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Sunday, April 13, 2008 Massad lashes at accusers

Vast fortune, reputation challenged

By Jay Whearley and Thomas Caywood TELEGRAM & GAZETTE STAFF
jwhearley@telegram.com


David G. "Duddie" Massad

Amit Mathur
Enlarge photo

This picture, provided by Mr. Mathur, shows Mr. Mathur, left, and Mr. Massad in January 2003 prior to the Super Bowl game in San Diego.


These canceled checks are among the items Amit Mathur and his lawyers say will be used at his federal court trial on 20 counts of wire and mail fraud, scheduled to begin May 5.




'In the last week alone, two thick racketeering lawsuits naming the Westboro resident and others were filed in federal court, both echoing allegations of financial intimidation and chilling threats contained in three previous racketeering lawsuits that have been combined into one action seeking $118 million. Several other racketeering lawsuits against him are in the works.

The legal salvos, according to Mr. Massad, result from an orchestrated campaign to smear his name and relieve him of sizable chunks of a personal fortune that he said he’s worked hard every day of his life since childhood to amass.

As if to underscore the point in an interview this past week, the 79-year-old at one point reached under the table and pulled out a folded bundle of $100 bills from a hiding place near one ankle and dropped it on a conference room table. He said the wad of cash totaled $3,000.

“They want to destroy me,” Mr. Massad said. “They do nothing but fabricate deceitful lies. This is where it all came from.”

During the nearly three-hour interview, he grew agitated at times, slapping his palms down on a conference table and lashing out at his accusers over the sometimes heated objections of one of his high-profile lawyers, Bowditch & Dewey LLP managing partner Michael P. Angelini.

“This is sick. They are going to burn in hell, all of them,” Mr. Massad said of his accusers.

Sketching a rectangle with a silver pen on the back of a sheet of paper, Mr. Massad diagramed the key players in what he adamantly maintains is a coordinated plot to ruin him financially. Chief among those players, he said, are Nicholas J. Fiorello, a 32-year-old would-be real estate developer who Mr. Massad described as the best car salesman he ever hired, and the newest member of their alleged crew, Amit Mathur, a 37-year-old investment adviser set to stand trial next month on charges he swindled 15 people out of $16 million — the bulk of it from Mr. Massad — by providing false investment account statements that hid stock trading losses, as well as misappropriating investors’ money for personal use.

Mr. Fiorello’s carping about Mr. Massad — which escalated on Friday afternoon with the launch of Mr. Fiorello’s thetruthonduddie.com Web site — and the growing number of lawsuits are matters which obviously irritate and frustrate the aging businessman. He’s turned to a small army of lawyers to help him fight back.

Mr. Massad said he lends money to lots of people. At the bottom of the heap, he said, are the “scum” who’d rather grind him down with lawsuits than pay it back.

But Mr. Fiorello, who grows equally agitated talking about the man he speaks of as an archnemesis, fired back: “The only conspiracy has been the one perpetrated by Massad and his noblemen …”

As for his part, Mr. Mathur said his only motivation is to clear his name and move on with his life.

Despite the growing rancor, something Mr. Massad hadn’t previously encountered were allegations of the nature raised by Mr. Mathur, the man indicted for swindling him. Mr. Mathur is accused in U.S. District Court of hiding stock trading losses from clients, including Mr. Massad, of his Entrust Capital management investment fund, as well as misappropriating clients’ money to his personal use.

In interviews, Mr. Mathur produced a stack of financial records, canceled checks and photographs that he and his lawyers say will be used at his federal court trial on 20 counts of wire and mail fraud, scheduled to begin May 5. Mr. Mathur maintains that most of the money from the bank accounts of Entrust and a wholly owned subsidiary that he is accused of misappropriating actually was spent at Mr. Massad’s direction or on his behalf, and that the remainder was money legitimately due him as president of Entrust.

“Initially it was a ‘let me take you under my wing’-type of relationship. Then it turned into ‘let me use you for my benefit,’ ” Mr. Mathur said.

His former client scoffs at the claim as “the most ridiculous damn thing.”

“Why would I give him my money to spend for me?” Mr. Massad said. “I don’t throw my money away.”

The 2006 fraud indictment specifically lists five clients who lost $12,499,000, with Mr. Massad allegedly suffering the biggest hit — an estimated $11.3 million — and Mr. Massad’s daughter, Pamela A. Massad, a Worcester lawyer and businesswoman, allegedly losing $400,000.

After the criminal charges against Mr. Mathur were filed, Mr. Massad filed a civil lawsuit against him; the investment adviser’s former business partner, Rajeev Johar; and Entrust, alleging he personally was swindled out of more than $15 million and seeks that amount from Entrust’s insurer if the defendants are unable to pay. A similar lawsuit was filed against the Boston investment firm Kimball & Cross, where the fund was maintained, for its role in handling the Entrust investment fund.

