Posted on 10/09/2005 4:32:28 PM PDT by Tolerance Sucks Rocks
In 2000, Locke Liddell & Sapp, the Texas legal firm of which Harriet Miers was then co-manager, paid out $22 million to settle out-of-court with investors, many of whom had been defrauded of their life savings in the Austin Forex International currency-trading Ponzi scheme run by former Texas football star Russell Erxleben. Locke Liddell agreed to pay the $22 million restitution to investors because legal representation the firm provided Erxleben figured prominently in the perpetration of the fraud itself.
Michael Shaunessy, the Austin attorney who represented the investors in the Locke Liddell settlement, told WND that Erxleben's Ponzi scheme defrauded over 600 investors who had established more than 800 separate investment accounts with Austin Forex International, or AFI.
"Many of these investors were seniors," Shaunessy explained. "Erxleben convinced some of them to borrow the equity out of their homes, others he showed how to convert their IRAs to self-directed IRAs, so their IRA money could be handed over to him. Investors in AFI lost everything; some were retirees who lost their life savings. People were not able to make their home payments and their homes were foreclosed; some had to move in with relatives because they had nothing left after Erxleben was finished with them."
What had Locke Liddell done wrong? According to the petition filed by Shaunessy, Locke Liddell's lawyers allowed AFI to sell unregistered securities. Moreover, the firm signed off on Erxleben's fraudulent investment brochures and promotional materials that contained misrepresentations. Locke Liddell knew for months that AFI's was taking staggering losses; still, the firm did nothing until they found out that state securities regulators had begun investigating.
"These were not sophisticated investors," Shaunessy explained. "Many of them were older, and their economic means were limited. There were a lot of retired people. People's lives were disrupted; there were divorces. I even heard rumors that some people become suicidal."
"Erxleben was the perfect con man," noted Ed Martin, who was then the IRS special agent who tracked down the AFI Ponzi scheme. "He was this University of Texas football star, a kicker who then went to the NFL. He was the guy next door, your buddy on the golf course. Everybody liked him – the trouble was that he'd shake your right hand with his right hand, but his left hand would end up in your pocket."
In 1997, when Erxleben's scheme was in full swing, the Austin Business Journal wrote him up as a rising star. "In its first year," the Austin Business Journal reported in its Oct. 17, 1997, print edition, "Erxleben says Austin Forex averaged 8 percent to 10 percent monthly return for its clients, a 100 percent annual average. That's nearly double what a Top 25 mutual fund makes, according to a Bloomberg Business News study." Almost sounding like a sales brochure, the Austin Business Journal promoted Erxleben's hype: "Word is spreading from Austin Forex's small core of clients, and people are cashing in life insurance policies and college savings accounts to increase their initial investments. Austin Forex requires a minimum investment of $20,000."
Like all gifted con artists, Erxleben knew how to create the "can't lose" feeling. He would brag that he had the same law firm the governor had, playing off the fact that George W. Bush, then the governor of Texas, was known to be one of Harriet Miers' clients.
"He created the feeling that the boat was going to leave the dock, and you had to be on board," Martin explained to WND. "The problem was that you got on the boat only to find out the boat was going to sink, with you still on board."
When AFI began to take loses, Erxleben went the way of all Ponzi schemes – he used the money of new investors to pay off old investors, a pattern which led to the bragging about how great returns "everybody" was getting from AFI.
"It's like all Ponzi schemes," Ed Martin continued. "It works great until the con artist runs out of money. When the cash flow dries up, the deal is done. While the money lasts, the con artist lives high on the hog."
Erxleben knew how to do that; AFI rented plush space in an Austin high rise at 100 Congress Avenue with a glass-enclosed corner office that overlooked the Capitol.
"Trouble is that when the money is gone, the investors are left high and dry," Martin explained. Martin, now retired from the IRS, operates his own private investigation firm in Austin, where he specializes in preventing people from falling victim to financial swindles.
