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.
When some unknown comes on FR wanting to dig around in somebody's private life, they deserve to be treated like a dog on a fire hydrant.
Typos happen. I realized the typo after posting but relied, unrealistically I see now, on others' ability to tolerate forum typing -- hardly a paragon of exactitude of keyboard use.
I think it's far more worthwhile to discuss the issues rather than someone's typing skills, or, in my case, lack thereof while drinking coffee, watching a film and trying to type a reply simultaneously.
I'm not laughing at you, I'm pointing out the irony. Don't be so touchy.
Yeah, something's noticably amiss lately with Coulter. She seems far more desperate than I'm accustomed to her appearing as...strange to see her take such a nosedive as lately, in many of her recent comments.
Those about Miers were so beneath anyone as to now make her sound like Tweedle Dee to Michael Moore's Tweedle Dum.
Sorry, but if you don't agree with a point of view, there is no need to get nasty. Some might interpret your flaming as 1) you can't answer their argument or 2) you're a nasty sort...or both.
You really should give it a rest because you are obviously smart and make good points at times, but your vicious name-calling diminishes your arguments.
I give it a rest with you and with more reasonable posters.
Drive-by-shooters don't deserve it.
The Freepers are now officially a threat as the
posts keep coming with the obvious trashing of our
President and any action he takes ..Courts, War,
Budgets,etc...you name it.....They can only see
the next election and then putting Hillary there
in 2008...first is to demoralize the base and the
supporters of POTUS. Jake
At any rate, many of us on this forum have supported Dubya even though we are 1) not happy with his spending and 2) VERY unhappy with his immigration policy. We thought that the SC nomination is what we worked for...and you must understand why we have serious doubts about Miers. As Richard Viguerie said (paraphrasing):"We've waited 40 years for this opportunity...and this is the best we could do?"
This forum has supported Dubya with a lot of energy...this is the first time that there has been a real split on him and I for one think it is deserved--and healthy.
According to the WaPo timeline in your post, Miers became president of Locke Purnell in 1996. I presume she was still president when the firm merged with Liddell and Sapp, and thereupon became co-managing partner of the new Locke Liddell and Sapp. If that is correct, she was president of LP during the preliminary period of negotiations with the firm of Liddell and Sapp. One would expect her to have been involved in the negotiations and to bear some responsibility for allying her firm with that of Liddell and Sapp.
If that is unreasonable, hopefully someone will point it out.
Just WHO do all you "Dump Miers" people think is going to fight FOR your "Rock Hard Conservative Judge" See the 90-09 Senate Terrorist Protection vote in the Defense Appropriation? War's over boys. Your Republican Senate has ALL ready surrendered.
Did she really? This is great news. Now my liberal friends, despite having tried to associate me with every hysterical comment Coulter ever makes, now have more in common with her than I have.
I was wondering if this was the same guy I heard on Ankarlo!
I was listening to his spiel and I kept having this nagging feeling that something wasn't right... for lack of a better phrase, the numbers weren't adding up to me.
Thanks to FR, now I know what I was missing....
The fraud happened before she got there!
See how much we learn and how great FR is??!!!!
I didn't know about the timing of Mier's involvment with the laws firm either, until I read it HERE!!!!
Corsi sure didn't bring it up...and Ankarlo didn't know to question him on it...I don't think...
Hopefully, Darrell will have done his homework soon...and tell his listeners THAT part of the story...because I wouldn't have known..
GREAT POINT...THANKS!!
Everyone else is trashing Bush over the Miers pick so why not pile on to sell a few papers? You'll find WND and NYT next to National Enquirer in the news stands. It looks like Jayson Blair found work after all.
"Comrade Napoleon is always right"
I'm kind of surprised to see you write this question; I thought you opposed Miers.
How embarassing for you that you don't know the "rest of the story" concerning this guy.
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