A federal grand jury in Florida has returned a verdict of more than $52 million against a defunct mortgage firm, its owner and one of its directors.
The jury in Fort Lauderdale found that CFI Mortgage Inc. of Largo, Fla., which was once publicly traded, and former president, CEO and chairman Stephen E. Williams, committed securities fraud, breach of contract, defamation and civil racketeering.
Gary and Michelle Fioretti filed suit against CFI, the company’s subsidiaries and others involved with the company after losing millions of dollars and property through fraudulent investments and being plunged into bankruptcy.
Gary Fioretti thought the money was being invested in legitimate deals and being used to run the companies. But the jury found that CFI defrauded him, Fioretti’s law firm said in a written statement.
“According to Gary Fioretti, the defendants defrauded him into entering agreements with CFI and, once he threatened the expose the fraudulent scheme, the defendants engaged in a campaign to defame and humiliate him, including lying to the FBI,” the New York law firm of Goodkind Labaton Rudoff & Sucharow said in the statement.
Williams, who is now living in Canada, was found responsible by the jury for $33 million.
James Kowalcyzk, a former CFI director, was responsible for $100,000. According to federal court records he filed for bankruptcy the day after the verdict was handed down.
The jury also entered a $6 million judgment against CFI Mortgage and another $6 million against First United Mortgagebanc, a CFI subsidiary.
Finally, Richard Winkel, CFI’s public relations consultant, was found to have defamed Mr. Fioretti and was held liable for $7 million.
None of the defendants could be reached for comment.
Court records indicate that Fioretti, a former real estate investor and operator of a financial services firm, lost more than $4 million in the scheme. He is now working as a mortgage broker in Florida, according to published reports.
Fioretti told the Tampa Bay Business Journal that money he thought was being used to help keep the company afloat was used for other purposes including $180,000 worth of super box seats for Tampa Bay Lighting hockey games and $18,000 for Tampa Bay Buccaneers football tickets.
“All the money I loaned was listed as revenue,” Fioretti told the weekly business paper. “These companies were established to hide money.”
Fioretti began investing money with CFI in 1999 but reportedly said “by January 2001, I knew I had made the worst mistake of my life.”
“I was defrauded out of millions of dollars, and I lost everything,” he told the paper. “It was all a scam.”
Fioretti’s lawyer are attempting to recover the judgment, possibly through assets that were transferred before the company went out of business.
