Controversy Over Fraud in United States
On March 15, 2012, a United States District Court (SDNY) entered a default judgment against Lehman, Lee & Xu and its Managing Director Edward Eugene Lehman in the amount of:
- $1,135,850 in compensatory damages;
- $3,407,550 in treble damages under 18 U.S.C. §1964(c) for plaintiff's RICO conspiracy claims;
- $406,339.36 in attorneys' fees and costs;
- $150,000 in punitive damages; and
- $297,997.25 in prejudgment interest.
The lawsuit, filed by United States clients of the firm, alleged that defendant Lehman fraudulently induced the plaintiffs and their investors to deposit approximately $1.2 million into an escrow account with the defendant on the pretext that Lehman, Lee & Xu would provide the plaintiffs with legal, financial, and accounting services, including services related to investment projects in Hong Kong. The plaintiffs allege that, after depositing the money in the escrow account, they began to lose confidence that the defendants were in fact performing the services agreed to. The defendants then allegedly refused the plaintiffs’ request that their money be returned to them and ceased responding to the plaintiffs’ further attempts to communicate with them.
The plaintiffs claimed to have subsequently discovered that the defendants’ conduct was part of a scheme to defraud the plaintiffs of at least an additional $ 2 million. Based on these allegations, the plaintiffs asserted claims for 1) violation of the civil RICO statute (18 U.S.C. §1962(c)), 2) conversion, 3) aiding and abetting conversion, 4) breach of fiduciary duty, 5) aiding and abetting breach of fiduciary duty, 6) professional negligence, 7) securities fraud, 8) fraud, 9) setting aside fraudulent conveyances, 10) unfair business practices, 11) unjust enrichment, 12) misrepresentation likely to cause confusion, and 13) false and misleading advertising.
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