This is one of these stories that must have been cooking for a while....yet we found it not in the Philadelphia Inquirer, but in Delaware newspapers, Pittsburgh Post Gazette, and today on page 5 of The Philadelphia Business Journal, the March 9-15th, 2007 edition. Anyway, this is a made for Lifetime TV movie waiting for final script review, unfortunately. You have to feel sorry for him on some level, as well as his family. Here's what we've read:
Spending on mistress, gambling focus of fraud trial
By SEAN O’SULLIVAN, The News Journal
Posted Monday, March 12, 2007 at 1:28 pm
WILMINGTON – Federal prosecutors charged today that the operator of a Newark student loan business spent more than $800,000 of his company’s money on a mistress and gambling in the months before he declared bankruptcy in 2002.
...Yao’s attorney, Brian McMonagle admitted his client lied, but told the jury it was to cover marital indiscretions, not financial impropriety.
“He’s a good man who made some serious mistakes,” he said. “With great wealth, sometimes, comes great temptation.”
According to court papers, Yao, 45, of Bryn Mawr, Pa. wire transferred $669,000 to Alexandra “Lexie” Karlsen Wolfe, a Playboy Playmate, Penthouse Pet and mistress in 2001.
Hansen said Karlsen then used the money to buy a house, an expensive car and jewelry.
Yao also transferred $150,000 to two Las Vegas casinos around the same time to cover gambling debts.....Yao originally was charged with 14 counts of fraud. But all sides have agreed that only two of those counts – the bankruptcy fraud charges – will be tried in Delaware. The other 12 fraud counts are set to be re-filed in Pennsylvania federal court.
Pittsburgh Post Gazette: Suit alleges big law firm let Ponzi scheme unfold
Thursday, January 18, 2007
By Paul Davies, The Wall Street Journal
PHILADELPHIA -- After W. Roderick Gagne's law firm here disbanded 10 years ago, he joined the city's bigger and more prestigious Pepper Hamilton. He brought along a young client named Andrew Yao, whose business involved repackaging loans to students at trade schools.
The relationship was lucrative for Pepper Hamilton, which billed Mr. Yao $3.2 million over six years. It also was helpful for Mr. Yao, who was able to use his tie to an old-line Philadelphia law firm to help persuade a bank to lend to him.
And the relationship worked for Mr. Gagne himself, though in an unorthodox way: For years, the law partner's family lent millions of dollars to his law client, at interest rates as high as 15 percent.
Then Mr. Yao's business collapsed. A federal prosecutor in Delaware later charged Mr. Yao with fraud and money laundering. And Pepper Hamilton, a 117-year-old law firm with 11 offices and 450 lawyers, is caught in a messy legal dispute, accused in an insurer's suit in federal court in Delaware of having been "essential to (Mr. Yao's) success as a ponzi-like scheme."
The business collapse led to $500 million in losses....Mr. Yao rose swiftly within Philadelphia society. He paid himself at least $26 million from his business between 1995 and 2002, according to a suit by the bankruptcy trustee against Mr. Yao, in federal bankruptcy court in Delaware. He and his wife lived in a $1.8 million home on the Main Line and joined the Merion Cricket Club. The couple bought a New Jersey beachfront home, then traded up to a 6.5-acre estate in Nantucket. They began building a home in Bryn Mawr, Pa., containing 33,000 square feet, his wife said in a deposition for a lawsuit, later settled, by Wilmington Trust.
The couple also owned two jet planes, a boat, several luxury cars and a chauffeur-driven limousine, she said, and employed a personal chef. They were active on the charity circuit, pledging $500,000 toward a new Philadelphia Orchestra hall.
Did thousands go to Yao mistresses?
By SEAN O’SULLIVAN, The News Journal
Posted Monday, March 5, 2007 at 3:43 pm
Company's money went to Playmate, filings say
Defense seeks to bar evidence
By SEAN O'SULLIVAN, The News Journal
Posted Tuesday, March 6, 2007