Burnsville Company, 3 Locals Accused of Fraud
An investment fund in Florida filed a lawsuit in St. Paul this week accusing Burnsville-based Lazy Deuce Capital Company of running an investment fraud and racketeering scheme, according to a Star Tribune report.
Loxahatchee, Florida-based Integrity Dominion Fund reportedly alleges that it was tricked into making $3.6 million in short-term loans to Lazy Deuce, $1.5 million of which hasn't been repaid.
The suit reportedly also names Eden Prairie resident Brian Baldwin, Apple Valley resident Frank W. Delahanty III, and Prior Lake resident Brent L. Johnson as defendants and describes the three as “the principals and masterminds” in the alleged scheme.
Integrity Dominion alleges that Baldwin pitched Lazy Deuce as a company that made high-interest, short-term loans to companies with “exotic” collateral that ordinary financial institutions wouldn't touch.
According to the Star Tribune, the Florida firm claims that it loaned money to Lazy Deuce from November 2010 through the spring of 2011. At the time, Baldwin and Johnson allegedly told the fund that Lazy Deuce's loans were covered by so much collateral that they actually would benefit if their borrowers defaulted because they could liquidate their holdings.
According to the suit, it turned out that Lazy Deuce, which defaulted on Integrity Dominion's loans, had few other “investors of significance” and its investment capital had come from those short-term loans.
The lawsuit accuses the defendants of breach of contract, securities fraud, misrepresentation, deceptive trade practices, and racketeering, the Star Tribune reported.
This is reportedly not the first time that Lazy Deuce and its co-defendants have been accused of fraud. The suit notes that Baldwin and Delahanty were accused in a federal lawsuit filed in Massachusetts several years ago of orchestrating a million-dollar fraud scheme involving forged bank records. They denied wrongdoing before settling the case in 2010 on undisclosed terms.
Lazy Deuce was also named in a securities fraud lawsuit that the U.S. Securities and Exchange Commission filed in October against former Minneapolis police and fire pension fund adviser David Blaine Welliver and his advisory firm, DBlaine Capital.
To learn more about Integrity Dominion's allegations, read the full Star Tribune report here.