“Dr. Melgen was a seed investor in a high-tech company that did extremely well. He made a great deal of money in that particular investment,” Scarola said. “He did not make those kinds of dollars practicing medicine, although he has a very successful practice.”
Melgen also has an ownership stake in ICSSI, a company that had a long-dormant contract with the Dominican Republic to provide port security at an estimated value of $500 million. Menendez spoke to State Department officials about the contract and at a hearing last year, urged State and Commerce Department officials to press the Dominican government to revive that contract.
While some Melgen investments have paid off handsomely, others have not and have prompted litigation by Melgen to try to recover his losses.
• In an ongoing 2011 federal suit, Melgen, his wife and the Melgen-controlled SFM Holdings say they lost more than $32 million on investments in CitiGroup stock after relying on what they called false and misleading public disclosures from the company between 2007 and 2009.
• In litigation that has bounced between state and federal courts since 2005, Melgen and SFM say they lost $5 million through the Palm Beach-based KL Group Ponzi scheme and another $15 million in a Banc of America Securities account that was managed by a KL principal. The KL Group’s three principals pleaded guilty to fraud charges and were sent to prison after bilking investors out of an estimated $200 million.
A federal judge last month barred Melgen from pursuing a claim against Banc of America Securities, essentially agreeing with the defendant’s argument that it served only a ministerial role and did not have a fiduciary duty to Melgen. That decision is being appealed.
Melgen has also tried to recover the $15 million by suing Palm Beacher Jerome Fisher, the founder of Nine West Shoes, whom Melgen accuses of inducing him to invest with the KL principal. Fisher denies Melgen’s claim. A federal judge dismissed the suit against Fisher in 2010, but an appeals court vacated the order and sent the case back to state court last year.
• A suit filed last year says the Melgens lost more than $10 million by investing in Bank of America Corp. stock in 2008 after relying on “false and misleading reports and statements” from the company and its president. The Bank of America Corp. suit is separate from Melgen’s complaint against Banc of America Securities.
• In another suit filed in 2012, Melgen and his wife say businessman Michael Levy and Open Sports Network, an online fantasy sports company, made “material misrepresentations and omissions of material facts” that caused the Melgens to lose $5.9 million after investing in the failed venture. Levy says Melgen knew the risks involved and continued investing and participating in decision-making after becoming aware of the alleged problems with the business.
Lawrence Duffy, another attorney for Melgen, declined to comment on any past or ongoing litigation.
Palm Beach Post staff researcher Niels Heimeriks and The Associated Press contributed to this report.