Miami investment professional Sylvia Benito sued New York attorney Edward J. Lake and his Long Island firm in October 2025, alleging that Lake ran what amounted to a Ponzi scheme by using new investor money to cover obligations to earlier investors while diverting funds meant to finance mass tort litigation. A second suit followed days later from Benito’s husband, Rick Solit, and by early December the firm was in Chapter 11 bankruptcy. The Edward Lake Ponzi scheme lawsuit centers on more than $15 million that investors say they entrusted to the Law Office of Edward J. Lake, doing business as Lake Law, to fund cases involving hernia mesh, Roundup, 3M earplugs, talcum powder, and Employee Retention Tax Credit claims.
Who Edward Lake Is
Edward J. Lake is a New York-licensed attorney who runs the Lake Law Firm on Long Island. The firm advertised involvement in a long list of mass tort dockets — 3M military earplugs, hernia mesh, talcum powder, Zantac, Roundup, paraquat, baby food contamination, infant formula, firefighting foam, and Camp Lejeune water contamination — along with Employee Retention Tax Credit claims. According to the firm’s website, its network has handled over 20,000 cases across three decades on a contingency basis. That volume, and the capital required to work up mass tort cases, is what drew outside investors into the arrangement now at issue.
How the Investment Was Structured
In 2020, Benito and Lee Melchionni formed a venture called Justice Partners to raise capital for Lake Law’s mass tort litigation. Justice Partners raised $11.25 million total, sending $6.125 million to the firm in April 2021 and another $5.125 million that October. A separate “sidecar” investment of $4 million was routed through an entity called KS Law Group, with $3.88 million reaching the firm in September 2021. Altogether, investors put more than $15 million into the firm to fund its dockets.
Benito also invested personally. In April 2022, she sent $1.5 million to the firm to purchase Employee Retention Tax Credit claims. As the firm’s finances allegedly worsened, Benito and Melchionni provided what her complaint calls “rescue funding”: $400,000 in January 2024 and an additional $1.7 million between March 2024 and March 2025.
The Ponzi Scheme Allegations
Benito filed her complaint on October 20, 2025, in New York Supreme Court, Suffolk County (Index No. 628021/2025), bringing claims for breach of contract, fraudulent inducement, negligent misrepresentation, and constructive trust. She sought $2.55 million in compensatory damages tied to her personal investments and loans, an $8.55 million constructive trust over the assets of Lake and the firm, disgorgement of profits, and punitive damages.
The complaint alleged that Lake was “effectively running a Ponzi scheme.” According to the filing, he commingled investor funds, diverted money away from the litigation it was supposed to finance, paid earlier investors with money from newer ones, and pledged the same attorney’s fees to multiple parties without disclosing the double-pledge. On the $1.5 million ERC investment, the complaint alleged that Lake bought the ERC claims for himself and then recharacterized Benito’s payment as a personal loan to him.
The rescue funding, the suit alleged, was induced by false claims that Lake was about to close major outside financing from Arena Investors LP and American Law Firm Capital LLC. Benito’s attorney, William A. Brewer III of the Brewer firm, said the suit was brought “to hold Edward Lake and his firm accountable for misusing investors’ funds.”
Solit’s Separate Lawsuit
On October 22, 2025, Rick Solit — a medical doctor, litigation financier, and Benito’s husband — filed his own suit against Lake Law and Lake in New York State Supreme Court (Case No. 628419/2025). Solit alleged he had put nearly $5.3 million into the firm to finance hernia mesh, Roundup, 3M earplugs, Johnson & Johnson talcum powder, and ERC cases.
His complaint focused on how few cases the firm actually produced against what it had promised:
- 15 of 113 hernia mesh suits
- 40 of 100 3M matters
- 8 of 50 Roundup cases
- 2,655 of 8,000 ERC cases
Solit alleged that the firm then defaulted on a case-replacement agreement meant to make up the shortfall. He described the operation as “more akin to a Ponzi scheme than a legitimate litigation finance program” and sought $6.2 million in damages plus profits from the cases he claimed belonged to him. Lake did not immediately respond to a request for comment from Bloomberg Law on Solit’s suit.
Lake’s Countersuit
Lake pushed back with a $20 million suit of his own in New York state court against Melchionni, Benito, and Solit, accusing them of fraud, racketeering, and the unauthorized practice of law. His complaint alleged the defendants — none of whom are licensed to practice law in New York — used coercion and duress to seize control of the firm, drained its accounts, took over payroll and client communications, and sabotaged an $18 million financing deal in progress. The filing said the defendants demanded $39 million without legal basis and boasted to third parties that they “own Ed Lake.” Brewer called the countersuit “retaliatory and unlikely to withstand scrutiny.”
Bankruptcy and Current Status
On November 28, 2025, multiple creditors filed an involuntary Chapter 7 petition against the Law Offices of Edward J. Lake, citing significant financial mismanagement. Less than a week later, on December 3, 2025, Lake’s firm filed for Chapter 11 protection, a move the bankruptcy court characterized as “the functional equivalent of an admission that relief is warranted.”
Counsel for Benito alleged in court that the firm intended to use “creditor-advanced funds for payroll and a $30,000 monthly salary to Ed Lake.” A hearing was set for December 9, 2025, to determine whether the Chapter 11 case should proceed and whether an interim trustee should be appointed over the firm’s remaining assets. No trustee had been named as of the available reporting, though Benito’s legal team said they “look forward to the appointment of a trustee.”
The federal case Solit had filed (Case No. 2:2025cv06683 in the Eastern District of New York) was closed on December 8, 2025, with a notation that it had been incorrectly opened in district court rather than bankruptcy court, reflecting how the Chapter 11 filing absorbed the related litigation.