Pitcher's Lawsuit Over Money Woes Needs Work
(CN) - Retired pro pitcher Jaret Wright may amend claims that a SunTrust financial adviser cost him $7.5 million by investing his money in cohorts' Ponzi schemes, a federal judge ruled.
The dispute stems from agreements Wright entered with Todd LaRocca, CSI Capital Management, and San Francisco-based Taylor & Faust in late 1998, the original complaint states.
LaRocca allegedly approached Wright in 1997, claiming to be a very conservative, low-risk adviser and expert in managing pro athletes' often unstable income.
But Wright, who pitched from 1997 to 2007 for the New York Yankees and Baltimore Orioles, among other teams, said LaRocca lied.
He sued LaRocca, Taylor & Faust, CSI, and its acquirer, SunTrust Bank, as well as SunTrust's Investment Services and Mortgage branches, in Philadelphia last year.
"Contrary to LaRocca's express representation, he also placed plaintiff in high-risk, alternative instruments which were Ponzi schemes or other fraudulent investments run, managed, controlled, operated and/or created by individuals with whom LaRocca had a personal relationship, a vested interest and kickback agreements," Wright's complaint states.
Countering that Wright's accounts had an overall positive return of $1.9 million, SunTrust and its affiliates moved to dismiss and to impose sanctions.
Senior U.S. District Judge Mary McLaughlin agreed on April 25 that Wright's lengthy complaint fails to detail LaRocca's alleged mismanagement.
"The complaint does not identify by name any of the unsuitable, high risk, or fraudulent investments allegedly made by LaRocca," McLaughlin wrote. "Nor does the complaint specify any dates on which, or even any year in which, these investments were made, after the initial investments in or around 1998. Other than generally describing and labeling investments as high risk, illiquid, and fraudulent, the complaint does not explain when or how the plaintiff's purported losses occurred with regard to any investment. The complaint does not state the amount of the plaintiff's initial investment in 1998, the value of his portfolio or individual investments at the end of the relevant time period, or any other facts supporting his assertion that he lost more than $7.5 million as a result of the defendants' actions."
SunTrust, which did not purchase CSI until November 2009, about 11 years after Wright hired LaRocca, are "limited and almost wholly conclusory," according to the ruling.
"Plaintiff has simply not pleaded any actionable wrongdoing by the SunTrust defendants themselves, or explained how SunTrust is liable for alleged wrongdoing by other defendants that took place a decade before SunTrust entered the picture," McLaughlin wrote.
Wright cannot compel arbitration and he has 30 days to amend his claims under the Securities Exchange Act, the ruling states.
The original complaint had alleged that a failure to advise Wright that LaRocca would materially change his investment strategies; misrepresent his net worth, asset values, and expenses; and primarily invest his money in "unsuitable, privately held, unsecured, illiquid securities which LaRocca had a financial and personal interest in."
Not until 2012 did Wright allegedly discover his SunTrust investments were "essentially worthless," when a third party audited him for investments not associated with the defendants.
Wright said CSI and SunTrust ignored "red flags" like how LaRocca disregarded industry standards related to document-retention systems, operated without written investment objectives, and never had Wright complete a risk-tolerance survey.