Former New York City Mayor Rudy Giuliani leaves U.S. District Court after being ordered to pay $148 million in his defamation case in Washington, United States, December 15, 2023.
Bonnie Cash | Reuters
One of the largest donations to Rudy Giuliani’s legal defense fund is at the center of a new lawsuit that argues the $100,000 donation rightfully belongs to victims of an alleged online fraud scheme.
Matthew Martorano’s September donation represented nearly 13% of the total money raised in the fund by Giuliani, Donald Trump’s former lawyer and New York City mayor.
The fund was intended to help Giuliani pay lawyers in the Georgia election interference case – in which Trump is a co-defendant – and in a civil defamation case that Giuliani lost, brought by two Georgia election officials.
But the plaintiff in the new civil lawsuit — filed after CNBC reported on Martorano’s donation earlier this year — alleges that $100,000 flowed from Martorano’s involvement in an alleged online skin-care product scam. They want to “handle” the donation to Giuliani.
There is no public evidence that Giuliani and Martorano know each other. CNBC asked a spokesperson for Giuliani if this was the case.
Still, the lawsuit adds another layer of litigation to the dispute over Giuliani’s remaining assets. The former mayor filed for bankruptcy protection in December after a judge ordered him to pay $146 million to election workers.
Giuliani “should return all of the money” he received from Martorano, said Kevin Kneupper, the attorney who filed the fraudulent wire lawsuit in Fulton County against Martorano, his wife and companies on behalf of his client LeAnne Tan.
Giuliani spokesman Ted Goodman said in an email to CNBC: “This is a lawsuit that has nothing to do with us.” He had no immediate additional comment.
CNBC reached out to attorneys for Martorano, his wife and the other defendants in both the Georgia lawsuit and a federal civil racketeering and fraud lawsuit in California related to the alleged skin care cream fraud. None of them answered.
Fraud
In early January, a San Diego judge overseeing the federal lawsuit certified a nationwide class action lawsuit against the alleged skin care product fraudsters, as well as Martorano, his wife Kathryn Martorano, their company called Konnektive LLC and other related companies. collectively known as the Konnektive Defendants.
In her ruling, the judge wrote that the plaintiff “has established by the preponderance of the evidence that the Konnektive defendants deceived banks and credit card companies.”
The lawsuit alleges that many people across the country were deceived into signing up for a purported “free trial” of skin care cream products under the brand name La Pura.
“The fraudsters’ sole goal is to fraudulently obtain the victim’s credit card or bank account information,” the lawsuit states. “And once they have it, they start charging their victims for subscriptions that they never signed up for, never agreed to, and were never properly informed about.”
According to the complaint, Martorano’s company sold Konnektive payment software to the fraudsters, which provided a “load balancer” to the companies selling La Pura products and began charging people fees despite being told it was a free trial offer.
The load balancer supposedly helps sellers hide the number of chargebacks their customers have from Visa and Mastercard. A high number of chargebacks — or reversals of charges to a customer’s account — are viewed by Visa and Mastercard as a sign of potential fraud, the lawsuit says.
“The Konnektive software was designed specifically for the purpose of facilitating automated bank fraud,” the federal lawsuit says. That complaint also states that the software was specifically marketed to scammers with “free trials” at conferences those scammers attend.
Kneupper, who was appointed class counsel in the class action lawsuit, told CNBC that the question of whether the Konnektive defendants face civil liability for fraud will “ultimately be left to a jury.”
“But I think the evidence is compelling,” Kneupper added.
The new lawsuit, filed by Kneupper in Fulton County Superior Court in Georgia, names the Martoranos, Konnektive LLC and two other companies as defendants. Giuliani is not named as a defendant.
The new lawsuit states that based on the San Diego judge’s ruling against Martorano and the other Konnektive defendants, “it is highly likely that … the injured consumer class will prevail on the merits and receive a favorable judgment that easily surpasses that.” “could be $30 million.”
Asset Transfers
The Georgia lawsuit states that Martorano and the other Konnektive defendants “are aware of this” and therefore “have begun a series of asset transfers in a blatant attempt to divert payment of a potential eight-figure federal RICO judgment to consumers.” avoid”. who suffered damage as a result of their fraud.”
The lawsuit cites the fact that Martorano “has also recently begun making large political contributions,” including the $100,000 donation to Giuliani’s legal defense fund.
Then-President-elect Donald Trump meets with former New York City Mayor Rudy Giuliani at the clubhouse at Trump National Golf Club on November 20, 2016 in Bedminster, New Jersey.
Don Emmert | AFP | Getty Images
Martorano also donated $5,000 to the Trump Save America Joint Fundraising Committee last year, another $3,330 to Trump’s presidential campaign and $1,700 to Trump’s political action committee Save America, Federal Election Commission records show.
And in November, Martorano and his wife also transferred a home and two properties in Georgia covering 135 acres to a limited liability company, each time for a purchase price of $0, appraiser’s office records show in the statement of claim. The total estimated value of the three properties was $4.1 million.
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Two of the real estate transactions took place on Nov. 14, the same day Kathryn Martorano was deposed on federal racketeering charges. The other transaction occurred five days before the deposition, the lawsuit says.
Kneupper questioned Matthew Martorano’s motive for donating to Giuliani, whose former client Trump is the presumptive Republican presidential nominee.
“Just ask why this guy donates 13 percent [legal defense] Fund?” said Kneupper. “People do it for a reason.”
Nancy Simonick, a Michigan woman who was sued over her La Pura offering despite the “free trial” offer, echoed Kneupper’s argument about Giuliani’s donation from Martorano.
“Oh yeah, if he knew it was money obtained through fraud, he should definitely return it,” said Simonick, who has signed on as a member of the group suing the Martoranos and the other defendants in the California lawsuit .
One of Martorano’s attorneys in the Georgia case, Holly Pierson, also represents David Shafer, the former chairman of the Georgia Republican Party, in a pending criminal case in Fulton County.
Shafer is a co-defendant alongside Giuliani, Trump and a dozen others in this criminal case that accuses them of conspiring to try to overturn Trump’s defeat in the 2020 presidential election in the state.
The defendants have pleaded not guilty.
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2024-04-11 16:46:44
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