A Paramount ATM is retrieved from a laundromat in Providence, Rhode Island on Saturday, May 3. The Paramount ATMs, which been out of order since last fall, were retrieved on behalf of investors in the ATM network that had been owned by Daryl Heller.
Laundry Capital Co.
Laundry Capital Co.
A Paramount ATM is retrieved from a laundromat in Providence, Rhode Island on Saturday, May 3. The Paramount ATMs, which been out of order since last fall, were retrieved on behalf of investors in the ATM network that had been owned by Daryl Heller.
A New Jersey couple claim they lost $2 million investing in the ATM network managed by Daryl Heller’s Paramount Management Group and are plaintiffs in a class-action lawsuit that claims Heller’s partners helped carry out a $700 million Ponzi scheme.
The suit was filed Wednesday in U.S. District Court for the Eastern District of Pennsylvania by Batman Investments LLC on behalf of 2,700 investors.
The suit names Jerry Hostetter, Mir Jafer Ali “Buck” Joffrey, Randall Leaman and David Zook; all are Lancaster County residents, except Joffrey, who is from Santa Barbara, California. Hostetter referred a reporter to attorney Josh Voss, who did not immediately respond to a message left Thursday morning. Messages were also left for the other defendants, also represented by Voss.
Batman Investments is a New Jersey limited liability company consisting of husband and wife Vlad and Tatyana Detinich. Through a spokesman, they declined comment Thursday.
The investors’ lawsuit is the latest development in the collapse of businesses that bought, sold and managed ATMs, purportedly paying investors back with fees generated by the machines.
Hostetter, Joffrey and Zook were officers of Prestige Funds, which raised money from investors to purchase ATMs that were in turn managed by Heller’s Paramount Management Group. Leaman was Paramount’s chief executive officer from 2022 to 2024, and president for 11 years before that.
The suit accuses the four of helping carry out a fraud and violating fiduciary duty. Hostetter, Joffrey and Zook are also accused of violating Pennsylvania securities laws.
Heller, of East Hempfield Township, is not named as a defendant in the civil suit.
“Heller is able to avoid liability here, at least temporarily, on account of his bankruptcy filing. And everyone is already well aware of his role in this scam,” attorney Jason Kane, a partner at New Orleans-based Peiffer Wolf Carr Kane Conway & Wise, said Thursday.
The firm is one of several representing the plaintiffs. “Our goal is to shine a light on the others around him who helped carry out the fraud — including promoters who time and again seem to find themselves associated with troubled investments that look like Ponzi schemes.”
A Ponzi scheme is a financial fraud that relies on new investors to pay off earlier ones, and which collapses when the payouts are greater than the money coming in.
According to the suit, the Detinichs were provided investment information, known as private placement memoranda, or PPMs, dated May 17, 2022, indicating that Prestige would make monthly cash payments from running the ATMs, but did not disclose that the distributions could also come from future investors.
“In short, the PPMs failed to disclose that their true ‘intended business’ was operating a Ponzi scheme,” the suit said, later asserting that Prestige’s officers “knew that the line between Paramount’s finances and those of the Prestige Funds was so blurred that it was non-existent.”
Potential investors weren’t told that Heller and Leaman were able to withhold additional money, “including excessive sums retained as improper ‘owner draws’ used to fund outlandish purchases and lifestyles,” the suit claims.
After years of regular payouts, Paramount stopped making monthly payments in April 2024, which set off a slew of lawsuits against Heller.
The lead Prestige investors – Hostetter, Zook and Joffrey – were among the first to sue, though Heller is a co-owner of the funds and has challenged their right to sue without his consent.
It was not immediately clear what impact the latest suit has on that suit, which sought to address the stopped payments to investors.
In addition, the Prestige funds, at the behest of Hostetter, Joffrey and Zook, are challenging Heller’s bankruptcy filing in New Jersey federal court, arguing that a judge should appoint a trustee to review Heller’s holdings and wind them down to pay back creditors and investors.
Peiffer Wolf attorney Daniel Centner said the lawsuits Hostetter, Joffrey and Zook filed against Heller were intended “to distract from their own wrongdoing.”
“There are a lot of bad actors and a lot of moving parts,” Centner said, “and it’s time for investors to start getting some answers and the return of their hard earned money.”
The losses attributed to Heller and his businesses stand at more than $800 million. The 2,700 investors in Heller’s former ATM network, joined by banks, business partners, vendors, individuals and family trusts, have submitted nearly 100 separate “proof of claims” totaling $826 million.
Heller, meanwhile, has filed a reorganization plan that envisions selling all his businesses to pay creditors what amounts to 14 cents on the dollar even as he continues to seek the dismissal of most of the claims against him.
Heller’s plan says selling off the businesses could take 10 years, during which time he could be paid about $3 million to manage the process. His Chapter 11 bankruptcy plan describes him satisfying $118 million of the $825 million worth of claims against him.
The federal judge overseeing the bankruptcy case has set an October hearing to hear the Prestige owners’ request to appoint a trustee. A recent report by a court-appointed examiner said that Heller’s network of businesses had the hallmarks of a Ponzi scheme, a finding that is likely to play a key role in arguments around whether a trustee is necessary.
Heller may also face criminal charges. The FBI raided his offices last December, as noted in the Batman Investments lawsuit, and Heller has said he is the subject of a federal investigation. The U.S. Securities and Exchange Commission has also filed a proof of claim in Heller’s bankruptcy case, citing its “investigation into certain pre-bankruptcy transactions and practices” involving Heller.
The agency, which seeks to prevent or eliminate fraud in securities markets, said it may take legal action against Heller “based on possible violations of federal securities laws,” the document states.
A collection of interviews, photos, and music videos, featuring local musicians who have stopped by the WITF performance studio to share a little discussion and sound. Produced by WITF’s Joe Ulrich.
