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Daily Business Review

Monday, December 9, 2013


Mediation and arbitration are supposed to be faster and more cost-effective than going to court. However, it was neither in a case involving the theft of millions of dollars from College Health and Investment L.P., a family-run limited partnership.

The case took more than three years to resolve as attorneys for Wachovia Securities, now part of Wells Fargo, used numerous delaying tactics before ultimately paying a $2.75 million arbitration award, said Boca Raton securities attorney Robert W. Pearce, who represented College Health.

The case grew out of Wells Fargo’s failure to detect the alleged theft and unauthorized transactions of millions of dollars by Esther Spero, whose aunt, Shari Jakobowitz, was in charge of the partnership’s accounts.

Spero was accused of misusing the family’s financial information to steal about $7 million, which she in turn lost to one-time Miami Beach developer Michael Stern, who was supposed to be investing in real estate. Instead, Stern allegedly used the money to pay off his own debts after the real estate crash while funding a lavish lifestyle.

Pearce traced most of the money and made recoveries in state court against Stern, a title company, Spero and Wachovia.

“They came up a bit short, but we came close to getting most of their money back,” Pearce said.

Then, in July, a Financial Industry Regulatory Authority arbitration panel ordered Wells Fargo to pay $2.75 million in damages and interest for failing to detect Spero’s alleged embezzlement.

Pearce alleged bank employees went so far as to create a false power of attorney to give Spero control over the account that held most of the assets.

Had the bank enforced its own policies and procedures, as well as FINRA’s rules, it would have detected the embezzlement, Pearce argued.

“The bank had numerous red flags. It should have made inquiries to stop the movement of funds,” Pearce said.

Author Photo

Robert Wayne Pearce

Robert Wayne Pearce of The Law Offices of Robert Wayne Pearce, P.A. has been a trial attorney for more than 40 years and has helped recover over $170 million dollars for his clients. During that time, he developed a well-respected and highly accomplished legal career representing investors and brokers in disputes with one another and the government and industry regulators. To speak with Attorney Pearce, call (800) 732-2889 or Contact Us online for a FREE INITIAL CONSULTATION with Attorney Pearce about your case.

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