Robin Forte-Burrell and Joslynn Briggs thought they’d finally won justice for their mother.
Marti Westmoreland, 88 and in the cruel clutches of dementia, had been a client of former preacher and money manager Aubrey Lee Price, who made international headlines in recent years after running a scheme that ripped off dozens of clients and contributed to the failure of a small south Georgia bank.
Price faked his death and spent 18 months on the lam before being captured on New Year’s Eve 2013 near the Georgia coast.
Last year, Westmoreland and seven other investors won judgments totaling $1.3 million against an Atlanta firm once affiliated with Price. An arbitration panel under financial industry watchdog Finra found FSC Securities Corp. did not properly supervise Price and two other brokers who directed clients to Price after he left to start his own firm.
“My mom doesn’t remember a lot, but when we say Lee Price’s name her eyes light up,” Forte-Burrell said. When she told her mother the panel had ruled in the investors’ favor last August, Forte-Burrell said her mother’s reaction was: “Really?!”
But instead of paying the judgment in the required 30 days, FSC asked a court to vacate the award, delaying repayment for investors still bruised by what Price did.
In investment fraud cases, the initial pain of loss heals slowly, and victories — when they do come — can be delayed or hollow. Often there’s little left to collect for clients who are typically older with fewer working years to make up lost financial ground.
Corporations in many industries have pushed to move disputes with customers to arbitration rather than the courts. Lawsuits are costly, take longer and in many cases, businesses have an upper hand outside the traditional justice system, an investigation last year by The New York Times found.
The shift to arbitration also can limit consumers’ ability to form class-action lawsuits.
Even when outcomes favor consumers, it’s possible to convince a judge to vacate decisions if a party can prove severe misconduct. But it’s a high bar.
FSC argues in a lawsuit against the eight investors in the Price case that the arbitration panel ignored evidence key to its defense and that the victims’ claims were too late, falling outside the statute of limitations.
Price pays a price
Price will be in a federal prison for three decades after pleading guilty in 2014 to federal fraud charges. He’s pledged to try to help clients get their money back — in part from an autobiographical book detailing his scheme and life on the run.
He’s also helped a court-appointed receiver try to pick up the pieces of his shattered investment company and testified on his former clients’ behalf in the wave of lawsuits that followed his crimes.
More than 50 former Price clients have settled or been awarded some damages by Finra, an nongovernmental industry watchdog, in cases involving FSC, according to John Chapman, an Ohio attorney representing former Price clients. They haven’t been made whole, Chapman said, but it’s all part of the process of rebuilding broken lives.
Until this latest case involving Westmoreland and seven other former Price clients, FSC had settled cases, won a few and honored Finra’s decisions when arbiters found FSC liable. But this time, FSC filed a lawsuit in Cobb County Superior Court saying the arbitration panel overstepped its bounds.
Price left FSC in early 2008 to start his own firm, but he recruited clients from FSC to join his hedge fund, PFG, and two FSC brokers directed clients to Price after he left the Atlanta firm.
Chapman argued FSC failed its investors, and if the firm had properly supervised Price and the two other brokers it could have taken steps to protect clients from Price’s scheme.
FSC’s attorney argued in court that the arbitrators refused to hear key evidence, didn’t allow cross-examination of two witnesses and disregarded Georgia and federal codes governing arbitration.
A Cobb judge recently spiked FSC’s arguments, saying he found “no evidence supporting a claim of arbitrator misconduct.” FSC signaled in March it will appeal the judge’s decision to the state Court of Appeals.
An attorney for FSC directed comment to the company, and a representative declined citing ongoing litigation.
‘Dig its heels in’
Chapman said the case might end up before the state Supreme Court, which could take a long time.
“It’s a brokerage firm that’s just decided to dig its heels in and wait and try to starve these folks out rather than deal honestly,” he said.
Meantime, victims like Westmoreland and her daughters wait.
Westmoreland spent most of her life in Ohio and raised her daughters as a single mother after their father left.
She worked in accounting for a subsidiary of Sherwin-Williams before retiring to metro Atlanta in the late 1980s. Forte-Burrell said her mother met Price through Bank of America, where she got her mortgage. At the time, Price worked in the banking giant’s securities division.
Westmoreland moved her money with Price when he joined FSC. Price, who told Westmoreland her money was in safe investments, convinced her to join his private firm when he left FSC, Forte-Burrell said.
FINRA awarded Westmoreland $146,000. For now she gets by largely on Social Security and help from long-term care insurance and her daughters.
“When she invested with (Price) she had no worries,” Forte-Burrell said. “She felt he told her everything that was right to do.”
Forte-Burrell said the delays have made her feel as though FSC thinks it is “above the law.”
Briggs said the saga has shaken her trust in the financial system.
“I understand why the older generation put their money in the mattress or in the backyard,” she said.
Merrilynn Teixeira, another Price victim who was awarded a claim in August, lost a nest egg consisting largely of the life insurance policy of her late husband. Like Westmoreland and her daughters, Teixeira found out about Price’s disappearance on the news.
Teixeira said she hoped to leave something for her adult son, Tony, who struggles with multiple sclerosis. The FINRA panel awarded her more than $420,000.
“It’s a big juggling act to make sure that I can make sure my bills are paid and that I can eat,” said Teixeira, 69. “It’s not the retirement that I had pictured.”