"It's a tragedy," he said, reflecting back on AFI. "The investors are all ordinary people – doctors, lawyers, Indian chiefs – except that some of them were seniors who lost their retirement money when Erxleben's scheme ran out of gas."
How responsible was Harriet Miers for allowing her law firm to participate in this fraud? Granted, Locke Liddell is a large law firm, and the fraud involved the Austin office, not the Dallas office where Miers worked. Still, she was supposedly "on watch" as the firm's co-manager when Erxleben perpetrated his fraud through Locke Liddell. In the press quotes of the time, Harriet Miers was typically the spokesperson for the firm.
Moreover, Locke Liddell was caught not once, but twice. The firm was also burned by con artist Brian Stearns, who used the law firm's advice to defraud investors in an elaborate fake-bond scheme. For its role in this scam, Locke Liddell had to cough up another $8.5 million to settle out-of-court with the fleeced investors, many of whom again were senior retirees. In a two-year period of time while Miers was co-managing the law firm, Locke Liddell paid out $30.5 million to pay back ordinary citizens who had been robbed of their money, in part because the firm allowed its advice to be parlayed by crooks.
"All in all, we did the best we could," settlement attorney Shaunessy told WND. "With the money Locke Liddell agreed to pay back, the defrauded investors ended up with something like 66 cents on their dollar."
The conclusion of the Texas legal community is that the bilked investors will never again see the 34 cents of every dollar they put into these schemes that Locke Liddell ill-advised. Unfortunately, in a post-Enron era, these credentials do not help build a positive resume justifying a lifetime position as an associate justice on the Supreme Court of the United States.
PING!
this is how they want you to read it "How Miers defrauded investors" (regardless of the validity of the contents)
Miers was Co-Managing Partner at Locke Liddell & Sapp, LLP from 1998-2000.
WND writes "In 1997, when Erxleben's scheme was in full swing, the Austin Business Journal wrote..."
Con scheme in 1997. Miers joins firm the next year. WND blames Miers.
...sheesh...
credit washington post
Still, she was supposedly "on watch" as the firm's co-manager when Erxleben perpetrated his fraud through Locke Liddell. In the press quotes of the time, Harriet Miers was typically the spokesperson for the firm.
This piling-on has gotten out-of-control. I'm not thrilled with Miers either, but let's stck to logic, not scurrilous garbage like this. Pathetic.
She would certainly have handled press releases on that case...that came out **after** the 1997 con.
But her firm didn't join with Liddell Sapp until 1998 (then she was made "Co-Managing Partner").
I actually AM shocked, this is a real low blow. I guess there really isn't that much of a difference between the diehards of either party, is there...
And she is consistently presented as a 14 hour a day, detail and procedure obsessed workaholic.
World Net Daily has become as shrill and absurd as Lew Rockwell.
This shabby charge is crap. Sell it to Raimando.
Haven't you been reading the descriptions of her ? That is how her law firm tenure is described.
Has the Destroy Miers camp finally jumped the shark?
Wow, WorldNetDaily really, really, REALLY does not like Harriet Miers. I make no comment as to the voracity of their claims, this article, but it's another in their stream of attack articles about Miers. Next we'll likely read that WorldNetDaily reveals that Miers used to have four legs but two were surgically removed in a South American private hospital.
Err, something equally up-in-negative-volume about Miers.
Old news, and Meirs had no part in any of it (she was a litigator, not a securities lawyer), and it is a rather crude attempt at guilt by association, which even Biden won't be dumb enough to bring up at the hearings. Cheers.
Simply do not patronize World Net Daily.
It is simply the case that some out there wanted this big fight in the Judiciary committee over a big name known conservative.
Bush actually is putting in someone who would be conservative for sure because he personally has known her for 14 years.
That's a very telling typo there. WND's claims are indeed voracious (ravenous, eager to consume), LOL, but their veracity (truthfulness) is another question entirely.
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