Merchants Hospitality, a New York City-based property management company, recently filed a lawsuit against one of its former partners, accusing him of running a Ponzi scheme, embezzling investor money, and retaliating against his former associates after he was terminated.
The plaintiff company alleges it attempted to help the former partner get back on his feet after he served a two-year prison sentence for fraud. The plaintiff company further alleges it caught the former partner stealing from the firm and using its name and assets to defraud unsuspecting investors and partners of money, which he then used to pay back victims of his previous fraud schemes.
The partner went to prison in 2010 after pleading guilty to 15 counts of grand larceny and three counts of scheming to defraud his uncle, in-laws, and other investors out of more than $18 million.
The plaintiff company hired him in 2012 prior to his release from prison in order to manage acquisitions and development for the firm. For years, the company had been loyal to the now-former partner, with the CEO, in 2014, calling his hiring "one of the best decisions we ever made."
However, with the filing of the recent lawsuit, the former relationship has now changed. Instead of being the best decision ever made, Merchant now claims the partner was hired "only as a favor". "Adam Hochfelder accused of Ponzi scheme, embezzlement by former firm" www.therealdeal.com (Oct. 05, 2020).