SACRAMENTO (CN) - Bank of America will not face claims made by former star football player Dwight Freeney that it aided and abetted a pair of swindlers who took him for millions, a federal judge ruled.
Freeney played for the Indianapolis Colts from 2002 to 2012, and the San Diego Chargers from 2013 to 2014. Among his career highlights was being named to the NFL's Pro Bowl seven times, and his being a member of the Colts' 2007 Super Bowl championship team.
In 2009, he bought a 20 percent ownership interest in the Roof Group, which was then raising funds to open a Rolling Stone magazine-themed restaurant in Los Angeles.
In a complaint filed in February, Freeney said he increased his ownership interest in the restaurant to 51 percent in May 2010, and that six months later, he became the 100 percent owner of the company -- all with the urging and support of Bank of America.
The restaurant opened in early 2011, but closed two years later due to financial difficulties that Freeney claimed were the direct result of Bank of America's shoddy financial management advice.
Freeney claimed Michael Bock, senior vice president and head of the Global Wealth and Investment Management Division if Bank of America, conspired with several individuals to defraud him.
According to the complaint, Bock and his alleged co-conspirators convinced Freeney to sign on with Bank of America by falsely misrepresenting themselves as financial advisors who could, among other things, help him obtain investors for the Rolling Stone restaurant, and manage his other investments.
Freeney said between June 2010 and October 2011, Bock and the other participants in the alleged scheme swiped over $17 million through, among other things, unauthorized withdrawals, wire transfers and real property investments.
The former NFL great said he discovered the scheme in November 2011, and hired a lawyer to investigate the matter, but Bank of America allegedly refused to cooperate.
Freeney sued the bank and Michael Bock alleging 16 causes of action, including several RICO violations, conspiracy to defraud, breach of fiduciary duty and professional negligence.
Bank of America moved to dismiss for failure to state an actionable claim.
U.S. District Judge Margaret McGowan sided with the bank July 15 and dismissed Freeney's complaint with leave to amend.
Bank of America successfully argued that the conspirators were employed by Merrill Lynch, not the bank.
Though Freeney argued that they worked for the bank because it bought Merrill Lynch in 2009, McGowan said there is no evidence the wealth management firm completely merged with Bank of America and ceased to exist on its own.
In fact, she said, annual audit reports filed with the Securities and Exchange Commission demonstrate that both companies are separate entities.
As an alternative, Freeney argued that Bank of America was liable for the actions of Merrill Lynch's employees as parent corporation and joint employer.
But rather than plead facts to support the theory, Freeney urged the court to take judicial notice of 27 documents, which Judge McGowan found improper.
She held that even if the joint employer allegations were properly introduced, the argument failed because Freeney presented no evidence demonstrating that Bank of America controlled the day-to-day actions of Merrill Lynch's employees.
Bock also successfully moved to have the case against him dismissed for lack of personal jurisdiction.
McGowan noted that personal jurisdiction is proper unless applying it would violate a defendant's federal due process rights.
Freeney argued that Bock "waived his right to challenge personal jurisdiction by making a general appearance" through his attorney, Paul Malingagio, and filing several stipulations to extend deadlines in the matter.
But case law shows that filing these documents is not a de facto waiver of personal jurisdiction because they do not "demonstrate a 'clear purpose to defend the suit," McGowan wrote, citing the ruling in Heller. Cepia LLC.
Bock also argued that the court has no specific jurisdiction over him because he is not in California and has no contacts in the state.
But Freeney argued that was exactly true. He claimed that Bock helped Eva Weinberg (the financial advisor's ex-wife) move to Los Angeles and set up the company she used to advance the scheme.
McGowan was still unconvinced.
Even if Bock did encourage Weinberg to move to California, Freeney cannot prove that Bock knew she intended to commit fraud once she got there, she said.
"Neither the complaint nor the evidence proffered by plaintiffs demonstrates that Bock's conduct was connected to California, as opposed to Weinberg, who resided here ... At most, plaintiffs have alleged that Bock encouraged Weinberg to move to California, and that she engaged in fraud in the state. That will not suffice to haul a Florida resident into court in California," McGowan wrote.
Although she granted the defendants' motions to dismiss, McGowen gave Freeney 20 days to submit an amended complaint.
"We are pleased with the court's decision. Although we sympathize with Mr. Freeney as the victim of a crime, the bank had nothing to do with the criminal scheme," Bank of America spokesman Bill Halldin told Courthouse News in an email.
"The two people responsible for this wrongdoing have already been convicted. The primary wrongdoer never worked for the bank or any of its affiliates and the other person committed her criminal conduct after she left Merrill Lynch in 2010," he said.
Freeney did not immediately return requests for comment.
Weinberg and disgraced real estate developer Michael Stern, another of the alleged conspirators, were arrested by the FBI in March, and charged with wire fraud, The Huffington Post reported.
Freeney is but one of many professional athletes with money problems.
In May, former NFL running back Clinton Portis lost a suit brought by the MGM Grand for $287,178 in gambling debts. Portis, who made $43 million over his career, also owes the IRS $459,000.
He and 35 other football stars lost $43.6 million on a "Center Stage" casino investment that was shut down by Alabama regulators in July 2012.
Hall of Famer Charles Barkley told ESPN in 2006 that he has lost over $10 million to gambling, while pro golfer John Daley has lost $60 million.
A 2014 study of professional cricket and soccer players in the United Kingdom found that professional athletes are more susceptible to gambling problems than other people.
Studies of college athletes in the United States indicate that male athletes between 18 to 24 who are highly competitive, impulsive, and prone to substance abuse are at much higher risk than their female counterparts to develop gambling addictions.
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