Opinion ID: 202684
Heading Depth: 2
Heading Rank: 2

Heading: Attempts to Recover Dissipated Funds

Text: 7 In June 1998, ISG had become concerned that COB was not honoring the non-depletion agreement and unsuccessfully sought assurance from COB that its funds were intact. By mid-1999 ISG's director, Phillip Clark, a Hong Kong attorney, was actively investigating COB's handling of ISG's investment. By then, ISG knew that COB had transferred funds to Swan Trust, and that Pearlberg had subsequently transferred the majority of those funds to the FMB account. By this time, ISG also had learned of Pearlberg's assignment to Pomeroy and Pomeroy's recovery of $1.2 million based on the assignment. By April 2000, ISG had learned of COB's initial depletion of its investment — the May 1998 transfers to the ESCM and COB accounts in the United States. 1 8 In July 1999, Pappalardo, then an attorney with ESCM, began representing COB. On August 11, 1999, COB's Pomeroy sent ISG an email detailing COB's options for retrieval of the lost funds. Pomeroy also informed ISG that, I have chosen to move to prepare litigation against the parties utilizing the law firm of Greenberg & Traurig. I have utilized the law firm of Seamin Cherin & Melott [sic] for the criminal assistance against the parties. 9 During this same period, ISG's Clark flew to Boston to confront COB over the missing funds. When the parties met in Boston, Pappalardo told Clark that he had been retained by COB; that COB was also a victim of the fraudulent scheme; that all necessary steps, including litigation, would be taken to recover the funds; and that any independent action by ISG against COB, Pomeroy, or other parties would jeopardize Pappalardo's negotiations to recover the missing funds. ISG alleges that these representations, and other events that we detail below, led it to believe that Pappalardo was ISG's legal representative and that an attorney-client relationship had been formed. 2 10 Pappalardo informed ISG on several occasions that a negotiated recovery of the funds was imminent, as was COB's filing of a civil complaint against the perpetrators of the fraud. When Pappalardo had neither recovered the funds nor filed a complaint in over two years, ISG finally retained outside counsel on November 7, 2001. Through counsel, ISG filed suit against COB and Pomeroy in March 2002. ISG obtained a $10 million judgment in that suit, but the award has proven uncollectible. ISG also filed suit against ABN Amro Bank, FMB, and two individuals associated with COB's scheme. Those suits are currently pending.