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Local News

December 16, 2010

Jury: Broker is liable for a bad loan to con man

BEVERLY — It seemed to local auctioneer Frank Kaminski like a great opportunity to make a little extra money.

He would make a loan to fellow Beverly resident Michael Abbot, secured by a multimillion-dollar wine collection, to be repaid at 25 percent annual interest.

With another Beverly resident, Peter Caten, vouching for Abbot by drawing up papers that referred to the wine collection, it seemed pretty safe, as well.

Three years later, Abbot, who turned out to be a blue-blooded con artist, is sitting in jail, serving out a sentence for failing to pay a $400,000 fine for swindling investors in the early and mid-2000s.

No one has ever found that wine collection.

And Kaminski hasn't seen a dime of his money.

Yesterday, a Salem Superior Court jury found that Kaminski had been defrauded, not by Abbot (who has defaulted in the case), but by Caten, the financier who vouched for him three years ago and brokered the loan.

The jury ordered Caten to pay Kaminski the $570,000 loaned to Abbot.

The case is just the latest in a series of lawsuits centering around the schemes of Abbot, who pleaded guilty in 2007 to a series of fraud charges involving unsophisticated investors who believed he was putting their money into stocks in major companies like Google, Sirius and Motorola.

Abbot initially avoided jail by repaying more than $526,000 to those investors, including some retirees who had entrusted their life savings to him.

But the money apparently came from a series of loans, all secured by the wine collection that Abbot claimed his late grandfather, Beverly Farms financier John Moseley Abbot, had left to him in a trust.

Abbot even convinced prosecutors and a judge that he'd pay his fine by selling the wine, which led to a suspended jail term.

Jack Milgram, Caten's lawyer, argued to jurors that Caten didn't think the loan to Abbot needed to have collateral, given the high interest rate, and that references to the transfer of the wine in the documents he drew up were all in the future tense — suggesting Kaminski knew that Abbot didn't have the wine when he gave him the loan.

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