Timothy Christopher Karen

Timothy Christopher Karen's Legal Cases (8)

San Diego, CA

Securities and investment fraud Lawyer at San Diego, CA

Practice Areas: Securities & Investment Fraud, Consumer Protection, Insurance Fraud

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Securities and investment fraud

The First Jersey Securities Scandal

Jan 01, 1985

OUTCOME:

Mr. Karen began to handle securities fraud litigation shortly after beginning in private practice in the mid-1980's. Within a year of being admitted to the California Bar, in 1985 he filed the nation' ... s first securities fraud class action against Robert E. Brennan and First Jersey Securities, alleging penny stock fraud on a massive scale. First Jersey specialized in promoting "Pump and Dump" penny stocks to unsuspecting investors, many of them elderly, who lost their entire investments when the stocks inevitably crashed. The First Jersey Securities scandal eventually involved many other lawsuits filed by other attorneys and nationally these cases were ultimately consolidated via the Judicial Panel for Multidistrict Litigation, In re: First Jersey Securities Litigation, MDL Docket number 681, Civ. No. 85-6059, in the Eastern District of Pennsylvania. This case ultimately settled for $10 million. Karen was counsel of record for class action plaintiffs in the case he filed and the attorney of record for claimants as well as for a large number of investors who pursued their claims through arbitration before the National Association of Securities Dealers ("NASD") (presently known as the Financial Industry Regulatory Authority ("FINRA"). All of these cases were privately settled. First Jersey itself went bankrupt in 1987 and Brennan was found guilty of securities fraud in 1994. The SEC held the Defendants liable for $75,000,000.00. Brennan declared bankruptcy in 1995 but committed another fraud when he did not declare all of his assets to the court. In 2001, Brennan was found guilty of money-laundering and bankruptcy fraud and sentenced to a prison term of nine years and two months. On appeal, in 2003 the sentence was upheld.

Securities and investment fraud

The San Diego Realty Exchange Case

N/A

OUTCOME:

The firm also represented approximately sixty-five percent of the creditors in the consolidated bankruptcy proceedings arising from the collapse of San Diego Realty Exchange and Donald Dean Cook, style ... d In re: Donald Cook, Debtor, U.S. Bankruptcy Court, S. Dist. Ca. Consolidated Case No. 90-03752-B7, Case No. 90-08996-B-07, Adversary Proceeding No. 91-90032. The Cook case arose from a multimillion dollar Ponzi scheme involving fictitious IRS Code 1031 exchange transactions. Cook, a CPA and Realtor, formed a company called "San Diego Realty Exchange" for the purpose of facilitating IRS Code Section 1031 Exchanges. Cook absconded with money entrusted to his company by its exchange clients. On December 5, 1991, in the case of People v. Donald Dean Cook, San Diego County Superior Court No. CR122699, Cook was convicted by a jury of 32 counts of grand theft; 19 counts were for amounts taken in excess of $25,000.00, and 10 counts were for amounts taken exceeding $100,000.00 (Penal Code sections 487, subd. 1, 12022.6, subds. (a) and (b)). He was sentenced to serve a total of 10 years in state prison. Cook was incarcerated in the Centinela State Prison in Imperial, California. In the case filed by Karen, he obtained a nondischargeable multimillion dollar verdict against Cook.

Securities and investment fraud

The James Earl Davis Case

N/A

OUTCOME:

In one noteworthy securities fraud case involving a stockbroker and insurance agent named James Earl Davis, Mr. Karen represented 54 individuals and two churches who were defrauded of $2.65 million by ... Davis, who was the Church Treasurer at the time of the fraud. Davis sold the congregation and churches fictitious variable annuities and pocketed the money. Davis was ultimately apprehended by the FBI and went to prison. One of Mr. Karen's clients confided to him that although losing the money due to fraud was bad, the worst part about the case was that he had considered Davis to be his best friend, the two had gone camping together and spent holidays together. Working in conjunction with well know trial lawyer Harvey Levine, Mr. Karen recovered $3.3 million for defrauded investors from the insurance company and brokerage house that had employed Davis. After fees and costs had been fully deducted, the victims recovered 100% of their actual investment losses.

