Court Enters Order Preliminarily Approving Settlement Against Markel Insurance for $60 Million Ponzi Scheme Case Involving Movie Producer Jason Cloth

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Court Enters Order Preliminarily Approving Settlement Against Markel Insurance for $60 Million Ponzi Scheme Case Involving Movie Producer Jason Cloth 

Cook County, IL – November 4, 2024   A significant settlement has been preliminarily approved in the high-profile case surrounding a fraudulent international Ponzi scheme led by movie producer Jason Cloth (Fowler v. Schmidt et al, Cook County No. 2024CH01610). Today, the Cook County court entered an order granting preliminary approval of a $60,000,000 settlement with a Chicago-area Investment Advisor.   

The scheme raised over $100 million in Cook County, largely through recommendations from local registered investment advisor Sanford Schmidt. Unfortunately, Schmidt’s clients, who invested via syndicated loans with Cloth’s entities, faced substantial losses totaling $75 million. 

Cloth, the principal behind two bankrupt entities, misled investors by claiming he was financing specific film projects. Instead, he commingled investor funds across various ventures, neglecting the terms of the investor agreements. By 2021, the operation turned into a Ponzi scheme, and by 2023, Cloth’s entities sought bankruptcy protection outside of the United States. 

The recent settlement results in a $60 million judgment against Schmidt, whose recommendations led to these ill-fated investments. While the pursuit of Cloth and other participants in the scheme continues, this settlement resolves claims against Schmidt related to the syndicated loans. Fortunately for investors, Schmidt’s losses are covered by his insurance policy with Markel American Insurance Company. However, Markel argued the investments were securities thus excluded from coverage and the Court found otherwise today’s Order granting preliminary approval of the settlement.  

“This settlement yielding a $60 million judgment is an extraordinary result,” said Alexander Loftus, counsel for the plaintiffs. “Now that the court has preliminarily approved the settlement and made the necessary findings to do so, we are well on our way to monetize the deal.” 

This development represents a pivotal step toward justice for those financially harmed by Cloth’s fraudulent scheme. It offers a significant opportunity for Schmidt’s clients to recover their investments without further diminishing his assets. 

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