A federal lawsuit alleges that Daniel L. Gordon, a convicted Wall Street swindler banned for life from public company roles by the SEC, secretly controlled a $115 million Nasdaq venture. The suit claims Gordon used Alan H. Ginsburg, an 87-year-old donor to Barack Obama and a Florida real estate mogul, as a "front" to operate Sagaliam Acquisition Corp., a special purpose acquisition company (SPAC).
Gordon, who previously served prison time for embezzling $43 million from Merrill Lynch and agreed to a lifetime ban in 2003 to settle SEC charges, is also accused of owing $59.1 million in back taxes to New York State. The lawsuit, filed by BN Holdings Trust, whose trustees purchased a controlling interest in Sagaliam's sponsor in 2023, seeks at least $14 million for alleged deception regarding Gordon's role and undisclosed liabilities.
According to the suit, Ginsburg, whose name adorns a hospital tower in Orlando, was identified in SEC filings as controlling the company's sponsor, the private entity through which insiders held shares. However, the BN Holdings Trust alleges Ginsburg was "serving as a front for Gordon's control."
Legal actions against Gordon began when attorneys for Sagaliam expressed concerns in July 2021 about his criminal past and SEC ban threatening the venture's Nasdaq listing. Correspondence cited in the lawsuit described Gordon as a "convicted felon who defrauded a bankruptcy court." The law firm subsequently quit.
Despite his lifetime ban, the suit alleges Gordon continued to exert influence. Emails filed with the complaint show Gordon communicating with Sagaliam CEO Barry Kostiner about company matters, including investor demands and potential deal adjustments. In one instance, Gordon stated, "HARD PASS. Alan and I will find the shortfall but it will require further adjustment to your share allocation."
In August 2021, Gordon reportedly wrote that prospective lawyers understood his "continued involvement" and suggested changing ownership disclosures to list Alan Ginsburg as the "beneficial owner," a move the suit claims was an attempt to conceal Gordon's true role.
Sagaliam later pursued a deal valuing Gordon's firm's Saudi Applebee's business at $379 million. This proposed takeover would have provided Gordon's investment firm with $180 million in stock, along with bonus shares if certain targets were met. Gordon himself signed the deal as a director of the company slated to become the new public parent.
However, the deal collapsed in February 2023 after investors redeemed approximately 92% of Sagaliam's public shares, withdrawing $107.6 million and leaving the company with insufficient funds. Gordon's camp later agreed to sell its interest in Sagaliam's sponsor to BN Holdings Trust for about $1 million.
Ginsburg denies wrongdoing, with his attorneys calling the lawsuit "desperate" and "meritless." They argue that his SEC filings were truthful and he played no role in the sponsor sale, noting that Gordon was not sued and his involvement was evident in transaction documents. No judge has yet ruled on the fraud allegations.
The lawsuit also seeks to hold Ginsburg in civil contempt of Gordon's 2003 federal judgment, contending that the injunction applies to those who knowingly assisted Gordon in violating it. Former SEC enforcement lawyers have suggested that such allegations, if proven, could warrant federal investigation and potential criminal charges.
Gordon has reportedly been living in a $5 million California mansion, running a prison-reform charity, and developing an inhalable version of a Viagra active ingredient. He was also previously named New York's top tax deadbeat in 2016.