Crime novelist, Patricia Cornwell, sues her financial advisor and wins $51 million

Plot Device · Feb 20, 2013

Part of me wants to say this woman is an idiot who lived well above her means for way too long. But at the end of the day, her financial advisor truly screwed up and violated all kinds of fiduciary requirements when he changed her investment risk strategy from a "conservative" strategy to an "agressive" one without her permission.

From what I can see, he did it BECAUSE she was so exgravagant, and so he was trying to play catch-up as far as how much money was flying out the door due to her lifestyle. But he still shouldn't have done it.

Meanwhile, there is an added detail about fraud concerning the Hilary Clinton presidential campaign. That was enough to knock any jury right over and decide entirely for the plaintiff.

http://finance.yahoo.com/news/crime-writer-wins-lawsuit-against-192645703.html

Crime writer wins lawsuit against money advisers

Crime writer Patricia Cornwell wins lawsuit against former financial management company

By Denise Lavoie, AP Legal Affairs Writer -- Feb 19, 2013

BOSTON (AP) -- A federal jury awarded crime writer Patricia Cornwell nearly $51 million Tuesday in her lawsuit against her former financial management company and a former principal in the firm.

The author best known for her series of novels featuring medical examiner Kay Scarpetta claimed that Anchin, Block & Anchin LLP was negligent in handling her finances and cost her millions in losses or unaccounted for revenue.

Lawyers for the New York firm and former principal Evan Snapper said there was no money missing from Cornwell's accounts. They blamed losses on the economic downturn and what they called Cornwell's extravagant lifestyle, which included Ferraris, helicopters and a temporary apartment in New York City she rented for $40,000 per month.

Cornwell, 56, testified that Anchin moved her from a conservative management strategy to an aggressive one without her permission. She said she fired the firm in 2009 after discovering that her net worth was a little under $13 million, despite having eight-figure earnings in each of the previous four years....

willietheshakes · Feb 20, 2013

Aside from the financial management co's statement that her lifestyle was "extravagant", what grounds do you have for saying that she is "an idiot who lived well above her means for way too long"? There's certainly no evidence of that in the article you quoted, or in anything I've seen in reference to this case in the last couple of days.

I find it difficult to assume best intentions on her management's part with stuff like this in the record:

She said she knew something was awry when she was forced to subpoena her own bank records. And she said she remains horrified at the lack of accountability within the company: Checks had been voided, expenses were unaccounted for. One of the biggest stunners, she said, was when they found a $5,000 check that Snapper had written claiming it to be a bat mitzvah gift Cornwell had given to his daughter.

(from http://bostonglobe.com/metro/2013/0...ton-lawsuit/srxHZZC5A9j3MsIBVscsON/story.html)

ETA: The header is either misleading, or demonstrates, perhaps, a misunderstanding: Anchin, Block & Anchin LLP wasn't Cornwell's "financial adviser", suggesting a perilous investment strategy to her. They were her financial managers, hired to look after the money stuff with full signing authority, etc. From all appearances, there's about $50million they can't account for...

Albedo · Feb 20, 2013

Yeah, that one seems to push this out of simple professional negligence and into the outright fraud category.

Course, all your non-writer friends are going to read this and assume YOU rent, or will soon rent, a $40,000 per month apartment.

regdog · Feb 20, 2013

They stole her money.

Myrealana · Feb 20, 2013

As a professional financial analyst, I can tell you that a financial manager's #1 responsiblity is to follow the client's directives. If those directives are at odds - for instance they insist on living like they've got investments earning 15%, but they've told you to be conservative and you're only earning 8%, you tell them and list their options. You don't shift money around without permission.

Even if this were a simple matter of them investing her money in risky markets she didn't approve, they would be guilty of misconduct.

It sounds like they went quite a bit beyond that, though.

muravyets · Feb 20, 2013

Yeah, this one seems pretty cut and dried. Apparently, the court thought so, too.

Jean Marie · Feb 20, 2013

W/o permission is just that.

Does anyone else find it funny that the guy's last name is, Snapper? Or, do I need more coffee.

I'd like to see pics of a 40k apartment; has to be some kind of beautiful.

Alessandra Kelley · Feb 20, 2013

Jean Marie said:
W/o permission is just that.

Does anyone else find it funny that the guy's last name is, Snapper? Or, do I need more coffee.

