Ex-Fla. Telecom Executive Alleges 4 Banks Laundered Money Off His Assets

Mansour in 1998 sold NTF, a company he co-founded with his brothers Joe and Jimmy, to Intermedia Communications for $151 million, said the complaint. The plaintiff’s share was about $50 million in cash and stock, it said. Mansour placed his assets under the management of “expert bankers” at Morgan Stanley, and subsequently followed the advice of his brother Jimmy to move his money and holdings to Deutsche Bank and then to Merrill Lynch, it said.

Though Mansour asked for “conservative investment strategies and hedges,” his net assets “declined precipitously in the millennium tech downturn, then stagnated or shrunk for the next 15 years, despite multiple bull markets and a collection of expensive wealth managers and lawyers apparently actively managing” his accounts, the complaint alleged.

When COVID-19 hit, Mansour requested that all of his assets be put in “conservative bonds and cash,” but his assets again began to decline “precipitously,” the complaint said. After he engaged forensic accountants and lawyers “to investigate what, exactly, was going on with his financial accounts,” Mansour discovered a “far-fetched” scheme, in which his assets were used “to facilitate money laundering and other unauthorized transactions in the billions of dollars,” the complaint alleged.

Mansour alleges a “scheme of money laundering, conversion, and fraud spanning two decades” caused him “tens of millions of dollars in losses, foregone gains, and outright theft” by the defendants. He seeks damages and injunctive relief against defendants Morgan Stanley; Morgan Stanley Smith Barney; Merrill Lynch, Pierce, Fenner & Smith; Deutsche Bank Securities; and Charles Schwab.

Before the sale of NRF, the Mansour brothers sold National Telecommunications of Austin in 1984 to Long Distance Discount Services (LDDS), which later became WorldCom, for about $36 million in cash and stock, said the complaint. The Mansour brothers then founded NTF, with each brother receiving 100 shares of stock, leaving 50 remaining, it said.

The company continued to issue “significant stock” to the plaintiff, Jimmy Mansour and Mark Mansour and to trusts established for Mansour's other siblings, with the two founders remaining the largest NTF shareholders, it said. The remaining 50 shares of NTF would have been worth about $24.75 million, but statements in closing documents said the third stock certificate had “never issued,” the complaint said.

'Slipped In At Closing'

An affidavit from Joe Mansour stated that 50 shares has “been issued as part of stock certificate number three” of NTF Florida, “but averred that Joe Mansour never possessed the certificate, disposed of it if he had it, and disclaimed any interest in the stock of NTF or the shares issued as part of the certificate,” it said. The affidavit, “slipped in at closing, ensured that the stock was not attributed to Plaintiff’s brother, Joe Mansour,” the complaint said.

Facing a “significant” tax bill as a result of the sale, Jimmy Mansour pitched his siblings on a “supposedly novel tax shelter called the ‘Bond Linked Issue Premium Structure'” through KPMG that would engage in “complex maneuvers to generate a tax loss” for the person buying the tax shelter, said the complaint. KPMG warned that the IRS might disallow the transaction, which could result in “significant expense, interest, penalties, and back taxes,” the complaint said. Though Mansour had already paid $9.8 million in taxes on his share of the Intermedia sale and the BLIPS tax shelter “seemed unnecessary” to him, he nevertheless bought into the BLIPS on advice of “his new fiduciaries at KPMG and at his brother Jimmy’s urging,” it said.

KPMG’s BLIPS strategy “ultimately failed, but the strategy’s fallout disguised from Plaintiff that he had paid taxes on Intermedia stock that was hidden from him (and variously reported as “never issued” or lost),” said the complaint.

Jimmy and John Mansour went in separate directions after the NTF sale, with Jimmy using his “rapidly growing wealth” to “quickly rise to political power"; John chose to spend his time with his family, the complaint said. John delegated his finances and estate planning to the “professionals in Jimmy’s orbit,” who had “direct access” to the plaintiff’s “considerable wealth, array of accounts at financial institutions, and even his identity.” That was “the beginning of a multi-decade nightmare” for John, who “had unwittingly been conscripted as a money-laundering mule, and Plaintiff’s own supposed fiduciaries carefully kept him in the dark,” said the complaint.

Defendant Morgan Stanley set up a strategy for Mansour for the “sale and hedging” of restricted Intermedia stock associated with the NTF sale and purportedly sold all of it from June 30, 1998-June 30, 1999, said the complaint. A “sudden downturn” in the stock market owing to the dotcom bubble burst resulted in “severe price drops” in Intermedia stock over the period, and by the time Morgan Stanley “supposedly sold all of Mansour’s Intermedia shares,” his account had lost $21 million in value, it said. Morgan Stanley bankers told Mansour their hedging strategy had failed to mitigate most of the loss, calling it the kind of “bad luck” that can occur in securities markets.

In all, Mansour had paid approximately $4.6 million in back taxes on top of the approximately $9.81 million he had paid on the proceeds of the Intermedia consideration he received from the NTF-Intermedia merger, said the complaint. The additional $4.6 million “corresponded to the $23-25 million in value that would have been associated with the shares issued as part of NTF Stock Certificate Number 3, which was falsely stated in the Intermedia merger documents to be missing,” the complaint said.

'Complex Scheme'

Morgan Stanley’s explanation of the stock market downturn after the tech bubble burse made sense to Mansour until this year, when a multiyear, multimillion-dollar investigation revealed “a carefully hidden exfiltration of approximately $20.5 million of Plaintiff’s Intermedia stock,” alleged the complaint. The investigation by forensics experts and lawyers revealed Mansour hadn’t lost money from fluctuations in market price; instead, he had lost $20.5 million in value “through a complex scheme perpetrated by Morgan Stanley that comprised accumulating massive Intermedia short positions on Plaintiff’s behalf and ultimately exfiltrating Plaintiff’s Intermedia stock from his accounts,” it said.

In a twisted web of other allegations, the complaint referenced forged signatures and fraudulent loans in Mansour's name, including one for $6 million at Deutsche Bank, then “coordinated money laundering with billions of dollars of trades” through his Merrill Lynch and Charles Schwab accounts.

Mansour asserts RICO violations against Morgan Stanley, along with fraud, breach of fiduciary duty, conversion and unjust enrichment; he brings similar claims vs. Deutsche Bank. Claims against Charles Schwab add violation of California’s Unfair Competition Law for failing to comply with SEC regulations and restitution, alleging Schwab generated commissions on over $1 billion in transactions through his accounts over several months in 2009. He also asserts RICO, fraud, breach of fiduciary duty and unjust enrichment claims vs. Merrill Lynch, plus conversion for converting “tens of millions of dollars of assets in undisclosed accounts” associated with Mansour “but outside of his view and control.”

The plaintiff seeks actual, compensatory, statutory, consequential, punitive and trebled damages; disgorgement, restitution and disgorgement of ill-gotten gains; attorneys’ fees and legal costs; and an injunction restoring his ownership and access to all bank accounts and interests unlawfully taken from him.

A Morgan Stanley spokesperson emailed: “We are currently reviewing the allegations which are about matters alleged to have taken place twenty years ago.” Deutsche Bank, Charles Schwab Merrill Lynch parent Bank of America had no comment.