Two women are alleging that a city law firm schemed with a former Portland developer to defraud investors of nearly $50 million.

George Marcus

Their class-action lawsuit filed this week in federal court cites another ongoing lawsuit against businessman Michael Liberty. Rather than target Liberty himself, the women’s suit goes after Portland attorney George Marcus and his firm, Marcus Clegg.

The federal Securities and Exchange Commission charged Liberty and several other people in April, alleging they tricked people into putting money into a tech startup and instead used the funds for chartered flights, expensive homes and cars, production of a movie and even the purchase of a dairy farm in Maine.

Marcus, who represented Liberty, is among those facing charges in the SEC’s lawsuit. He is accused of providing legal advice on handling the investments and drafting documents that misrepresented or omitted facts about the investments. Both Marcus and Liberty have denied the agency’s allegations.

Now Tina Endicott of Massachusetts and Denise Medina of Florida have filed their lawsuit, which says they lost money investing in Liberty’s supposed startup. The complaint, filed Wednesday in U.S. District Court in Portland, calls Marcus a “co-conspirator” in the alleged plot. The complaint does not state how much money they invested or lost, and they seek unspecified damages for a class of investors.

Lee Bals, a partner at Marcus Clegg, said Friday that neither woman has ever been a client of the firm. He said he was still reviewing the civil complaint, but the firm’s first step would be filing a motion to dismiss.

“This firm did not represent these individuals,” Bals said. “This firm does not know these individuals. Mr. Marcus does not know these individuals. The complaint itself is replete with inaccuracies and misrepresentations.”

Michael Liberty

The plaintiffs are represented by three law firms in Maine, Pennsylvania and Iowa. The local attorney directed questions to the other two involved in the cases, and messages at those firms left Friday were not returned.

“I think we have an excellent reputation, and I think it is wildly inappropriate for some out-of-state lawyers to come in and make allegations that have no basis in fact,” Bals said.

Liberty was a top Portland developer in the late 1980s. Before he moved out of Maine, he helped build the 100 Middle St. office complex and the Chandler’s Wharf waterfront condominium complex.

The current legal battle revolves around Mozido, a Texas-based company that Liberty founded. It was supposed to develop cellphone applications for mobile banking and other financial services.

According to the SEC’s lawsuit, Liberty sold investors shares in shell companies that supposedly could be converted into stock in Mozido. But, according to the SEC, the shell companies either didn’t have convertible shares or were barred from transferring the investments.

Liberty and the others, the lawsuit charges, lied to the investors about Mozido’s valuation, finances, Liberty’s investments and how their funds were to be used.

The class-action lawsuit filed Wednesday echoes those allegations, focusing on Marcus’ role in the alleged plot. It states misconduct by the law firm that includes “their drafting of faulty and misleading legal documents and their negligent and improper handling of investor funds.”

For example, the complaint says that when the head of Mozido’s board raised red flags about Liberty in 2013, the lawyer misled him.

“Remarkably, Marcus defended his partner and co-conspirator, Liberty,” the complaint reads. “He wrote the Executive Director and said, untruthfully, that Liberty had only raised funds from investors in his circle of friends, and that all of the investors were accredited investors.”

Bals said Friday that Marcus had never talked to investors and had only limited interactions with lawyers for investors.

“There were no misrepresentations made in any of those conversations,” Bals said.

Marcus is a senior member of his firm. He does not have a discipline record with the Maine Board of Overseers of the Bar.

This is not the first time Liberty has been in legal trouble.

Last year, Liberty pleaded guilty in federal court in Portland to violating campaign finance laws.

He served four months in federal prison and paid a $100,000 fine.

Liberty is also in the SEC’s cross hairs in Pennsylvania, where he paid a $600,000 fine years ago for allegedly defrauding investors there. Now, the agency’s lawyers are saying he lied about his finances to reduce the amount of the penalty and they are asking a federal judge to reinstate the fine to the original amount, $6 million.

A Philadelphia law firm – the same one listed on the class-action complaint filed this week – had said it was recruiting investors who lost money to join together to recover their investments.

Megan Doyle can be contacted at 791-6327 or at:

mdoyle@pressherald.com

Twitter: megan_e_doyle