Victims of alleged Ponzi scheme have some hope

Investors who say they lost millions to a Garden City attorney accused of killing himself and his family as an alleged Ponzi scheme unraveled have a shot at getting back some money after a Nassau judge ruled in their favor.

Nassau Surrogate's Court Judge John Riordan's decision last Thursday closed one chapter in the fight over William Parente's $5-million life insurance trust, ruling the proceeds must go to Parente's publicly administered estate, which has been hit with more than $35 million in claims from investors.

"We're obviously pleased," said Albert Petraglia, a Uniondale attorney for two investors who say they gave Parente a total of nearly $3 million. "They're not going to be made whole, that's for sure, but hopefully they'll get something out of this."

The ruling dealt a blow to relatives of Parente's wife, Betty, who, as a policy beneficiary, was the rightful heir, her family argued.

Her cousin Joseph Mazzarella of North Bellmore vowed to appeal. "Bill Parente brutally murdered his family," Mazzarella said. "I think that should eliminate that estate for anything," he said, referring to the Parente estate.

The bodies of William and Betty and their two children, Stephanie, 19, and Catherine Ann, 11, were found in a Baltimore area hotel on April 20, 2009. Baltimore County police say William Parente killed his wife and daughters before bleeding to death from self-inflicted cuts.

The FBI began investigating Parente's financial dealings, as dozens of people came forward saying they had given him money for unsecured bridge loans came forward. No evidence of actual loans has been found and Parente had less than $5,000 in the bank at his death, officials said. The probe is ongoing.

Parente, a tax and estate attorney, left no will.

Riordan ruled the life insurance trust - a separate legal entity into which the policy pays out - must remain with Parente's estate for two reasons: His family died before him and the trust had no provision for them dying first.

The judge rejected a court doctrine called "the slayer rule," which holds no one should not benefit from his own bad acts. Riordan wrote this case was different because Parente did not benefit materially from his family's death.

Riordan's long-awaited decision doesn't end the case.

Eric Milgrim, the Nassau County public administrator appointed to oversee Parente's estate because no one from his family stepped forward, said the next step is to deliver to Riordan a full accounting of all claims against Parente. Milgrim said that won't happen until October at the earliest.

The Parentes' three homes in Garden City, Bay Ridge and Westhampton Beach are being sold off, but, because William Parente's guilt hasn't been proven in court, a hearing to show his culpability in his family's demise will likely be held before any payouts.

Finally, a wrongful-death lawsuit filed by Mazzarella, as the administrator of Betty's estate, against her husband's estate must be resolved before the life insurance policy is distributed, attorneys said.