Attorneys for the brokerage firm Raymond James say they shouldn’t have to comply with a plaintiff request that the firm sort through nearly a decade of electronic records for the word. Federal regulators had used the term in their case against the developers.
“Searching for the word ‘Ponzi’ as a standalone term in the emails of 18 people from September 2007 to December 2014 would not turn up material relevant to the claims or defenses in this case,” wrote Deborah S. Corbishley, an attorney for Raymond James, “but would add costs to Raymond James to sift through thousands of irrelevant documents.”
Corbishley added in the motion filed this week, “If there is any reasonable basis for a belief that anyone at Raymond James used the word Ponzi in an email in connection with these accounts before the suit was filed, plaintiffs’ counsel has not explained it.”
The dispute over the word is part of a class-action lawsuit brought by investors against Jay Peak developers Ariel Quiros and William Stenger as well as Joel Burstein, Quiros’ former son-in-law and a former branch manager for Raymond James. Alexander Daccache, an investor from Brazil, is the case’s lead plaintiff.
The case was filed about a month after separate state and federal lawsuits were leveled in April against Quiros and Stenger, alleging they misused $200 million raised through the EB-5 visa program for projects in northern Vermont, including hotels and condos.
The federal lawsuit, brought by the Securities and Exchange Commission, alleges the two men operated a “Ponzi-like” scheme.
Quiros, a Miami businessman, is owner of Q Resorts, a holding company that includes Jay Peak. Stenger is former CEO and president of Jay Peak.
Attorneys for the investors in the Daccache class-action case filed a motion last month asking a judge to compel Raymond James to search its electronic files for the term “Ponzi” over several years for several employees.
In a sharply worded 20-page response, attorneys for Raymond James, whose customers included Quiros, call the request to conduct the search “wasteful” and “unproductive.”
“In a brokerage firm in the period between 2008 and 2014, ‘Ponzi’ appeared regularly in emails,” Corbishley wrote.
For example, the filing stated, the firm received a daily news update via email from the Miami Herald, which regularly reported on a high-profile Ponzi scheme case involving the University of Miami.
Also, during that period, the case of Bernie Madoff, convicted of running the largest Ponzi scheme in the country’s history, was pending and reported on by numerous news outlets.
“About a dozen significant United States Ponzi schemes are listed by Wikipedia for the 2008 to 2014 period, and many more existed and were reported on in industry publications,” Corbishley wrote. “Naturally, the email boxes of people in the financial industry were flooded with reports and newsletters about events in the various Ponzi scheme cases across the nation.”
A search of Burstein’s emails found only two with the word “Ponzi” that also contained terms relating to the case involving Quiros and Stenger, according to the filing.
“Both were reports on the filing of the Daccache complaint and are privileged,” Corbishley wrote.
As of Oct. 11, the filing states, Raymond James had provided 51,258 pages of documents to the attorneys for the plaintiffs in the class-action lawsuit. From Oct. 11 through Oct. 28, an additional 4,890 pages were turned over, according to the filing.
In addition, Corbishley wrote, more reviews are underway and additional documents are expected to be produced within the next two weeks.
Also, a dispute is brewing over how many, and which, company policies the firm is willing to share with attorneys for the investors. For example, Corbishley wrote, there is no need to turn over the day trading policy when there is no allegation that day trading took place.
“Plaintiffs asked for 92 different policies in 2008 alone,” she wrote, “with about half of them completely irrelevant to any issue reasonably present in the case.”
In another example showing the difficulty of finding documents, the investors asked the firm to conduct a search for Quiros’ first name, Ariel.
That search, the filing states, brought up many unrelated references to names of other people, including Mariel, Marielle or Mariela, leading to more than 300,000 documents to review.
Attorneys for the plaintiffs also asked for documents relating to international transactions in currency and any exemptions from reporting requirements. However, none were turned over.
“The answer is simple,” Corbishley wrote. “There is no indication whatsoever that any transactions in currency occurred, that any currency was transported to or from another country, or that any foreign accounts were maintained by Raymond James in connection with the relevant people or accounts.”
The attorney called several of the requests for documents from the plaintiffs’ lawyers a “snipe hunt.”
“Only when counsel confirmed that there were no snipe to be found could she state with certainty — there are no such documents and none are being withheld,” the filing states.
In a footnote included in her response, Corbishley wrote that counsel for the plaintiffs several times used the word “current” rather than “currency” in requests for documents.
“When questioned whether ‘currency’ was in fact meant, plaintiffs counsel was unsure,” the footnote read. “As electricity has nothing to do with the case, the searches proceeded on the basis that ‘currency’ was the correct term.”