DALLAS (CN) - Eleven people claim in court that a Morgan Stanley Smith Barney financial adviser had them invest hundreds of thousands of dollars of their savings and retirement money into a Ponzi scheme.
Lead plaintiffs Allan and Angela Caligone sued Morgan Stanley Smith Barney and its financial adviser Delsa Thomas, in Dallas County Court.
They claim Thomas "took advantage of the trust she had built with the plaintiffs and proposed that each invest into a company called Tejas Eagle Financial LLC."
"Under the investments into Tejas, the plaintiffs were given the option of either investing $125,000 or $250,000," the complaint states. "At this point, Thomas had built a trustworthy and successful relationship with each plaintiff, leaving the plaintiffs without a reason to doubt her advice. While inducing the plaintiffs to invest into Tejas, Thomas led the plaintiffs to believe she would oversee the investment.
"In reliance upon their financial adviser, Thomas's, advice and representation, each plaintiff invested into Tejas. For the plaintiffs, this meant re-allocating funds from retirement or savings accounts to a Ponzi scheme, which Thomas had no oversight or control over.
The plaintiffs say the brokerage had a duty to use ordinary care to provide thwm with suitable financial advice.
But "The company breached this duty by assigning Thomas to advise the plaintiffs or by allowing Thomas to provide financial advice to the plaintiffs that would destroy their investments," the complaint states. "The failure to provide suitable advice or a suitable financial advisor proximately and actually caused plaintiffs to lose their entire or a substantial part of their investments."
They seek damages for fraud, negligent misrepresentation, vicarious liability and negligent supervision. They are represented by Sammy Ford with Abraham, Watkins, Nichols Sorrels, Agosto & Friend, of Houston.
Based in New York, Morgan Stanley Smith Barney was formed in 2009 when Citigroup sold 51 percent of its Smith Barney wealth management arm to Morgan Stanley during the height of the financial crisis.
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