A New Jersey family is suing Donald Rowe and The Wall Street Digest newsletter, based out of Sarasota, Florida. The Formica family alleges Rowe accepted large fees from promoting Art Nadel’s hedge funds, along with several other investment funds. The family estimates their losses to exceed $6 million and their attorney also moved to have Rowe’s wife added to the lawsuit, alleging she received in excess of $2 million from distributions of the Nadel funds.
In addition to this being the second lawsuit brought against Rowe and the Wall Street Digest, the court-appointed receiver in the Art Nadel case has sued Rowe for $8.6 million. Furthermore, Rowe’s relationship with Nadel and his partners has spawned a lawsuit against the national law firm Holland & Knight.
The Formica family says they trusted and indeed relied heavily on Rowe and the advice provided in his newsletter for their investments. The family became so close with Rowe that they spoke frequently on the phone.
The lawsuit claims false statements were made through the Digest from 2000 through 2004, and the Nadel funds became worthless in 2009. The family goes on to say that Rowe failed to perform any due diligence related to these funds, as any meaningful due diligence would have revealed the fraudulent money pyramid.
This is yet another example of a Ponzi Scheme or other investment fraud originating out of Florida. The sad part is that most investors who lose their investments in a Ponzi Scheme recover less than 20 cents on the dollar of their losses. If you know an investor who has lost money in a Ponzi Scheme, he or she should seek out competent counsel with experience in this area.