A case involving a Portland doctor, a Salem lawyer and Liberian diamond and gold mine scam led to a $2.4 million lawsuit being filed in Multnomah County Circuit Court on May 12.

According to the complaint attorney Robert Custis, of Salem, is accused of professional negligence for failing to act in the best interest of his client, David Rosencrantz, a 76-year-old Portland doctor.

The complaint also alleges the following:

Between 2010 and 2017, Custis represented Rosencrantz in a series of financial transactions involving a Liberian diamond and gold mine enterprise.

Rosencrantz deposited $2.44 million with Custis after Custis assured him the investment would be secure and he would be able to recover the money if repayment was not made.

The money was never returned to Custis, and the legal documents from the Liberian mine turned out to be fictitious.

"We'd like to know where that money is," said James Huegli, Rosencrantz's current attorney.

Rosencrantz was relying on Custis's advice, Huegli said, adding that Custis used a photo of diamonds as proof the mine was legitimate.

Custis declined to comment.

The complaint said Custis "fell below the standard of care of a reasonable and prudent lawyer" by failing to secure a complete financial background check of the mining company and not recommending that Rosencrantz hire an attorney with experience in international investing.

It also alleged that Custis failed to disclose that he had a personal financial interest and a conflict of interest in the deal. According to the complaint, Custis was guaranteed to be paid as long as he transferred the money to Liberia.

In December 2015, Custis filed a complaint on behalf of Rosencrantz accusing the S Group, Phoenix Mining and Investment Group, Cassell Kuoh, Vern Jerome Slocum, Knight Nguyen Investments and Christopher K. Lopez of breach of contract, misrepresentation and financial elder abuse.

The case was dismissed, but Rosencrantz filed a new complaint against Knight Nguyen Investments and Lopez alleging fraud, financial elder abuse, misrepresentation and breach of contract. The $825,000 lawsuit remains open.

Kuoh and his company Phoenix Mining have been tied to a global diamond and gold mine fraud. He was arrested in November on wire fraud and conspiracy charges. According to documents filed in U.S. District Court, Kuoh was involved in defrauding people of $13 million.

Kuoh, the former vice president for operations of the Liberia Football Association, and his associates pretended to be middlemen shipping gemstones and precious metals from Liberia to the United States for refinement and sale.

The diamonds and gold never arrived, and investors lost millions, according to the criminal complaint. Kuoh pleaded guilty to conspiracy in March and is awaiting sentencing.

The 2017 complaint is not the first complaint encountered by Custis. Following a settlement in 2014, the U.S. Securities and Exchanges Commission blacklisted Custis for his role in a $37 million Ponzi scheme.

A complaint filed in U.S. District Court alleged that Custis made false and misleading statements to the investors in a Portland-based hedge fund controlled by Yusaf Jawed.

Custis settled with the SEC and was banned from appearing or practicing before the commission as an attorney. Jawed pleaded guilty to fraud and was sentenced to six years and six months in prison.

According to the 2017 lawsuit, Custis failed to disclose to Rosencrantz that he was under investigation by the SEC while he was representing him.

For questions, comments and news tips, email reporter Whitney Woodworth at wmwoodwort@statesmanjournal.com, call 503-399-6884 or follow on Twitter @wmwoodworth

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