Five Evergreen Scam Suits Docketed

ORLANDO-R. W. “Bill” Cuthill, the court-appointed trustee representing 2,000 global investors, is suing at least nine individuals and 10 companies associated with locally based Evergreen Security Ltd. in what he calls the largest single securities fraud in Florida history.

Evergreen purportedly is a mortgage securities-backed investment fund that has been operating unobtrusively from a leased Pine Street location Downtown for 10 years.

Cuthill’s five suits, filed Aug. 6 in U.S. Bankruptcy Court, Orlando, mark the first civil actions against the defendants since the $214 million alleged fraud surfaced a year ago.

In the suits, Cuthill calls Evergreen’s operations “a massive Ponzi scheme from inception.” (In a Ponzi scam, investors are paid high returns in the beginning and lower returns as the fund grows and attracts more investors.)

The trustee hopes to recover a total $70 million from defendants named in the suits. Privately, however, Cuthill’s staff will be pleased if it can find $10 million, court staffers tell GlobeSt.com on condition of anonymity.

Named in the suits as defendants are William J. Zylka, 65, of New Vernon, NJ, the fund’s recent owner who has been jailed without bond in Manhattan since his June 8 arrest; James P. Conroy, 61, a New York lawyer allegedly associated with Evergreen; and R. W. McKamy with no further identification.

Also named as defendants are developers/investors Robert W. Boyd and Thomas A. Coyle, both of Orlando; and Herman Castro, a Costa Rican national and principal of Intrados, a Costa Rica-based firm; Martin W. Boelens Jr., the most recent Evergreen manager; Jeffrey A. Stanley and William H. Blankenship Jr., all of Orlando. Ten companies owned by Zylka are corporate defendants.

Thomas S. Spencer, Orlando, was allegedly associated with Boyd and Coyle as principals in Evergreen’s first management company but is not named as a defendant.

Cuthill expects to add to the defendants’ list the names of accountants, lawyers, financial consultants and other individuals allegedly associated with Evergreen defendants over the past 10 years.

When Evergreen voluntarily filed for bankruptcy protection in January of this year, the fund listed liabilities of $214 million and assets of $3 million. In 1995, four years after Evergreen started, it had $45 million in liabilities and $26 million in assets, according to the fund’s bankruptcy filings.