Merrill Lynch embezzler now faces bankruptcy woes

Merrill Lynch embezzler now faces bankruptcy woes
Daniel Gordon (2003 file photo)
HARTFORD, Conn. (AP) - After getting out of prison in 2007 for stealing $43 million from Merrill Lynch, Daniel Gordon quickly was back in business, loaning hundreds of thousands of dollars to pro athletes at interest rates topping 75 percent per year and on his way to making multimillion-dollar business deals, court records show.

The Norwich, Conn., native is now managing partner of a New York City-based, privately held investment firm, Rosedale Cooley & Co., and lives in a posh apartment building on Manhattan's Upper East Side, according to court records and documents filed in Delaware, where Rosedale Cooley is incorporated.

But Gordon's return to the business world from prison has been a bumpy ride. He's faced several lawsuits over his business dealings and remains mired in a Chapter 7 bankruptcy case he filed nearly three years ago that includes allegations of theft and fraud against him made by his ex-wife, Laura Gordon, and pro basketball player Eddy Curry.

After prison, Gordon "wasted no time resuming his fraudulent behavior," according to a document filed in the bankruptcy case by Laura Gordon. She accused Gordon of illegally drawing $3.5 million from her home equity line of credit on her Manhattan apartment beginning in February 2008, only four months after being released from prison. A court ordered Gordon to pay back the money.

The bankruptcy trustee has also accused Gordon of hiding more than $7 million in assets from creditors through fraudulent transfers.

Gordon, 36, who was sentenced in 2005 to 3 1/2 years in prison for the Merrill Lynch embezzlement, didn't return messages seeking comment. He was released from prison in October 2007 after serving half his sentence.

Manhattan attorney Donald David, who is representing Gordon in the bankruptcy case, declined to comment on specific allegations against Gordon and his businesses made by Laura Gordon, Curry and others, citing pending litigation.

"Quite obviously, allegations are made in litigation that we have disputed and which will ultimately be decided by a court," David wrote in an email to The Associated Press. "To rely upon such allegations, and certainly to presume their truth, is inappropriate and reckless."

Gordon listed $10.8 million in assets and $41 million in liabilities in his bankruptcy filing. He's been fighting the Internal Revenue Service, which claims Gordon owes $44 million in taxes and interest on the money he stole from Merrill Lynch.

Curry, a 7-foot center for the current NBA champion Miami Heat who is now a free agent, took a $570,000 loan with an 84 percent interest rate from Gordon's company, Las Vegas-based Allstar Capital, on Feb. 22, 2008, the same day Laura Gordon alleges her ex-husband started racking up her credit line, court records show. Nevada law allows such high interest rates.

Curry defaulted on the loan in September 2008 and was later ordered by a Nevada court to repay Allstar more than $1.2 million in principal and interest. But Curry has filed documents in Gordon's bankruptcy case seeking to stop Gordon from collecting the loan repayment and have the loan deal declared void.

"Daniel Gordon ... stole funds from his ex-wife, Laura Gordon, and proceeded to launder the theft through a usurious loan to an innocent party, Mr. Curry," said Curry's filing in the bankruptcy case.

Laura Gordon and Curry's agent didn't return messages.

Another pro athlete, Miami Dolphins defensive back Jonathan Wade, also got into trouble after taking a loan from Allstar, which is controlled solely by Gordon. The firm gave Wade a $48,500 loan in January 2008 with a 76 percent annual interest rate on any balance remaining after eight months. Wade ended up defaulting and was ordered by a court to repay Allstar $122,000 in principal and interest.

A representative for Wade could not immediately be located for comment.

Gordon's bankruptcy case remains pending in federal court in Manhattan.

Dubbed a "whiz kid" in news stories, Gordon was only 23 when he was named president of Merrill Lynch's energy trading division in 2000, two years after he joined the Manhattan-based division after getting a master's in economics from Yale.

The government said Gordon fooled Merrill Lynch into paying a one-time $43 million premium insurance payment that the company thought would guarantee it could buy energy it might need, but the money went into offshore accounts Gordon controlled. He pleaded guilty to wire fraud, money laundering and conspiracy in 2003.

He was also accused of helping the accounting fraud that brought down Enron Corp. He settled those charges with the Securities and Exchange Commission without admitting or denying them and was barred from serving as an officer or director of a public company.

Over the past 11 years, Gordon has controlled or held an interest in more than 30 companies, court records show.

One of those companies, Wurk-Times Square, leases two floors in a building in Times Square for more than $5 million a year and subleases them out to other businesses, court records show.

Another of Gordon's companies, RC Sooner Holdings, is in bankruptcy in federal court in Oklahoma after having acquired eight apartment complexes with nearly 800 units in Tulsa, according to court records. Documents show that RC Sooner paid nearly $1.2 million for the apartments in October 2009 and assumed nearly $27 million in mortgages held by the previous owners.

In 2008, Allstar Capital acquired a $3.5 million mortgage taken out on a 21-acre parcel of undeveloped land in Groton, Conn., with the help of Michael Thomas, former tribal chairman of the Mashantucket Pequots, who own Foxwoods Resort Casino, court records show.

Under the terms of a proposed settlement, the Groton property would be sold and most of the proceeds would go to Laura Gordon and the bankruptcy trustee.