Upset about your investments that are stuck in the gutter? Be thankful you”™ve still got the clothes on your back ”“ and pray those who are putting your money to work can say the same.
Bodnar Capital Management L.L.C., a family trust in Fairfield, is suing a California man, claiming he solicited Bodnar funds on the pretext of creating a West Coast investment banking firm, only to put Bodnar”™s seed capital to work instead in the pornography industry.
Milton Ault III, whose resume includes stints at Prudential Securities and Dean Witter, solicited Bodnar backing in 2005 for Zealous Holdings, which he has promoted as a boutique investment banking firm.
Bodnar Capital originally sued Ault in February, claiming Ault misrepresented how he would use funding from Bodnar Capital in 2005 when he first solicited the money.
Bodnar Capital states it repeatedly attempted to obtain financial updates on its investments, as Zealous Holdings racked up a $3.6 million loss on $350,000 in revenue in the first half of the year.
At the close of the second quarter, Zealous listed itself as a “going concern” requiring additional capital to stay in business, getting Bodnar Capital”™s attention. D-Day arrived in late August when Bodnar Capital discovered the naked truth: Ault”™s unveiling of Adult Entertainment Capital, formed from a reverse merger “to take porn public” with the company”™s shares quoted on an over-the-counter bulletin board.
In October, Adult Entertainment Capital disclosed it had made investments in a sexually explicit Web site, a magazine that tracks the adult club industry, and a party-line call center “staffed by talented phone actors and actresses,” in the company”™s words. In August, the company also recently hired the man who previously ran the pay-per-view cable entity Spice before Playboy acquired the sex channel a decade ago.
“Point blank,” Bodnar Capital states in its lawsuit, “BCM did not invest ($1.2 million) so it could be involved in ”˜groundbreaking development changes (to) the porn finance landscape.”™”
In addition to the funds invested, Bodnar is seeking $3 million for punitive damages and court costs.
For its part, the Bodnar family made its money the old-fashioned way: selling cars at its Mercedes Benz and Porsche dealerships in Fairfield. Founder Geza Bodnar sold off the dealerships to United Auto Group and formed Bodnar Capital to manage the family wealth.
The case has an added Fairfield connection ”“ Adult Entertainment Capital”™s chief financial officer is Bill Duffy, who lists the Catholic school Fairfield University on his resume. Duffy is not listed as a defendant in the Bodnar Capital lawsuit.
Last month, Bodnar Capital won a settlement judgment of $350,000 plus interest on its initial lawsuit filed in February, and successfully got its second, Adult Entertainment Capital complaint transferred to U.S. District Judge Janet Bond Atterton, who issued the first verdict.
Ault did not file a formal answer to the initial lawsuit in court, and has yet to do so in the current case.
