New Hampshire Bar Association
About the Bar
For Members
For the Public
Legal Links
Online Store
Vendor Directory
NH Bar Foundation
Judicial Branch

Set Your Business Apart - Advertise with NH Bar News!

Order with big business buying power.
New Hampshire Bar Association
Lawyer Referral Service Law Related Education NHBA CLE NHBA Insurance Agency
Member Login
Member Portal

Bar News - August 10, 2007

Mending a $31 Million Rip-off: Manchester lawyers help investors recoup losses from massive financial scam



Kevin Fitzgerald, left, sits with partner David Vicinanzo in a conference room at Nixon Peabody's Manchester office.

The box that arrived at the US Securities and Exchange office that cold, November morning in Boston, was unremarkable, one of many that normally come to the SEC. But the contents were mystifying – an audio recorder and nine cassettes. The sender – well known.  The mystery was too great for agents who finally gave in and pushed play.


“The money’s gone,” said a desperate voice from the speaker of the tape player. The SEC agents stared – confused – as they listened to a voice they’d heard hundreds of times on the radio. “I stole it.”


The voice continued, listing point-by-point, how the speaker had stolen more than $30 million dollars from 140 of his clients over the course of ten years. The voice told of buying cars, works of art, and even entire companies with money stolen from investors.  


No, this isn’t the latest John Grisham tale. Even Mr. Grisham would be hard pressed to tell a more compelling story than the one that unfolded in November 2004 when the delicate house of cards build by Bradford Bleidt, a Boston-based investment advisor, radio station owner, and money management talk show regular, came tumbling to the ground. The story has it all; drama, emotion, and a high-profile case full of attorneys overcoming all odds to win one for the little guy.                 

According to court documents, on or about November 11, 2004, Bradford Bleidt, spurred by a monetary disbursement request from a client which he was unable to fulfill, tape recorded a confession, mailed it to the US Securities and Exchange Commission, and then attempted to kill himself. He failed, and thus turned on the media spotlight that would last for the next year-and-a-half. 


Enter the protagonist of the tale, David Vicinanzo, a former federal prosecutor and current partner with Nixon Peabody, LLP. Certainly he is not your traditional pro bono attorney/hero, struggling to keep his practice running in the face of funding problems; but within days of the arrival of Bleidt’s confession, the SEC brought Vicinanzo in to do some very important work: to act as legal receiver of Bleidt’s businesses, accounts, and personal assets. He was to take stock of, and wind down, the various enterprises driven by Bleidt’s greed.


 Upon receiving Bleidt’s holdings, Vicinanzo says the outlook was bleak. The press was having a field day with the story and printed something new and more scathing every day. People wanted answers, and  Vicinanzo and his team were responsible for finding them. He brought in Kevin Fitzgerald, managing partner at Nixon Peabody’s Manchester office, and they assessed the situation.


Bleidt had accrued enormous debts; his radio station wasn’t making money, what was thought to be a valuable art and automobile collection turned out to be worth only a fraction of what was expected. It seemed that Bleidt was not only a thief, but a poor businessman as well. It didn’t look good for Nixon Peabody; it looked worse for the bilked investors.


“We weren’t really counting on a payout for this case. It wasn’t quite pro bono but we were definitely working at discounted rates,” said Vicinanzo. “And we didn’t really know at that time what the range of losses was. I don’t think we had high expectations for the case.”


 But despite the odds, the team utilized every tool at their disposal; a variety of negotiations, creative business contracting, and even threatened litigation to turn a complete and utter loss into a $6.3 million net return, giving back the investors their money at a rate of 20 cents on the dollar.


“Bleidt had a fiduciary duty to these people. We did what Bleidt hadn’t done. We got to know them very well,” said Vicinanzo. “A lot of them were literally ‘moms and pops’ and they couldn’t afford to lose this money. In some cases it was their life savings, which made it was all the better when we finally started putting money back in their pockets.”


And in yet another surprising turn of events, the very man who’d wreaked so much havoc, turned out to be a help to Vicinanzo and Fitzgerald. Soon after Bleidt’s indictment, the two attorneys spent two days taking Bleidt’s deposition.


“He was an interesting person to deal with. He was a very soft-spoken, complicated individual. He had a very fine recollection of the more than 10 years he spent progressively putting together this monumental fraud,” said Fitzgerald. “And he described it like you might have described what you had for lunch. But he helped us in understanding the extent of his crime.”


According to Bleidt, he often asked investors to make checks out directly to him, instead of to his business. At that point, he placed the money in personal accounts and issued investors false investment account profiles. If investors requested a payout from their investment, Bleidt issued them personal checks, funded by money taken from other investors instead of from accrued wealth.


