BREAKING NEWS: FTC Seeks Contempt Sanction Against Lawyer For Charles Castro Ponzi Scheme; Says Retainer Paid To Jeffrey Benice Came From Ponzi Proceeds

UPDATED 3:17 P.M. ET (U.S.A.) The Federal Trade Commission has asked a federal judge to find attorney Jeffrey S. Benice in contempt of court for failing to turn over $238,300 to a victims’ compensation pool as required.

Benice represented Charles Castro in the Network Services Depot Ponzi scheme involving the sale of Internet kiosks. The defendants in the 2005 civil case were ordered to pay a judgment of $18.9 million earlier this year. Castro separately was charged criminally with securities fraud. He pleaded guilty, and is in Chino State Prison in California.

Prosecutors said many of the victims were senior citizens.

Benice received a retainer of $375,000 in the case. The FTC alleged that $238,300 of the sum was attachable as consumer redress under a theory of constructive trust, claiming the payment had come from proceeds of the Ponzi. A federal judge agreed in March, and ordered Benice to turn over the money. Benice was permitted to keep $136,700 of the retainer for legal fees, but ordered to turn over the balance of $238,300.

FTC attorneys now say Benice is “flouting” the court order, while claiming the money has been spent and that he lacked the means to comply. Although Benice has offered to pay $2,500 per month, the FTC said he “appears to have very few assets but is living in extravagant style, paying over $6,000 per month in rent and over $3,100 per month in car payments on a BMW, a Porsche Turbo, a Jeep Wrangler, and a motorcycle.”

During the past few years, according to the FTC, Benice has earned a nice living.

“Benice testified at his deposition that he makes an average of $400,000 per year from his
practice and specifically asserted that he is not insolvent,” the FTC said.

Read the FTC’s motion to find Benice in contempt of court.

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One Response to “BREAKING NEWS: FTC Seeks Contempt Sanction Against Lawyer For Charles Castro Ponzi Scheme; Says Retainer Paid To Jeffrey Benice Came From Ponzi Proceeds”

  1. This kind of makes you wonder if the Prosecution in the ASD case will go after the attorney’s fees to be paid back in the ASD Case? After all, the money used to pay them was from a Ponzi, and illegal enterprise. It will be interesting to see how this plays out in the ASD case.

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