Victims of a $30 million Ponzi scheme allegedly orchestrated by a New York lawyer who committed suicide several years ago reportedly face a bleak prospect of recovery, with a bankruptcy proceeding resulting in just $85,000 recovered thus far. Jay Korn, who jumped off an office building in March 2010, was accused of operating a real estate Ponzi scheme through his law firm, Korn & Spirn, that took in nearly $30 million from clients and investors. The entirety of the $85,000 recovered has come from a settlement with a company that purportedly recruited investors for Korn's scheme.
Korn solicited clients and friends for what he touted as a real estate investment program that promised annual returns ranging from 12% to 15%. Korn was well known in his community, serving as president of the Middle Bay Country Club and the Oceanside Board of Education. According to victims, Korn represented that investments would be used to help people who could not afford typical mortgages by offering them the ability to borrow money. In total, nearly $28 million was raised from investors.
While there were no complaints from investors prior to Korn's death, his suicide resulted in dozens of complaints to authorities about both investments and other funds that had been entrusted to Korn - including at least one instance of Korn allegedly converting client funds for his own use. Korn's firm was subsequently placed into involuntary bankruptcy, and an investigation by the district attorney's office later concluded that Korn had acted alone. At the time of Korn's death, records later showed that the firm had only $2,500 in assets - most of which was contained in a checking account. The court-appointed bankruptcy trustee is also currently pursuing Korn's wife for $1.25 million.
For more news and analysis of Ponzi schemes, visit Ponzitracker, a blog by Jordan Maglich, an attorney at Wiand Guerra King P.L.
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