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Capital Factors of Boca Raton claims it. lost $30 million because of fraudulent transactions arranged by a New York City jewelry wholesaler.
In a federal civil suit filed in New York, Capital Factors maintains that Cosmopolitan Gem Corp. set. up those transactions beginning in 2001 to help its president, Joshua Kestenbaum, recover $12 million that he lost in the stock market.
The suit, filed Aug. 13 in U.S. District Court for the Southern District of New York, names as codefendants three Cosmopolitan customers and two New York jewelers who collected payments for Cosmopolitan.
Capital Factors, a subsidiary of Memphis, Tenn.-based Union Planters Corp. (NYSE: UPC), maintains the "defendants' fraudulent scheme" violated the Racketeer Influenced and Corrupt Organizations Act (RICCO).
Capital Factors, which has a New York office, has asked the court for a trial. It is seeking restitution of "not less than $30 million and punitive damages of "not less than $100 million."
Meanwhile, the SEC and the U.S. Department of Justice have begun investigations of several defendants in Capital Factors' suit, according to SEC filings of two co-defendant companies.
Capital Factors' suit is this year's second multimillion-dollar case with alleged fraud involving a South Florida factor.
E.S. Bankest, a faded Miami-based factor, has been in receivership since Sept. 10.
A federal court in Miami took that step based on a...