MIAMI – A Florida law firm is being accused of “pocketing” and “squandering” an investor’s money, according to a federal lawsuit filed this month.
Plaintiff NEKO 2018 A LLC, a Texas LLC with its principal place of business in Bermuda, filed its lawsuit October 6 against Downs Law Group PA in the U.S. District Court for the Southern District of Florida.
According to its heavily-redacted complaint, NEKO claims it was forced to file the lawsuit to “preserve its collateral.”
In its filing, NEKO seeks the appointment of a receiver with the “exclusive power” to manage all aspects of DLG’s business – separate and apart from legal advice it provides clients, it notes. The Miami firm focuses on personal injury cases and mass tort litigation.
“DLG’s financial malfeasance, reckless spending, self-dealing, and intentional flouting of the contractual financial controls resulted in DLG losing nearly all of NEKO’s investment with virtually no return,” the complaint states.
“Absent the appointment of a receiver to run DLG’s business – an appointment DLG contractually agreed not to oppose in the event of default (a default DLG has now admitted) – NEKO’s remaining collateral is at significant risk of irreparable harm.”
In its complaint, NEKO calls out Craig Downs, DLG’s founder, for “utterly failing” in his management role.
“To say that Mr. Downs’ business management of the firm was catastrophic is an understatement,” the complaint states.
NEKO claims it made “extensive efforts” to try and collaborate on improving DLG’s management practices, but DLG “consistently failed” to implement any of the changes and, instead, reacted with “indignation” to its suggestions.
“NEKO thus has no choice but to enforce its right to have a receiver put in place to right the ship at DLG and focus any additional investment in a manner that effectively preserves NEKO’s collateral in DLG’s ongoing litigation matters,” the complaint states.
The plaintiff alleges that despite requirements to do so, the firm has failed to produce accurate firm budgets for the past four years.
“Even after receiving assistance and advice on how to produce a fulsome projected firm budget, DLG still is either unable or unwilling to produce the requisite report on a ‘budget vs. actual’ expense basis,” according to NEKO’s complaint.
NEKO also alleges that Downs, himself, has used firm funds for personal expenses since at least 2022 to early 2025.
“NEKO has lost all confidence in the management and business decision making of Craig T. Downs – notwithstanding the undoubted dedication of the DLG staff lawyers to their clients’ interests on specific matters,” it wrote in its filing.
“But if independent business decision-making about day-to-day operations of the firm – specifically excluding any strategic legal decisions regarding the representation of existing DLG clients – can be rectified and guided by an appointed receiver, NEKO is willing to provide additional funding to support specific cases NEKO believes could result in successful outcomes for DLG’s clients in the near-to-medium term.”
It continued, “But NEKO is unwilling to provide further funding without a receiver and is unwilling to fund certain DLG cases that have historically proven to be enormous resource drains without the prospect of any significant recovery in a reasonable period of time.”
Attorneys at the West Palm Beach and Chicago offices of McDonald Hopkins LLC are representing NEKO in the action.
