WEST PALM BEACH (CN) – A financial publisher claims Charles Schwab Corp. hurt his business and forced him to sell his publishing operation on cheap by falsely accusing his head writer of misrepresenting his credentials.
James DiGeorgia and James DiGeorgia & Associates (JDA) sued Charles Schwab & Co. for fraud in Palm Beach County Court.
DiGeorgia runs several companies that publish materials on investment strategies and economic issues.
In 2000, he says, he hired William Johnson, a former Schwab employee, to write books and newsletters for one of his publishing businesses, 21st Century Investor Publishing Corp. (TIP).
“JDA hired Johnson because of Johnson’s credentials, including that Johnson was a former employee of Schwab who had significant options trading experience and who taught other Schwab brokers how to trade options,” according to the complaint.
DiGeorgia says that while working for TIP Johnson wrote two successful online courses on options trading and 10 books, some of which were selected as supplemental texts for universities, including Binghamton and Wingate universities.
He claims Johnson’s book and workbook, “An Investor’s Guide to Understanding and Mastering Options,” sold 10,000 copies in its first year at $100 a pop, bringing in $1 million.
Johnson left DiGeorgia’s company in 2006 to work for Options University, which trains investors, but he agreed to write another book, “Power Hedging”, to be published by TIP, according to the complaint.
DiGeorgia says Schwab, which competes with DiGeorgia’s publishing businesses, interfered with the deal and with book sales by discrediting Johnson.
“In April 2007, DiGeorgia received a letter from Schwab threatening legal action based upon certain ‘false statements’ regarding Johnson that Schwab claimed were being made by DiGeorgia, JDA and/or TIP,” the complaint states. But “In fact, unbeknownst to DiGeorgia, in April of 2007 the letter sent by Schwab was itself based upon falsehoods and contained false statements.”
The letter falsely stated that DiGeorgia’s companies were using Schwab’s name and trademark in materials written by Johnson, without permission, and misrepresented Johnson’s work credentials and job duties at Schwab, according to the complaint.
DiGeorgia says Schwab asked him to remove all references to its name from mailings, websites and books published by DiGeorgia’s companies.
He says that after receiving Schwab’s letter, his companies stopped publishing books and other materials written by Johnson, and lost sales income.
“In reliance upon the letter from Schwab, DiGeorgia and JDA did not pursue further business with Johnson when Johnson was terminated by Options University because of similar false statements by Schwab regarding Johnson made in a letter to Options University dated Oct. 9, 2007,” the complaint states.
DiGeorgia says he was forced to sell his publishing business for less than its actual value because of Schwab’s false statements.
And he says he did not find out that Schwab’s accusations were unfounded until July this year, during an arbitration proceeding between Schwab and Johnson.
DiGeorgia seeks damages for fraud.
He is represented by Joel Rothman with Arnstein & Lehr.
Charles Schwab, a publicly traded brokerage firm with more than 13,000 employees and more than $1 trillion in client assets, provides brokerage, banking and insurance services, and educational resources and support for online traders and investors. Schwab has been publishing an investment advisory newsletter since 1963.