Lapeer County commissioners on Thursday agreed to a settlement payment in the bankruptcy proceedings relative to the Ponzi scheme perpetrated by now-convicted and jailed Southfield investment advisor Dante DeMiro. They also agreed to hire a law firm to investigate their options and probability of success in pursuing further claims to recover the county’s lost funds.
The county was one of a number of victims that included municipalities, unions and school districts in a scam that spanned from August 2007 to September 2010. The scheme was exposed after then newly-elected Lapeer County treasurer Dana Miller began to chase down suspicions about county investments that DeMiro was handling.
DeMiro had worked with the county for over ten years, but shortly after Miller took office in January of 2009, she acted on a “gut feeling,” and began exploring the investments DeMiro was handling. In the end, Lapeer County was out $750,000. It was just one of a number of victims, with total losses at least $12.9 million. One victim lost as much as $3.7 million. Now, the county will be anteing up another $210,000 under a settlement agreement with the bankruptcy trustee as it seeks to recover its share of the bankruptcy payout and avoid litigation.
As noted in the bankruptcy trustee’s motion relative to the settlement agreement with the county, perpetrator DeMiro “did not invest their funds as promised, but instead used their funds to purchase personal items, real property, gamble, make payments to other investors in the same scheme, and make loans to several individuals and a local jewelry store.”
The county had been doing business with DeMiro for years, nor was the county benefiting from abnormally high rates of return. Shortly after the Ponzi scheme was exposed, Miller said DeMiro had provided documentation on the investments. Even so, she just didn’t trust him.
The county first attempted to recoup the lost funds through a claim to their insurer, Michigan Municipal Risk Management Authority, but those attempts failed. Since then, the county has had to wade through the bankruptcy process, and will now be forced by the courts to ante up additional money to make up funds it received from DeMiro in the Ponzi scheme.
Everyone was tight-lipped about the bankruptcy settlement matter since it has yet to be approved by the judge.
“It’s still being litigated, this whole situation,” said board chair Gary Roy.
“The judge has not accepted the order yet,” confirmed Biscoe. And assistant prosecutor Steve Beatty cautioned everyone to make no comments in the matter.
The motion commissioners approved, however, authorizes “payment of $210,000 in the matter of MuniVest Services LLC et al pending in the US Bankruptcy Court” following approval and entry of the motion. The amount represents 80% of a $260,323.40 amount that was transferred back to the county by MuniVest as part of Dante DeMiro’s Ponzi scheme – serving to dupe the county into thinking its funds had actually been invested and were realizing returns.
The 80% agreement acknowledges the fact that whether or not there actually were any “red flags” that might have alerted the county to DeMiro’s activities could only be determined through an expensive and exhaustive process that would only diminish recovery to creditors in the bankruptcy.
The county is among other duped investors returning money that will become part of the assets that will be distributed to victims.
It is unknown what the county may stand to recoup from the bankruptcy estate when all is said and done. The next avenue to pursue a claim would be against the firm with which DeMiro was apparently involved during the Ponzi scheme, Brookstone Securities.
Commissioners agreed to engage Fink & Associates Law in Bloomfield Hills to investigate whether there are courses of action available to the county relative to Brookstone, and, if so, the likelihood of success in pursuing them. The county will pay the firm a flat fee of $5,000 for the exercise. Beatty recommended engaging the firm to try to get some of the county’s money back.
“We’re not the only ones in this boat,” noted commissioner Dyle Henning, asking Beatty if it would make sense to collaborate with other victims of the crime.
“We’re all separate victims,” said Beatty, noting they’d each be after their piece of the pie.
The lengthy and dispiriting process that has resulted from the county’s victimization, along with a number of other entities, prompted Biscoe to comment, “It’s been a thoughtful process how best to proceed…. We’re victims. We didn’t bring this on ourselves.”
Later, alluding to the settlement payment bringing the county’s total loss to almost $1 million, Biscoe said, “We feel we’ve been victimized twice.” Nevertheless, Biscoe remains confident that the county will recoup at last some portion of its losses, and he noted, “Economically, we’ll survive it.”
I bet you’ve seen ‘em, too. Butterflies. They’re everywhere. Bill Meinz noticed them in his yard last week, and snapped these great pictures. He also identified them as Red Admiral butterflies.
The lovely creatures are apparently enroute to Canada as part of their annual springtime migration, but this year the event is early and it’s huge. Warm temperatures in the southern United States apparently contributed to the unusually large population. Winds and early warm temperatures on the route up north have been factors in the gigantic migration as well.
