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.
But wanting her destroyed is another matter entirely. This kind of stuff ought to be left to the left.
Totally agree about WND. Every time I see WND quoted lately I get a mental image of "Weekly World News" in my head. Rubbish.
I think that happened on Friday night, when Ann Coulter slobbered all over Bill Maher, calling Miers a "cleaning lady" and saying she would proudly put an "Impeach Bush" bumper sticker on her car.
He's also known for coming on FR, under his real name, and trashing the Catholic Church in the summer of 2004. His remarks were widely quoted by the Kerry Campaign in the fall, to the point where he had to duck out of sight.
Corsi is a loose cannon.
Well, that should lock up the Hillary Clinton vote.
I support President Bush and I have confidence in his appointment, because Harriet Miers is a true prolife evangelical conservative.
President Bush is managing two wars, a war against a worldwide terrorist enemy, and 9/11. President Bush hasn't had any help from the UN or the media. He's done all of those things alone. President Bush and Harriet Miers has done an excellent job serving this great country. Harriet Miers isn't perfect but she was right there with President Bush on all these problems and was loyal. So I will always stay loyal to the President and trust his judgement. Now we are engaged in a great internal and external testing whether conservatives can long endure. Let us have conviction that we are right and in that conviction, let us dare to do our duty, as 'we understand it to be' and give moral support to our President.
I understand that but it does not change the fact that people root for him when he says things with which they agree and trash him when he does not -- just like every other Conservative author or pundit.
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Something to consider.
During her watch, lawyers brought in two clients — ex-University of Texas football star Russell Erxleben and businessman Brian Stearns — who wound up being accused of operating investment companies that were Ponzi schemes. Both were sentenced to prison, and Miers' firm had to pay $30 million to settle lawsuits stemming from its representation of the men.Clements says Miers had no link to Erxleben or Stearns. "She would tell you that ultimately, the buck stops with her," Clements says. But "as a practical matter ... it was impossible for her, in a firm this size, to know what every lawyer was doing."
This worthless drivel post of your's "Sucks Rocks".
Heh! WWN or WND? Who can tell?
Corsi was on the radio with Darrell Ankarlo of KLIF Radio last week with this "news"...
He even said it "pained" him to report this...because he is a Bush backer....but, it "has to be told".
LOL!
How forgot? He was right then, now he's jumped the shark.
Are you implying that if someone is right once, they can never again be wrong?
Glad to see you haven't lost your touch bringing that special ad hominem attack dog crapola to the debate.
Give it a rest, why dontcha...
Coulter said that? That really stinks.
Naughty naughty. LOL
He even said it "pained" him to report this...because he is a Bush backer....but, it "has to be told".
Corsi reminds me of that fat sleazeball who worked for Dan Burton, who used to trot out wild accusations against Clinton every other week. Most of them were rehashs of stuff we already knew about, but they made Burton look nuttier than we already knew him to be.
Corsi's "scoop" was out there on Tuesday, and answered by legal experts much more knowledgeable than he.
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