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It's a Start

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  • | 6:00 p.m. March 11, 2005
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It's a Start

By Francis X. Gilpin

Associate Editor

A court-appointed receiver for a Sarasota company accused of running a multimillion-dollar Ponzi scheme has reached a tentative settlement with one of the architects of the alleged fraud.

But the receiver's proposed agreement calls for Charles Douglas York, former president of the defunct Viatical Capital Inc., to repay investors barely a nickel for every dollar of their money that he spent on himself.

The U.S. Securities and Exchange Commission went to federal court in 2003 to stop York and his partner, Robert Kingston Coyne, from selling any more so-called viatical settlements.

Viatical contracts allow the terminally ill to sell future life-insurance proceeds to investors whose discounted cash payments may be spent by policyholders while they're still around.

A federal judge chose David M. Levine to act as receiver for Viatical Capital and 65 investment partnerships that York and Coyne set up. The companies took in about $60 million from almost 2,000 investors, according to Levine's calculations.

Levine, a Miami bankruptcy lawyer, is attempting to recover for the investors any assets from the partnerships, from York and Coyne, and from anybody else who benefited from the alleged scam.

The tentative settlement with York states that Levine already took custody of $278,000 in cash that York has now agreed to surrender. York is also giving up assets, including a 1967 Ford Mustang automobile, which could be liquidated for at least another $75,000.

That will hardly make up for the $4.8 million of investor money that Levine believes York misappropriated. Most of the investors were elderly and living on fixed incomes, says Jeffrey C. Schneider, a partner with the Miami law office of Tew Cardenas LLP, which represents the receivership.

York, 42, couldn't be reached for comment.

In a court filing last month in Tampa, Levine told U.S. Magistrate Judge Thomas G. Wilson that his settlement with York is about the best he could do under the circumstances. Wilson must approve the deal.

York stated in an accounting of his personal finances dated last August that he had a negative net worth of $1.3 million.

The financial statement shows that York blew $75,000 on gambling and splurged for services such as hair transplants. Another expenditure of $232 was simply marked down as "titty bar."

York, who gets to keep about $10,000 that had been frozen in local bank accounts, claims to have no other cash overseas. York told Levine that he and Coyne visited Antigua and Belize five years ago to see about opening an offshore gambling enterprise. But they later abandoned the idea, says York.

The SEC has come to a separate agreement with York. Alise Meredith Johnson, an SEC attorney in Miami, says the contents of that deal cannot be disclosed until the commission approves it.

While York stayed around Sarasota after Viatical Capital unraveled, Coyne is believed to have fled the country to Costa Rica.

York is providing Levine with limited cooperation in the receiver's efforts to find money and assets to pay back investors. Receivership attorney Schneider says Levine has returned about 5% of the money that York and Coyne took from investors.

But York is reserving his right to invoke his constitutional privilege against self-incrimination. Schneider and the SEC's Johnson declined comment on any possible criminal probe of Viatical Capital.



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