Normally, investors only requested small amounts, but in one case, a Weston, Mass. church asked for $2 million to perform renovations. It was the straw that broke the camel’s back. Bleidt had much of his money tied up in his businesses, most notably; the WBIX radio station where he and his wife offered a weekly financial advice show called ‘The Money Couple.”


Through the development of his relationships with broker-dealers and banking institutions, he built, and was the sole principal, of both the Allocation Asset Management Company, Inc. (APAM), an investment advisory firm with $850 million in assets under management as of 2004, and Financial Perspectives Planning Services, Inc. (FPPS), an advisory firm specializing in financial planning. These companies were largely legitimate, which Bleidt claims was the sole reason for their success. However, most cases that Bleidt himself handled were brought into his Byzantine system of money laundering.


In 2002, Bleidt purchased WBIX Corp. for $10 million. WBIX Corp., parent company for the WBIX radio station in Boston, Mass., aimed at providing business and financial news. The station was completely funded by Bleidt’s fraud. However, it also turned out to be the only personal asset of Bleidt’s which had potential for monetary returns to investors.         


“The radio station was most important. [It] was the biggest asset. If it went dark then the stick-value (the value of the dial frequency) declines rapidly,” said Vicinanzo. “The FCC license of the radio station represented financial liability and a promise to keep the station on the air. We were very concerned about preserving that asset.”


But before they could make a successful sale, Vicinanzo and Fitzgerald had to ensure that the station kept running. Vicinanzo had  been a deejay in high-school, but that was no preparation for establishing payroll and benefits plans for WBIX employees.


As Thanksgiving 2004 approached and the radio station was threatened with going black, the team decided to contact Chris Egan, a businessman who was in the process of purchasing WBIX from Bleidt. He attempted to back out of the deal once he learned of Bleidt’s criminal activity but the team, utilizing the contract he had signed with Bleidt, ensured that Egan continued running the station – as he had since August 2004, as part of his intended purchase – until Vicinanzo could find a buyer.


“We worked out a deal where the potential buyer, Egan, agreed to run the station and pay the employees salaries and benefits during those crucial first weeks,” said Vicinanzo. “Then with some really creative business solutions on the part of the team we had behind us, we structured a deal where the original owner, [Alan Langer] of the station agreed to manage it until the end of the year.”


In January 2005, Langer bought the station for $11 million. The sale, with a net gain of $1.5 million, was the first sizeable return the group had seen. The US District Court then presented the defrauded investors with their first taste of hope.


Now with a little steam behind them, the team brought together the 140 victims and according to Fitzgerald, decided to go after a source of funds that could be used to provide some compensation to the bilked investorsBleidt’s financial backers.


According to Fitzgerald, the law does not allow ‘freelance’ investment advisors. These independents must be backed by financial institutions or broker-dealers. And of course, Bleidt was. But on the first attempt at speaking with the broker-dealers, the team found the institutions claimed zero liability. After some deliberation and creative thinking, the team felt that they had a solution.


“None of these people (victims) could go after these institutions on their own. So we brought them together, set up a vote, and all agreed to pursue it,” said Fitzgerald.                    With Bleidt’s victims organized, Fitzgerald threatened what he terms a “quasi-class action” lawsuit against the financial institutions. The litigation didn’t go to court.


“These broker-dealers [understood] that the leverage had shifted. And thankfully, institutions saw the merit of stepping up and taking some responsibility,” Fitzgerald said.


The broker-dealers offered a $6.3 million dollar settlement. The court awarded Nixon Peabody $1.7 million of the return for what US District Court Judge Nancy Gertner called “an outstanding job,” and forwarded the rest of the winnings on to the victims, bringing the return to almost 20 percent of the total amount stolen from them.


“We were very happy with the result,” said Vicinanzo. “[The victims] considered this a total loss so they were happy to get even some of their investment back.”


Initially, despite having the backing of an international firm like Nixon Peabody, Fitzgerald and Vicinanzo did not believe that there was much to be salvaged from Bleidt’s broken empire to compensate the victims. But both say that it was concentrating on the fundamentals – keeping large assets like WBIX running – and creative thinking that produced a successful outcome.


“You know, there was no shortage of people telling us we were out of our minds. But we just tried to think outside the box and stay at it,” said Fitzgerald. “That’s something anybody can use. It’s important to remember to apply yourself creatively. Not all of the answers are in a book.”




Supreme Court Rule 42(9) requires all NH admitted attorneys to notify the Bar Association of any address change, home or office.

Home | About the Bar | For Members | For the Public | Legal Links | Publications | Online Store
Lawyer Referral Service | Law-Related Education | NHBA•CLE | NHBA Insurance Agency | NHMCLE
Search | Calendar

New Hampshire Bar Association
2 Pillsbury Street, Suite 300, Concord NH 03301
phone: (603) 224-6942 fax: (603) 224-2910
© NH Bar Association Disclaimer