Big donation to Rudy Giuliani defense fund is target of lawsuit alleging fraud by donor

One
of
the
largest
donations
to

Rudy
Giuliani‘s
legal

defense
fund
is
at
the
center
of
a
new
lawsuit
that
argues
the
$100,000
contribution
rightfully
belongs
to
victims
of
an
alleged
online

fraud
scheme.

The
donation
by
Matthew
Martorano
in
September
accounted
for
nearly
13%
of
all
the
money
that
Giuliani,
the
former
attorney
for

Donald
Trump
and
onetime

New
York
City
mayor,
raised
in
the
fund.

The
fund
was
intended
to
help
Giuliani
pay
for
lawyers
in
the
Georgia
election
interference
case
—
where
Trump
is
a
co-defendant
—
and
in
a
civil
defamation
case
that
Giuliani
lost,
brought
by
two
Georgia
election
workers.

But
the
plaintiff
in
the
new
civil
suit
—
filed
after
CNBC
reported
on
Martorano’s
donation
earlier
this
year
—
claims
that
$100,000
flowed
from
Martorano’s
participation
in
an
alleged
online
skin
care
product
scam.
They
are
seeking “to
unwind”
the
donation
to
Giuliani.

There
is
no
public
evidence
that
Giuliani
and
Martorano
know
each
other.
CNBC
has
asked
a
spokesman
for
Giuliani
if
they
did.

Still,
the
claim
adds
another
layer
of
legal
wrangling
to
the
fight
over
Giuliani’s
remaining
assets.
The
former
mayor
filed
for
bankruptcy
protection
in
December,
after
a
judge
ordered
him
to
pay
the
election
workers
$146
million.

Giuliani “should
give
all
the
money
back”
that
he
received
from
Martorano,
said
Kevin
Kneupper,
the
attorney
who
filed
the
lawsuit
alleging
fraudulent
transfer
in
Fulton
County
against
Martorano,
his
wife
and
corporate
entities
on
behalf
of
his
client,
LeAnne
Tan,
who
is
also
the
named
plaintiff
in
the
federal
racketeering
lawsuit
in
California.

Giuliani
spokesman
Ted
Goodman,
in
an
email
to
CNBC,
said, “This
is
a
lawsuit
unrelated
to
us.”
He
had
no
immediate
additional
comment.

CNBC
requested
comment
from
lawyers
for
Martorano,
his
wife,
and
the
other
defendants
in
both
the
Georgia
lawsuit
and
a
federal
civil
racketeering
and
fraud
lawsuit
in
California
related
to
the
alleged
skin
care
cream
scam.
None
of
them
responded
to
the
requests.

In
early
January,
a
judge
in
San
Diego
overseeing
the
federal
lawsuit
certified
a
nationwide

class
in
the
lawsuit
against
the
alleged
skin
care
sales
scammers,
as
well
as
against
Martorano,
his
wife
Kathryn
Martorano,
their
company
called
Konnektive
LLC,
and
other
connected
entities,
collectively
known
as
the
Konnektive
defendants.

In
her
ruling,
the
judge
wrote
the
plaintiff “has
shown
by
a
preponderance
of
the
evidence
that
Konnektive
Defendants
deceived
banks
and
credit
card
companies.”

The
suit
alleges
many
people
around
the
country
were
duped
into
signing
up
for
a
purported “free
trial”
of
skin
care
cream
products
under
the
brand
name
La
Pura.

“The
scammers’
only
goal
is
to
fraudulently
obtain
the
victim’s
credit
card
or
bank
account
information,”
the
suit
says. “And
once
they
have
it,
they
begin
billing
their
victims
for
subscriptions
they
never
signed
up
for,
never
agreed
to,
and
about
which
they
were
never
properly
informed.”

According
to
the
complaint,
Martorano’s
company,
Konnektive,
provided
software
known
as
a “load
balancer”
to
the
entities
that
sold
La
Pura
products
and
began
charging
people
despite
them
being
told
it
was
a
free
trial
offer.

The
load
balancer
allegedly
helps
sellers
hide
from
Visa
and
Mastercard
the
number
of
chargebacks
from
their
customers.
A
high
number
of
chargebacks
—
or
reversal
of
charges
to
a
customer’s
account
—
is
viewed
by
Visa
and
Mastercard
as
a
sign
of
potential
fraud,
the
suit
notes.

