Malvern Prep to return $700,000 received from Ponzi schemer

Malvern Preparatory School agreed to return $700,000 received from convicted Ponzi schemer Joseph S. Forte, according to a consent order signed Thursday by Judge Paul S. Diamond of the U.S. District Court in Philadelphia.

The settlement ends a heated legal fight between the private Main Line school and the court-appointed receiver who is trying to recoup money for investors who lost $35 million in the fraud by Forte, who is serving a 15-year prison term.

The receiver, Marion A. Hecht, had first demanded that Malvern Prep return $900,000 allegedly donated by Forte, a former trustee and volunteer strength coach at the school who pledged $1 million for a strength-and-conditioning center.

The exact amount of stolen money that Forte gave to Malvern Prep was in dispute. Malvern Prep's president, Jim Stewart, did not respond to a voice mail seeking comment left late Thursday afternoon.

Joshua Peck, spokesman for Duane Morris L.L.P., the school's law firm, said on behalf of the school: "We're very happy that a compromise has been reached with the receiver. We want to thank the magistrate, Judge [Timothy R.] Rice, for his role [in negotiations]. We're especially pleased that we can put our attention where it belongs: on our mission to educate Catholic young men."

The consent order said Malvern Prep received about $800,000 from Forte, but the receiver settled for the return of $700,000 because some of the money was used to pay tuition for Forte's son.

Hecht is still trying to recoup $1.25 million donated to Cardinal O'Hara High School, Monsignor Bonner High School, and St. Anastasia Church and School, plus $154,992 to Hill Top Preparatory School.