Plaintiffs: Alfred N. Koplin and Koplin Trading Loan, LLC
Defendants: DuPage National Bank, Kevin J. McCracken, Michael J. Baum, Greenberg Traurig LLP, Thomas D. Philipsborn, Moris Kricheli, Ronald M. Schiller, Bradley Schiller, and Currently Unknown Parties
This complaint stems from a Ponzi scheme allegedly perpetrated by Bradley Schiller with the assistance of DuPage National Bank president Kevin J. McCracken and Greenberg Traurig LLP attorney Michael J. Baum.
According to the complaint, plaintiff, Koplin Trading Loan, LLC (Koplin Trading), which was formed for the sole purpose of carrying out the transactions involved in this case and is the alter ego of Alfred N. Koplin, filed a confession of judgment action against Bradley Schiller in Cook County, Illinois on May 25, 2011. In that action, Koplin Trading obtained a judgment in the amount of $4,220,279.00, the majority of which allegedly remains unpaid.
The complaint alleges that “Bradley Schiller ran a Ponzi scheme dating from at least January 2008, persuading investors to invest money, or otherwise loan funds to him under a different pretext, to allow him to trade commodities, and produce a profit.” However, Schiller allegedly “lied about his success as a trader, using altered account statements to bolster his claims ... [and] used much of the funds he obtained from the new investors to pay back the old investors.” According to the complaint, in early 2010, Koplin agreed to lend $2,500,000.00 to Schiller, “which was to be placed in a segregated account at MF Global in the name of Koplin Trading Loan, LLC ... whereby the money could not be accessed by Defendant, Bradley Schiller, and was to be held only as security for the trading activities of Defendant, Bradley Schiller.” Several documents were allegedly executed in order to “create an arrangement which would allow Plaintiffs to lend money to provide the financial backing to allow Defendant, Bradley Schiller to trade commodities and make a profit. This would allow him to make interest payments and payback the principle of the loan.” According to the complaint, among the safeguards built into the documents were 1) the loan monies were to be held in a pre-designated, segregated account at MF Global in the name of Koplin Trading, 2) Mike Dowd, the President of MF Global, agreed [in a document identified in the complaint as “Exhibit 4”] to the establishment of the account, to which Schiller would have no access, and 3) Schiller’s daily account statements were to be personally monitored by Defendant, Kevin J. McCracken. However, the complaint alleges that “instead of transferring the money to such segregated account, the money was transferred to the personal account of Defendant, Bradley Schiller, who quickly misappropriated the funds.”
Accordingly to the complaint, prior to the transfer of the loan monies, Defendant, Michael J. Baum, undertook to have Exhibit 4 executed by MF Global and subsequently presented Exhibit 4 to Plaintiffs’ attorney, Larry Robins, “as a properly executed document signed by Mike Dowd of MF Global. In fact the signature of Mike Dowd was forged, and Mike Dowd of MF Global had no knowledge of this document and had not agreed to the terms contained therein.”
According to the complaint, during the months following the execution of the documents described above and the transfer of the loan monies, McCracken allegedly “reported to Plaintiffs that Defendant, Bradley Schiller was making large amounts of money trading, when in fact [he] was losing money and continually on the edge of financial collapse.” Based on these alleged representations, Plaintiffs provided an additional loan of “$1,500,000.00 (and later another $400,000.00) to be made under the same procedures and arrangements as the 1st loan described above.” However, according to the complaint, “Plaintiff[s] later learned that [the segregated MF Global account] did not exist, and all the loan money in question had been wired by Defendant, DuPage National Bank, and Defendant, Kevin J. McCracken, into the personal account of Defendant, Bradley Schiller, at Harris Bank, who used the money in part to pay off previous participants in his Ponzi scheme, who are identified based on current information as Defendants Thomas D. Philipsborn, The PrivateBank & Trust Company, Ronald M. Schiller, Moris Kricheli, and Currently Unknown Parties. Any monies not paid by Schiller to participants in the Ponzi scheme were dissipated by Schiller through his extravagant lifestyle.”
Plaintiffs allege the following counts in the complaint: 1) Negligence against Kevin J. McCracken; 2) Breach of Confidential Relationship and Fraudulent Concealment against Kevin J. McCracken; 3) Breach of Confidential Relationship and Fraudulent Concealment against DuPage National Bank acting through its President Kevin J. McCracken; 4) Violation of the Illinois Consumer Fraud and Deceptive Business Practices Act against Kevin J. McCracken; 5) Vicarious Liability of DuPage National Bank for the actions of Kevin J. McCracken; 6) Negligence against Michael Baum; 7) Vicarious Liability of Greenberg Traurig LLP for the actions of Michael Baum; and 8) To Set Aside Fraudulent Transfers and for Other Equitable Relief against Thomas D. Philipsborn, Moris Kirchell, Ronald M. Schiller, and Currently Unknown Parties.
Plaintiffs seek judgment on counts 1-4 and 6 in the amount of $4,220,279.00, together with interests and costs; on counts 5 and 7 for unspecified damages; and on count 8 “in an amount equivalent to the monies improperly transferred to [the defendants’] benefit from Defendant, Bradley Schiller, plus, costs, interest, and attorneys’ fees.”
Circuit Court of Cook County, Illinois
Complaint filed September 18, 2012
For additional information, please contact:
Timothy O'Driscoll | (215) 988-2855 | Timothy.O'Driscoll@dbr.com
Stephen C. Baker | (215) 988-2769 | Stephen.Baker@dbr.com