Carolina Bolado
December 26, 2025
Monitor Will Stay In Place In $1B Broad Street Fraud Case
4 min
AI-made summary
- A Florida federal judge denied Broad Street Global Management LLC's request to discharge court-appointed monitor Jeffrey Schneider, rejecting claims of bad faith and undisclosed relationships in an SEC fraud case involving a $1 billion fund
- The judge emphasized the monitor reports to the court, not the SEC, and clarified that monitor approval is not required for business decisions
- The SEC alleges Broad Street and its officials defrauded over 1,000 investors by commingling funds and diverting $170 million.
A private equity firm accused by the U.S. Securities and Exchange Commission of defrauding investors in a $1 billion fund lost its bid Wednesday to discharge the court-appointed monitor overseeing its books when a Florida federal judge rejected arguments that the monitor was acting in bad faith.
In a videoconference hearing, U.S. District Judge Darrin P. Gayles denied a motion by Broad Street Global Management LLC to discharge court-appointed monitor Jeffrey Schneider, a partner at Levine Kellogg Lehman Schneider & Grossman LLP. Broad Street said Schneider failed to disclose that he knew the SEC's expert in the case, and accused him of bad faith tactics like threatening a receivership if the company did not agree with him.
Judge Gayles said he did not find any bad faith on Schneider's part and noted that the pool of attorneys and experts who work on these types of cases is small, so it is not surprising that Schneider knows others involved in the case.
"I'm going to deny the motion to discharge the monitor, but I do want to emphasize to the parties that the monitor here is an officer of the court and reports to the court," Judge Gayles said. "He does not report to the SEC. It's important for the monitor to have open dialogue with the SEC and the defendants, but he works for the court and no one else."
Judge Gayles also made clear that his order appointing Schneider does not require the monitor's approval for business decisions. The order says defendants must make the monitor aware of significant business decisions before enacting them, but that does not equate to monitor approval, the judge said.
"I don't know how long a monitorship is necessary, but I do find at this point there is sufficient basis for me to continue the monitorship," Judge Gayles said.
Earlier in the hearing, Broad Street attorney Brianna Hathaway of Lomax Legal said the relationship between the firm and Schneider was initially good until a few months ago when, she said, the SEC began putting pressure on him to be more critical of the firm.
Ariel Lett of Lett Law PLLC, who also represents Broad Street, said Schneider had "opened himself up to legal liabilities" and that Broad Street intends to sue him for $580 million.
Stephanie Hauser of Levine Kellogg Lehman Schneider & Grossman LLP, who represents Schneider, called these "very serious and frankly unsubstantiated allegations," and said the firm was only asking the court to make findings of bad faith so that they could sue her client.
"To say he's the one who has engaged in intimidation tactics is ironic considering that's what they're doing against him," Hauser said. "It's conduct that this court really should not condone."
Judge Gayles also rejected a follow-up request to appoint a different court monitor after Irwin Weltz of Weltz Kakos Gerbi Wolinetz Volynsky LLP, who also represents Broad Street, said the relationship with Schneider has been "irreversibly damaged."
"We're willing to report to you directly every two weeks or get another monitor, but we don't see how we can proceed forward in a way that protects everyone with this monitor," Weltz said. "There's a lot of money, a lot of people involved here, and an irreversibly damaged relationship is not a good thing."
But the judge denied the request and told the parties to work it out.
The SEC filed suit in January, alleging that the South Carolina firm and its three top officials had made a number of false promises and statements to investors in the fund, including about the profitability of some of the investments they managed and claims that they would segregate investor assets.
The agency also accuses the defendants of diverting $170 million in investor funds into bank accounts overseen by brothers and fund managers Joseph and Steven Baldassarra, as well as accounts controlled by the firm's CEO, David Feingold.
The lawsuit says there were more than 1,000 investors in the fund, which was divided into "series" that allowed participants to invest in different real estate development opportunities or in other ventures like small business funding.
Despite promising to keep the pools of investment funds separate from one another, the assets in the various series were "extensively commingled," the SEC says. The agency also says investors in the small business loans, known as merchant cash advances, were paid inflated returns.
Judge Gayles appointed Schneider as monitor in April, making him responsible for reviewing the books and records of the Broad Street entities, including documents related to the fund's assets, transaction records, financial statements, bank records, ledgers and communications provided to the fund's investors.
The SEC is represented in-house by Terry Miller and Jacqueline M. Moessner.
Schneider is represented by Stephanie L. Hauser of Levine Kellogg Lehman Schneider & Grossman LLP.
Feingold and Broad Street Inc. are represented by Thomas Scot Wolinetz and Irwin Weltz of Weltz Kakos Gerbi Wolinetz Volynsky LLP, Ioannis G. Conits of Gallivan White & Boyd PA, Ariel Lett of Lett Law PLLC and Jessica W. Laffitte of Gallivan White & Boyd PA.
Broad Street Global Management, Joseph Baldassara and Steven Baldassara are represented by Thomas J. Krysa, Andrew A. Howell and Crystal B. Carswell of Foley & Lardner LLP, Lorne E. Berkeley of Berkeley Law PA and Brianna Hathaway of Lomax Legal.
The case is U.S. Securities and Exchange Commission v. Feingold et al., case number 1:25-cv-20436, in the U.S. District Court for the Southern District of Florida.
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Carolina Bolado
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