Mr. Mathur founded Entrust in 1999 as a hedge fund, a type of investment vehicle often used by wealthy investors. He was doing reasonably well and earned about $80,000 in 2000, his first full year of business, doing business primarily with family members and friends.

The situation changed considerably in 2001 when Mr. Mathur and Mr. Massad were introduced by a mutual acquaintance. Starting that year and continuing until he was indicted in 2006, he had a business relationship with Mr. Massad that at first seemed incredibly fortunate.

“I could not believe how lucky I was to have landed such a big and influential client,” he said.

In short order, Mr. Massad transferred several million dollars into Entrust and referred other investors as well, causing Mr. Mathur’s income to soar. In 2004, the Entrust president made just over $800,000.

Problems, however, were quickly evident, Mr. Mathur said. As Mr. Massad put more money into Entrust, Mr. Mathur said, he demanded more control and eventually was dictating how money was to be used.

The high life started to crumble in 2005, Mr. Mathur said, when it became apparent that the federal Securities and Exchange Commission was investigating Entrust and its principals. He was indicted the following year.

In Mr. Mathur’s indictment, prosecutors allege that clients lost about $5.3 million through Entrust’s trading of securities between September 2001 and March 2005, and that the defendant “for his personal use, withdrew approximately $3.2 million from the Entrust bank account in hundreds of transactions.” Numerous canceled checks drawn on that account, as well as from the account of a wholly owned Entrust subsidiary called AMR Realty, during the period were for cash, which Mr. Mathur maintains was Mr. Massad’s preferred method of payment for various expenses.

Mr. Massad said he never directed Mr. Mathur to do any such thing, nor did he exercise any control over the operation of Entrust. “I trusted him,” Mr. Massad said of Mr. Mathur. “The kid was smart and seemed to know what he was doing.” That confidence, Mr. Massad said, prompted him to recommend Mr. Mathur to others, including his daughter and brother.

The ultimate beneficiary of the checks for cash can’t be determined. There are some checks drawn on the Entrust accounts, however, which Mr. Mathur maintains support his contention that money was spent for expenses that weren’t his or his company’s, and therefore wasn’t misappropriated for his personal use, as alleged in the indictment.

Examples of Entrust and AMR funds spent on Mr. Massad’s behalf, according to Mr. Mathur, include:

• A $10,000 check written in 2002 and a $35,000 check written in 2003 to Everest Construction of Westboro, which Mr. Mathur said were given at Mr. Massad’s instruction to the company’s president, Kevin J. McManus, for various design, engineering and permitting fees associated with a tract of land planned for a condominium development off Belcourt Road near Lake Quinsigamond in Worcester. Entrust checks also were used in 2002 to pay about $200 in property taxes to the city.

Worcester County Registry of Deeds records show that the large land tract was sold on Oct. 29, 1986, by James W. Tavano to the Second Trust company of Westboro, which lists Ms. Massad, Mr. Massad’s daughter, as trustee. Mr. Massad said last week that Second Trust is his company and that he purchased the property about the time Mr. Tavano, who had been the subject of a federal and state drug trafficking investigation, was to be sentenced to prison.

Although Second Trust remained owner of record of the Belcourt Road property, Mr. Massad said that in 2002 he agreed to let Mr. Mathur develop it. The arrangement, he said, called for Mr. Mathur to pay the costs of actually building the condos, with the two splitting the profits when the units were sold.

His intent, Mr. Massad said in the interview, was to help his young protégé.

A few hours after that interview with Mr. Massad, Mr. McManus called a T&G reporter from Mr. Angelini’s Main Street law office to support Mr. Massad’s version. Mr. McManus said that it was Mr. Mathur who ordered the $10,000 in engineering services paid for with an Entrust check, and that Mr. Mathur claimed to be in charge of the project at the time.

Mr. McManus said the $35,000 check from Entrust wasn’t for the Belcourt Road project, adding that he believed it was for remodeling work done on Mr. Mathur’s home in Shrewsbury.

Mr. Mathur maintains it was Mr. Massad who ordered both payments and noted that his name appears nowhere on property or tax records in connection with the land. Mr. McManus, he added, has been a business associate of Mr. Massad’s.

Registry of Deeds records show two mortgage loans to Mr. McManus from LBM Financial of Marlboro, a company in which Mr. Massad has a significant financial interest.

• Four checks totaling $16,500 from the Entrust account written in 2004 to the Travel Maker travel agency in New York City. Mr. Mathur said they were for first-class airline flights from Boston and Hartford trips to Orlando, Fla., and Daytona Beach, Fla., for Mr. Massad and others.

