In 2010, College Health and Investment Ltd (College Health), a family limited partnership, filed a case against Wells Fargo & Co. (Wells Fargo) in Financial Industry Regulatory Authority (FINRA) arbitration. College Health accused Wells Fargo of failing to detect the theft and unauthorized transactions in College Health’s account. College Health sought $4.4 million in damages against Wells Fargo.
From 2005 until 2008, Esther Spero (Spero), a former legal secretary at a firm that represented College Health, allegedly misused the family’s financial information and embezzled around $6 million. Spero’s scheme worked by opening accounts in Wachovia (now Wells Fargo) under College Health’s name or similar names in order to appear related to College Health. By doing so, she was easily able to transfer money from one of College Health’s actual accounts into the fake account and then finally into her own account.
College Health also filed a civil suit against Spero in the Southern District Court of Florida where she was eventually found guilty of the charges. However, Spero was unable to pay College Health for the amount she had taken from the company leading College Health to bring action against Wells Fargo in FINRA arbitration.
The FINRA arbitration spanned 26 hearing sessions and culminated in the three-person panel finding Wells Fargo liable. The panel awarded College Health $2.3 million out of the $4.4 million they asked for in their complaint. Included in the $2.3 million payment was $419,000 in interest and $35,000 in legal fees. The arbitrators’ award reflects a 60/40 split of liability between the parties for the losses.
A spokesperson from Wells Fargo stated that they were disappointed with the panel’s results and that the facts did not warrant such an outcome. During the arbitration Wells Fargo tried to seek damages from Spero and an unnamed employee at College Health, but were unable to because they were not associated with a member firm under the FINRA rules.
The attorneys at Gana LLP are experienced in investigating claims of financial abuse. Our attorneys can help you detect and uncover suspicious activity in your accounts. Our consultations are free of charge and the firm is only compensated if you recover.