A trustee involved in the Chapter 11 case of bankrupt real estate investment company DBSI Inc. sued Foley & Lardner this week, claiming that the firm played a role in perpetuating what the trustee described as a classic Ponzi scheme that bilked investors out of hundreds of millions of dollars.
The suit—filed Monday in U.S. district court in Delaware by James Zazzali, the trustee for the DBSI estate litigation and private actions trust—alleges that Foley attorneys worked with DBSI principals as early as 2004 to create fraudulent investment and tax structures as part of a $500 million fund designed to attract new investors. The fund ultimately collapsed and DBSI was forced into bankruptcy in 2008.
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