Even if Kenneth E. Marsh beats his securities fraud charges, he's never going to get back his black, 2007 Porsche 911 Turbo.
The Feds seized Marsh's only car from his Staten Island, N.Y., home on July 7.
Continue Reading Below
On Aug. 4, federal Judge Jack Weinstein in Brooklyn ordered it sold, even though Marsh has not been convicted for the $20 million-plus fraud alleged at his stock-tip newsletter company, Gryphon Holdings Inc.
Free on a bond that was secured in part by his mother's home, Marsh, 43, has been reduced to public transportation, his attorney, Fred A. Schwartz of Adorno & Yoss LLP in Boca Raton, Fla., said in a telephone interview.
"My white-collar clients don't realize how draconian the forfeiture laws are," said Schwartz, who once worked as a federal prosecutor himself.
Schwartz argued his client should not be stripped of wheels when he's not been convicted.
In a motion filed in U.S. District Court, Schwartz said Marsh needs the car to get to weekly doctor's appointments for his bi-polar disorder.
He also needs it to get to mandatory pre-trial services, to visit his 2-year-old son, and to look for jobs in New Jersey, which is no easy commute from Staten Island on public transportation, Schwartz said.
"The postal inspectors, who were the main arresting entity, were very upset that he was continuing to drive a Porsche while they drove less expensive vehicles," Schwartz told me. "It irked them."
Prosecutors alleged Marsh purchased the Porsche with an $88,749 transfer from a Gryphon account. They have shut down the business and seized its assets, so seizing the Porsche may seem like a logical next step. But unlike some other white-collar defendants, Marsh did not have an entire fleet of exotic cars. He just had one vehicle, and it happened to be an expensive Porsche.
Judge Weinstein had to choose between the Feds, who are diligently trying to recover as much money as possible for alleged victims, and Marsh, who is presumed innocent.
"I don't blame the judge," said Schwartz. "He was Solomon-esque."
The judge ruled the Feds could sell the car and hold the proceeds pending a further order. But he also ruled Marsh could have some of the proceeds of the Porsche sale to buy another car.
Marsh, trying to be reasonable, asked for only $5,000, Schwartz said.
What kind of car is he going to get for $5,000?
"I don't know," Schwartz replied. "We don't have the money yet."
I scrolled through a few New York auto ads on Craigslist: How about a 2002 Hyundai with just a little over 100,000 miles? Even has "child safety locks" for the kid.
Marsh, who was president of Gryphon, is among 14 defendants, five of whom have pleaded guilty; the rest, not guilty.
The U.S. Securities and Exchange Commission filed a civil complaint in April, calling Gryphon, "an Internet-based scam that misleads investors into paying fees for phony stock tips and investment advice from fictional trading experts."
Prosecutors allege Gryphon touted a "fake trading desk," a "fake hedge fund," "fake employees," "fake research," "false addresses," "false sales pitches" "false history" and "false testimonials."
"Gryphon's promotional materials stated that the famous financier George Soros said, '... the traders of Gryphon Financial are incredible ...,'" the indictment reads.
Hey, at least we know for a fact that the Porsche was real.
"We think we'll be able to prove that, really, what he was doing was a First Amendment function," said Schwartz. "He was selling newsletters ...
"We think he'll be found not guilty. .. We hope that at the end of this case, the government is going to have to take back the $5,000 car and buy him a Porsche."
(Al's Emporium, written by Dow Jones Newswires columnist Al Lewis, offers commentary and analysis on a wide range of business subjects through an unconventional perspective. Contact Al at email@example.com or tellittoal.com)