$60 Million Settlement Reached in Ponzi Scheme Case Involving Movie Producer Jason Cloth and Cook County Investment Advisor

FOR IMMEDIATE RELEASE

$60 Million Settlement Reached in Ponzi Scheme Case Involving Movie Producer Jason Cloth and Cook County Investment Advisor

Cook County, IL – September 24, 2024 – A major settlement has been reached in the high-profile case involving a fraudulent international Ponzi scheme led by movie producer Jason Cloth. (Fowler v. Schmidt et al Cook County No. 2024CH01610) The scheme raised over $100 million in Cook County, largely through recommendations made by local registered investment advisor Sanford Schmidt. Schmidt’s clients, who invested via syndicated loans with Cloth’s entity, suffered significant losses totaling $75 million.

Cloth, a principal of two bankrupt entities, raised funds under the guise of financing specific movie projects. Instead, he commingled investor capital across various entities, with little to no regard for investor agreements. In or about 2021, the scheme turned into a Ponzi operation, and by 2023, Cloth’s entities sought bankruptcy protection outside of the United States.

The settlement results in a $60 million judgment on behalf of the class against Schmidt, whose recommendations led to these ill-fated investments. While the pursuit of Cloth and other participants in the scheme continues, this settlement concludes claims against Schmidt for the syndicated loans. Fortunately for investors, Schmidt’s losses are covered by his insurance policy with Markel American Insurance Company (NYSE: MKL). However, Markel breached its duties to Schmidt, allowing Schmidt’s investors to pursue a bad faith claim directly from Markel for the judgment.

“This settlement yielding a $60 million judgment is an extraordinary result,” said Alexander Loftus, counsel for the plaintiffs. “Rather than engaging in lengthy litigation that would have depleted Schmidt’s assets, we worked with experienced insurance coverage attorneys to achieve a settlement that should return the vast majority of the investors’ losses.”

The settlement is a critical step toward justice for those who suffered financially due to Cloth’s fraudulent scheme. It represents a significant recovery opportunity for Schmidt’s clients without further diminishing his assets.

The Plaintiff believes the proposed settlement is well within the range of approval and respectfully requests that the Court grant the motion in its entirety. The next step in the process involves notifying the Settlement Class and setting a hearing to consider final approval.

For more information about this case or to request interviews with key stakeholders, please contact jess@loftusandeisenberg.com. 

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Contact: Loftus & Eisenberg, LTD 
Email: jess@loftusandeisenberg.com