Two blogs were recently posted regarding an investment fraud case that proceeded to trial in Texas State District Court, the Honorable William Sowder presiding.  As a means of expanding on those postings, this blog has been constructed; it addresses the following: A) the “verdict” which was issued by Judge Sowder shortly after the trial concluded; B) the Judgment Judge Sowder entered; and C) the Amended Findings Of Fact And Conclusions Of Law on which Judge Sowder “signed off.”

___________

Soon after the above-referenced trial came to a conclusion, the learned district court judge issued a verdict, the fundamental essence of which is paraphrased below.

Verdict

1) the “financial vehicle” that was sold by the Defendant was a security;

2) even if the underlying “financial product” was not a security, the Defendant “was reckless in the promotion and sale of this product,” and “is answerable . . . in damages”; and

3) “the Defendant is also liable . . . for damages” pursuant to the Texas Securities Act provisions, “as specifically pleaded.”

Judgment

Roughly six weeks later, the trial court entered a Judgment against the Defendant.  Among other things, it provided for the recovery of principal, an award of attorney fees, pre-judgment interest, post-judgment interest, and costs of court.

Amended Findings Of Fact And Conclusions Of Law

The trial court thereafter entered Amended Findings Of Fact And Conclusions Of Law.  The factual segment of that document reflected findings noting that the Defendant failed to make certain disclosures.  In that regard, it found, among other things, that the Defendant:

1) “failed to disclose that he had been the subject of a 2001 Texas State Securities Board Cease and Desist Order . . .”;

2) “failed to disclose that the Texas Department of Insurance issued an Emergency Cease and Desist Order against PCI,” the issuer of the attending guaranty bonds, “wherein it barred PCI from engaging in the business of insurance in Texas, absent registration”; and

3) “failed to disclose that he had not performed a reasonable investigation” of the pertinent securities, “and as a result, the sales pitches he made lacked a reasonable basis.”

With respect to the Conclusions Of Law, they encompassed various points, to include the following:

1) “Texas securities law allows the recovery of attorney fees . . . where it is shown that the award of attorney fees would be ‘equitable’”;

2) “The financial vehicles in question . . . constituted securities under Texas securities law”; and

3) “Evidence not related directly to the actual sales” of the underlying investment product which “was objected to by the Defendant on relevance grounds was relevant . . . and the probative value of such evidence outweighed the prejudicial value of such evidence.”

___________

Readers must keep in mind that the summaries set forth above, which are arguably loosely-worded in some respects, should not be allowed to play a meaningful role in connection with an attempt to comprehend the case discussed herein.  Framed in compact terms, this discussion is far too incomplete — and far too informal — to play a substantive role in such an endeavor.  Given the scope of the editing process that has been undertaken as part of an effort to provide for brevity, numerous words, phrases, concepts, and allegations have been taken out of context; and important details have been left out.  Based on those considerations, this blog must not be allowed to serve as the basis for an assessment or analysis of any individual or entity referenced, directly or indirectly, in this discussion.

On a parallel note, readers must remember that the case which is discussed in this blog is currently “on appeal.”  Concisely stated, no concrete predictions can be attached to any determinations that may be reached by the appellate court; that observation generally holds true for all cases that are appealed.

___________

If you believe that you have been taken advantage of via a misleading sales presentation, you may wish to consider the merits of contacting an attorney who possesses extensive experience in securities fraud cases.  Chris Bebel, a former SEC attorney and a former AUSA, is an accomplished securities law attorney.  Mr. Bebel cannot guarantee success; no reputable attorney would do so.  But, if your case is accepted, Mr. Bebel will work in tandem with other Tefteller Law, PLLC personnel, to include Bradley Ellison (a distinguished paralegal), in connection with an effort that is designed to advance your interests.

___________

Although the case described in this blog was pursued in Texas, it is important to understand that Mr. Bebel has, for many years, represented investors residing throughout the nation, including investors living in the following states: California, New Jersey, Minnesota, Iowa, Mississippi, Florida, New York, Colorado, Indiana, Kansas, Arkansas, and Oklahoma.

Mr. Bebel has provided instructive presentations addressing an array of securities industry topics to lawyers and securities industry professionals in the following cities: Jacksonville, FL; San Diego, CA; Colorado Springs, CO; Dallas, TX; Toronto, Ontario; New York, NY; Fort Myers, FL; Tucson, AZ; San Antonio, TX; and Houston, TX.

Mr. Bebel has been published through the following: Practicing Law Institute, New York, NY; West Virginia Law Review, West Virginia University; the State Bar of Texas, Austin, TX; South Texas College of Law, Houston, TX; Texas Tech Law Review, Texas Tech University (voted Best Article of the Year by Texas Tech Law Review editors); Public Investors Arbitration Bar Association, Oklahoma City, OK; and Louisiana Law Review, Louisiana State University.

Mr. Bebel has served as a visiting lecturer on securities law principles at the following institutions: Texas Tech University School of Law, Lubbock, TX; Mitchell Hamline School of Law, St. Paul, MN; Baylor University School of Law, Waco, TX; University of Houston Law Center, Houston, TX; and the FBI Academy, Quantico, VA.