Blank Rome Document Production Case Nearing Resolution
Neither Gordon's attorney, Christopher J. Day of Clark Hill Thorp Reed in Philadelphia, nor Blank Rome General Counsel Jeremy Rist, returned calls seeking comment Friday.
According to the motion to enforce, Gordon was appointed receiver for Gregory McKnight, Legisi Marketing Inc. and Legisi Holdings in May 2008 as part of a federal case in Michigan, U.S. Securities and Exchange Commission v. McKnight. In his role as receiver, Gordon filed a Financial Industry Regulatory Authority arbitration against Alan Goddard, Michael Lichtenstein, Eric Bloom and their former broker-dealer entity, Allen Goddard McGowan Pak & Partners, later known as Sierra Equity Group.
Gordon accused the arbitration respondents of fraudulently offering and selling more than $21 million in securities to Legisi Marketing in 2007, according to the motion to enforce. Blank Rome and former partner Bruce Rosetto represented the lenders in the deal.
According to the motion to enforce, the lenders allegedly knew Legisi was a Ponzi scheme and were warned by a third party that the company's strategy was "highly suspect."
Also in 2007, Rosetto and some of his family members created the Royal Palm Fund, in which Legisi invested more than $9.5 million, according to the motion.
In mid-to-late 2007, the Legisi scheme began to unravel as news reports questioned the company's business structure, Gordon said. According to Gordon's motion, a "run on the bank" soon followed. In 2009, Gordon filed a related lawsuit in Michigan against Rosetto, his family-member business partners and Royal Palm Investment Management Co. That complaint alleged the defendants unjustly enriched themselves in the Royal Palm real estate deal at the expense of Legisi, according to the motion. That case was stayed pending the FINRA arbitration. Gordon said in his motion that Rosetto is a party to the Royal Palm lawsuit and an "essential witness" in the FINRA case.
Gordon had argued in his motion that he needed the Blank Rome documents in order to prepare for his depositions of Rosetto and other witnesses by a September 11 deadline for such discovery in the FINRA case.
Gordon said the attorney-client privilege in the FINRA case has been waived as to the documents in question because the respondents in the FINRA case have asserted an advice-of-counsel defense. According to the motion, the respondents said they asked Rosetto for his opinion about Legisi before investing with the company. The respondents have alleged, according to the motion, that Rosetto said there was "'nothing to worry about'" in taking McKnight as a client.
In 2011, the FINRA arbitrators ruled the attorney-client privilege had been waived. The respondents and Rosetto filed a motion for reconsideration of that ruling, which was later denied, according to the motion.
"There is no good cause for Blank Rome's continued delay in commencing production of electronic files and hard copies of documents," Gordon said in the motion.