Posted May 24th, 2016 at 7:14 amNo Comments Yet
FOR IMMEDIATE RELEASE:
LOS ANGELES, CA (MAY 24, 2016) – A February, 2016 complaint filed in United States Bankruptcy Court for the Southern District of New York, details egregious acts of fraud perpetrated by David Molner, including the systematic looting of the Aramid Entertainment Fund (the Aramid Fund) for over $100 million, ultimately leading to the Fund’s demise.
The complaint asserts that Molner was, “completely ignoring and otherwise flouting his fiduciary and contractual obligations as the day-to-day manager of the Aramid Fund,” which resulted in lining “his own pockets” as well as serving “his other interests.” For eight years, Molner “implemented and executed a well-oiled plan designed to keep the Aramid Fund marginally afloat so that he, and the entities he controls, could garner substantial compensation in the form of referral and operating fees, in addition to handsome kickbacks and other illegitimate and unearned payment streams.”
The complaint marks yet another vindication for David Bergstein, the target of a scorched earth litigation campaign launched by Molner in 2009.
Akin to Bernie Madoff’s infamous pyramid scheme, for years Molner falsely reported a consistent above market performance by the Aramid Fund to his investors, thereby lulling them to inaction while he attempted to raise additional funds and ultimately siphoned off virtually all the Aramid Fund’s remaining cash for himself. The campaign against Bergstein was devised by Molner in an effort to divert attention away from Molner’s reprehensible transgressions against the Aramid Fund.
At the end of 2008, the Aramid Fund’s investors collectively demanded a return of hundreds of millions of dollars from Molner based on suspicion that he was falsely reporting the fund’s true value. With no ability to repay investors, Molner decided to divert the investors attention elsewhere. After a year of denying any problems with the Aramid Fund, Molner switched gears, admitted to his investors that the Aramid Fund was suffering, and then began depicting Bergstein as the scapegoat responsible for the Aramid Fund’s losses. Molner having refused to provide transparency to his investors and failing to provide any audit, was then free to explain matters as he saw fit. Over a six-year-period commencing in 2009, after introducing the scheme against Bergstein to his investors, Molner launched his carefully devised litigation and press campaign against his former partner. Said campaign entailed co-opting Alex Ben Block of The Hollywood Reporter, as well as numerous accomplices and over a dozen attorneys in filing in excess of 200 litigations against Bergstein and his affiliates (including five highly-publicized involuntary bankruptcies, collectively referred to as the “ThinkFilm Bankruptcies”).
Sources involved say the multi-pronged attack was architected by Molner and his team to create an insurmountable amount of damage to Bergstein, crippling his financial and time resources, and calculated to bring a rapid collapse of Bergstein’s business and personal life rendering him defenseless and quickly presumed guilty. Molner told his investors as early as June of 2010 at a Fund presentation that Bergstein would be financially ruined by the end of the summer and the Aramid Fund would take over Bergstein’s extensive and valuable film library.
To date, all litigations initiated by Molner against Bergstein have been dismissed with prejudice, including the ThinkFilm Bankruptcies, and Bergstein has obtained judgments and settlements from Molner’s affiliates and attorneys already totaling over $75 Million. The presiding judge in the ThinkFilm decision harshly rebuked the conduct in which the Molner team engaged, including lying to the court. From the outset of Molner’s litigation campaign, Bergstein asserted that the lawsuits which Molner filed were baseless, and part of an elaborate scheme to divert attention away from the systematic fraud and looting which victimized the Aramid Fund’s investors. Initially, Bergstein’s explanation was viewed as outlandish, as it seemed inconceivable that Molner would go to such lengths to cover up his illicit activities.
Molner ultimately spent a reported $25 million of Aramid investors’ money to fund his diversionary legal attack on Bergstein. When the Aramid Fund was finally thrown into bankruptcy, in addition to what was spent paying lawyers and accomplices, Molner left an additional $10 million bill owed to the aforementioned legal team. By the time the Aramid Fund went bankrupt, it was left virtually cashless, (although Molner continued removing any available cash from Aramid until the very end). Despite the condition of the Aramid Fund, Molner continued to enjoy a lavish bi-coastal lifestyle with residences in Beverly Hills and on New York’s Park Avenue, each valued at well over $10 million. Additionally, Molner maintained assets including offshore accounts and indulged in frequent trips to Monte Carlo and other worldly destinations around the world while the Aramid Fund collapsed.
Though Molner’s plan against Bergstein devolved and eventually failed, court filings reveal that Bergstein was forced to spend over $30 million in legal fees to defeat Molner and expose his nefarious wrongdoings. Moreover, Bergstein and his partners suffered an estimated $100 Million in damages as a result of Molner’s actions and the Aramid Fund investors lost an additional $300 Million. As a result, attorneys for Aramid spoke out at various proceedings and confirmed that in addition to “victimizing the Fund’s investors,” Molner “victimized” Bergstein by “using him as a scapegoat,” thus validating Bergstein’s initial theory regarding Molner’s intentions. Aramid eventually agreed to pay Bergstein $10 million to settle the matter.
The 77 page complaint against Molner reads like a Hollywood script, with sordid details including: “In what can only be described as a complete departure from any semblance of business ethics, Molner undertook a sexual relationship with Mr. Bergstein’s former corporate counsel, Susan Tregub, (one which is well documented in sexually explicit emails within the Aramid Fund’s possession) to improperly obtain privileged, confidential and proprietary information from her in order to assist in Molner’s litigation campaign.” “Not coincidentally, Molner’s litigation campaign raged on during a time of precipitous decline for the Aramid Fund, as he shifted efforts from day-to-day management to attacking his perceived enemy.”
Discovery during the litigation eventually revealed that Molner seduced Tregub prior to launching the litigation campaign, and that, in exchange for hundreds of thousands of dollars from Aramid, Tregub worked in an undercover position within Bergstein’s organization for nearly a year. Bergstein learned of Tregub’s role after the litigation began, at which point Bergstein sued Tregub and ultimately obtained a $50 million judgment against her, resulting in Tregub’s suspension from the state bar.
Other attorneys involved in Molner’s scheme have, to date, paid $17.5 million to settle claims against them for their role in aiding Molner. Actions against other firms involved currently remain in litigation. When Aramid was finally placed into bankruptcy in 2014, discovery revealed that the fund in fact had a negative asset value, a huge disparity from a figure in excess of $250 million asserted by Molner to the investors and courts at the outset of his litigation campaign.
ABOUT DAVID BERGSTEIN:
David Bergstein is the founder and CEO of Cyrano Group Inc. He is a financier who specializes in locating, securing financing for, and restructuring companies with special situations, including those which are undervalued, distressed, or have complicating or litigious factors in their history. He is known for his talent in accurately predicting trends and recognizing opportunities to restore and reposition businesses.