Car dealer says he, others taken for ride

Braintree-based Quirk Infiniti Inc., one of his car companies, filed a federal class-action lawsuit last November in Boston, saying Edward H. Okun of Florida took the corporation's money in 2007 through a type of Ponzi scheme.

According to the suit, Okun allegedly defrauded hundreds of investors across the country of about $130 million to fund a lavish lifestyle that included a Lamborghini sports car; a $6 million lakeside vacation home in Wolfeboro, N.H.; and an $8.6 million, 131-foot yacht, the "Simone," named after his Brazilian bride, who was half his age.

Okun also has been indicted in US District Court in Virginia for allegedly plundering the accounts of investors and companies he purchased. He and an alleged coconspirator, Lara Coleman, have been arrested and charged with 27 counts of wire- and mail-fraud conspiracy, money laundering, and bulk cash smuggling.

Thursday, Coleman pleaded guilty to conspiring to commit mail and wire fraud, among other offenses. In her plea deal, Coleman admitted that she misappropriated money to support Okun. She agreed to a 10-year sentence and faces a fine and forfeiture of assets tied to the case.

Quirk discovered he was out the money when he received documents in 2007 saying Okun's company had filed for bankruptcy. "I wasn't too happy," Quirk said in an interview last week. "It was a lot of money."

He said the loss will not affect his auto business. Quirk owns 12 foreign and domestic car dealerships, including companies in Quincy and Braintree, selling such makes as Infiniti, Ford, Chevrolet, and Subaru. He also owns the Fore River Shipyard property in Quincy.

News of Quirk's loss comes amid national attention on the Ponzi scheme allegedly masterminded by Bernard Madoff. Though the Okun case involves far less than the $50 billion apparently lost with Madoff, it shared an essential feature of a Ponzi scheme: Early investors are repaid with money collected from later investors.

Okun's arrangement involved a legal maneuver that real estate investors make to protect assets after selling a property. It's known as a "1031 exchange," named after the section of the IRS code that describes it.

The section allows owners of investment properties to put off capital gains taxes by giving real estate owners 180 days to sell one property and to purchase another. However, the owner cannot touch the money from the original sale. Rather, a "qualified intermediary" must hold the money until the new purchase.

Okun was in the "qualified intermediary" business, through his Delaware-based company, 1031 Tax Group LLC. Okun expanded his business, purchasing six other companies in 2005 and 2006 that specialized in 1031 transactions, including Atlantic Exchange Co. LLC in Boston.

However, rather than holding the money for investors and giving it back when they needed it, Okun would take money from later investors to repay earlier investors, while also spending millions of dollars as if the money were his own, according to the criminal charges. Quirk's money was with Atlantic Exchange.

Court documents filed as part of the criminal proceedings show a pattern of wild spending by Okun. His wedding to Simone Bolani in 2005 cost $200,000, according to prosecutors.

Okun and Bolani met in February 2005, when he was 54 and married, and she was 27. One week after they met, he gave her $50,000. Soon afterward, employees of his company noticed he was spending a lot of money on jewelry and cars for her, prosecutors said. In August, he negotiated a divorce settlement that required him to pay his then-wife, Dorothy, nearly $8 million within six months.

But his company was also in financial trouble by then, which is when he began purchasing other companies to conceal his financial troubles, according to the government. Financial problems did little to slow down his spending spree, however. Okun purchased million-dollar condos and houses, cars, a helicopter, and real estate, prosecutors said.

Soon, the network of bogus finances began to tangle and fall apart, according to documents. Bankruptcy was declared in 2007, with debts of $132 million.

Quirk's lawsuit is against Wachovia Bank, headquartered in North Carolina, which held the money and was Okun's lender. Quirk alleges the bank aided and abetted the fraud and breached its fiduciary duty to protect Quirk's money.

Matt Carroll can be reached mcarroll@globe.com.