Lake Law Firm Lawsuits: Fraud, Bankruptcy, and Ponzi Claims

The Lake Law Firm is facing two investor lawsuits filed in New York state court in October 2025 and a bankruptcy proceeding that began weeks later, all centered on allegations that the mass tort practice and its founder Edward J. Lake took more than $15 million in litigation financing and ran what the complaints call a Ponzi scheme.¹

Who Sued and What They Claim

On October 20, 2025, Miami-based investment professional Sylvia Benito filed suit against Edward Lake and the Law Office of Edward J. Lake, P.C. in the Supreme Court of the State of New York.² Her complaint alleges the firm failed to repay its investors and was “effectively running a Ponzi scheme” by using new investment money to cover earlier obligations.¹

Benito says she was induced to provide loans totaling more than $1 million that were never repaid, and that she invested another $1.5 million to acquire Employee Retention Tax Credit claims, only for Lake to purchase those claims for himself and recharacterize her money as a loan.³ Her causes of action include fraudulent inducement, breach of contract, negligent misrepresentation, and constructive trust. She seeks $2.55 million in compensatory damages, an $8.55 million constructive trust over Lake’s assets and the firm’s assets, punitive damages for what the complaint calls “felony-level misconduct,” and disgorgement of profits.¹

Two days later, on October 22, 2025, Rick Solit filed a separate suit against the firm and Lake in the same court, styled Solit v. Lake, No. 628419/2025. Solit invested about $5.3 million across several mass tort categories and the Employee Retention Credit program.⁴ His complaint alleges the firm delivered far fewer cases than promised:

Talcum powder: zero delivered.
Hernia mesh: 15 delivered against 113 pledged.
3M earplug claims: 40 delivered against 100 pledged.
Roundup: 8 delivered against 50 pledged.
Employee Retention Credit claims: 2,655 delivered against 8,000 pledged.

Solit describes the operation as “more akin to a Ponzi scheme than a legitimate litigation finance program” and seeks $6.2 million in damages plus any profits from the mass tort and tax credit cases he contends belong to him. Both plaintiffs are represented by attorney William A. Brewer III. As of late October 2025, Edward Lake had not responded to the complaints or to media requests for comment.⁴

The Financing Arrangement Behind the Ponzi Allegation

Mass tort firms typically rely on outside capital to fund the marketing, client acquisition, and case development needed to build large portfolios, and investors take a share of the eventual fees or settlements. The complaints allege the Lake Law Firm attracted money by promising guaranteed returns and touting proprietary case-acquisition methods.

In 2020, Benito and business partner Lee Melchionni formed an investment vehicle called Justice Partners that raised $11.25 million specifically to fund the firm’s mass tort cases. All told, the complaints say the firm and Lake received more than $15 million from investors.¹ What sets this dispute apart from the more common complaint about mass tort funders is that the law firm itself, rather than an outside financier, is the party accused of failing to deliver on promises made to the people bankrolling the work.

Bankruptcy Proceedings

Events moved fast after the two suits landed. In late November 2025, creditors filed an involuntary Chapter 7 petition against the Law Offices of Edward J. Lake, P.C. in the U.S. Bankruptcy Court for the Eastern District of New York, case number 8:25-bk-74584. The petitioning creditors were Sylvia Benito, Lee Melchionni, Titan Law Group LLP, and LRS Law Group LLP.⁵

On December 3, 2025, the firm answered by filing its own Chapter 11 petition, seeking to reorganize rather than liquidate. According to Brewer, the filing was aimed at using creditor-advanced funds to cover payroll and to keep paying Edward Lake a $30,000 monthly salary. The bankruptcy court remarked that the Chapter 11 filing was “the functional equivalent of an admission that relief is warranted.” A hearing was scheduled for December 9, 2025, to decide whether the Chapter 11 case would proceed and whether an interim trustee should be appointed to oversee the firm’s remaining assets.⁶

Court records also show that the Lake Law Firm filed its own suit against Lee Melchionni, Justice Partners Group LLP, and others in the Eastern District of New York, Case No. 2:2025cv06213, though the docket does not fully lay out those claims.⁷

Where the Firm and Its Founder Stand

The Lake Law Firm was positioned as one of the country’s larger mass tort operations, with practice areas including Zantac, Roundup, talcum powder, hernia mesh, 3M military earplugs, baby food heavy metals litigation, infant formula, Paraquat, Camp Lejeune, firefighting foam, and the Employee Retention Tax Credit program.⁸ The pending civil suits and the bankruptcy proceedings now sit alongside each other in New York state and federal court, and the allegations against Edward Lake and the firm remain allegations. He had not answered them publicly as of late October 2025, and no court has ruled on the fraud or Ponzi claims.

1
New York Law Journal. Effectively Running a Ponzi Scheme: NY-Based Lake Law Firm Sued Over Mass Tort Financing
2
Goldberg Segalla. Matthew Feinberg Explores Liability and Ethical Risks of Litigation Funding in Law 360 Article
3
Brewer Attorneys & Counselors. Brewer Client Sylvia Benito Files Suit Alleging Fraud and Contract Breaches by New York Attorney
4
Bloomberg Law. 3M JJ Mass Tort Funder Sues NY Law Firm for Investment Debacle
5
PACER Monitor. Law Offices of Edward J Lake PC
6
Brewer Attorneys & Counselors. Law 360 Reports on Emerging Developments Involving Lake Law Firm Brewer Client Sylvia Benito
7
Justia Dockets. Law Office of Edward J Lake et al v Melchionni et al
8
The Lake Law Firm. The Lake Law Firm