Kelley Drye Wins Dismissal of $1.6 Million Arbitration Claim
April 9, 2008
Kelley Drye successfully represented FINRA registered representatives Robert Lewin and Richard Lewin in an arbitration brought by a former brokerage client named Mark Urich. The essence of the Urich claim was that he was a conservative small business owner who invested "his last $1,000,000" with the Lewins and lost money because they put him into an unsuitable investment.

The investment at issue was a loan to a company called DJS Leasing, Inc. Urich alleged that he made the loan only after the Lewins assured him it was "riskless" and that repayment would be one hundred percent secured and guaranteed. After Urich made the loan, his monies were not used for their intended purposes, DJS Leasing failed and defaulted on the loan and Urich lost virtually all of his money. Urich sought $1.6 million in damages, consisting of the loss of his investment principal plus the interest that he would have earned, other opportunity losses and punitive damages. In addition to making allegations of fraud, Urich alleged that the Lewins were liable to him for breach of fiduciary duty, breach of contract, unjust enrichment and conversion.

A three-member FINRA arbitration panel heard the case in New York over five days in January and March. Using discovery materials showing that Urich had numerous brokerage accounts and a long history of making highly speculative investments, Kelley Drye demonstrated that he was a wealthy and sophisticated investor who directly negotiated the loan transaction at issue with principals of DJS Leasing and was well aware of the attendant risks. Kelley Drye also demonstrated, both through documentary evidence and cross-examination, that many of the allegations in the statement of claim were demonstrably false or, at a minimum, substantially overblown.

The arbitration panel issued its award dismissing all of the claims in their entirety within three weeks of the final hearing session. For the Lewins, this was a "bet the career" litigation as an adverse decision would likely have meant the end of their respective abilities to act as brokers in the securities industry.