella and two other individuals were partners in a pretty impressive sounding Florida-based hedge fund: KMFG International, LLC. Katz was the Portfolio Manager and Fardella the Treasure.
For starters, just consider that august name: KMFG International, LLC.
You got four initials making up the first name of this hedge fund. Any organization that goes by initials must be pretty big, right?
Then you got that whole “International” thing which means that this is, you now, something worldwide, not just a rinky dink operation in a lousy office in some strip mall in suburbia.
Also, it’s one of those LLC thingamajigs which are a lot more important than a Corp. or Inc. — I think.
And let’s not forget that this whole thing was run out of the Sunshine State where there isn’t any fraud . . . well, that’s unless you’re counting pennystock hustlers and Medicare mills but then who’s counting?
SIDE BAR: To new readers of “Street Sweeper,” yes, the above is all dripping sarcasm. Please stand back lest you be splashed by my acid drool
Anyways, Katz, Fardella, and two others pitched the KMFG story to a batch of folks out of the blue and managed to get those individuals to part with some $1.03 million. Some folks — prosecutors and regulators, for example — would pejoratively characterize this solicitation effort as “cold calling.” Oddly, it seems to work. Repeatedly.
The illustrious KMFG’s marketing materials stated that the hedge fund was operated by “a management team consisting of hedge fund managers, traders, and top level executives from independent oil and gas companies” with a track record of generating substantial trading profits for KMFG’s investors. Whoa — no wonder the pigeons lined up for this investment of a lifetime. When you got a chance to invest with a management team (as opposed to an odd gathering of talented folks operatin’ on their own) and these savvy folks have a track record of profits, what’s not to like or trust? Forgetting the fact that you were cold called by the promoters, it’s not as if any old group of folks could just pretend to be part of a team that generates profits. Well, okay, maybe that could happen but not to you, right?
Of course there’s all that puffery that came up during the cold calling and then there’s the truth. Some might say, in this case, for example, that the difference between the truth and the pitch was fraud. For example, the four folks supposedly running KMFG had no genuine experience running a hedge fund . Well sure, not necessarily a big deal unless you thought you were investing with qualified professionals — and, of course, there was the added fact that not a single one of the folks pitching this hedge fund had ever been the claimed top level executive in the oil and gas industry.
So, where we at with this? You were cold called, and then the promoters lied about their hedge fund experience and about their oil and gas industry credentials. Geez, who the hell can you trust these days? Still, to be fair, ya gotta give folks a shot. Everyone’s gotta start somewhere, someplace. After all, even if these folks did fudge a bit about their experience, the profits speak for themselves.
Well, about those claimed profits — cumulative returns for 30 months of over 165 percent — never happened. A big fat lie. Apparently, Katz, Fardella, and their two cronies actually lost or spent $981,000 out of the $1,031,086.16 collected in investor funds. Katz and Fardella diverted the invested funds for their personal use and towards such lavish outlays as expensive meals and trips to Las Vegas. Of course, if you were one of the victims, you did get lots of bogus statements showing growing profits. Oh my.
And so it goes, yet again.
In October 2011, Katz and Fardella each pled guilty to one count of conspiracy to commit securities fraud and mail fraud and one count of securities fraud. On September 19, 2012, Katz, 33, Brooklyn, NY, and Fardella, 34, Ft. Lauderdale, FL, were each sentenced to three years in prison , three years of supervised release, and ordered to forfeit $981,000.
Co-conspirator Kristian Murphy-Fuhse, who was charged in a separate Information for his role in the same scheme, pled guilty in January 2012 and is awaiting sentencing .
In commenting on the sentences, U.S. Attorney Preet Bharara said:
In order to lure investors, Michael Katz and Christopher Fardella created resumes and marketing materials for their phony investment fund out of whole cloth. Their sentences demonstrate to those who may consider similar schemes that smoke and mirrors will not fool law enforcement, and you will be held accountable for such fraudulent activity.
Of course, that’s one way to look at this case — or spin it. Another view, far less optimistic, is that the smoke and mirrors did fool a lot of folks for some 6 to 7 years — the time it took to catch, prosecute, and convict these guys. Not exactly setting a speed record. Moreover, in 2012 we’re only first taking care of the mess from 2005 and 2006. Of course, for a failed bit of chicanery, someone want to tell me where the missing million bucks are?
The scary thing about that case is that it got underway in 2005 and 2006, the good old days when Wall Street was booming and everyone was flush with cash. Just imagine what’s gonna happen when Bharara and his colleagues catch up to Labor Day 2008 when the Great Recession crashed down upon us!
I’m a thirty-year veteran of Wall Street and an outspoken critic of ineffective regulation and an advocate for economic and political sanity. Following a career as an…
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