Securities and investment fraud

The FundAmerica, Inc. Case

N/A

OUTCOME:

The firm was also class co-counsel in a class action lawsuit filed against FundAmerica, Inc. This was a securities fraud class action case involving a pyramid scheme. The case was informally consolid ... ated with the consolidated class actions in Nguyen v. FundAmerica, et al., No. C 90-2090 MHP filed in the United States District Court for the Northern District of California. The combined class action litigation ultimately settled for approximately $15 million.

Securities and investment fraud

The Towers Financial Case

N/A

OUTCOME:

The firm represented over 100 investors who suffered investment losses in excess of $35 million due to the collapse of the Towers Financial Corporation. Towers Financial Corporation allegedly was invo ... lved in factoring hospital receivables. It sold private placement type securities that guaranteed a steady rate of return. The CEO of Towers was Steven Hoffenberg. Hoffenburg used Towers in a Ponzi scheme and in reality, the firm had little or no legitimate earnings from its factoring activities. The firm collapsed in 1993, and in 1995, Hoffenberg pled guilty to bilking investors out of $475 million and was sentenced to prison. At the time the SEC considered the fraud to be "one of the largest Ponzi schemes in history." Mr. Karen represented Towers victims in arbitration cases before the National Association of Securities Dealers ("NASD") (presently known as the Financial Industry Regulatory Authority ("FINRA") and in many Court cases filed in State and Federal Court.

Securities and investment fraud

The Bennett Funding Case

N/A

OUTCOME:

The Bennett Funding Group were accused of being perpetrators of one of the largest Ponzi schemes in U.S. history. The leasing & funding company was based in Syracuse, New York. BFG operated under the B ... ennett Receivables Corporation, Bennett Receivables Corporation II, Bennett Management and Development Corporation, The Processing Center, Inc., Resort Service Company, Inc., American Marine International, Ltd., Aloha Leasing, and Aloha Capital Corporation brands. On March 28, 1996, the SEC filed a civil action against The Bennett Funding Group, Inc., its chief financial officer, Patrick R. Bennett, and other companies Bennett controlled, in connection with a massive Ponzi scheme. The SEC alleged that the defendants fraudulently raised more than several hundred million dollars, purportedly to purchase assignments of equipment leases and promissory notes. Mr. Karen represented a substantial number of victims of the Bennett Funding fraud in arbitration and court cases.

Securities and investment fraud

The Prudential Limited Partnership Cases

N/A

OUTCOME:

During the 1980s and 1990s, Prudential Securities Incorporated (PSI), formerly a division of Prudential Financial, was investigated by the Securities and Exchange Commission (SEC) for suspected fraud. ... During the investigation, it was found that PSI had defrauded investors of close to $8 billion, the largest fraud found by the SEC in US history to that point. The SEC charged that Prudential allowed rogue executives to cheat customers on a large scale and blithely ignored a 1986 SEC order to overhaul its internal enforcement of securities laws. In all, some 400,000 individual investors lost money on the deals. Mr. Karen represented 75 investors in private lawsuits and arbitrations and in SEC restitution proceedings. Additionally, the firm participated In re: Prudential Limited Partnership Litigation, MDL 1005, Southern District of New York, the class action that resulted in a $110 million settlement with Prudential Securities, and Mr. Karen was in the objector group In re: Prudential Energy Income Partnerships Securities Litigation, MDL 888, Eastern District of Louisiana, which was resolved for $92.5 million.

Securities and investment fraud

NASDAQ Market Maker Antitrust & Securities Litigation

N/A

OUTCOME:

In 1996, the US Department of Justice charged 24 major NASDAQ securities firms with price fixing transaction costs for investors. In a civil class action lawsuit that was based upon these allegations, ... Mr. Karen was among the class co-counsel in proceedings consolidated In Re: NASDAQ Market Maker Antitrust & Securities Litigation, MDL 1023, Southern District of New York, which was recently settled for approximately $1 billion. The class action alleged that NASDAQ market-makers set and maintained wide spreads pursuant to an industry-wide conspiracy.

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