By Tim McGlone
A federal judge in New York signed off on a $7.9 million settlement involving two law firms, including one in Virginia Beach, and investors in the WexTrust Capital Ponzi scheme.
The Virginia Beach firm Poole Mahoney will pay $900,000 and the Chicago firm Much Shelist, and its insurers, will pay $7 million to the receiver managing the WexTrust assets. The two firms did work for WexTrust but admitted no wrongdoing in settling the matter.
Norfolk resident Joseph Shereshevsky and his Chicago partner Steven Byers collected around $270 million from 1,400 investors while operating the WexTrust scheme. They did invest in real estate and diamond mines, but the Securities and Exchange Commission said they squandered about $100 million on unauthorized uses.
Shereshevsky and Byers are serving lengthy prison terms after pleading guilty in a Manhattan federal court to fraud charges.
The court-appointed receiver, Washington lawyer Timothy J. Coleman, and his associates have spent the last four years tracking down the remaining investments and liquidating them.
Victims have so far shared in $5 million recovered by the receiver. The receiver has reported that up to $20 million will be available for distribution as soon as the lawyers untangle some red tape involving unpaid taxes to the Internal Revenue Service.
The receiver has about $13.8 million in cash on hand. Adding in the legal settlements will raise that account to about $21 million.
Federal Judge Denny Chin on Thursday also approved payments totaling $686,000 to the lawyers handling the receivership to come from that $21 million.
A numbers of victims showed up at the hearing Thursday and objected to the legal fees, according to news accounts.
Tim McGlone, 757-446-2343, firstname.lastname@example.org
The law firm Poole Mahoney will pay $900,000 of a $7.9 million settlement in the WexTrust Capital Ponzi scheme. The other firm and its insurers will pay the rest.
Beach firm's share