A convicted Wall Street swindler was barred for life from serving as an officer or director of a public company — but secretly pulled the strings at a $115 million Nasdaq venture anyway, a bombshell federal lawsuit alleges.
Daniel L. Gordon, who served prison time for swiping $43 million from Merrill Lynch, agreed to the lifetime ban in 2003 to settle SEC charges involving the theft and other alleged energy-trading fraud.
Named New York’s No. 1 tax deadbeat in 2016, Gordon was exposed by The Post last week as still owing a whopping $59.1 million.
The lawsuit claims Gordon secretly controlled Sagaliam Acquisition Corp., a special purpose acquisition company, or SPAC, while an 87-year-old Florida real estate mogul, Alan H. Ginsburg, was identified in SEC filings as controlling the company’s sponsor — the private vehicle through which insiders held a large block of shares.
Ginsburg, a Barack Obama donor and philanthropist whose name adorns a 15-story Orlando hospital tower, was actually “serving as a front for Gordon’s control,” according to the suit.
Sagaliam later struck a deal valuing Gordon’s own firm’s Saudi Applebee’s business at $379 million — a proposed takeover that would have handed his investment firm $180 million in stock. The deal never closed.
Meanwhile, Gordon has been living it up in a $5 million California mansion with a swim-up bar, running a prison-reform charity praised by Gov. Gavin Newsom and peddling an inhalable version of Viagra’s active ingredient.
The allegations come from BN Holdings Trust, whose Texas trustees bought a controlling interest in Sagaliam’s sponsor in 2023. They are suing Ginsburg and unidentified defendants in Manhattan federal court for at least $14 million, claiming they were deceived about Gordon’s role and millions of dollars in undisclosed liabilities.
Gordon’s involvement had already set off alarm bells among Sagaliam’s original lawyers. In July 2021, attorneys at Ellenoff Grossman & Schole warned CEO Barry Kostiner that Gordon’s criminal past and lifetime SEC ban threatened the venture’s Nasdaq listing.
The lawyers described Gordon as a “convicted felon who defrauded a bankruptcy court,” according to correspondence cited in the Manhattan federal lawsuit.
Four days later, they quit.
“This guy could in no way, shape, or form hold any kind of responsible office with a publicly held company,” Anthony Sabino, a St. John’s University law professor and veteran securities lawyer, said of Gordon.
“Could he be the janitor? Yeah, that’s about it.”
The day after the lawyers quit, Gordon introduced Ginsburg in an email. And on Aug. 5, Gordon said prospective replacement lawyers understood his “continued involvement” — before proposing a change to the company’s ownership disclosures.
“Everything would be much simpler if we just change the ‘beneficial owner’ to Alan Ginsburg,” he wrote.
The suit says either Ginsburg really took control — or Gordon, who was named in Sagaliam’s first SEC filing in May 2021, simply changed the name on the paperwork while still pulling the strings.
“You’re banned from doing indirectly what you’re banned from doing directly,” Sabino told The Post.
Ginsburg denies wrongdoing. His attorneys called the lawsuit “desperate” and “meritless” in an Oct. 5 motion to dismiss, arguing that his SEC filings were truthful and he had no role in the sponsor sale.
His legal team also noted that Gordon wasn’t sued and that his involvement was apparent from the transaction documents he signed. No judge has ruled on the fraud allegations.
The lawsuit also seeks to hold Ginsburg in civil contempt of Gordon’s 2003 federal judgment, arguing that the injunction extends to people who knew of the order and actively helped Gordon violate it.
“It’s a very serious violation if a company or a person is acting as an undisclosed control person,” said Robert Heim, a former SEC enforcement lawyer, who cautioned that the lawsuit’s allegations would have to be proved.
Ginsburg did not respond to The Post’s request for comment. A rep for Kirkland & Ellis, the law firm representing the former Obama donor, declined to comment.
Powerhouse law firm Mayer Brown took over Sagaliam’s dealings with the SEC back in 2021, a letter the firm filed with the agency shows.
When the company went public that December, its prospectus said the sponsor was “controlled by its managing member, Alan H. Ginsburg.” Gordon’s name appeared nowhere in it, the filings show.
But Gordon continued wielding influence behind the scenes, according to emails filed with the complaint.
In December 2021, when two investors offered to put up $250,000 subject to conditions involving share allocations and control of company funds, Gordon fired back.
“HARD PASS. Alan and I will find the shortfall but it will require further adjustment to your share allocation,” he wrote to Sagaliam CEO Barry Kostiner, copying the investors.
Gordon also warned that he would “remember” their demands when it came to another business venture called Legacy.
“Time is up and the games must stop,” he declared.
When the tech startup StoryFile walked away from a merger, jittery investors demanded shares as a safety net. Kostiner went straight to Daniel Gordon, pleading: “Dan, these guys are going nuts.”
Gordon told him how and when to act. “Sagaliam isn’t going anywhere — your guys just need to relax,” he shot back.
An SEC spokesperson and an attorney representing BN Holdings declined to comment. Gordon, Kostiner, Sagaliam and Mayer Brown did not respond to requests for comment.
“This clearly is a fact pattern that cries out for federal investigation, regardless of outcome,” former federal prosecutor and SEC enforcement lawyer Jacob Frenkel told The Post. “A compelling written paper trail becomes the well-lit path to indictment and incarceration.”
In November 2022, Sagaliam struck its Saudi Applebee’s deal.
The target was Arabian Entertainment Company, which runs 17 restaurants in Saudi Arabia, including Applebee’s. Gordon’s GLD Partners had bought it from investment giant SEDCO Holding just nine months earlier, in February 2022. The price was never disclosed.
Sagaliam planned to take the business public at a $379 million valuation, SEC filings show. GLD and an affiliate would get $180 million in stock — plus up to 35 million bonus shares if the share price hit certain targets.
Under certain conditions, GLD could also name directors and pick the board chairman. Gordon himself signed the deal as a director of the company set to become the new public parent, the paperwork shows.
The two sides were already close. GLD held an indirect stake in Sagaliam’s sponsor, and two Sagaliam executives also worked for Gordon’s firm, the filings show. A special Sagaliam committee reviewed the deal, and valuation firm Marshall & Stevens gave an opinion that it was fair.
But the deal soon unraveled.
In December 2022, investors redeemed roughly 92% of Sagaliam’s public shares, withdrawing $107.6 million from its trust account and leaving less than $10 million.
Sagaliam failed to secure required outside financing, and the Saudi deal collapsed in February 2023. GLD never received the proposed stock payout.
Weeks later, Gordon’s camp agreed to sell its interest in Sagaliam’s sponsor to BN Holdings Trust for about $1 million, according to court documents obtained by The Post.
The trust’s trustees, Kelli Austin and Kathleen Miller, claim the business came saddled with more than $8 million in undisclosed liabilities — along with evidence that Gordon’s control had been deliberately concealed.
Meanwhile, Mayer Brown’s Hong Kong partnership ended up chasing Sagaliam and its sponsor for unpaid legal bills — winning default judgments totaling nearly $2.3 million in 2024.
