Rothstein Investor Victim Seeks to Avoid Arbitration Order
Friday, October, 24, 2014
An investor who lost $1.1 million by investing in a Ponzi scheme involving fictional lawsuit settlements offered by Scott Rothstein is seeking to avoid arbitration as ordered by a Florida judge over his loss.
Don Beverly’s suit against his former financial advisor Hightower Advisors LLC and specifically Hightower advisor Curtis Lyman in the $1.2 billion fraud was heard in Florida Circuit Court, where the judge found that the right to arbitration had not been waived and thus the issue fell under the jurisdiction of the Federal Arbitration Act. Beverly had argued that his investment in the Ponzi scheme fell outside his normal investments which were covered by the arbitration clause between himself and Hightower Advisors.
The court also questioned the basis for the lawsuit, because Hightower’s advice to Beverly to invest in the Rothstein scheme did not benefit Hightower at all, as they collected no commission on the investment, which Beverly undertook personally. Beverly claims Hightower is responsible as they misrepresented the investment in a variety of ways, including telling him the scheme was approved by the State Bar and that Hightower had conducted due diligence on the principals.
Beverly also claims that Hightower breached its fiduciary duties by offering him misleading investment advice. Hightower has denied all claims. Beverly has since appealed the circuit court’s decision regarding arbitration and is seeking to bring suit against Hightower over the losses directly. However, it is unlikely the Appellate court will reverse the findings.