“The
Konnektive
software
was
designed
specifically
for
the
purpose
of
facilitating
automated
bank
fraud,”
according
to
the
federal
suit.
That
complaint
also
says
the
software
was
specifically
marketed
to ” ‘free
trial’
scammers
at
conferences
which
those
scammers
attend.”

Kneupper,
who
was
appointed
the
class
counsel
in
the
class-action
suit,
told
CNBC
that
the
question
of
whether
the
Konnektive
defendants
will
be
held
civilly
liable
for
fraud “is
ultimately
going
to
go
to
a
jury”
to
decide.

“But
I
think
the
evidence
is
compelling,”
Kneupper
added.

The
new
suit
that
Kneupper
filed
in
Fulton
County
Superior
Court
in
Georgia,
names
as
defendants
the
Martoranos,
Konnektive
LLC,
and
two
other
corporate
entities.
Giuliani
is
not
named
as
a
defendant.

The
new
complaint
says
that
as
a
result
of
the
San
Diego
judge’s
ruling
on
Martorano
and
the
other
Konnektive
defendants, “it
is
highly
likely
that
…
the
Class
of
injured
consumers
will
prevail
on
the
merits
and
will
obtain
a
favorable
verdict,
which
could
easily
exceed
$30
million.”

The
Georgia
suit
says
that
Martorano
and
the
other
Konnektive
defendants “are
aware
of
this,”
and
as
a
result
have
begun “a
series
of
asset
transfers
in
a
blatant
attempt
to
avoid
paying
a
potential
eight-figure
judgment
in
the
Federal
RICO
Action
to
consumers
who
were
injured
by
their
fraud.”

The
suit
cites
the
fact
that
Martorano
has
also “recently
begun
making
high-dollar
political
donations,”
among
them
the
$100,000
donation
to
Giuliani’s
legal
defense
fund. 

Martorano
also
donated
$5,000
to
the
Trump
Save
America
Joint
Fundraising
Committee
last
year,
$3,330
to
Trump’s
presidential
campaign
and
$1,700
to
Trump’s
Save
America
political
action
committee,
according
to
Federal
Election
Commission
records.

And
in
November,
Martorano
and
his
wife
also
transferred
a
house
and
two
properties
in
Georgia
spanning
135
acres
to
a
limited
liability
corporation,
each
time
for
a
$0
purchase
price,
according
to
assessor
offices’
records,
the
suit
notes.
The
combined
assessed
and
estimated
value
of
the
three
properties
was
$4.1
million.

Two
of
the
property
transactions
occurred
on
Nov.
14,
the
same
day
that
Kathryn
Martorano
was
being
deposed
for
the
federal
racketeering
lawsuit.
The
other
transaction
occurred
five
days
before
the
deposition,
the
suit
says.

Kneupper
questioned
Matthew
Martorano’s
motive
for
donating
to
Giuliani,
whose
former
client
Trump
is
the
presumptive
Republican
presidential
nominee.

“You
just
ask,
why
is
this
guy
donating
13
percent
of
the
[legal
defense]
fund?”
Kneupper
told
CNBC. “People
don’t
do
it
for
no
reason.”

Nancy
Simonick,
a
Michigan
woman
who
was
charged
for
her
La
Pura
offer
despite
the “free
trial”
offer,
echoed
Kneupper’s
argument
about
Giuliani’s
donation
from
Martorano.

“Oh,
yeah,
if
he
knew
it
was
money
gained
through
a
scam,
for
sure
he
should
give
it
back,”
said
Simonick,
who
has
signed
up
as
a
member
of
the
class
suing
the
Martoranos
and
the
other
defendants
in
the
California
lawsuit.

One
of
Martorano’s
lawyers
in
the
Georgia
case,
Holly
Pierson,
also
represents
David
Shafer,
the
former
chair
of
the
Georgia
Republican
Party,
in
a
pending
criminal
case
in
Fulton
County.

Shafer
is
a
co-defendant
with
Giuliani,
Trump,
and
a
dozen
more
people
in
that
criminal
case,
which
accuses
them
of
conspiracy
in
trying
to
overturn
Trump’s
2020
presidential
election
loss
in
the
state.

The
defendants
have
pleaded
not
guilty.