dczoldan@naplesnews.com" /> Quarles & Brady, Salvatori fire back at federal receiver for Mobley's investors » Marco Eagle

Quarles & Brady, Salvatori fire back at federal receiver for Mobley's investors

Convicted swindler David Mobley was an effective and frequent liar and Leo Salvatori and the Quarles & Brady law firm were as much his victims as anyone, attorneys for the firm and Salvatori contend in court documents.

"It is now clear that Mobley lied to QB as much as he did anyone," wrote William F. Jung, of the Tampa law firm Jung & Sisco, in documents filed in Collier Circuit Court.

Jung is defending Quarles & Brady and Salvatori in a civil suit filed in February by Otto Obermaier, the federally appointed receiver for Mobley's bilked investors.

The receiver alleges malpractice on the part of Quarles & Brady and Salvatori, a former partner in the company's Naples office. The suit blames them for $21 million in losses to Mobley's investors.

In the mid- to late-1990s, Mobley passed himself off as a superstar Naples hedge-fund manager before confessing to federal regulators in February 2000 of his seven-year scheme to defraud investors of $120 million. Hedge funds are largely unregulated and typically restricted to wealthy investors who pool their money to trade and hedge investments on the ups and downs of the markets.

The suit alleges that Quarles & Brady either drew up or reviewed the marketing materials, partnership agreements and circulars of Mobley's investment funds, chiefly Maricopa Investment Corp. The suit contends that Quarles & Brady knew that the money was to be invested exclusively in market-based securities.

Some of Mobley's ventures included the failed cigar bar, Heaven; Stadium Naples, a proposed arena surrounding the final hole of a golf course; The Strand development; Peabody Sports Cafe; and Attitude Network.

The receiver's suit contends that when Mobley was spending investors' money on businesses, homes, real estate and other ventures, including the failed Stadium Naples project, the firm and Salvatori knew or should have known that those expenditures weren't permitted under terms of the hedge funds.

Court documents of the Quarles & Brady billing records show the firm provided legal services or billed Mobley, and Maricopa Financial Corp., Maricopa International Investment, and David Mobley Inc., from April 1996 through May 2000.

Mobley was sentenced to 17½ years in federal prison for his investment fraud. A federal judge in Fort Myers reduced his sentence last week by 3½ years for his cooperation in the Stadium Naples public corruption case.

Quarles & Brady contends that the receiver and Mobley's investment entities have no standing to sue, saying "the entities which the receiver claims to be asserting the rights of are simply Ponzi creations of a swindler, and nothing more. (Quarles & Brady) is a victim of Mobley as are many others. . . The entities are barred by their own illegal conduct . . . under the doctrine of unclean hands," the court documents say.

Quarles & Brady contends that Obermaier is negligent because he failed to pursue and recover fees from the liable parties.

"Obermaier has settled or received recovery from others who, on the theory of this case, are jointly, partly, comparatively or contributorily liable for the alleged damages," Quarles & Brady contends.

The receiver's suit also alleges that Quarles & Brady had a continuing relationship in representing the investment funds and third parties, namely Mobley, who had interests that ran counter to those of the investors. The firm never advised the investors of the potential conflict of interest or obtained adequate waivers as required, the suit contends.

But the firm and Salvatori deny they had continuous contact with Mobley's investment entities and that, in fact, they had "no contact whatsoever with some of them."

Patrick M. Ryan, chairman and managing partner of the law firm of Quarles & Brady LLP, released this statement Friday:

"As we stated in our response to the lawsuit, we believe that any and all investor losses were caused by David Mobley, not by anything our firm did or did not do. We are confident that, in the end, it will be established that we acted appropriately. Mr. Mobley lied to us, just as he lied to other people."

As a financier, Mobley was a key player in Stadium Naples, which became the largest public corruption probe in the history of Collier County. Mobley was a partner in Maricopa Hardy Development, the original developers of The Strand golf course community off Immokalee Road.

Obermaier has distributed $30.1 million to holders of 271 investor claims. A single investor could have more than one claim.

The Florida Bar is investigating whether Salvatori did anything to deserve disciplinary action. The Bar acts as the investigative arm of the Florida Supreme Court. Discipline can range from verbal reprimand to disbarment.

Salvatori left Quarles & Brady in September 2003 and opened his own law firm, Salvatori & Wood. He had worked for the Naples office of Quarles & Brady since 1982.

Salvatori made headlines in Naples when he was arrested Oct. 11, 2001, along with several other defendants in the Stadium Naples public corruption case.

Defendants were accused of trading financial favors for Collier County Commission votes beneficial to their development projects, including Stadium Naples and The Strand development. Most of the defendants pleaded to reduced or related charges. Mobley's development partner, Paul Hardy, was cleared when his charges were dropped earlier this year.

Salvatori originally was charged with racketeering, racketeering conspiracy and money laundering. In November 2003, as part of a plea, he pleaded guilty to two misdemeanor counts of failing to report a $300,000 cash transaction.

© 2004 marconews.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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