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September 2, 2010 |
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| October 16, 2009 |
By: Jordana Mishory |
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n a speedy downfall, South Florida attorney and receiver Lewis Freeman went to court Friday to put his firm out of business amid a federal investigation trying to trace $3.6 million from accounts overseen by the firm.
Miami-Dade Circuit Judge Victoria Sigler signed an order appointing another veteran South Florida receiver, Kenneth A. Welt of Hollywood, as receiver for Lewis B. Freeman & Partners. Freeman, a lawyer and forensic accountant, filed a request to liquidate his firm.
Freeman has often been selected by federal and state judges in the past two decades as a receiver or trustee whenever companies went bust or were plagued by fraud. He did not return a call for comment.
Warren Trazenfeld, a Miami attorney who represented Freeman in receiverships, said he was “in a state of shock and disbelief” when he heard Freeman placed himself in receivership.
“I never imagined such a thing would happen with Mr. Freeman, and I just hope everything works out for the best of both of him and his clients,” Trazenfeld said.
He said it is very unusual for anyone to place their own business under court control and added Freeman appeared to have taken the “honorable course” to keep his personal issues from detracting from his legal responsibilities.
The goal of receivers and trustees, who serve as agents of the court, is to find and preserve as much money as possible to repay creditors or defrauded investors.
Freeman’s Miami and Plantation offices were raided by the FBI early this month, and sources told the Daily Business Review that records were being sought on money controlled by the firm.
Welt’s office said he was in court on another case, and he did not return calls for comment by deadline. His major cases have included the liquidation of Boca Raton-based women’s apparel retailer Cascade International and Florida West Airlines.
The Web site for Freeman’s firm lists 10 principals and 12 consultants, but Freeman’s court filing listed himself as the firm’s sole shareholder. He is represented by Adorno & Yoss partner Mitchell Bloomberg, who did not return a message seeking comment.
Time to dissolve
The firm “has determined that it is in its best interests to wind up, liquidate and dissolve the corporation," the complaint said. “Freeman is not able to direct and manage the affairs” of the company.
An attached form signed by Freeman consented to his firm’s dissolution effective Thursday.
The disintegration of Freeman’s firm took little more than two weeks from the time of the FBI raid.
The firm’s Web site was not updated by late Friday to indicate it has shut down, and no notice was posted at the Miami office to alert visitors to any change in operations.
Freeman’s work in the E.S. Bankest collapse laid the groundwork for a lawsuit by Portugal’s Espirito Santo Bank, which produced a $522 million negligence award against the defunct Miami factoring company’s accounting firm, BDO Seidman. The record verdict against a U.S. accounting firm is on appeal.
Freeman is the receiver in an Orlando civil fraud case filed by the Commodity Futures Trading Commission against investment manager Capital Blu Management and its principals.
The commission claimed in March that Capital Blu pocketed some of the $17 million solicited ostensibly to invest in off-exchange foreign currency futures contracts. Freeman’s latest court filing was Oct. 1.
Other receiverships handled by Freeman included an appointment in April 2008 for radio station WOIR-AM in Homestead and for the Betsy Ross Hotel and restaurant in Miami Beach in 2004.
In August, Freeman sued the Internal Revenue Service after he became the target of a $4.5 million civil assessment for allegedly promoting a pre-tax parking deduction program with employers. The agency called it an abusive tax shelter.
Freeman’s firm also took charge of the shuttered Coral Springs firm Hess Kennedy, which allegedly defrauded clients nationally in a debt settlement scam. Receiver Daniel Stermer, a member of Freeman’s firm, found almost $55 million in valid claims against the law firm and its affiliates.
Stermer was appointed in the case filed by the state attorney general’s office. An office spokeswoman, who commented on condition of anonymity, said Stermer was an independent fiduciary and Freeman had no authority in the receivership.
“The Freeman situation should not affect the Hess Kennedy case in any way,” she said.
Stermer did not return calls for comment by deadline.
Jordana Mishory can be reached at (954) 468-2616. Review staff writer Paola Iuspa-Abbott contributed to this report.
Reader's comments
said:Lewis B. Freeman ran the Hess Kennedy pony show. Daniel Stermer was on vacation July 17 when the order was served Oct. 17 at 9:39 a.m. |
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