Although a federal jury in March awarded $2.45 million to the bankruptcy estate of a man who is currently serving jail time for running a Ponzi scheme, the Hanamirian Law Firm (HLF) has settled this case for the sum of $100,000. HLF’s client, a Pennsylvania-based accounting firm, was found to have helped Ira J. Pressman, presently in prison for his actions, carry out his scheme. This case evolved from allegations regarding Defendants’ purported involvement in a “Ponzi” scheme perpetrated by PJI Distribution Corporation “PJI” and Ira J. Pressman.

Plaintiff alleged that Pressman utilized PJI to defraud various parties from 2007 through 2010. Plaintiff alleged that Defendants, as outside tax accountants, facilitated this ongoing scheme through either willful blindness or negligence, by their failure to suspect Pressman’s activities and the nature of certain transactions. This case is related to a bankruptcy proceeding that arose out of that Ponzi scheme committed by Ira Pressman through his ownership and operation of PJI.  The verdict in the underlying matter was rendered on March 18, 2016.

There were originally four Defendants in this matter, Robert Raggi, Herbert Weinstein, Thomas Lisowski and the entity under which they practiced accountancy, Raggi & Weinstein, CPA’s LLP (succeeded to by Raggi & Lisowski, CPA’s LLP). Herbert Weinstein, Robert Raggi, Thomas Lisowski and the Raggi & Lisowski entity each resolved with the Plaintiffs below in the form of an Assignment Agreement whereby each them assigned their bad faith claims to the Plaintiffs.

CPA Mutual, the insurance carrier for each of the Defendants, has taken a post-Verdict position that the insurance policy under which coverage was identified is now rescinded on the basis that facts uncovered at Trial reflected a level of knowledge on the part of the Defendants not previously disclosed either in the professional insurance application process or in the context of the pre-trial process. CPA Mutual has also filed a Declaratory Judgment action in the Eastern District of Pennsylvania.

There remains an Appeal pending to the Third Circuit Court of Appeals. CPA Mutual, the insurance company, is being pursued for bad faith after first insisting on going to trial, only to deny coverage in the aftermath.

READ THE PUBLISHED OPINION



READ THE CONSENT ORDER