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Local multimillionaire James Grosfeld has a 3-year-old legal headache that seeks to capture a chunk of his fortune.
Grosfeld, an ex-board chairman and CEO of Pulte Corp., is accused in a 1990 Florida lawsuit of directing a fraudulent commodity-futures options scheme through a Fort Lauderdale-based company that the lawsuit says he owned and controlled. Pulte isn't involved in the suit--which, until recently, was not well-known.
In a status report filed with the court earlier this month, the defense calls the suit "a flight of fancy, unsupported by anything other than the wildest imagination and most unfounded hopes by plaintiffs' counsel."
The class-action suit, filed in U.S. District Court in West Palm Beach, alleges that at least 90 percent of MultiVest Options Inc.'s more than 14,800 active clients lost most of the money they invested from 1987 through 1989. Their losses totaled more than $98 million of the $126 million invested, the federal suit claims.
The civil suit claims Grosfeld, 56, knew and directed MultiVest's widespread fraudulent business practices, which enriched the company with $77 million in commissions. The suit alleges that MultiVest Options paid above-average broker commissions, used deceptive marketing and sales tactics to woo its targeted unsophisticated investors, downplayed risk and broke U.S. commodity law and regulations.
The estimated 28,000 plaintiffs and their San Francisco lawyer, Neil Goteiner, are suing under an infrequently used Florida law that lets investors with fraud claims go after hidden corporate owners. They claim in their suit that Grosfeld "did either directly or indirectly manage, control or own MultiVest Inc." Therefore, he's liable for MultiVest Options' alleged violations of law.
Grosfeld, who has an office in Southfield's Oakland Towne Square, doesn't give interviews, said his attorney, Stephen Wasinger.
RESPONSE: SUIT WITHOUT MERIT
Wasinger of Detroit-based Honigman Miller Schwartz and Cohn said the case has no merit because Grosfeld had nothing to do with the management or daily operations of MultiVest Options.
He said the plaintiffs "are trying to get a lot of money under the circumstances."
The suit, first filed in California, seeks unspecified damages. But the suit seeks to recover at least the $77 million in commissions that clients paid to MultiVest Options; all plaintiff losses, estimated at more than $98 million; unspecified punitive damages; triple damages;...