Lake
NEW YORK – Investing in lawsuits isn’t always a good idea, as a failed arrangement between litigation funders and a mass tort lawyer has them suing each other.
Edward J. Lake of the Lake Law Firm says control of his own company was taken from him, while Rick Solit says he gave Lake more than $5 million with little to show for it. Solit sued Lake on Oct. 22 in Suffolk County Supreme Court, and Lake responded Nov. 6 with a suit against Solit and others, including former Duke University basketball player Lee Melchionni.
Solit seeks at least $6.2 million from Lake, who complains in his court filing that interference from Solit and others caused the “collapse of a $20 million revenue firm.” Lake is seeking tens of millions of dollars and filed his suit under the federal racketeering law.
“(Lake) permitted Defendants to access confidential business information, client relationships and financial accounts,” Lake’s case says.
“Defendants exploited this access to seize control of the firm’s operations, including management of payroll, communications with staff and co-counsel and interactions with funders. Defendants made repeated threats regarding payroll and employment, coercing staff and Plaintiff Lake and subjecting them to duress in order to force compliance with Defendants’ demands.”
Solit was introduced to the world of litigation funding, in which investors give money to lawyers in exchange for a percentage of what is recovered from their caseload, by his now-wife, Sylvia Benito.
Benito’s business partner was Melchionni, who formed a D.C. law firm with Solit to invest in mass tort cases. They picked Lake, who promised to only file cases with sufficient medical records to keep the portfolio strong.
Four types of cases were picked for Solit’s $1 million pledge, including talcum powder and Roundup. Two-hundred total cases were the goal, but Lake didn’t sign any talc clients and managed just 15 hernia mesh cases, 40 against 3M and eight Roundup, Solit says.
But Solit still put more than $4 million into a plan to make money on ERC tax refunds, in which the money pays a specialist law firm to help taxpayers through the process. Lake promised 8,000 of those cases but delivered only 2,655, Solit says.
Lake extracted more than $1.3 million in “rescue” funding in 2024, Solit said.
“(A)s time went on, it became clear that Ed Lake was not above board – particularly with respect to his ERC business,” Solit says.
“For instance, like the mass torts cases, Ed Lake was required to keep ownership information regarding ERC claims in a tracking database called ZoHo. He did not do so – which allowed him to take companies originally assigned to Solit and transfer them to new investors.
“In addition, Ed Lake failed to keep adequate reserves and was paying old investors with new investor money – a classic Ponzi scheme.”
Lake’s main gripe is alleged interference with $18 million in financing that fell through in 2024 that he said would have financed thousands of mass tort cases he already had pending. Solit and Melchionni’s law firm had taken control of the Lake firm, he says, and it directed staff to tell vendors and co-counsel that Lake was no longer involved in firm operations.
Solit and Melchionni converted $7 million in firm money for their own benefit, Lake says, while blocking the $18 million loan to “maintain leverage” over him.
“Despite their fiduciary duty to clients, the sole concern of the defendants was their fee interest in the cases,” Lake says.
“Because of their lack of legal experience, Defendants operated under the assumption that filed cases could be simply maintained until settlement with little to no firm staffing or resources.
“Defendants then terminated almost all staff with no notice of severance pay.”
