Introduction
Garrity Traina has taken legal action against The Litigation Practice Group (LPG) and its principal, Tony Diab, for allegedly misappropriating millions of dollars invested by Garrity Traina in LPG’s debt resolution legal services. This ongoing scheme has caused significant financial harm to Garrity Traina and other investors.
Background
LPG, a law firm specializing in consumer debt resolution, collaborates with Marketing Affiliates to identify clients who require debt resolution services. LPG compensates these Marketing Affiliates with a portion of the fees earned from the debt resolution process. VP, a company that provides financing for LPG, purchases these accounts receivable and uses funds from investors like Garrity Traina to repay the principal amount plus a return on investment.
The Allegations
According to the complaint, LPG, under the direction of Tony Diab, abruptly stopped remitting payments to VP in June 2022, despite having a stable revenue stream. Diab allegedly intended to transfer LPG’s revenue-generating client accounts to another entity, diverting funds from VP and Garrity Traina.
The Parties Involved
Garrity Traina, a Nevada limited liability company, is the plaintiff in this lawsuit. The Litigation Practice Group PC (LPG) is a California law firm specializing in debt resolution. Tony Diab, a disbarred attorney, is the principal of LPG. Validation Partners, LLC (VP), a Florida company, provides financing for LPG’s activities.
Jurisdiction and Venue
The lawsuit has been filed in the United States District Court for the Central District of California, citing diversity of citizenship. The court has personal jurisdiction over the defendants, who conduct significant business in California.
Factual Allegations
LPG’s Investment Structure
VP was established in 2021 to provide financing for LPG’s debt resolution business. LPG collaborates with Marketing Affiliates to identify clients, compensating them with a portion of the fees earned. VP purchases these accounts receivable and uses investor funds to repay the principal and provide a return on investment.
Plaintiffs First Investment
Garrity Traina made its initial investment in VP in October 2021. The terms of the agreement stated that VP would repay the principal plus a 20 percent return over 12 monthly payments. Garrity Traina received nine payments, leaving a shortfall of $366,000.
Plaintiffs Second Investment
In March 2022, Garrity Traina made a second investment in LPG’s debt resolution practice. The terms of this agreement deferred the first payment by 90 days and offered a 25 percent return. Garrity Traina received only one payment of $300,000, leaving a deficit of $2,825,000.
LPG’s Assurances and Nonpayment
Garrity Traina was informed in August 2022 that LPG had ceased remitting funds to VP, resulting in nonpayment to Garrity Traina. LPG claimed a lack of funds, despite ongoing revenue from client fees. Tony Diab, allegedly in complete control of LPG’s finances, diverted these funds for personal use and to other entities.
Tony Diab’s Role at LPG
Tony Diab, a disbarred attorney, exercises complete control over LPG’s finances, despite not being licensed to practice law. Licensed attorney Daniel S. March is listed as LPG’s Managing Shareholder, but Diab is the one who directs all financial and business decisions.
Tony Diab’s Control and Diversion of LPG’s Funds
Since June 2022, Tony Diab and the LPG Defendants have intentionally diverted revenue owed to VP and Garrity Traina. Diab has misrepresented LPG’s financial status and diverted funds to third parties, including marketing/lead generation firms that he partially owns. LPG has also purchased new client accounts and rapidly transferred existing accounts to another entity called Teracel, without compensation.
Conclusion
Garrity Traina’s lawsuit against The Litigation Practice Group seeks to hold the defendants accountable for their alleged misappropriation of millions of dollars invested by Garrity Traina. The ongoing scheme has caused significant harm to Garrity Traina and others, and the lawsuit aims to recover the outstanding amounts owed. For more information on the case, see the complaint.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. For legal advice, please consult with an attorney.
