The Daily Business Review reports that lawyers for Ruden McClosky, a now-defunct Florida law firm, settled a malpractice lawsuit brought by a group of South Florida investors who invested in a hedge fund operated by the law firm. Ruden McClosky once was Fort Lauderdale’s largest law firm. Ruden filed for bankruptcy in late 2011. The firm’s assets, and approximately 100 lawyers, were acquired by Fort Lauderdale law firm Greenspoon Marder.
Capital Partners High Yield Mezzanine Fund, plaintiff in the suit, reportedly was pleased with the $1.7 million settlement, which the parties reached on the eve of trial. Capital’s attorney, Miami attorney Andrew C. Hall, said “The damages are very close to what we settled for. Now we’re over and done and finished. Our client is thrilled,” reports the Daily Business Review.
The Capital lawsuit was just one of 11 malpractice cases pending against Ruden, including three related to the failure of the firm’s two little-known hedge funds operated by Ruden and its former partner, Patrick Moran. For years, Ruden McClosky surreptitiously operated the two hedge funds, Ruden McClosky Capital Partners. Plaintiffs in the suits have alleged that the two hedge funds invested in startup technology companies and land in the Bahamas. Plaintiffs also have alleged that the two hedge funds were risky and speculative. Although named in the suits, Moran did not contribute to the settlements, which were paid from Ruden’s $20 million malpractice insurance coverage, reports the Daily Business Review.
The first claim reportedly was paid in October after a Broward jury awarded money to a former Broward County resident, Ryan Gill, who alleged he was defrauded $4.6 million through the hedge fund. In Gill’s case, the investor came into an inheritance, and Ruden was handling the estate of Gill’s Father, who inherited a share of revenues from two beachfront hotels in Fort Lauderdale, the Yankee Trader and the Yankee Clipper. Gill lost virtually all of his $3.5 million investment, and alleged that he was misled by Ruden and Moran about the risk of investing in the hedge funds. Gill further alleged that Ruden failed to disclose conflicts of interest related to the firm’s collection of investment banking fees, finder’s fees, and legal fees for directing clients to the hedge funds.
Hall stated to the Daily Business Review that investors in the Capital suit relied upon advice from Moran and other Ruden attorneys to make a $2 million loan to be secured by property in the Bahamas, for which the investors ultimately discovered the borrower never held title.
The Alzheimer’s Disease and Related Disorders Association has filed a third lawsuit which remains pending in Palm Beach County. The Association has accused Moran, a former chairman of the Association’s Southeast Florida chapter, of mis-using his check-writing authority to place $1.1 million in one of Ruden’s funds.
Investors who have lost money in the Ruden McClosky hedge funds or other investments may be able to file claims for their damages. Sonn Law Group specializes in representing investors (not brokerage firms) in securities arbitration and investor fraud cases throughout the country, including Florida state and federal court. To learn more, including whether you may have a claim for your Ruden McClosky hedge fund investment or other investment losses, please call us at 844-689-5754 or complete our “contact form.”