The judge in the civil securities fraud cases against former North Salem Supervisor Paul Greenwood has approved the distribution of $815,000,000 to investors in WG Trading Company and Greenwood’s other companies.
The money will be distributed based on a percentage of the amount the institutions invested, less any withdrawals. Most of Greenwood’s investors were pension plans, universities and other institutional investors. The distribution plan was proposed by the receivers who control the assets of Greenwood and his former business partner Stephen Walsh. The amount is about 85 percent of net investments and more money could be distributed later. The receiver, Robb Evans, continues to sell off assets, including homes and a horse farm, and has sued former investors who took out what he terms fictitious profits.
Meanwhile, on Monday the federal judges in the civil and criminal cases have scheduled a hearing on whether Walsh is entitled to the proceeds of the sale of his home in Sands Point, Long Island to pay for his criminal defense. The court had ruled that Walsh could use $900,000 from the sale but he has indicated he will seek the rest of the $4 million agreed-upon sale price, according to prosecutors. But the prosecutors argue Walsh took money from investors to pay upkeep on the home and buy out his wife’s interest in their divorce. Because of that, the home is tainted by the fraud and Walsh is not entitled to the proceeds, prosecutors argued.
Walsh’s lawyers have subpoenaed Greenwood, who pleaded guilty and is cooperating with prosecutors, Deborah Duffy, a former employee who is also cooperating, and others to testify but prosecutors are seeking to have the subpoenas quashed to avoid giving the defense lawyers a preview of the prosecution’s case. The prosecutors argue they only need to show probable cause that Walsh committed the crimes to keep his assets frozen.
Greenwood, who lives in North Salem, and Walsh, of Long Island, were arrested in February 2009 and later indicted on six charges including securities fraud, commodities fraud, wire fraud, money laundering and conspiracy to commit securities and wire fraud. They were accused of taking investor money for themselves and hiding losses with new investor funds in a fraud with elements of a Ponzi scheme. Walsh has pleaded not guilty.