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Investor sues Nassau DA Kathleen Rice, seeks $370M

An undated file photo of Kathleen Rice at

An undated file photo of Kathleen Rice at a news conference. Photo Credit: Howard Schnapp

A federal lawsuit accuses Nassau County District Attorney Kathleen Rice of improperly prosecuting an investor and an attorney at the behest of her campaign contributors.

Both Rice's office and an attorney for the contributors said the suit, filed Oct. 21 in Central Islip by former Long Islander Ted Doukas and lawyer Robert Del Col, is baseless.

The suit seeks $370 million in damages from Rice, Nassau County and the contributors. It is the latest in a series of legal actions involving Del Col, of Smithtown, and DataTreasury, a Texas technology company founded in Melville by Claudio Ballard.

The suit contends that contributions to Rice from DataTreasury officials spurred the DA to target Doukas and Del Col in a sting.

John Byrne, a Rice spokesman, and Scott Mollen, the Manhattan attorney for DataTreasury, Ballard and DataTreasury general counsel Shepherd Lane , said it's untrue that campaign contributions prompted the prosecution of Del Col and Doukas.

Both noted that the contributions were made months before Del Col first hinted at what Nassau prosecutors and DataTreasury officials called an extortion attempt.

Doukas sued DataTreasury in April this year for $15 billion, claiming that because he financially backed Ballard while the man worked on remote image capture technology, he owned half the proceeds from the invention. The technology, used by banks to process checks electronically, is worth hundreds of millions of dollars, according to previous court cases, and Doukas claims Ballard, then of Huntington, cheated him out of part-ownership.

According to Del Col, he first raised in June 2009 the possibility of Doukas, whom he took on as a client earlier that year, deserving a stake while representing another client suing DataTreasury. Later that month, Ballard and Lane started contributing to Rice's campaign, according to court documents and campaign finance reports.

Later that year, Del Col sought to settle the claim out of court and told DataTreasury's then-attorney Richard Friedman that if Doukas were paid, he would not testify against the company in its litigation with banks, according to court papers filed by Nassau prosecutors and in civil litigation filed by Doukas against DataTreasury. Prosecutors characterized this as extortion but Del Col sees it as a typical step toward reaching an out-of-court settlement.

DataTreasury officials went to Nassau prosecutors, who had them invite Doukas and Del Col to what appeared to be a settlement conference at the Garden City Hotel, the lawsuit says. Instead, it was a sting that ended with Del Col and Doukas being charged with extortion for threatening to testify adversely if Doukas wasn't paid, the suit says.

Nassau County Court Judge Meryl Berkowitz dismissed the indictment last year, ruling that Rice "improperly" appointed a private attorney to oversee the prosecution. Rice's office said the lawyer was selected for his expertise on technology cases. An appellate court upheld the dismissal earlier this month. Rice's office is now asking the state Court of Appeals to hear an appeal.

Rice's campaign in March 2010 refunded donations of $5,000 to Ballard and $1,500 to Lane, to avoid "the mere appearance of possible impropriety," according to letters to both men from the campaign.

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