I'd like to see pics of a 40k apartment; has to be some kind of beautiful.

Even in Manhattan $40K will get you a pretty fancy apartment.

You can rent an apartment bigger than our house on Park Avenue for $25K a month, if poking around luxury apartment rental websites is anything to go by.

muravyets · Feb 20, 2013

Jean Marie said:
W/o permission is just that.

Does anyone else find it funny that the guy's last name is, Snapper? Or, do I need more coffee.

I'd like to see pics of a 40k apartment; has to be some kind of beautiful.

Here ya go: http://ny.curbed.com/archives/2012/10/21/4200squarefoot_soho_loft_wants_40000month.php

Apparently, $40K will get you a crap-ton of square footage and a big ol' bathroom.

Jean Marie · Feb 20, 2013

muravyets said:
Here ya go: http://ny.curbed.com/archives/2012/10/21/4200squarefoot_soho_loft_wants_40000month.php

Apparently, $40K will get you a crap-ton of square footage and a big ol' bathroom.

Thanks, mura! Wow, still that's a lot of bucks for that-bathroom's pretty awesome. But, 40k a month? Ouch!

Even what Allesandra said, 25k's a lot. I cannot see that. Like you said, bigger than my house. Amazing to me that someone would spend that much in rent, but if that's what you want to do, it's your money.

dfwtinman · Feb 20, 2013

Albedo said:
Yeah, that one seems to push this out of simple professional negligence and into the outright fraud category

Perhaps, but a plaintiff's attorney of average competence would not want to recover on a fraud theory (as opposed to creating settlement leverage) because you would be pleading and proving yourself "out of coverage." This verdict may not be worth much absent an insurance policy to collect from. A professional liability policy, if one existed, would not have covered the defendant for intentional wrongdoing (ie fraud), hence the reason for casting this as a negligence claim. If there is no liability insurance then the situation would be different, especially if the general partner of the LLP is an individual (though I doubt that's the case as most GPs are corp's with a 1% interest).

Unfortunately for the plaintiff, sometimes the real work doesn't start until the verdict has been secured.

ETA: just read the verdict. 2 tort theories (simple negligence and breach of fiducial duties) and one for breach of contract. Breach of contract isn't insurable, but the damages overlap, so, baring some other exclusion, a professional liability policy would respond. Just judging by the way the verdict form was written, I am betting there's a policy (informed hunch). But, good news on breach of contract is that it often sets up post- verdict claim for attorney fees, whereas more typically not true for tort claims.

dfwtinman · Feb 20, 2013

Jean Marie said:
Thanks, mura! Wow, still that's a lot of bucks for that-bathroom's pretty awesome. But, 40k a month? Ouch!

Even what Allesandra said, 25k's a lot. I cannot see that. Like you said, bigger than my house. Amazing to me that someone would spend that much in rent, but if that's what you want to do, it's your money.

Well, the article says she had been earning "8 figures" per year for 4 straight years . So that is a minimum of $10,000,000 per year (She actually claimed a year's lost income as part of her damages which she pegged at $15,000,000). $40,000/month is $480,000/year or just under 5% of $10,000,000. So, for perspective, that is like a person making $100,000 spending $5,000 per year on rent ($416.66 per month).

willietheshakes · Feb 20, 2013

dfwtinman said:
Well, the article says she had been earning "8 figures" per year for 4 straight years . So that is a minimum of $10,000,000 per year. $40,000/month is $480,000/year or just under 5% of $10,000,000. So, for perspective, that is like a person making $100,000 spending $5,000 per year on rent ($416.66 per month).

According to the second article, the earned figure was $89 million over the four years.

dfwtinman · Feb 20, 2013

willietheshakes said:
According to the second article, the earned figure was $89 million over the four years.

Thanks, I didn't see that. I started to say it could be up to $99 million but that seemed like mighty tall cotton.

So, that's edging closer to 1/2 a % or making 100k per year and spending $500 a year on rent.

Jean Marie · Feb 21, 2013

dfwtinman said:
Thanks, I didn't see that. I started to say it could be up to $99 million but that seemed like mighty tall cotton.

So, that's edging closer to 1/2 a % or making 100k per year and spending $500 a year on rent.

In other words, go buy a house for pete's sake. Even w/ the lousy market, it's a better investment than tossing away 40k a month, which makes me think she's most definitely living above her means. But, hey she did win a massive lawsuit so we'll see how long the money lasts. I do hope she seeks out an honest investor for herself, one that will do right by her.