Mr. Mathur, who provided Travel Maker itineraries identifying Mr. Massad and the other passengers, said the high cost of the tickets was due to Mr. Massad waiting until the last minute to book the flights and because they are first-class fares. A total of eight round-trip tickets are listed in the itineraries.

Mr. Massad said he and his guests were on those flights, but remembers charging them to his American Express card. “I kind of remember Amit offering to book one of the trips,” he said, “but I’m sure that I paid for them on my AMEX card.”

Mr. Angelini, one of his lawyers, said on Friday that a request has been made to American Express to retrieve Mr. Massad’s 2004 account records, but they will not be available for several days.

{smallbox} There also are checks totaling more than $100,000 written on Entrust and AMR accounts to ticket agencies and other outlets for tickets to major sporting events, including $34,000 to purchase New England Patriots season tickets in 2003 and 2004; and at least $30,000 in 2004 for that year’s World Series and Super Bowl. Additional payments for tickets were made for the 2003 Super Bowl in San Diego, additional individual Red Sox games in 2003 and 2004, and the 2004 AFC Championship game.

Mr. Mathur maintains that at Mr. Massad’s instruction, two to five guests were invited to those games and provided with airfare, lodging, meals and money for personal expenses. He said the junkets were intended as goodwill gestures and to promote future business for Mr. Massad.

“I go almost every year. Almost every year, I’m someone’s guest,” Mr. Massad said, adding that the tickets typically are freebies given away to top advertisers by a Boston radio station. He denied paying for the costly trips described by Mr. Mathur.

“Why would I have a junket?” he shrugged, saying that if he was going to pay anybody’s way to the big game it would be a family member.

Mr. Massad said he did see Mr. Mathur at some of the sporting events in question, but that he and Mr. Mathur arrived there separately and not as the result of any organized junket.

Mr. Angelini, Mr. Massad’s lawyer, flatly denied Mr. Mathur’s contentions about how and for whom money from the Entrust account was spent, saying they are part of desperate, last-minute attempt by a defendant facing 20 years in prison. In addition, he said, concentrating on money that the indictment alleges was misappropriated diverts attention from more serious charges that Mr. Mathur faces.

Mr. Angelini specifically referred to transactions cited in the federal indictment in which his client directed slightly more than $9 million be given to Mr. Mathur to invest in two specific stocks, Only about $1 million of that amount actually was invested, but interest payments reflecting a full $9 million investment were paid to Mr. Massad on a monthly basis.

Mr. Mathur said the transactions were at Mr. Massad’s instruction.

At his trial, due to begin in three weeks, Mr. Mathur’s lawyers plan to challenge the math used by federal authorities prosecuting their client.

The indictment cites $5.3 million lost in trades and $3.2 million allegedly misappropriated by Mr. Mathur, which leaves about $4 million unaccounted for from the $12.5 million total losses alleged by prosecutors.

Mr. Mathur, however, provided the T&G with financial ledgers from Kimball & Cross, the Boston investment firm that held the Entrust hedge fund during the period at issue, showing that at least $7.5 million was lost in stock trades. He also produced copies of checks and wire transfers showing that about $4.5 million was returned to investors, including about $3 million to Mr. Massad. The authenticity of the ledgers was confirmed by John C. Clifford, chief financial officer and chief compliance officer at Kimball & Cross.

Mr. Clifford told the T&G that in interviews during the past two years with civil and criminal investigators looking into the Entrust case, he conveyed “serious concerns about David Massad’s potential involvement or association with Entrust and Amit Mathur, based on the evidence available.” He said those concerns don’t appear to have been acted upon by federal authorities.

By Mr. Mathur’s account, the $7.5 million in losses and the $4.5 million returned — a total of $12 million — would leave an amount of less than $1 million that could have been misappropriated by him.

His former partner at Entrust, Rajeev Johar of West Monroe, La., also was investigated by the SEC and has since agreed to pay fines and restitution of more than $624,000. Mr. Johar, the head trader for the firm, was not indicted.

Mr. Mathur maintains that Mr. Johar deceived him as well as Entrust clients by covering up trading losses by sending false statements, supposedly audited by a West Monroe CPA firm. The indictment, however, states that Mr. Mathur knew about the losses and the deceit in disguising them from investors.

“Clearly, there is a great deal of information involved in this case that needs to be brought to light,” said Jeffrey A. Denner, head of the Denner Pellegrino LLP law firm in Boston, which now represents Mr. Mathur.

A spokeswoman for the U.S. Attorney’s office in Boston, which is prosecuting the case, said she would not comment on the pending court case or whether Mr. Massad’s alleged role was investigated.

Contact Jay Whearley by e-mail at jwhearley@telegram.com and Thomas Caywood at tcaywood@telegam.com.

Duddie's been screwing people forever, finally he's being held accountable!!!

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