(The Sun Sentinel) - Wells Fargo did everything by the book when it managed a massive, ever-growing trust fund on behalf of the children of the Seminole Tribe of Florida, the banking company’s lawyer said in court Thursday.
Defending the bank against a lawsuit seeking to recover up to $800 million in allegedly lost revenue, attorney Tom Melsheimer accused the Seminole Tribal Council of regretting its own cautious investment choices and trying to pin the blame for low performance on the bank.
Melsheimer acknowledged that the bank improperly charged the trust fund for service fees that were not owed, but he said the bank’s efforts to address the error were rebuffed by the tribe in favor of the lawsuit.
According to the suit, those fees amounted to $7,138,320. But far more money was lost when the bank chose to invest in low-yielding money market accounts instead of stocks, which traditionally perform much better in the long term, according to the suit.
The Seminole Tribe established the Minors Per Capita Payment Trust in 2005 to hold the proceeds of gambling interests throughout the state, including casinos in Hollywood, Tampa and Okeechobee. Children receive a payout when they reach maturity, which is now considered age 24 by the terms of the trust. Before they receive payment, they must take a financial management course and demonstrate that they are drug-free.
Plaintiffs’ lawyers William Scherer, Steven Osber and Irwin Gilbert laid out their case on Wednesday, accusing the bank of deliberately short-changing the trust by favoring safe investments.
The trust was initially managed by Wachovia Bank, which Wells Fargo acquired in 2008.
At issue in the case is whether the bank acted inappropriately or at the behest of the tribe when choosing its investment strategies.
According to Melsheimer, the tribal council shoulders much of the blame.
“The bank never altered the investment strategy without the consent of the council,” he said. The tribe was still reeling from the loss of $20 million in a stock scheme that was blamed on former Tribal Chief James Billie, who was ousted from his leadership role in 2001. The episode made the tribe skittish about trusting the stock market, Melsheimer said.
“I believe the evidence will show we did exactly what we were supposed to do in managing this trust,” said Melsheimer, denying any illegal attempt to cheat the children of the Seminole Tribe.
The case is scheduled to continue for the next several weeks in front of Broward Circuit Judge William Haury.
By Rafael Olmeda, South Florida Sun-Sentinel
