Former Marks Paneth partner arrested for fraud
Steven Henning, a former partner in charge of advisory services at Top 100 Firm Marks Paneth LLP, was arrested and charged with wire fraud for allegedly defrauding investors out of $2 million by claiming to have entered into multi-million-dollar intellectual property deals.
Henning, 57, was arrested in St. Johns, Florida, on Tuesday and appeared before a federal judge in Jacksonville, Florida, on Wednesday. Before joining Marks Paneth, Henning had taught accounting at Southern Methodist University. Prosecutors accused him of enticing a former student into investing in a company he founded that he claimed could earn money with potentially valuable intellectual property.
In June 2008, while he was working at Marks Paneth’s New York offices, he formed what would later become known as OpportunIP LLC, a business that had offices in Purchase and Tarrytown, New York. He was CEO and owned an interest in OpportunIP through a family partnership. Other members of the firm also owned interests in OpportunIP, according to prosecutors. The firm itself is not part of the investigation.
Marks Paneth declined to comment. Henning could not be reached for comment.
He became a partner at Marks Paneth in 2006 and became partner-in-charge of advisory services in 2016. Previously, he was a professor of accounting at Southern Methodist University and the University of Colorado at Boulder. He also served as an academic fellow in the Securities and Exchange Commission’s Office of the Chief Accountant.
In May 2012, he told one of his former university students about OpportunIP, describing it as a business venture through which he established partnerships with owners or developers of intellectual property and helped them take the IP to market in exchange for a substantial share of future profits. Over the next few years, he provided his former student with information about OpportunIP, including a series of opportunities that were in various stages of implementation. For example, he claimed that OpportunIP had signed an escrow agreement with two multinational corporations relating to the licensing of certain intellectual property.
“Steven Henning, a CPA at a Manhattan accounting firm, established his own firm called OpportunIP, which he allegedly told victims was a company specializing in assisting other entities in taking intellectual property to the market,” said Manhattan U.S. Attorney Geoffrey Berman in a statement. “Henning allegedly induced victims to invest in OpportunIP by providing them with false documents showing OpportunIP’s involvement in multi-million-dollar transactions that would reap millions of dollars in future profits. Ultimately, the victims learned that the deals did not exist and they were victims of an alleged scheme to defraud them out of millions of dollars.”
In the fall of 2014, Henning presented his former student with an opportunity to invest in OpportunIP and asked the victim to help him secure bridge financing for an IP owner who was in financial distress and needed temporary financing while he brought his IP to market. Henning told his former student that the IP owner needed a $500,000 loan to get him past some financial hurdles and he would repay the loan in six months’ time.
After that, there were ongoing communications relating to the former student’s purchase of an interest in OpportunIP. Around the same time, Henning disclosed another multi-million-dollar deal involving an agreement between an IP owner represented by OpportunIP and two global automobile manufacturers, showing his victim fraudulent documents that he claimed were licensing agreements with the car makers. He also listed IP deals with other multinational companies for which he said he had “signed deals and minimum guarantees.” He proposed that the former student acquire 5 percent of OpportunIP for $2 million. He allegedly emailed the student false documents that he claimed were escrow agreements. Based on the information and documentation provided by Henning, in November 2014, the former student sent Henning $500,000, and a few days later wired another $500,000 to a bank account supposedly controlled by an owner of the intellectual property.
Henning then proposed forming a new company with the same goals and business model as OpportunIP. The former student then brought a relative and his family into the venture. In spring 2015, the victims, along with another investor, and a corporate attorney working on the transaction on their behalf, were communicating with Henning about creating a new corporate entity through which he would transfer control of the company from other partners at Marks Paneth to Henning and the former student.
After that, the victims’ families agreed that they, through their various investment entities, would fund another loan to Henning’s new venture, based largely on their confidence in the supposed agreements and Henning’s claims about future business opportunities.
After discussions about the structure of the company and requests for information from the victims’ corporate attorney, on June 3, 2015, Henning sent purported electronic bank records for the months of April and May for a bank account in the name of OpportunIP. He told them that “the April statement shows the amount coming in from [one of the multinational companies] ($2 million plus remaining interest from the escrow account).” The bank statements were also false and there was no deposit of over $2 million during those months.
In October 2015, the victims had $1 million transferred to an account in the name of an entity that was set up to be the holding branch of the new OpportunIP. After that, nearly all of the $1 million was transferred to accounts controlled by Henning.
In the meantime, Henning allegedly continued to make false representations about the supposed progress he was making in securing deals for OpportunIP, and he indicated he was ready to have his former student become more involved in OpportunIP’s operations. As a result, in 2016, the former student left his job at an investment bank to become chief operating officer of OpportunIP. But, despite Henning’s assurances that business was going well, he insulated his alleged business contacts from direct interaction with his victims and provided them with excuses for why deals were delayed. In at least one instance, in November 2016, Henning made it seem like he had scheduled a meeting between himself and his former student and an executive at one of the multinational companies when he actually hadn’t done so. The former student traveled to New York and visited the Purchase office of OpportunIP to meet with Henning and the executive, but the meeting was never actually scheduled. To make it seem like it had been, Henning forwarded a fabricated email to his victim, which was purportedly sent from the executive to Henning canceling the meeting.
In August 2017, during a search of Henning’s office at Marks Paneth, the fraudulent escrow agreement and auto manufacturer licensing agreement and guarantee were recovered and contained taped-on signatures of executives on their signature pages.
“Mr. Henning’s claims were nothing more than a bag of lies,” U.S. Postal Inspection Service Inspector-in-Charge Philip Bartlett said in a statement. “Law enforcement reminds investors to research all investment opportunities thoroughly to avoid being scammed.”