Atty Chokes Up During Emotional Opening At Trial Over MetLife’s Alleged Role In $216M Ponzi Scheme

Posted by David Siegel on Jul 25, 2016 3:37:15 PM


Plaintiff's attorney Richard Donahoo, left, and MetLife attorney Sidney Kanazawa, right,  deliver their opening statements. Click here to see video from the trial. 

Los Angeles - An attorney representing a woman who is one of hundreds of investors alleging MetLife agents duped them into purchasing unregistered securities from a supposed $216 million Ponzi scheme delivered an emotional opening statement last week in a California state courtroom at a trial over the insurance giant’s responsibility for the investors’ losses.

Richard Donahoo of Donahoo & Associates choked up shortly after he began telling jurors how his client, 75-year-old Christine Ramirez, lost hundreds of thousands of dollars after a MetLife agent convinced her to invest in an alleged scam operation called the Diversified Lending Group. Ramirez is part of a group of roughly 200 similar investors that was denied class action status last year, and she is the first victim of the supposed scam to take her case to trial. 

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Her suit claims MetLife and subsidiary New England Insurance Co. should have known its agents were pitching clients on fraudulent investments, and that a senior MetLife manager coordinated with DLG's operator Bruce Friedman. 

"She raised her children and worked as a single mother to support herself and her family," Donahoo told jurors on July 20 as his voice began to crack with emotion, according to a Courtroom View Network webcast of the trial. "The evidence will show she hoped for a comfortable retirement. She hoped to be able to travel back to New York and visit her family, and to be able to splurge a little bit on her children and her grandchildren."

Ramirez invested around $280,000 in DLG in 2009 at the urging of her MetLife agent Scott Brandt, according to Donahoo. He said Ramirez was impressed by the “guaranteed” returns as high as twelve percent that DLG supposedly showed, but had no idea she was actually purchasing worthless, unregistered securities and helping to bankroll Friedman’s lavish lifestyle.

The U.S. Securities and Exchange Commission eventually accused Friedman of misling investors, and he died in 2010 in a French prison while fighting extradition to the United States on related criminal charges.

Donahoo explained to the jury that MetLife managing partner Tony Russon introduced Friedman to MetLife agents in 2004. At the time he said Friedman already owed Russon nearly $750,000 from an unrelated business arrangement, and Friedman promised Russon half of any future income to help pay off his debt. MetLife agents supposedly received DLG-themed “welcome packets” and were encouraged to pitch promissory notes claiming to back DLG investments as “premium financing” for MetLife policies - a practice that company agents later said in depositions was prohibited.

Donahoo told jurors that he planned to pursue an unspecified amount of both compensatory and punitive damages.

MetLife’s attorney Sidney Kanazawa of McGuireWoods LLP told jurors during his opening statement that MetLife had no formal affiliation with DLG, and that Brandt was acting outside the scope of his employment with the company when he encouraged Ramirez to invest in the fund. MetLife has argued Brandt was acting as a contractor that they had no duty to supervise.

Kanazawa showed jurors a document signed by “Scott Brandt of Diversified Lending Group” and argued that MetLife played no role in encouraging Ramirez to invest in Friedman’s operation.

"The correspondence that you'll see in this case will not say MetLife," he said. "It will not say New England Life Insurance, will not say New England Securities. It will say Diversified Lending Group. The email addresses that you see will say”

Representing Russon, who has since left MetLife, Ted Peters of Edgerton & Weaver LLP told jurors that his client was fooled by Friedman’s promises of near-guaranteed returns just like Ramirez.

"DLG left a long trail of victims," Peters said. "Ms. Ramirez was one of them. You're going to hear evidence Tony Russon was one of them. You're going to hear evidence that Scott Brandt was one of them."

Related cases are proceeding against MetLife individually after Judge Elihu Berle in 2015 refused to certify a class of investors who lost money in DLG, finding that due to DLG’s unreliable records class membership would be difficult to ascertain and could require numerous “mini-trials.”

Judge Kenneth Freeman is presiding over the current trial, which is expected to take six weeks to complete. Video of the full proceedings will be available live and on demand via CVN.

The case is Harthshorne, et al. v. MetLife Inc., et al., case number BC576608 in the Superior Court of California for Los Angeles County.

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Topics: Insurance, Securities, California