Charities on hook for 'Ponzi' money?

The woman in charge of recouping money from a local Ponzi scheme filed a federal lawsuit this week against several charitable organizations, including Philabundance and the Boy Scouts, seeking to reclaim money donated by a foundation that received payouts from the bogus investment fund.

"I had to read the suit several times to try and understand what this is all about," said Martha Buccino, senior vice president of Philabundance, a local food bank and hunger-relief organization. "I thought, 'My goodness, this doesn't come at a good time.' "

In November, Joseph Forte, 57, of Broomall, was sentenced to 15 years in federal prison and ordered to pay $34.8 million to 76 victims for running a Ponzi scheme out of his basement between 1995 and 2008.

Forte used the money he received from new investors in his partnership, Joseph Forte LP, to pay earlier investors.

Marion Hecht, of a Washington-certified public accounting firm, was named by the court as receiver for Joseph Forte LP.

A receiver is appointed to gather up or "claw back" all the payouts of a Ponzi scheme "that were almost certainly stolen or money from some other victims," said Andrew Stoltmann, a Chicago securities attorney.

"It's really controversial because obviously the charities had no idea that this was a Ponzi scheme and now they're being sued," Stoltmann said. "The receiver is saying, 'I don't care,' despite complete ignorance by everybody that this was a Ponzi scheme."

Stoltmann said that a receiver usually doesn't care whether the money has already been spent.

"Some people have actually had to declare bankruptcy in that situation," he said.

Other organizations listed in the suit include The ALS Association, the Boy Scouts of America Cradle of Liberty, Bryn Mawr Hospital, the Salvation Army and St. David's Episcopal Church, in Wayne.

The suit does not list the sum of money the receiver is seeking.

All the organizations in the suit appear to have received their donations from the Thorton D. and Elizabeth S. Hooper Foundation, a "limited partner" in Joseph Forte LP that received payments and distributions of more than $13 million, the suit said.

As Forte was the only one convicted in his scheme, there is nothing to suggest that the foundation or any of the charities knew that the money was the result of a scam.

"The question is whether they received the money in good faith or not, that's a legal question," said Lawrence Hoyle Jr., Hecht's Philadelphia-based attorney. "They have the burden of proving that they did."

Hoyle said that the suits were filed before a statute of limitations ran out, and that those people and organizations who were listed in seven suits that his firm filed on Monday, for one reason or another, didn't waive the statute, or his firm didn't have a chance to contact them.

Buccino, of Philabundance, said that for an organization that has to have a fundraiser every year to pay for operating costs, this will be "just another piece we hadn't planned on."

"We are already trying to keep up with a growing need of providing food and providing a safety net for the community," she said. "So when things like this arrive that are totally unexpected, it becomes more challenging and is another thing to deal with."

Stoltmann, the securities attorney, said that it's a little unusual for a receiver to go after not just a foundation but the charities that it donated to as well.

"The feeder fund issue is a little new to me but the receiver tries to cast as wide a net as possible to get into as many pockets as possible," he said. "As bad as it seems for these good organizations, it may only get tougher."