Thursday, October 27, 2005

The Answers, part 2.

This is from the 10/27/5 answers. Part of one paragraph has spaces between letters. That is how it was. Hopefully I will get a better source later.

The approach is simple. Put these in the middle. Make it seem as dull as possible. Withdraw before they are read.


17. Mortenson v. Locke Liddell & Sapp LLP, No. 99-12003 (126 th Judicial District, Travis County, Texas) (1999). This class action was filed by the receiver of Austin Forex International, L.L.C. (“Austin Forex”), a former client of the firm and its predecessor, Locke Purnell Rain Harrell, P.C., on behalf of itself and other named and unnamed class members who had invested in Austin Forex and related companies. The action alleged that Locke Liddell, various other law firms and accounting firms, and individuals at those firms knowingly assisted Russell Erxleben, the founder of Austin Forex, in perpetrating a complex fraudulent scheme involving foreign currency trading. The complaint alleged that Locke Liddell had assisted Erxleben in perpetrating his scheme and asserted causes of action for fraud, negligent misrepresentation, and other violations of state securities and common law. The firm denied liability, but settled the case out of court for a sum of $23,696,000. To the best of my recollection, I did not participate in the firm’s representation of clients in the matters which are the basis for the allegations set forth by plaintiffs’ counsel in this complaint. During my tenures as Co-Managing Partner of Locke Liddell and President of Locke Purnell Rain Harrell, the firm improved its precautionary ethics measures, which included ethics briefings for all incoming lawyers, periodic (generally annual) ethics training for all lawyers, and distribution of written ethics materials. The firm also instituted tighter restrictions on client intake, including approval of new clients by senior lawyers in the firm, a Dunn & Bradstreet fraud check on new clients, mandatory engagement letters, and use of a new file opening form that specifically inquires about whether the client manages investments on behalf of others. The firm also has a conflicts/risk management committee with easy “walk-in” access comprised of partners in each city, and across varying practice areas, to which lawyers are encouraged to report concerns about ethics issues.

1 8 . I v o r W o l f s o n C o r p o r a t i o n S A v . L o c k e L i d d e l l & S a p p L L P , P h i l l i p W y l i e , R e f c o S e c u r i t i e s , I n c . a n d J o n a t h a n S l a v i n ' N o . 9 9 - C I V - 1 1 4 7 1 ( U n i t e d S t a t e s D i s t r i c t C o u r t f o r t h e S o u t h e r n D i s t r i c t o f N e w Y o r k ) ( 1 9 9 9 ) . T h i s c a s e c o n c e r n e d a l a w s u i t s e e k i n g $ 4 8 . 6 m i l l i o n i n d a m a g e s o w e d t o p l a i n t i f f s b y B r i a n S t e a r n s , a f o r m e r c l i e n t o f L o c k e L i d d e l l . P l a i n t i f f s a l l e g e d t h a t a f o r m e r p a r t n e r a t t h e f i r m , P h i l l i p W y l i e , h e l p e d S t e a r n s d e f r a u d t h e m . S t e a r n s a l l e g e d f r a u d c o n s i s t e d o f o b t a i n i n g l o a n s o f $ 2 0 m i l l i o n f r o m I v o r W o l f s o n a n d $ 6 m i l l i o n f r o m T r e m m e r o n a p r o m i s e t o r e p a y t h e m $ 4 0 m i l l i o n a n d $ 8 . 4 m i l l i o n , r e s p e c t i v e l y , a n d t o s e c u r e t h e f u l l a m o u n t s d u e w i t h a m a r k e t a b l e s e c u r i t y , w h e n S t e a r n s k n e w t h a t h e h a d n o s e c u r i t y t o p o s t . P l a i n t i f f s s o u g h t t o r e c o v e r t h e f u n d s f r o m L o c k e L i d d e l l , a l l e g i n g t h a t t h e f i r m k n o w i n g l y a n d a c t i v e l y a s s i s t e d S t e a r n s i n t h e
commission of his fraud. Locke Liddell denied these allegations in court. This matter was resolved by confidential settlement. To the best of my recollection, I did not participate in the firm’s representation of clients in the matters which are the basis for the allegations set forth by plaintiffs’ counsel in this complaint. (For a description of the precautionary ethics measures in place at Locke Liddell, see above description of Mortenson v. Locke Liddell, case 17.)

19. Janet Mortenson, Permanent Receiver for Trans-Global Asset Management, Brian Stearns, v. Locke Liddell & Sapp, LLP & Phillip Wylie, No. GN-002674 (53rd Judicial District Court, Travis County) (2000). This class action suit was filed by Janet Mortenson, in her capacity as the court-appointed permanent receiver of several companies owned by Brian Stearns, the former Locke Liddell client mentioned above (see case 18, above) who, prior to his arrest in the fall of 1999, held himself out as a successful trader of medium-term notes. The suit also represented a class of investors who were defrauded by Stearns with the alleged assistance of Locke Liddell. Plaintiffs alleged that Locke Liddell engaged in securities fraud, sale of unregistered securities, aiding a breach of fiduciary duty, conspiracy, and negligent misrepresentation, in violation of Texas law. It was alleged that Phillip Wylie, the former Locke Liddell partner, took money from investors and placed it in the firm’s IOLTA account, as a conduit to transfer the money back to Stearns, rather than using the funds to purchase legitimate securities, as had been promised. Locke Liddell denied the allegations, and the litigation was settled out of court for $8.5 million. A subsequent intervention in this case (captioned Brady National Bank v. Locke Liddell & Sapp LLP) was resolved by confidential settlement. To the best of my recollection, I did not participate in the firm’s representation of clients in the matters that are the basis for the allegations set forth by plaintiffs’ counsel in this complaint. (For a description of the precautionary ethics measures in place at Locke Liddell, see above description of Mortenson v. Locke Liddell, case 17.)

0 Comments:

Post a Comment

<< Home