First he was bilked in a Ponzi scheme. Now he says he has been bilked by his lawyer

When private equity investor Doug Von Allmen lost about $70 million to South Florida’s infamous Ponzi schemer Scott Rothstein nine years ago, he did what anyone would do after losing that much money: He called his lawyer for help.

Attorney Bill Scherer and his firm, Conrad and Scherer, delivered on recouping that loss. When Scherer, whom Von Allmen considered a good friend, asked for $15 million to fund a suit to recoup losses from Rothstein, he helped pay the bill. But now Von Allmen says he has been bilked again — this time by his one-time friend and his firm, which he says hasn’t completely paid back what is now a $25 million loan, not including interest.

Von Allmen and his wife, along with representatives for their family trust, sued Scherer and his law firm for $19.7 million in state circuit court in Broward County on Monday, alleging that the firm likely made back millions in legal fees since the first loan seven years ago but has failed to pay back the money that made those legal fees possible.

“There’s been six inches’ worth of lending documents over the years,” said Paul Turner, who is representing Von Allmen now. “Over time, they needed more and more money.”

The complaint filed Monday minced fewer words. “Defendants owe a ridiculous sum of money to Plaintiffs and they refuse to pay.”

Scherer’s law firm released a statement Tuesday denying the allegations and suggesting it might countersue Von Allmen for defamation.

“This is a complex business dispute involving relationships and transactions beyond the law firm. We intend to prove in court that any obligations between the parties have been satisfied,” the statement read. “It is disappointing that after unprecedented recoveries for [Von Allmen] over the past eight years, he has chosen to exploit the attorney/client privilege that he currently enjoys.”

Scherer and his firm represented several investors after fellow attorney Scott Rothstein was caught masterminding a $1.2 billion dollar Ponzi scheme in November 2009, in which he told hundreds of investors he could deliver lucrative returns by purchasing settlements from sexual harassment and whistleblower lawsuits. Rothstein’s arrest — which followed a dramatic escape to, then return from, Morocco and surrender to the authorities — stunned a South Florida community that had known and regarded him as an influential lawyer, albeit with a penchant for luxury homes and cars.

Rothstein was eventually sentenced to 50 years in prison, and Bill Scherer’s firm was among those that moved to represent the investors who had been cheated by Rothstein’s dealings.

Von Allmen, whose fortune included a sprawling beauty supply distribution company, was among them. He paid Scherer’s firm an hourly rate to represent him and recoup his losses, which was an expensive endeavor, Turner said. When the Rothstein lawsuit began to involve a contingency portion with defendants who could not pay the legal costs up front, Scherer and his firm came to Von Allmen with a request.

They asked for a $15 million line of credit in February 2010 to fund the lawyers’ work and pay for experts in the case, which Von Allmen granted, according to the lawsuit. Scherer personally guaranteed the money, Turner said.

“The thought was at some point that the case would end, it would be successful, Scherer would make a lot of money and we would be paid back,” Turner added.

But in January 2011, Scherer and his firm said they needed more money, according to the lawsuit. They struck a deal for an additional $5 million that year, and then another $5 million on top of that. Additional amendments to the lending agreement also extended the maturity date for the loan — when it would be due in full — by three years.

In March 2016, that date arrived but Scherer and the firm did not pay, according to the complaint. The last payment was made in December 2013.

“There were some excuses and reasons” the firm provided, Turner said, though he declined to discuss them. “We don’t think they hold any water.”

Turner said after about a year and a half of discussions, the Von Allmens felt forced to file the lawsuit, along with an emergency motion to appoint a receiver to safeguard their collateral. Conrad and Scherer is still the firm of record in some of Von Allmen’s other lawsuits, although Turner said he expected that to change if it hadn’t already.

This lawsuit, he added, will likely move fast and appear in front of a judge for a status conference next week.

“We’re suing a law firm, and we’re suing Bill Scherer, who is a well-known attorney and an able litigator,” Turner said. His clients are still willing to find “an amicable resolution,” although he acknowledged that Von Allmen and Scherer are no longer friends.

This story was originally published August 29, 2017 at 3:11 PM with the headline "First he was bilked in a Ponzi scheme. Now he says he has been bilked by his lawyer."