It never ceases to amaze me how money people think they can get away w/ ripping people off. The law will catch up w/ them at some point, and they will be held accountable.

willietheshakes · Feb 21, 2013

Jean Marie said:
In other words, go buy a house for pete's sake. Even w/ the lousy market, it's a better investment than tossing away 40k a month, which makes me think she's most definitely living above her means.

What are you talking about?

She spends half of one percent of her income on housing. One half of one percent.

This is the equivalent of someone making $1000 a week spending $5 a week on housing. How is that even remotely living above her means?

stray · Feb 21, 2013

This sort of thing shouldn't happen to a crime writer.

Xelebes · Feb 21, 2013

stray said:
This sort of thing shouldn't happen to a crime writer.

Well, not unless you want to get caught.

Jean Marie · Feb 21, 2013

willietheshakes said:
What are you talking about?

She spends half of one percent of her income on housing. One half of one percent.

This is the equivalent of someone making $1000 a week spending $5 a week on housing. How is that even remotely living above her means?

Admittedly, I suck at math, but aside from that, nothing I say is going to suit you. Absolutely nothing. I could say the sky is blue and you would argue it.

I claim that spending 40k per month on rent is entirely idiotic & frivolous, but as I stated, earlier, it's her money so have at it. I also stated, it's a lousy housing market, so invest there, but I'm fairly certain that you'll find an argument there. However, I have a novel to complete. Meaning, I've no time for nit-pickiness.

I come here to clear my head a bit and move on.

Yesterday's operative word was: maybe, but was overlooked.

I will do my best to use the italics, bold and underlining when necessary from here on.

stray · Feb 21, 2013

dfwtinman said:
Perhaps, but a plaintiff's attorney of average competence would not want to recover on a fraud theory (as opposed to creating settlement leverage) because you would be pleading and proving yourself "out of coverage." This verdict may not be worth much absent an insurance policy to collect from. A professional liability policy, if one existed, would not have covered the defendant for intentional wrongdoing (ie fraud), hence the reason for casting this as a negligence claim. If there is no liability insurance then the situation would be different, especially if the general partner of the LLP is an individual (though I doubt that's the case as most GPs are corp's with a 1% interest).

Unfortunately for the plaintiff, sometimes the real work doesn't start until the verdict has been secured.

ETA: just read the verdict. 2 tort theories (simple negligence and breach of fiducial duties) and one for breach of contract. Breach of contract isn't insurable, but the damages overlap, so, baring some other exclusion, a professional liability policy would respond. Just judging by the way the verdict form was written, I am betting there's a policy (informed hunch). But, good news on breach of contract is that it often sets up post- verdict claim for attorney fees, whereas more typically not true for tort claims.

Agreed. A professional indeminty liability insurer would have settled rather than go to court if there were any obvious policy coverage at play. There will be another court session to see if the insurers have to play ball, and if so, how much they will be hit by. She won't be seeing the money back any time soon.

Deleted member 42 · Feb 21, 2013

willietheshakes said:
What are you talking about?

She spends half of one percent of her income on housing. One half of one percent.

This is the equivalent of someone making $1000 a week spending $5 a week on housing. How is that even remotely living above her means?

Plus, there are some tax advantages if she can tie the temp apartment to a legit business expense, i.e. visiting lawyers, publishers, research at NYPL, etc.

Crime novelist, Patricia Cornwell, sues her financial advisor and wins $51 million

Plot Device

A woman said to write like a man.

willietheshakes

Gentleman. Scholar. Bastard.

Albedo

Alex

regdog

The Scavengers

Myrealana

I aim to misbehave

muravyets

Old revolutionary

Jean Marie

calm waters ahead

Alessandra Kelley

Sophipygian

muravyets

Old revolutionary

Jean Marie

calm waters ahead

dfwtinman

Cubic Zirconia in the rough

dfwtinman

Cubic Zirconia in the rough

willietheshakes

Gentleman. Scholar. Bastard.

dfwtinman

Cubic Zirconia in the rough

Jean Marie

calm waters ahead

willietheshakes

Gentleman. Scholar. Bastard.

stray

Xelebes

Delerium ex Ennui

Jean Marie

calm waters ahead

stray

Deleted member 42