Two lawsuits filed in firms’ failures
Ex-CEO of Patriot National, Guarantee says auditor, hedge fund destroyed companies
Two lawsuits filed by Steven Mariano, former CEO and majority owner of insurance services provider Patriot National and worker’s compensation firm Guarantee Insurance Co., blame an auditor and hedge fund investors for destroying the two Fort Lauderdale-based companies.
Guarantee Insurance Co. agreed to be placed into state-supervised receivership late last year after an audit found a previously reported $42.2 million surplus was actually a $236,775 deficit.
Patriot National laid off 250 workers without severance pay the day before Thanksgiving as a result of losing Guarantee, which Patriot said accounted for 60 to 70 percent of its business. Patriot National announced plans in November to restructure and file for Chapter 11 bankruptcy relief.
This week, Mariano and his holding company, Guarantee Insurance Group, filed two lawsuits against Guarantee’s former auditor firm and three investment funds, stating their actions caused Guarantee’s demise and Patriot National’s pending bankruptcy. Both suits were filed in circuit court in Broward County.
One suit names as defendants Cayman Islands-based hedge funds Hudson Bay Master Fund, LTD.; CVI Investments Inc.; and Alto Opportunity Master Fund, Spc., as well as two U.S.-based J.P. Morgan Bank executives, Ray Craig and Emily Clifford.
“Patriot National was once one of the largest private employers in Broward County,” the suit states. “That all changed when Defendants caused its financial ruin.”
Of the five defendants, only Hudson Bay responded to requests for comment.
“These frivolous claims are desperate attempt by a failed businessman to rehash allegations that have been completely discredited in federal proceedings in New York,” said Christopher Clark of Latham & Watkins, attorney for Hudson Bay. “We are confident that the Florida court will summarily reject Mr. Mariano’s false claims.”
The suit accuses the J.P. Morgan executives of an investment “bait and switch” in late 2015. Craig and Clifford, serving as placement