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A group of investors has filed a proposed class action in federal court in Florida accusing several private equity fund managers and related businesses of orchestrating a yearslong scheme that allegedly diverted more than $150 million from investment funds into affiliated entities and personal ventures.

The 13-count complaint, filed in the U.S. District Court for the Southern District of Florida, alleges that attorney David Feingold and multiple associates used their control over three private equity funds to shift investor money into side businesses tied to infrastructure projects, real estate developments and a merchant cash advance operation. Plaintiffs claim the transactions concealed losses and allowed insiders to extract millions of dollars at the expense of investors.

The funds at the center of the case include the L3 Capital Income Fund, the L3 Capital Hotel Fund and the L3 Special Opportunity Fund. According to the lawsuit, these vehicles raised nearly $150 million between 2019 and 2021, drawing capital from individuals who were promised stable, double-digit annual returns.

Investors say those expectations were not met. The complaint alleges that some distributions presented as profits were funded using investor principal rather than investment gains. Plaintiffs contend the funds generated little meaningful income and that a significant portion of capital was redirected to businesses owned or controlled by Feingold and other defendants.

The suit describes the structure of the funds as intentionally layered and difficult to track, which plaintiffs claim made it harder to detect where money was ultimately going. The alleged scheme involved transfers between related companies, internal loans and investments that, according to the filing, provided minimal benefit to the funds themselves.

The L3 Capital Income Fund reportedly raised about $81 million and invested in restaurant franchises, debt settlement ventures, merchant cash advance businesses and real estate-related entities. Plaintiffs allege that more than $24 million of those funds were routed to companies connected to the managers.

The hotel-focused fund, which raised approximately $47 million for hospitality projects in several southeastern states, is described in the lawsuit as having lost most of its value. Investors say they were informed earlier this year that the vehicle had little or no remaining assets.

A third vehicle, the L3 Special Opportunity Fund, targeted commercial real estate investments. According to the complaint, millions of dollars were wired to affiliated development companies, yet investors have not received returns. Plaintiffs also allege that undistributed funds were transferred directly to individuals associated with the management group.

The lawsuit names Feingold alongside Michael Dazzo, Richard Cardinale, Joseph Baldassarra and Steven Baldassarra, as well as several Broad Street–related entities. Plaintiffs claim these parties worked together to move assets away from the L3 funds and into other corporate structures.

The legal fight comes as regulators pursue parallel claims. The U.S. Securities and Exchange Commission filed a civil enforcement action last year against Feingold and certain Broad Street entities, alleging broader investor fraud. Court filings in that matter led to the appointment of an independent monitor to oversee operations and review financial activity.

According to reports from that oversight process, the companies explored plans to exchange investor interests for shares in a special purpose acquisition company tied to a proposed financial services venture. Plaintiffs in the new case cite those developments as further evidence of what they describe as attempts to shift or protect assets.

Attorneys representing the proposed class say they began investigating after several investors initiated arbitration proceedings related to losses in the funds. Counsel alleges that operating agreements were structured to minimize Feingold’s formal role, even though he allegedly played a central part in fund creation and management.

Defense counsel disputes the claims. Lawyers for Feingold and the other defendants said the allegations lack merit and described the filing as part of a pattern of unsuccessful litigation. They indicated that the defendants plan to challenge the suit and seek recovery of legal costs.

The proposed class includes investors who placed money in the three L3 funds. Plaintiffs seek damages, restitution and other relief tied to what they describe as misappropriated capital.

The case has been assigned to a federal judge in the Southern District of Florida. Court proceedings are expected to focus on whether the funds were managed in accordance with investor agreements and whether assets were improperly diverted for the benefit of insiders.

If certified as a class action, the lawsuit could affect dozens of investors and potentially expand depending on how many additional claimants join the case.