Celebs claim LA invester bilked them

April 18, 2008 7:38:39 PM PDT
Basketball great Jerry West, Lakers general manager Mitch Kupchak, the Dodgers' Nomar Garciaparra and other athletes claim they were bilked out of $3 million by a Los Angeles investment adviser. Twenty-one people, many of them current or former athletes, filed a claim of fraud, negligence and breach of duty last June with the Financial Industry Regulatory Authority contending that UBS Financial Services made unnecessary bond trades in order to reap commissions, said Steven M. Goldberg, an attorney for the claimants, on Friday.

The claim involves $300 million in bond trades made for UBS clients from 2002 to 2006 by Gary R. Fournier, who has since moved to Bear Stearns Cos. Fournier has denied any wrongdoing.

The claim will be heard by a binding arbitration panel in July.

"I am confident he is going to be fully exonerated after this gets heard," his attorney, Michael Blumenfeld, told the Los Angeles Times.

A call by The Associated Press seeking comment from Blumenfeld was not immediately returned Friday.

Some of the claimants include former NBA players B.J. Armstrong, Brent Barry, Stacey Augmon and Jeffrey West; former Major League Baseball players Sean Douglass, Mark Langston, Thomas P. O'Malley and Rex Hudler, who now is a color commentator for the Los Angeles Angels of Anaheim.

They also include noted sports agent Arn Tellem and his wife, Nancy, who is president of CBS Paramount Network Television Entertainment Group.

West and the others are seeking unspecified damages.

"We believe the claims were without merit," UBS spokeswoman Karina Byrne said Friday.

The claim includes "vague allegations ... untethered to any articulated factual and legal basis," UBS said in its formal answer to the claim.

According to the claim, Fournier made "excessive and unnecessary trades ... for the improper purpose of generating extra and exorbitant commissions." It also accuses Fournier of "churning" bonds by selling them from one client to another to pocket more commissions.

"In some cases, a bond would be sold from client A to client B, with commissions taken from both," Goldberg said. "If your position is that a bond that you've purchased for a client no longer is good and should be sold ... why would you then sell it to one of your other clients?"

Clients also were told the commission on trades would be no more than a half-percent but the undisclosed fee often was much higher, the claim contends.