Southlanders Sue Drexel Scandal Figure
Convicted inside trader Dennis Levine, a key figure in the Drexel Burnham Lambert investment scandal, was sued Friday by two Orange County developers who contend that they were defrauded out of $400,000.
Six other people, including Levine’s brother Larry, and six corporations were named in the lawsuit, which seeks $20 million in punitive damages.
The plaintiffs, Thomas Brechtel and Randy Jochim, alleged in the lawsuit filed in Orange County Superior Court that they were lured into trips to Panama and Florida with promises from Levine to arrange millions in financing for a Dana Point real estate development.
At each meeting with potential backers, they said, they were forced to pay thousands of dollars in guarantee money.
The suit contends that Levine, along with his brother and defendants Marty Messanger, Robert Amira, Alberto Barrios, Robert C. Wilson and James Massaro, conspired to bleed the developers for money while knowing that they could not raise the $32 million needed to fund the development. The six corporations that were named include Levine’s Adasar Inc., a financial consulting firm in New York.
Levine, who set in motion the insider trading scandal in the 1980s by fingering financier Ivan F. Boesky, served prison time and was released in 1988. Levine, who is on tour promoting a book on his experiences called “Inside Out,” could not be reached for comment on the lawsuit.
The office of his publisher, G. P. Putnam, was closed late Friday. A message left with the firm’s answering service was not returned.
In March, 1990, the suit said, Brechtel and Jochim were introduced to Levine by Messanger to obtain funding for a three-acre real estate development called Ritz Cove II. Levine and his brother said they could help, the suit said, and an agreement was signed on April 18, 1990. Levine and his brother visited the Ritz Cove II site, the suit said, and soon arranged for Levine to fly to Panama with the developers to secure a $32-million loan.
In Panama, they met with Pan-Global Securities Marketing Corp. and Barrios, the suit said, and the $32-million loan was promised. The developers were told that they had to pay $49,500 in “up-front money” and $150,000 to secure the loan, the suit said.
“All of this money was lost because the loan was not funded as promised by defendants,” the suit said.
While in Panama, it said, the developers were advised to start a Panamanian corporation that would offer and sell mortgage participation bonds, and they formed West Star Funding Corp.
The suit alleged that the developers were then coerced into opening an escrow account with $75,000 in non-refundable fees. That money too was lost, it said, when the project failed to close escrow.
Other trips took them to Boca Raton, Fla., the suit said, where meetings were held at Euro-Capital Trust Co. Ltd. and Earnscliffe Trust Company Limited and another $80,000 was paid out.
The suit, which alleges conspiracy, deceit, breach of contract, fraud and infliction of emotional distress, was filed by San Francisco attorney Kevin McLean. It seeks $400,000 in actual damages plus interest and attorneys fees and $20 million in punitive damages.
