CHICAGO (CN) – Two-time All-Star pitcher Denny Neagle says his financial manager took advantage of his “utter lack of financial acumen” to line his pockets with “exorbitant and secret fees.”
Jennifer and Dennis Neagle sued William S. Leavitt and Leavitt Financial Consultants dba Leavitt Capital Management, in Cook County Chancery Court.
Neagle had a 12-year career in pro baseball with six teams, beginning with the Twins in 1991 and ending with the Rockies in 2003. He had a lifetime record of 124-92, an E.R.A. of 4.24 and 1,415 strikeouts. He made the All-Star team in 1995 and 1997 and was a member of the 2000 World Series champion Yankees. “As Dennis’s pitching career skyrocketed in the late 1990s, the Neagles began to accumulate significant wealth at a very young age,” the complaint states. “The Neagles knew, however, that professional baseball careers often were short-lived and that the money Dennis earned playing baseball during his youth needed to last for the Neagles’ lifetimes.”
On the recommendation of his agent, Neagle says he and his (now ex-) wife retained Leavitt to manage and invest their money.
Neagle says Leavitt was “an engaging and persuasive pitchman. He dazzled the Neagles and won them over completely.”
Leavitt obtained full access to the Neagles’ bank accounts, paid all their bills and utilities, was named the executor of their estates, and went on vacations with the family, according to the complaint.
“Leavitt became like a father to the Neagles. He was the Neagles’ confidant and their sounding board for all major decisions,” the Neagles say.
“In short, the Neagles completely and unequivocally trusted Leavitt and LCM to take care of them.”
But the Neagles say, “Unbeknownst to them, however, Leavitt and LCM routinely recommended and places the Neagles in investments that defendants knew were totally at odds with the Neagles’ investment needs. Specifically, Leavitt and LCM recommended and invested the Neagles in hedge funds, private equity funds and other unregulated investments.
“These investments – known in the industry as alternative investments … – were neither conservative, nor liquid. Instead, they were incredibly risky, not in the Neagles’ best interests, and completely out of line with the Neagles’ stated investment strategy of conservative, liquid investments.”
Forty paragraphs later, the Neagles add: “Given the Neagles’ complete trust and confidence in the defendants, and the Neagles’ utter lack of financial acumen, the Neagles – as they were instructed to do – simply signed the subscription agreements that authorized Leavitt and/or LCM to execute a wire transfer to invest in an alternative investment.”
They claim that “Leavitt and LCM received exorbitant management fees” for at least eight alternative investments, which are named in the complaint.
They add: “These ‘secret’ fees were on top of the other fees the Neagles paid to Leavitt and LCM for managing and paying the Neagles’ bills, and neither Leavitt nor LCM ever disclosed that they would be receiving such fees.”
The Neagles say Leavitt and LCM “also received secret placement fees and subsequent additional fees (called ‘trail’ fees) for most, if not all, of the non-LCM managed alternative investments in which they caused the Neagles to invest. …
“LCM even took affirmative steps to ensure that the Neagles would not know the negative aspects of the alternative investments.”
The Neagles say they “would never have entered into the alternative investments but for the complete trust and confidence they placed in defendants and defendants’ recommendations. … Leavitt and LCM were acting out of their own self interest, with no regard for the Neagles’ best interest.”
They seek punitive damages for breach of fiduciary duty, negligent misrepresentation and unjust enrichment. They also want Leavitt ordered to return “all amounts paid by the Neagles for the alternative investments,” and all the money they paid him and LCM for financial advice.
The complaint does not estimate the total damages.
The Neagles are represented by Christopher Moor with Novack and Macey.