October 21, 2014

Elyria
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Judge rules banks not liable for money stolen by investor

Richard Zakarian

Richard Zakarian

A federal judge has twice rejected a bid by some of imprisoned Lorain tax consultant Richard Zakarian’s victims to hold two banks and a brokerage firm liable for the money Zakarian stole from his clients.

But in court orders filed in December and last week, U.S. District Judge Patricia Gaughan dismissed the lawsuit filed on behalf of Spitzer Management Inc. and 11 other fraud victims against Fifth Third Bank, Lorain National Bank and Chicago-based Interactive Brokers.

Zakarian was sentenced last year to 17½ years in prison after pleading guilty to mail fraud, wire fraud and tax evasion charges.

He stole nearly $4.5 million over the past decade from about 100 clients, although his lawyers had argued that he made a series of bad investment decisions rather than deliberately stealing the money entrusted to him.

According to the lawsuit against the financial firms filed last year, Zakarian had accounts with the banks and made investments through Interactive Brokers.

It was their duty, the lawsuit had argued to have recognized that Zakarian was taking money from accounts he had labeled “Tax” and using it for investments.

Investigators concluded that Zakarian lost most of the money — which was supposed to cover his clients’ tax liabilities — on the commodities exchange in Chicago.

Gaughan ruled that the banks did not have a duty to the victims in the case to have flagged the transfers under laws requiring banks to report suspicious circumstances.

There also was no agreement between Zakarian and the banks that the funds in his accounts were supposed to be limited to certain purposes.

“Absent an agreement between the bank and its customer, the presumption is that the deposits are general not special,” the judge wrote in her December decision.

Likewise, Gaughan concluded that the banks weren’t negligent in their monitoring of Zakarian because they had no relationship with the victims and thus no financial duty to them.

Anthony Giardini, the attorney for Spitzer and the other victims named in the lawsuit, had asked Gaughan to reconsider her decision or allow him to file an amended lawsuit.

But Gaughan rejected that request last week, noting that the request was an effort to reargue the case and there wasn’t any justification in granting the request.

Spitzer employees discovered the thefts by Zakarian and reported the matter to Lorain County Prosecutor Dennis Will, who turned the investigation over to federal authorities.

Contact Brad Dicken at 329-7147 or bdicken@chroniclet.com.


  • alreadyfedup1

    Anthony Giardini, the attorney is using the deep pockets theory of the democrat playbook.

    • Denise Caruloff

      I remember not so long ago giardini (in another spritzer case) wrote to the ct opinion page..and called the judge an umpire,,and they sometimes get it wrong…perhaps some judges are not fans and maybe they do get it right. lol…

    • Bob Owens

      How is THIS a political situation?

  • Laurelin Lulu Eakin

    This man came into a place of my employment on a day that our computers were being crazy…. and told me I deserve to be in the Special Olympics. He’ll of a man this one…..

    • beety

      Might want to keep that one under your hat…

  • Zen Grouch

    What kind of fool would look at this guy’s face and be dumb enough to let him invest more than, say… 30 bucks tops, of his hard earned money?

    I wouldn’t trust this guy to unplug my toilet without watching him like a hawk!

    • Bob Owens

      He looks a lot different in a suit and tie.

      • Phil Blank

        I could see right through him when he had opened his new office on Broadway and W. Eire.
        He wanted me to install his phone system so he would have to pay so much to Century Tel at the time.
        I never refused to do the job, I just disappeared.

      • Zen_Grouch

        Oops my bad, I was looking in a mirror when I made that comment. I’ve been told I look like an emaciated piece of albino broccoli pumped up with botox.

    • http://jstech.co Alex Paine

      some people are way more persuadable then others.

      • Zen Grouch

        Isn’t that the Tea Baggers motto?

  • levtrotsky

    Where was Spitzers ace legal counsel during the Zakarian years?? No due diligence?

  • bpbatista

    Nice try, Tony.

  • Zen_Grouch

    Anyone here know what happened to FormerLorainResident? The Chronicle closed posting on “”High school teacher resigns amid allegations of inappropriate conduct – Feb 15 Story”" just before we reconnected.

    I’ve decided to come out of the closet. Sorry Mom.

  • Zen_Grouch

    Never mind – I pulled one off and hate myself again.

  • Don Grantzki

    In the “good old days”, guys like Giardini would have recovered the stolen funds without notifying the prosecutor. I just about never agree with this guy, but it is ludicrous to suggest that the banks didn’t profit from this scam.