Doctor contests payout method

A local physician who lost millions of dollars in the

Al Parish investment fraud plans to file an appeal that could stall the return of money to other victims in the case.

U.S. District Judge David Norton in January approved a distribution method for the estimated $9 million recovered for clients of the imprisoned former Charleston Southern University economist. The so-called "rising-tide" method means victims who withdrew the least amount of money from Parish receive the first payouts.

Parish's clients collectively lost about $66 million.

Dr. Leonard Forrest invested $3 million and withdrew $715, 000 before the scheme collapsed, meaning he would get nothing in the distribution and ultimately would lose more than $2 million. His attorney, John Massalon, has notified the court that Forrest plans to appeal the payout method. A filing is expected in about a month. Massalon declined to comment on the challenge before it is filed.

Earlier this year, Massalon argued against the rising-tide distribution. He pointed out at a hearing in January that one Parish client invested $255, cashed out and walked away with a $72,000 gain.

Nearly 500 clients suffered a loss in the scheme, and a court-appointed receiver collected and sold assets from the self-described "Economan" to recoup some of those funds. David Dantzler, an Atlanta attorney representing the receiver, said victims soon would receive their payments if not for the appeal.

"The reality is once the money is paid, we can't get it back," Dantzler said. "If the method of payment is being challenged, we have to resolve that before we pay."

One victim, Oregon resident Steve Marshank, said the appeal notice "added insult to injury."

"I do know two people who would be largely impacted by getting their money back," Marshank said. "The fact that they're not getting their money back impacts their lives in a pretty profound way. And those are just the ones I know."

Dantzler said the receiver is trying to determine whether an interim distribution can be made to a subset of investors entitled to payment under the rising-tide method and an another distribution model called the net-loss method, by which everyone would get the same percentage return. Dantzler said investors who fit into that subset would receive the lesser of the two amounts.

People who qualify for money under the rising-tide model would get back about 18.6 percent of the original principal they invested. Those who qualify under the net-loss method would receive between 8 percent and 13 percent.

At a January hearing, Dantzler said the claims process alone ate up 2,500 hours. He said it was the most labor-intensive component of the complex case, which included an auction of Parish's belongings, ranging from silver from Paul Revere's workshop to hundreds of gnome sculptures.

Parish pleaded guilty and was sentenced in 2008 to 24 years in the same North Carolina prison that houses Wall Street swindler Bernard Madoff.

Reach Allyson Bird at abird@postandcourier.com or 937-5594.